Spring Hill City Hall

Spring Hill City Hall.

In what Alderman Trent Linville described as a tool that could both "slow residential growth" and generate more revenue for the city, Spring Hill leaders discussed Monday night the idea of increasing the city's adequate facilities tax.

An ADT is a tax levied on developers for the construction of both residential and commercial buildings, with revenue generated from said tax being restricted for use on capitol projects such as park facilities, libraries and fire stations.

Currently, Spring Hill sees local developers incur an AFT of 50 cents per square foot for both residential and commercial buildings, a rate that was last increased in 2006 from 25 cents per square foot.

The new proposal, which includes two options, would see those rates increased to at least $1 per square foot for both residential and commercial development.

The first option would increase the AFT to $1 per square foot for both residential and commercial development, with commercial development AFT being increased 2.5 percent annual to account for inflation.

The second option would increase the AFT to $1 per square foot for residential development, and $2 for commercial development — both the maximum AFT rates allowed per state law.

Linville, who was a key player in bringing the proposal to the board's attention, said that given the amount of capitol projects the city has planned in the next decade, reevaluating the city's AFT rates "makes a lot of sense."

"I was in high school whenever this was last changed, so it's been a minute since we've reevaluated this," Linville said.

"We're looking at about a potential of $730 million in projects that are in the hopper over the next decade or so, and so I think looking at potential funding sources from any perspective is something this board should not take lightly."

Alderman Matt Fitterer, who said he hadn't yet made a decision on which option he would support, put the increase in development fees in perspective for both the board and those watching Monday's meeting.

"Just to help keep it in perspective, construction costs for non-residential construction [are] about $350 a square foot," Fitterer said.

"So a dollar a square-foot tax on that is basically .2 percent. So yes, it's an increase from where we are, but proportionally I'd tell you that somebody looking to make an investment in a 10,000 square-foot commercial building where they're spending $3 million, a half-percent is not going to make or break it for them."

Despite the marginally small increase in development fees, city staff estimate the proposed increase would generate approximately $2.5 million annually from residential development alone, and approximately $275,000 from commercial development.

Linville said he was leaning toward supporting the first option — increasing the AFT rate on commercial projects to $1, then annually increasing that by 2.5 percent — whereas Alderman William Pomeroy voiced support for the second option.

At the behest of the board, Assistant City Administrator Dan Allen said he would arrange a public meeting for developers to weigh in on the matter, with the board likely to vote on the proposal next month.