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Osceola County won’t relax subdivision rules for rental communities

Osceola County changed the future land use on the site to Low Density Residential. It was previously part of a Rural Enclave, but it abuts a large commercial center.
Osceola County changed the future land use on the site to Low Density Residential. It was previously part of a Rural Enclave, but it abuts a large commercial center. (Osceola County)

Single family Build-for-Rent homes may be the fastest-growing asset class in the nation, but Osceola County’s strict zoning code and high impact fees will make it difficult to build them here.

Homebuilders across the nation have gravitated to the BFR model because the homes are often less expensive to build, and they’re sold in bulk to institutional buyers who then take over leasing and management. They also fill a need for affordable housing, especially for families who don’t want to live in apartment complexes and can’t afford to buy a house.

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Avex Homes President Eric Marks met Wednesday with county planners to discuss whether the BFR model could work on a 24-acre site just north of the St. Cloud Commons shopping center. Avex has an approved subdivision plan that called for a mix of townhomes and detached homes, but Marks wanted to explore a BFR option.

This is the third purpose-built rental subdivision proposed for Central Florida in the last two months.

Most of the feedback he received from staff was not encouraging. For example, even if the entire community is under a single ownership and functions like a multifamily community, the subdivision standards would still apply.

That means the developer would still have to provide at least three different building product types, meet the parking and recreation requirements for low density residential zoning and build the interior streets to county standards.

The one piece of bright news dealt with the parking standards. Osceola County typically requires 4.5 parking spaces for single family detached homes. But Development Coordinator Jane Adams told Marks the parking requirement for detached homes with one or two bedrooms would drop to 2.5 spaces.

“So 2.5 spaces is a lot easier to meet,” DRC Chairman Jose Gomez said.

Various staff members also chipped in with different types of housing products, such as duplexes or “big house” style stacked garden units that could help Avex meet its three-product minimum.

But even if the developer could design a BFR subdivision that meets all the siting standards for the county, the biggest obstacle could be Osceola’s impact fees, which are the highest in Florida at roughly $29,000 per single family lot. This site also needs a sewer lift station, so that adds another $300,000 to the pre-construction costs.

“So the actual question is, if I come in with a 500-square-foot house, and we’re calling it single family, what are my impact fees going to be?” he asked.

Avex could ask the School District of Osceola County to charge a lower impact fee for one and two-bedroom detached units, but there’s no guarantee the School Board would agree to the reduction. No one from the SDOC participated in the teleconference meeting.

Afterward Marks told GrowthSpotter Avex would go back to its original subdivision concept that mixed detached homes and townhouses and scrap the SFR idea.

“I think it’s probably not viable at that location,” he said. “The key thing is the impact fees. It’s just not feasible. You either end up with a subdivision that has too much parking for a rental community, or you go with smaller units to reduce the parking, but you can’t charge enough rent on a 2-bedroom unit to justify the $34,000 per lot fees."

City Homes, which builds vacation rental homes in Reunion Resort, has ventured into the purpose-built rental market. CEO Jim Bagley said he believes there is strong consumer demand in metro Orlando for these communities, but he doesn’t think the product is viable in Orange or Osceola counties because of the high pre-construction costs and extraction fees.

The developer has a contract to buy 24 acres on Dunson Road, next to the Polk County Sheriff's Substation.

So instead, City Homes is launching its BFR business in the metro Atlanta area.

“I’m willing to have a very broad-based affordable housing discussion, but the extraction fees are one of the biggest inhibitors to affordable housing,” Bagley said. “When you go to other markets, like Atlanta, those issues don’t exist, so I can provide affordable rental homes."

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And Bagley said his suburban BFR communities would utilize standard industry floorplans that would be found in traditional single family subdivisions. Renters now want more space than they can get in an apartment, especially now that so many are working from home and online schooling.

“We can deliver a 4-bed, 2.5 bath purpose-built house for $1,700 month in these other markets and be profitable, and I can not do that in the local markets in Florida,” he said.

Polk County, which has a less restrictive land development code, affordable land prices and lower impact fees might be the exception. So far this year Polk already has received interest for two BFR communities in the Four Corners area.

“Polk is a prime opportunity,” Bagley said.

Have a tip about Central Florida development? Contact me at lkinsler@GrowthSpotter.com or (407) 420-6261, or tweet me at @LKinslerOGrowth. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.

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