Brent Batten: Rising prices, uncertain revenues cast shadow on ambitious construction agenda
In a pandemic-wracked economy, you might expect to see prices go down.
Not in Collier County.
At least not when it comes to construction. And that presents a dilemma for the managers of an ambitious building agenda funded by a voter-approved sales tax that includes the eastward extension of Vanderbilt Beach Road and Big Corkscrew Regional Park.
While things like the price of gasoline are falling, demand for new homes and other facilities is driving the cost of construction up in Collier County.
In case you missed it:Average gasoline prices in Florida could dip below $2 by the weekend
“You would have thought COVID would bring things back to reality,” said Nick Casalanguida, the deputy Collier County manager overseeing the slate of construction projects.
“These contractors are busy,” he said. “Prices? I just can’t control them.”
As a result, estimated construction prices facing the county are rising. For instance, the early projection on the cost of extending Vanderbilt Beach Road east from its current terminus to 16th Street Northeast was around $100 million. The latest estimate puts the figure at $120 million. Big Corkscrew Island Regional Park went from $60 million to as high as $83 million.
Couple that with uncertainty over sales tax collections amid the pandemic and you could be facing a challenge, warns Clerk of Courts Crystal Kinzel.
In her latest newsletter, Kinzel points out the potential problem.
“Recent sales tax collections have fallen below initial projections due to this year’s COVID business shutdown period. If revenues do not increase to make up these shortfalls, or costs continue to exceed projections, further funding will be required to complete the identified projects. This could result in the removal of some projects from the authorized list or the need to identify other funding sources to complete the projects,” she wrote.
But even she acknowledges sales tax collections have bounced back from the spring, when widespread business closures drove collections down.
Since collections began in March 2019, the county has on average taken in almost $8 million a month from the 1% sales tax voters approved to pay for a backlog of public projects, including a sheriff’s evidence building, a mental health facility, a VA nursing home and 11 bridge replacements.
After nearly $12 million came in in February, June collections fell to slightly more than $4 million. They’ve remained below average, with the exception of August, when they were slightly more than $8 million. Kinzel projects a potential shortfall of about $94 million on a project list that was initially estimated to cost $420 million.
Still Casalanguida is optimistic sales tax revenue will bounce back to levels near the original projections. “The consumer has been pretty resilient. People are getting back out again,” he said.
So far, no projects have been delayed by a lack of funding, he said.
Casalanguida says Collier County’s favorable climate, modern infrastructure, quality school system and conservative political leanings make it attractive to many people looking to relocate.
As a result, there’s high demand for construction labor and materials. “Houses. We can’t make them fast enough,” he said.
Add to that a handful of major commercial projects along the Collier Boulevard corridor including Uline’s new distribution facility, Encompass Healthcare’s planned hospital and an Amazon warehouse, and you face even more demand. “They’re helping drive the price up,” Casalanguida said.
If sales tax revenue isn’t enough to pay for the list of projects, impact fees and gas taxes are possible sources to fill the gap, Kinzel said.
Kinzel said her projections aren’t intended to cause alarm, only to bring attention to the situation.
“We just want to keep the public aware in case something goes south with COVID,” she said. “It’s just a snapshot in time. It’s not a giant red flag.”
The tax is intended to raise about $490 million over seven years, with some of the money going to Naples, Marco Island and Everglades City for their own city projects.
Once the $490 million is collected, the tax sunsets. Or, if collections fall short, it will end after seven years unless voters agree to an extension.
Casalanguida says he can foresee that happening.
“I don’t want to be premature, but after the end of six years, if we’re killing it with these projects, I can see a conversation that takes place. As long as it’s for bricks and sticks and not people, the county benefits,” he said.
(Connect with Brent Batten at firstname.lastname@example.org or via Facebook.)