Henry County’s faulty $147.5M projection sparked illegal homebuilder fees

The illegal fees violated the Georgia Development Impact Fee Act. The state law allows counties and cities to plan for future growth and development by charging builders a fee to fund green space, libraries, police, and infrastructure and other projects.

Simon Bloom, an attorney representing the Greater Atlanta Home Builders Association, ResiBuilt Homes and Peachtree Building Group, said his clients want to recover $14 million in impact fees.

The builders sued the county over the first increase, arguing that it was creating more barriers to homeownership amid a housing affordability crisis.

Bloom said the unlawful fees made housing an even more expensive prospect for both builders and homebuyers.

“It increased the entire cost structure of housing with the housing stock,” Bloom said in an interview.

Timothy J. Buckley of the Atlanta law firm Buckley Christopher Hensel represented the county. In a statement, Henry County spokeswoman Ashley Larrow said the county believed it had grounds to appeal the court ruling.

“The county’s impact fee program was designed by a reputable impact fee/planning consultant used by many jurisdictions throughout Georgia,” Larrow wrote. “The county’s chief responsibility is to safeguard the citizens and taxpayers of Henry County and that is what it intends to do.”

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

However, the court was sharply critical of the process officials used to adopt the new fees after the consultant, Ross + Associates, an Atlanta-based urban planning firm, helped set the impact fee increases through two ordinances.

According to Amero, under state law, the county should have formed an advisory committee that included building industry officials before setting the new fees. But it did not do that, instead relying on the consultant.

County officials slipped up by relying on a “tiny” and “blatantly incorrect” net discount rate of 0.005% in their cost projections, according to Amero, ballooning future costs and impacting the fees.

For instance, the consultant’s report valued transportation projects at $317.8 million. If the county had used the local government borrowing rate of 1.57% listed in Henry County’s 2021 financial report, the value would be $251.1 million, the order states.

“This represents a reduction of $66 million in the amount of impact fees that the county would need to collect,” the judge wrote in the 25-page order.

The ruling said the county had overinflated the cost of police protection facilities by $3.17 million, library services by $1.85 million, and parks and recreation facilities by $19.1 million.

Amero said the calculations “results in an overcharge in impact fees of $147,482,040.34″ and impact “every category of impact fee collection.”

According to the court order, the county failed to include credits or take into account funding from T-SPLOST, a sales tax for transportation projects, and SPLOST taxes for infrastructure projects. That resulted in the county “double dipping,” Amero wrote.

In addition to refunding the builders, the county was ordered to pay attorneys’ fees because it had failed to investigate the home builders’ legal concerns before the increases.

Bloom said the ruling could have an impact beyond Henry County. In an email, Bloom Parham partner Troy Covington called the order “monumental.”

“We are thrilled for the message this sends to municipalities that irresponsibly wield their power to tax,” he wrote.