State law, charter conflict stall residential development in Orange County

As many as 20 proposed residential developments in Orange County are on hold because of crowded schools and a conflict between the county charter and a new state law.

The impasse is not easily fixed as it could require either new state legislation, an Orange County charter change or a court fight — none of which could happen quickly.

“There’s a lot of people trying to figure it out,” said Chris Testerman, Orange County director of government relations.

The conflict, unique to Orange County, arose in July after Gov. Ron DeSantis signed House Bill 7103 into law.

The complex legislation contained a slew of provisions affecting local governments, including a requirement changing how the Orange County school district must credit developers who pay school-impact fees, donate land or make other contributions to add classrooms in areas where schools are at or close to capacity.

“Somehow we’ve got to get this resolved,” said Joe Byrd, city attorney in Apopka, which wrestled with the issue in December.

The controversy has put 15 to 20 projects in limbo, said Lee Steinhauer, who serves as government & legal affairs director for the Greater Orlando Builders Association.

“When you look at the problem, it may be even broader than that,” he said.

Steinhauer said the conflict is affecting not only projects in development pipelines, but may be discouraging investors from financing similar projects in Orange County.

Orange County municipalities typically require the school district’s blessing to approve development projects which would add students to schools that are either at or close to the capacity for which they were designed. The Orange County school district has not approved any developer request for permission that was submitted after the law went into effect.

Before the new law, developers paid an extra fee for that permission formalized in a document called a “capacity enhancement agreement.”

In 2019, those fees totaled $2.92 million, according to the school district. Over the span of six years, the accumulated fees could finance the construction of a new elementary school.

The unique process was created with the authority of Orange County voters who overwhelmingly approved an amendment to the county charter in 2004.

The amendment was reaffirmed in 2012 with nearly 66% of ballots cast in support.

In a letter to DeSantis last year, School Board Chair Teresa Jacobs, who served as Orange County mayor from 2010 to 2018, urged him to veto HB7103.

She helped craft the 2004 charter amendment as a county commissioner.

Jacobs expressed concern for the provision, which is now blamed for idling development projects. DeSantis nevertheless signed the bill into law

The capacity enhancement fees are needed because school-impact fees, also paid by developers to fund schools required by their housing projects, cover about 78% of new school expenses — not the full cost of a new campus, according to the school district.

Money from other sources, including property and sales taxes, helps but still falls short of what is needed.

The new state law essentially outlaws the extra fee and makes the district shortfall worse.

“At this time, we are unable to recommend approval of a CEA [capacity enhancement agreement] to the School Board until we find suitable terms,” district spokeswoman Lauren Roth said.

Jacobs, the School District, county leaders and homebuilders say they are working to find a solution.

But the issue has proven to be a difficult obstacle for developers to hurdle.

Developer Richard Wohlfarth said he’s at a standstill with his company’s 75-acre mixed-use project in Ocoee.

Known as Ocoee Village Center, the development would comprise more than 300 apartments, 230 townhomes and 150,000 square feet of commercial space, including a large grocery store, retail and restaurant space and a hotel with up to 140 rooms. He filed an application with Ocoee last year but has been held up, unable to get a capacity enhancement agreement.

“We’re sitting here figuring out what the hell to do next,” Wohlfarth said. “I hope there’s at least a Plan B but I don’t think there is one.”

Among those involved with efforts to find a solution is Rebecca Wilson, a shareholder with Lowndes, who represents several impacted clients.

One option is a legislative fix narrowly tailored to Orange County, the only county in the state with a charter conflict.

But that won’t solve the problem until summer, meaning some pending developments will be on hold until then.

“This is a concerning outcome especially when additional housing is needed for our growing region,” Wilson said.

Another possible fix is raising school impact fees. But Wilson said an increase would mean boosting fees for all new residential developments and not just projects seeking rezoning or future land use amendments.

Developer Jose Cantero of Winter Garden-based Cantero Holdings LLC also has a project on hold.

He said he no longer anticipates construction of his proposed 282-lot single-family subdivision in Apopka to begin on track.

“I’m under contract with that property… This can put me in a bad spot and create an issue with me and the buyer,” Cantero said.

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