Impact fees may return to help fund schools

A new estimate shows the Marion County school district will need to spend about $459.4 million over the course of the next 15 years to build new schools and expand existing schools to accommodate the projected growth in the county’s student population.

Money has to come from somewhere, and the Marion County School Board is poised to recommend that the Marion County commission reinstate the Educational System Impact Fee on new construction to raise funds for help offset the district’s needs.

The school board is reviewing the findings from year-long Long Range Planning and Impact Fee studies conducted by the Benesch consulting company that identified which schools need expansions and where new schools need to be built. This information will help the school board decide whether to recommend bringing back impact fees.

Impact fees were first introduced in 2006 but have been suspended since 2011. At the time, the fee was about $3,967 for each new single-family home being built. The fees are one-time charges that local governments impose on builders and developers to offset the costs of expanding schools.

Board Chair Allison Campbell said Benesch has recommended that the county bring back the impact fees at 100%. The findings from the recent studies indicate that if impact fees are brought back, they may need to be higher than before to sustain the growth that the school district expects, according to the board.

Increasing impact fees is restricted, however, since the passing of House Bill 337 in 2021, which limits the frequency and rate that local governments can increase impact fees. Any increase in impact fees over 25% but not more than 50% must be implemented in separate increments throughout the year. With the amount of growth that the county is experiencing, Marion might fall under the “extraordinary circumstances” that exempt governments from these limitations.

“I understand that it does look like it’s a lot that we potentially could be asking for, but people have known that this was coming,” said Campbell.

“We have had 17 years (since implementing) a fee like this, and so from those who are coming into the county who are out-of-town developers, the information I always receive from folks is that they’re shocked that there isn’t any money at all that they have to contribute to schools,” she added.

Student population growth has been a concern for years, and the increase in enrollment across the district within the past year alone has matched the projections that were expected. From the 2021-22 school year to the 2022-2023 school year, the number of students enrolled in Marion County public schools increased by 1,000.

The consultant’s findings supported what district leaders have known for years.

“This wasn’t a surprise to anyone, especially if you’ve been in Marion County any length of time,” said School Board member Rev. Eric Cummings. “We knew where the growth was. We knew where the overcrowding was.”

The school board will have two mandatory workshops, on July 6 and July 13, to discuss whether they will recommend bringing back impact fees, and how much they will be. The board will then pass their recommendation during a regularly scheduled board meeting, and that recommendation will go before the county commission for a vote, likely in September, Campbell said.

Following the resignation of Jeff Gold, former vice chair of the Marion County Commission, there are four commissioners on the board until the governor appoints a new one. This means that three of the four commissioners must vote to approve reinstating the impact fee rather than the 2/3 approval required by law.

The school board is also eligible to levy the “school half-cent sales tax,” which if voters approve, would directly fund the construction, reconstruction or improvement of school facilities. The county formerly had this tax from 2005 until 2009, which gave the district $4.5 million in revenue for schools.

The district currently receives funding from the “Capital Outlay Millage,” and it levies the maximum 1.5 mills to make lease payments, fund construction, transportation and technology. Millage is a tax rate assessed on a property’s assessed value, and 1.5 mills is $1.50 for each $1,000 of value.

Though bringing back impact fees could affect the profits of builders and developers, funding the construction and renovation of schools is necessary to support the population growth that their projects bring to the county.

“There certainly are people in the affordable housing area who would like to see us continue to suspend the impact fee altogether,” Campbell said. “And there are people in the commercial and high-end residential (side) who completely understand the need to reinstate (impact fees).”