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Developer takes Osceola Schools to court over impact fees

Attorney Frank Kruppenbacher warned the Osceola County School Board it would likely face litigation if members rejected a negotiated agreement for reduced school impact fees for two W192 motel to residential conversions. He was right.

South Carolina-based Styx Co. is challenging the board’s vote last April to charge the developer an impact fee rate of $11,362 per unit for the planned 300 studio apartments instead of the lower rate recommended by the board attorney and Superintendent Debra Pace.

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Styx, through its attorneys at Shutts & Bowen, filed a Writ of Certiorari petition with the Ninth Circuit Court seeking to quash the board’s decision.

The developer had sought to apply an alternative rate study, which had been completed by Osceola County’s Community Development Division, to charge lower impact fees for studio apartments than the standard $11,356/per unit rate the district charged for multifamily dwelling units. The school board’s consultant, Steven Tindale of Tindale Oliver, initially supported the $552 alternative rate but later changed his opinion to recommend charging the district’s “townhouse rate” of $7,591.

The agreement would have saved the developer over $2 million in school impact fees.

Under the negotiated agreement supported by Pace, the developer would have paid $165,642 upfront and put $2.18 million in escrow (the difference between the alternative rate and the townhouse rate.) But the school board voted 4-1 to charge the full multifamily rate, for a total of $3.4 million.

In the petition, attorney Scott Glass said the board members ignored the county’s impact fee ordinance and state law that allows developers to submit alternative rate studies if they believe their project will generate fewer students than the standard. Styx argued that their project, known as “The Teale” met the standard because the units would be less than 500 square feet and would have rental restrictions limiting occupancy to two people. They also would require 12-month leases and would charge higher rents than other motel conversions.

Glass also claimed his clients were denied due process because they were not permitted to speak, present evidence or question witnesses during the April 21 livestream meeting. Rather, Superintendent Pace read a portion of their written comments into the record, stopping at the 3-minute mark.

“Petitioners were denied the opportunity to have anyone actually represent their interest at the hearing where the decision was made,” Glass wrote. “This is antithetical to the American adversarial system of justice and invites the government decision-maker to ignore potential factual and legal errors and give the benefit of every doubt to the government.”

Orlando-area apartment developers say they would build more studios if not for the $11,362 per unit school impact fee.

He suggested some board members’ comments equated to little more than political posturing. “While beating up a developer may be politically popular and of great use to the Chairman or other Members of the Board during future elections, ignoring law is about as much of a deviation from its essential requirements as is possible and therefore the Board’s decision must be quashed.

School Board Chairman Kelvin Soto is challenging incumbent Armando Ramirez for the Democratic nomination for Clerk of Court.

Kruppenbacher filed his response earlier this month. He argued that that the escrow option presented in the negotiated agreement was not allowed by code. The developer has the right to demand a refund of impact fees by providing an alternative study after the project is completed and the actual student generation can be calculated.

He said that any new residential construction shall be presumed to have maximum impact on the county school system. He also claimed the developer failed to follow proper procedure because it submitted the alternative fee request to the district’s director of planning and not to the superintendent.

Kruppenbacher also argued that the developer could have sought to pay a lower school impact fee through a waiver if it opted to convert the motels into affordable housing instead of market rate housing.

Glass said he intends to file a reply next week, then the case heads to a three-judge panel for review.

Meanwhile, the district hired a new impact fee consultant, Maryland-based TischlerBise to replace Tindale Oliver. Kruppenbacher told board members during the April meeting that Tindale’s often conflicting opinions regarding the Styx case left the district in a weak position.

“It was readily apparent that our consultants were not the people I would want to stand in court with me,” he said at the time.

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The impact fee ordinance is due for an update in 2021, and TischlerBise is scheduled to kick off its technical study in January.

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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