Panama City officials, consultants and local developers spent more than two hours at a workshop debating a proposed Transportation Impact Fees Ordinance that would charge new development for roadway capacity improvements. The hearing focused on how large the fees should be, which uses should be exempt, how fees interact with county and FDOT requirements, and whether the city should adopt the consultant study but delay or set fees to zero while officials refine exemptions and a work program.

The discussion matters because the proposed fees are among the highest in Northwest Florida and, if implemented as drafted, several speakers said the rates could make small commercial projects and lower-cost housing uneconomic. The commission heard technical background from Kimley‑Horn engineers, ordinance changes from city staff, and multiple public comments from builders and business groups warning that the fees would be passed to buyers and could halt projects.

Vincent Spahr of Kimley‑Horn, the consultant who led the study, told the commission that Florida law requires impact fees to be proportional to the capacity demand new development creates and that impact‑fee revenues “may not be used for operation, repair, and maintenance; strictly for capacity.” He summarized the methodology used to calculate fees (trip generation × capacity cost, with pass‑by credits and ad valorem credits applied) and listed allowable uses that include design, right‑of‑way acquisition, construction of through and turn lanes, signals, intelligent transportation systems and, in some cases, park‑and‑ride facilities.

City staff highlighted ordinance revisions made after public workshops. Mr. Fuller, the city’s director of development services, said the draft now exempts single‑family homes on existing lots of record that are under 2,400 square feet; exempts accessory dwelling units under 1,200 square feet; provides credits for previously existing nonresidential uses, public/municipal facilities and certain lot splits; allows applicants to submit alternate traffic studies for fee reductions; and delays collection so fees would not be assessed before Oct. 1 of the collection year specified in the ordinance.

Commissioners pressed on how the ordinance treats changes of use and redevelopment. Commissioner Hughes asked whether converting a school to apartments or a house to a coffee shop would trigger large fees. Staff replied that an existing use receives credit and the applicant would pay only the incremental difference between the existing and proposed use, but commissioners and developers said even that incremental charge could be large and unpredictable.

Several commissioners also raised the city’s unique jurisdictional mix in Panama City North, where many roads are county or state owned. Commissioner Street and others asked why the city would collect fees for improvements on roads that are under county or FDOT control if those agencies would not accept fee‑in‑lieu credits. Staff and the consultant said the city can collect fees and award credits for developer‑built improvements even when construction occurs on noncity roads, but acknowledged coordination with Bay County and FDOT would be necessary.

A recurring proposal advanced by multiple commissioners was procedural: adopt the Kimley‑Horn study as the city’s technical finding of need but set the initial collection rate to zero (or postpone collection) while staff and the commission work through exemptions, geographic overlays and coordination with the county. City Attorney Burke and staff explained that adopting the study preserves the work (and avoids restarting the 12–16 month study process) but leaves the commission flexibility to delay or phase in fees.

Developers and business advocates urged caution. Patrick Chapin of the Bay County Chamber of Commerce and several local builders warned that the proposed dollar amounts would make many projects — from daycare centers and medical clinics to grocery stores and hotels — financially infeasible. Jeff Marzell of D.R. Horton said, “You’re gonna pass this straight onto the consumer,” and other builders stressed that high impact fees added to higher land and construction costs and rising interest rates would squeeze buyers and reduce development activity. Several commenters recommended a simpler, lower flat fee (or the county’s approach of adopting a study and leaving rates at zero) and urged the city to produce a multi‑year work program showing how fee revenue would be used.

Commissioners also discussed housing policy: the ordinance currently exempts developments that meet the statutory definition of affordable housing under Florida law (Chapter 420), but staff said that exemption does not automatically extend to many multifamily or workforce projects that are not state‑ or federally certified. Commissioners asked staff to explore whether targeted credits or temporary waivers could be used to encourage housing and grocery or daycare projects in lower‑income census tracts.

No formal vote was taken at the workshop. Several commissioners expressed that they were not ready to adopt the fee at the current proposed levels and favored either setting collection to zero after adopting the study or phasing in lower rates while staff develops a clearer work program that lists priority capacity projects the fees would fund.

The commission scheduled the ordinance for subsequent action; staff noted a tentative second reading date in July and recommended additional outreach with Bay County and FDOT before any collection begins. The workshop concluded with the commission directing staff to return with refined proposals, potential geographic overlays or targeted exemptions, and a clearer capital‑improvement work program showing where revenue would be spent.