- December 4, 2025
A lawsuit demanding Palm Coast's recent impact fee increases be declared invalid and illegal was filed in Flagler County's 7th Judicial Circuit Court on Oct. 1.
The Flagler Homebuilders Association and six other local plaintiffs have joined together to file the lawsuit against Palm Coast in response to the city doubling its impact fees last June. The lawsuit is asking Flagler County's courts to declare the ordinance levying the impact fees as invalid, to stop the collection of impact fees based on these ordinances both "temporarily and permanently" and refund any impact fees collected under the ordinances.
Impact fees are fees paid by developers to a municipality that pay for growth-related infrastructure costs. These fees can primarily only be used for new projects, not fixing existing infrastructure. There are multiple types of impact fees, including ones for fire services, parks and recreation and transportation.
The lawsuit alleges Palm Coast violated Florida law by increasing the impact fee rates for transportation, Parks and Recreation and fire services over the 50% legal cap set by Florida Statute 163.31801. But the city, after reviewing studies on the city's needs, argued the need for a greater increase fell under the statute's "extraordinary circumstance" clause.
Studies presented to Palm Coast by consultant firms Nue Urban Concepts and Raftelis stated Palm Coast's extreme growth and the nation-wide increase in inflation costs over the last six years qualified as the “extraordinary circumstances” required to substantially increase impact fees.
The FHBA chose to take up legal action after the city dramatically increased its impact fees over the summer, and sent an intent to sue notice to Palm Coast in August. The city sent a reply stating it was "prepared to defend" the increases.
The FHBA created a page on its website dedicated to the legal challenge, called "Standing up for Fair Fees." The website details its stance against Palm Coast, and even includes copies of the lawsuit for the public to review.
WHAT ARE 'EXTRAORDINARY CIRCUMSTANCES'?
Florida Statute 163.31801 does not expressly define what qualifies as extraordinary circumstances.
Instead, it only states that a 'demonstrated-need study justifying any increase' in excess of the 50% cap be 'completed within the 12 months before' the rates are increased. The study must 'expressly demonstrate the extraordinary circumstances and the city is required to hold at least two publicly noticed workshops dedicated to explaining those circumstances.
A third section, which went into affect after Palm Coast adopted their increases, requires a unanimous vote to adopt increases over 50%.
Palm Coast did hold the workshops and did complete the studies within the 12-month time limit. The FHBA and the lawsuit alleges the studies were faulty and failed to demonstrate a need to exceed the statutory limits.
