Panama City staff propose transportation impact fees; builders and Realtors warn of affordability and timing risks

City staff and consultants presented a proposed transportation impact fee at a public workshop at Panama City Hall and heard more than two hours of public comment from builders, developers, Realtors and business groups who said the fee, as proposed, could make new housing and some commercial projects less affordable or infeasible.

City Manager Jonathan Hayes opened the workshop by describing the goal: to identify revenue sources beyond the general fund to pay for transportation capacity improvements as Panama City grows. “Existing tax revenues alone are not sufficient to cover the cost of the transportation infrastructure that’s needed to keep up with the growth,” Hayes said.

The study and methodology

Kimley Horn consultant Hadley Peterson, an urban planner, and project engineer Mike Woodward summarized a year-long study that began in March 2024. Peterson said the team conducted a comparative review of impact fees in the Panhandle and Florida, produced a draft in August, and presented to the planning board in October and November before a first reading by the commission in mid-January. “We launched this in March of 2024,” Peterson said.

Woodward said the methodology follows the state’s dual-rational-nexus approach: fees must be proportional to the transportation capacity new development consumes and must be spent on improvements that benefit that development. He described steps used in the calculations: trip generation rates, local trip-length data from Bluetooth-based sources, percent-new-trip adjustments, conversion to vehicle-miles of capacity and a cost-per-vehicle-mile based on recent local lane-mile projects and FDOT capacity tables. Credits reduce the raw fee for items such as gas-tax and ad-valorem contributions. “These two things really form the base for most of the other rules that are within the Florida Statutes,” Woodward said.

What the proposal would do

Peterson said the draft ordinance proposes two fee districts that match the city’s comprehensive-plan areas: “Panama City proper,” where trip lengths are shorter and the road network is denser, and “Panama City North,” where trip lengths are longer and roadway supply is lower. Fees would be assessed per dwelling unit for residential uses and per 1,000 square feet or other units of measure for commercial uses; they would be charged at the time of building-permit issuance. The consultants provided hypothetical examples of how fees would apply to typical uses in each district.

What the city can use the money for

Consultants and staff emphasized statutory limits on use of funds: impact fees may pay for added capacity (new lanes, turn lanes, new intersections, signalization, sidewalks and bike lanes) but cannot be used for routine repaving, operations or to pay existing debt. Peterson noted some lower-cost capacity improvements — for example signal interconnects and retiming — may be appropriate in infill areas where widening is impractical. “You are not probably not going to need to widen as many roads. But you could do something like improve the signalization infrastructure… so you can re-time the lights in ways that can provide a little bit of capacity,” Peterson said.

Public reaction: builders, associations and Realtors

Speakers representing the Bay Building Industries Association, Bay County Contractors Association, the Central Panhandle Association of Realtors and individual home builders repeatedly objected to the proposed residential fees and to the timing of implementation. Kurt Hartog of the Bay Building Industries Association said his group “really come[s] here to oppose the idea of these impact fees” for residential infill and existing lots. Several builders and developers said the proposal would add roughly $4,000 per single-family home in the city-proper examples shown during the workshop; they said that amount, when added to a mortgage, increases costs over time and could reduce affordability.

Builders also argued the fee may not yield locally visible benefits for small infill projects. “That $4,000 would do nothing. It will go into a pot and it will sit for 10 years until it’s not used,” said residential builder Brian Knox, describing small-scale infill projects where roads already exist.

Developers and commercial builders raised separate concerns. Jason Bence and other commercial speakers asked whether on-site or required off-site improvements would be credited against impact-fee obligations; Kimley Horn and city staff said approved off-site improvements that increase capacity earn a credit and may reduce a developer’s net impact-fee bill to zero in some cases.

Questions about competitiveness and timing

Multiple speakers asked whether the fee would deter business recruitment and whether neighboring jurisdictions’ fees would make Panama City less competitive; Woodward and staff said many nearby cities either already have mobility/impact fees or are considering them and that prospective developers often factor such costs into location decisions. Several builders urged delaying or phasing implementation to avoid adding costs while mortgage rates and construction costs remain high. “The timing is super poor,” said one builder, urging a lower initial fee or a later start date.

Statutory flexibility and exemptions

Staff and the city attorney’s office told the workshop that the commission has limited but real discretion in ordinance design. The assistant city attorney and consultants said the commission may create credits, exemptions and incentives allowed by Florida law, including established state exemptions for qualifying affordable-housing projects. Peterson and staff said the study does not bind the commission to adopt the draft as written; Peterson also clarified that, because this is a new fee (not a pure increase of an existing fee), the one-year study-timing rule referenced by commenters does not force an immediate adoption deadline.

Next steps

City staff said they will collect feedback from the workshop and brief elected officials before the item returns to commission consideration. “We’ll take all of that and put that together over the next… weeks,” City Manager Jonathan Hayes said, and staff committed to share proposed changes in advance of a future commission agenda. No ordinance adoption or formal vote occurred at the workshop.

Why it matters

The proposal seeks to create a dedicated revenue source for transportation capacity — an issue staff says general-tax revenues alone cannot fully fund. Opponents counter that near-term impacts on homebuyers and small builders could be substantial, and that timing and design choices (district boundaries, credits, exemptions and phasing) will determine whether the fee funds needed road capacity without discouraging development or worsening housing affordability.

What remains unresolved

Staff and consultants said they will consider the specific concerns raised at the workshop — especially the residential-impact arguments, the potential for credits tied to developer-funded improvements, and the timing of implementation. City officials did not set a final adoption date at the workshop.