Panama City holds workshop on proposed transportation impact fees as builders, developers warn of affordability and development risks

City of Panama City staff and consultants on Thursday presented a draft transportation impact fee program and heard more than two hours of objections from builders, developers, realtors and business groups who said the proposed charges would worsen housing affordability and could deter commercial investment.

City Manager Jonathan Hayes introduced the session and said staff had been "tasked with looking for alternate revenue sources so they don't have to rely solely on the general fund," adding that existing tax revenues are not sufficient to pay needed transportation improvements. Hadley Peterson of Kimley Horn, the consultant team that produced the study, walked through the study timeline and methods; Mike Woodward, Kimley Horn project engineer, explained the legal and technical basis for the proposed charges.

The proposal would establish two fee districts—"Panama City proper" and "Panama City North"—that mirror planning boundaries in the city's comprehensive plan. The draft calculates fees by estimating new trips generated by development, multiplying by local trip length data and the cost of added lane-mile capacity, then applying credits such as gas-tax and ad valorem credits. Kimley Horn showed sample impacts: per-unit residential charges in several size tiers (examples discussed in the workshop averaged roughly $4,000 per single-family unit in the Panama City proper examples shown on screen), higher per-1,000-square-foot charges for many commercial uses, and substantially larger totals for big commercial footprints. Woodward described the foundation of the methodology as the "dual rational nexus test," saying: "So the fee has to be tied to the actual needs. And the second one is that the impact fees are proportional and have a rational nexus with the expenditure of the funds." He also noted that the study uses local trip-length data collected from Bluetooth datasets and that Kimley Horn computed a cost per vehicle-mile of capacity of about $252 in the local sample of improvements the team examined.

City and consultant presenters emphasized legal and statutory limits on fee uses: impact-fee revenues may be spent only on capacity improvements caused by new development and may not be used for routine maintenance ("you cannot use them to repave a road"), to pay past debts, or to fund previously approved projects. The draft ordinance would collect fees at time of building permit and would allow credits where developers perform the necessary off-site capacity improvements identified in traffic studies; presenters said that a developer who constructs required off-site work would receive credit that reduces the fee assessed. Staff also said the commission may adopt exemptions or credits (for example, for qualifying affordable housing) and that the city attorney has reviewed statutory constraints.

Public commenters sharply challenged the proposal's timing and scale. Builders and trade groups said the proposed per-unit residential charges would materially increase monthly mortgage costs for buyers and the long-term carrying costs for builders, and several speakers said the charges would fall hardest on small, infill builders and on new buyers who face high mortgage rates and insurance costs. Kurt Hartog of the Bay Building Industries Association said, "We really are against this impact fee," and other builders argued the city should rely on alternatives such as targeted engineering conditions in development orders, community development districts, a phased approach, or additional surtax/sales-tax funding rather than broad new per-unit fees.

Commercial developers and property owners said the fee levels could kill or materially alter proposed business projects. Patrick Chapin, president and CEO of the Bay County Chamber of Commerce, asked whether the fee would meaningfully reduce the local capacity shortfall and how much revenue it would raise; consultants replied that the capacity-based method ties fees to per-trip costs rather than to a fixed plan and that projected revenue depends on the pace and type of future development. Multiple speakers said the consultants' comparative review found similar fee levels in other Florida jurisdictions but noted that many comparator fees are older and that construction and roadway costs have risen rapidly.

Several technical clarifications came out of the discussion: the draft defines trip distance used in the calculation by subtracting a local-road allowance (Kimley Horn cited a half-mile local-road deduction in the trip-length term), fees would be collected by district and spent within the district boundary, and the city would give credits for developer-funded off-site improvements so the developer is not double-charged. Staff also said the March statutory timing restriction that applies to increases to an existing fee does not strictly force immediate adoption of a new fee; because this is a new program the city has more scheduling flexibility, though staff cautioned the study can grow stale if long delays occur.

No formal action was taken at the workshop. City Manager Hayes and staff committed to collect the feedback, continue analysis and share proposed revisions and next steps with stakeholders and the commission before the item returns to the planning board and commission. As Hayes put it, staff will "take all of that and put that together over the next, you know, probably 3 or 4 weeks, and plow ahead."