Osceola school officials say they are positioned to be the first in the state to allow vacation-rental builders to forego paying construction fees to support schools. The tax break for new vacation homes and short-term rentals would add to the cost of new houses for full-time residents. It heads to the county commission for initial consideration Monday.
“There is basically no other county doing this. Osceola is so unique in that there is this whole area where they want to build vacation homes,” said Sarah Graber, chief finance officer for the school district. “The exemption is based on the idea that students would not be coming out of there. If it was commercial or a hotel, we wouldn’t even be talking about school impact fees.”
New-home prices in Osceola County now reflect an add-on construction tax of $10,187 per house to help finance schools. Under the proposal, that would increase about 16 percent for houses built for full-time residents and drop by about 38 percent for short-term rentals. Vacation housing would pay nothing for the school impact fee, according to recommendations.
For developers, the savings could be sizable. Florida allows active-adult communities to get a break from the fees in developments that bar schoolchildren from residency. In Volusia County, for instance, Minto Communities is expected to save $10.2 million for 3,400 homes planned in the first phase of Latitude Margaritaville, according to the Daytona Beach News-Journal.
In Osceola County, one of the chief beneficiaries of the discounts is expected to be Lennar Homes, which is building vacation rentals in the Osceola communities of Championsgate and Storey Lake. School officials said Lennar and the Greater Orlando Builder Association were part of the “stakeholder” group weighing in on the proposal.
“Lennar permits many, many homes in Osceola that will be both positively and negatively impacted by the upcoming fee changes,” said Brock Nicholas, president of the Orlando division of Lennar, which is based in Miami. He added that his group provided information when the county requested input on the proposed fee changes.
It’s unclear just how many vacation rental properties could save as much as $11,823 each if the county approves the changes. School officials said they had no estimate.
Even determining the number of existing short-term rentals in Osceola is uncertain because the Osceola Tax Collector’s Office “stated that they do not enforce the requirement of paying a [$30] business license tax,” according to a December study by Osceola school impact fee consulting group Tindale Oliver. Tax records show 11,926 short term rentals but, with limited enforcement of tax payments, it’s likely more.
Owners of vacation housing and short-term rentals pay more in annual property taxes than owners who live in their homes under a homestead exemption break. Also, county officials say vacation rentals have boosted Osceola’s economy and helped businesses thrive.
Osceola School Board Member Jay Wheeler said home sales should not suffer from the fee changes. In fact, he added, sales should do well because of the district’s academic gains and increased graduation rates.
“People will be getting their money’s worth,” he said.
County officials are expected to address long-term concerns that full-time families could move into vacation rentals built without paying school impact fees.
Osceola County chairman Fred Hawkins Jr. said the county will have to keep an eye on short-term rental units that receive a break under the plan.
“That’s where the rubber meets the road,” he said. “You have to make sure they have deed restrictions in place … letting them know no school bus can stop here.”