Developers call on Orange County commissioners for solution to a state law, charter conflict over school capacity funding

Orange County commissioners have begun talks aiming to find solutions for a state law and charter conflict that’s freezing up residential development.

At a Board of County Commissioners meeting, Tuesday morning, nearly a dozen developers and industry representatives said they want to resolve a nearly year-long impasse that indefinitely halts multifamily and residential developments from moving forward.

The issue at hand came about last year when Gov. Ron DeSantis signed House Bill 7103 into law in July.

The legislation changed the way Orange County’s school district must credit developers who pay school-impact fees or make other contributions to add classrooms in areas where schools are at or near capacity — essentially crediting back a fee developers give in a document called a “capacity enhancement agreement.”

[ State law, charter conflict stall residential development in Orange County ]

Under the law, county attorney Whitney Evers said, if the school district receives capacity enhancement fees for overcrowding relief, the impact fees would be reduced by the amount of capacity enhancement fees received, thereby eliminating the additional mitigation.

After the law went into effect, Orange County Public Schools took the position that without the capital contribution, they can no longer certify additional school capacity for certain projects as required by Orange County code and other established agreements.

The conflict derives from a charter provision, originally approved in 2004 by 74 percent of voters and reauthorized by 66 percent of voters in 2012.

According to the charter, any rezonings or comprehensive plan amendments that increase residential density may only be effective upon the approval of all significantly affected local governments when the attendance zone affected lies partly inside a municipality, and the school district cannot certify that it could accommodate the additional students for all corresponding municipalities.

As of today, there are 18 projects on hold, while 25 have passed capacity determinations as of May 8, 2020.

“We clearly need to do something to move projects that are in the system,” Chris Testerman, Orange County director of government relations, said at the meeting.

Those who submitted comments include representatives at Fore Property Company, Toll Brothers, Taylor Morrison, M/I Homes, Greater Orlando Builders Association (GOBA), Apartment Association of Greater Orlando and ContraVest Development Partners.

Several repeated a message to commissioners stating: “As Orange County emerges from the COVID-19 crisis, building and development will play a critical role in helping rebuild the county’s economy... this comes at a time when perhaps more than ever the county needs the economic activity.”

Benjamin Smith, with Fore Property Company said, “we are a multifamily owner/developer with our local office in Ocoee. We are currently under construction 352 apartment units in Orange County and have another 472 units in flux due to the impasse related to the county’s CEA process. We are hopeful that the county will find a quick resolution to allow for development to continue in the region.”

When asked by GrowthSpotter, which projects he was referring to Smith said he is unable to speak about details. “Once we get some clarity on the CEA piece and get plans ready for submittal we should be able to provide an update.”

Solutions proposed at the commissioner meeting include relying on a method never utilized before, called the County Charter Joint Approval Process. Through this process, the applicant must seek rezoning and/or comp plan amendment approvals from all affected local governments.

Orange County policy would need to be changed in order to allow it to exercise the responsibility.

Another solution would be to adjust school impact fees to account for funding lost. The action will result in revisiting and updating a school impact fee study conducted in 2018, which has not proceeded to the county for discussion or adoption yet.

A draft technical study obtained by GrowthSpotter last year, showed school impact fees in Orange County were slated to rise for every residential category, including single-family, townhouse, multifamily and mobile home, with the exception to multifamily high-rises.

Targeted rezoning of schools at capacity may also help alleviate overcrowded schools to adjacent under-enrolled schools, but a criticism with this approach is that will not add revenue to help build new ones.

Lastly, the meeting outlined the potential for borrowing internal capital renewal funds to fund relief schools. The process has been approved, but not utilized, in the past for relief and renovation projects, due to funding available for programmed schools.

Reallocated funds are borrowed and must be paid back.

At the meeting, Mayor Jerry Demings said he believes the current situation could have a negative impact on building housing for low-income residents, as well as first-time home buyers within the community.

“If we slow down the building of workforce housing, I will agree with many of the public comments, that it may have a potential to reduce the availability of quality housing and could therefore drive up the cost of rental units... at a time when we are likely going to experience a downturn in our economy associated with the pandemic that is before us," Demings said.

Before the next discussion, draft language of the final position of the school board will be brought to the board of county commissioners.

“I look forward to working with the commission, our staff, the school district and other jurisdictions to come up with something that makes sense for all of us," Demings said.

Have a tip about Central Florida development? Contact me at arabines@GrowthSpotter.com or (407) 420-5427, or tweet me at @amanda_rabines. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.