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Osceola school board rejects reduced impact fees for small apartments

Osceola County's impact fee consultant recommended making minor adjustments to the rates for new homes, townhomes and apartments, and creating a new category for studio and one-bedroom apartments. School board members only agreed to reduce the rate for studios.
Osceola County's impact fee consultant recommended making minor adjustments to the rates for new homes, townhomes and apartments, and creating a new category for studio and one-bedroom apartments. School board members only agreed to reduce the rate for studios. (Tischler Bise c/o SDOC)

Saying they didn’t want to open the door for developers to “game the system” Osceola school board members rejected the recommendation from their consultant to drastically reduce school impact fees for one-bedroom apartments.

Osceola County charges the highest school impact fees in Florida, including a multifamily rate of $11,362 per unit. Tischler-Bise consultant Carson Bise had recommended a 1% reduction of the countywide multifamily rate. He also recommended creating a separate category for one-bedroom units and studios, because they are less likely to attract families with children, and charging just $327 per unit.

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School board members disagreed. During a workshop Tuesday afternoon, district administrators and board members quickly reached a consensus to keep the impact fees at the same level for all multifamily units — except for studio apartments that are no larger than 600 square feet.

The school board's consultant is recommending modest changes for most types of housing. The notable exception is studio and one-bedroom apartments, which could see their impact fees reduced by 97%.

Bise found that the student generation rate for studios and one-bedroom apartments was statistically insignificant at about one student for every 100 units. Board members said they didn’t want to give a free pass to developers converting motels along U.S. 192 into apartments, which they predicted would be “full of kids.”

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Carlos Balzola, a partner in the group that converted the former Red Lion hotel on W192 into Maingate Apartments, said only about 5% of their units have parents with children. He attended the workshop said he understood the concerns from the district, especially given the lack of data for studios and one-bedroom apartments.

“We came into this market and we did this when there was no discussion of a reduction in impact fees,” he said.

Balzola and T2 Investments have two other hotel conversions underway along the tourism corridor. They could definitely benefit from a reduction in impact fees. At Maingate, biggest demand was for studio units, which are only 350 square feet but they offer people affordable housing without having to rely on a roommate.

He hopes the lower rate will encourage multifamily developers to offer more studio apartments in their new builds. “We can all agree there’s a need for affordable units,” he said.

In most of the new suburban class-A product coming into the market, at least half of the units are one-bedroom apartments. So developers were hoping for a financial windfall with the adoption of the new rates.

Rhonda Blake, the SDOC’s planning director, said that if the board adopted the lower rate for one-bedroom units, developers could flood the market with floorplans offering a flex room or den/office that tenants would use as a second bedroom.

“For the one-bedrooms, those can run anywhere from 600 to 1,100 square feet,” Blake said. “The key is, we need to be very specific about the size.”

The school board rejected the agreement that could have saved the developer over $3 million in school impact fees.

Developers have begun offering one-bedroom units with flex rooms in response to demand from tenants for designated work-from-home space during the pandemic, but those are still just a fraction of the one-bedroom units in the market.

For example, Fore Property Company is building the 19 South Apartments on Osceola Boulevard across from the Tupperware SunRail Station. The developer offers eight different one-bedroom floorplans, but only one has a defined “nook” just off the kitchen.

San Mateo Crossing, built by Eastwind Development, offers five one-bedroom floorplans — one of which offers a flexible loft space with a spiral staircase. It rents for $1,615 per month. At Epoch Residential’s recently completed Sonceto apartments, the Eclipse floorplan is the only one-bedroom design of the four available that comes with a separate den.

The next school board meeting is July 13, but board members said they wanted to wait until the August meeting to vote on the updated impact fee ordinance. The Osceola Board of County Commissioners would be expected to vote on the ordinance the following month.

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

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