Aubuchon Strong

The coming year will be tough, acknowledged a panel of experts in building, banking and property insurance Thursday night, but property tax and impact fee cuts and attracting major corporations to Florida could start to turn the situation around in the near future.

The panel of five, which spoke to a crowd of 250 at a Cape Coral Construction Industry Association dinner, had some divergent views on the short-term future of the economy, with some members speaking more optimistically than others. All seemed to agree the state and local governments had to do more to help residents and businesses alike.

“Impact fees, I think, are ridiculous,” said Todd Gates of Gates Construction. “Impact fees are nothing but a Band-Aid, and a temporary one at that.”

Gates said impact fees are harming the economy locally and across the state because prospective builders are halting their projects when the figures stop making sense as the costs are passed on to them.

“The people coming to our states are looking at our costs of occupancy and they are all out of whack,” agreed Gary Tasman of Cushman and Wakefield. “(Construction) is going to come to a screeching halt until the existing product gets absorbed. Impact fees need to be corrected to let new construction occur.”

The current bounce in commercial construction is a bit of an aberration, Gates said, because it takes about three to four years to get through the building process. Now that commercial building has caught up to the demand caused by the population boom, commercial building is starting to tail off.

“New construction countywide is going to continue to drop for the next 24 months,” said Tasman. “Cape Coral went from almost a zero vacancy rate in industrial and commercial to some of the highest vacancy rates in the area.”

State Rep. Gary Aubuchon, R-Cape Coral, told the crowd that he believes the real estate and construction crash is at its bottom. He argued the current sentiment that the slowdown will continue to get worse or never end is a mirror image of what the feelings were at the top of the boom when many felt the good times would continue forever.

Aubuchon added real estate prices have dropped to the point where people are left scratching their heads.

“It doesn’t make sense that you can buy an existing product at half of the price to build it,” he said. “But when the pendulum swings far in one direction, it swings far in the other.”

When asked if he agreed with an economist who predicted the current stagnation would drag on for up to four years, he chuckled at the idea.

“If you laid all of the economists end to end, it would probably be a good thing,” Aubuchon joked.

The credit crunch has also made serious waves in the economy, making lending extremely difficult and sapping liquidity in the financial markets. While the Federal Reserve has pumped money into the system and lowered interest rates, foreclosures are still happening at a rapid rate across the country.

But that does not have to be so, argued John Moran of Riverside Bank. He said financial institutions could stop demanding immediate payments that homeowners cannot come up with and not move quickly to foreclosing on those individuals. While it would cost lenders in the short-term, it would actually benefit them in the long haul, he argued.

“If every bank in the nation would do what some of the community banks are doing in Cape Coral, this problem would go away,” Moran said. “It would go away through natural attrition of inventory.”

But in the long run, the panel agreed Florida needs to diversify its economy to ensure it is not so severely damaged by a construction slowdown.

“My concern is the fragility of the economy,” Gates said. “I think we are one tragedy away from a recession.”

He argued state and local governments need to institute policies and fee structures that are more corporate friendly to ensure higher paying jobs start coming to Florida.

“Businesses take the path of least resistance. You either roll out the red carpet and we welcome them, or shut the door and keep them out,” Gates said.

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