Orange County school impact fee hike is back on the table

With Orange County Commissioners’ vote to eliminate Capacity Enhancement Agreements that helped fund new school construction in high-growth areas, the Orange County School District is now considering significant impact fee hikes on single family homes to make up for the lost revenue.

School officials and consultants from Tindale Oliver told members of the School Impact Fee Advisory Committee the CEAs generated about $3 million per year, and roughly $23 million over the life of the program. “We would like to recoup that money somehow,” Facilities Planning Administrator Steven Thorp said Tuesday morning.

His recommendations go beyond simply recouping the lost revenue. One of the proposals now under consideration would increase revenues from impact fees by nearly ten times that amount.

Orange County currently charges a $8,784 school impact fee for new single family homes – that fee hasn’t changed since 2016. When the advisory committee wrapped up its work last summer, it had settled on a proposed rate of $9,560. Now Tindale Oliver is scrapping the old methodology and recommending the county implement a tiered rate structure that would charge higher impact fees for larger homes.

Steve Tindale said Orange County’s prior decision to charge a flat rate for single family homes, regardless of size, is too conservative, given the size and rapid population growth in the county. More than half of the counties in Florida charge a tiered rate based on square footage because new homes built today are so much larger than homes that were built decades ago, he said.

“The things that you don’t charge for to be extremely conservative, when you’re smaller and growing slow, works fine,” Tindale explained. “But as soon as you get as big as you are, and you build as many schools you are, and you still want to do your zoning and your land use and your very intense development in specific geographic areas that don’t have capacity versus areas that do, then the need for that fee to be more realistic and to be closer to the full cost comes to the surface.”

The consultants also provided options where the impact fees are increased 11% to account for interest costs to the district during school construction periods and to reduce the credit it applies from other funding sources, such as sales tax and ad valorem revenue. Under those scenarios, the impact fees hikes could be $4,677 for a typical new home between 2,500 and 3,000 square feet. That’s a 53% increase over the current rate and 49% increase over the rate that was under consideration a year ago.

For homes between 3,000 and 4,000 square feet, the rate would jump to $14,185, an increase of $5,401 or 61.4%. Brandy Driggers, assisting zoning manager for Orange County, said the county might have difficulty defending the tiered rate if it’s challenged. The county has to be able to prove the rates are based on student generation.

Townhomes and apartments would see similar rate hikes, $3,466 and $1,884 per unit, respectively.

Avex Homes President Eric Marks, who chairs the advisory committee, said the school board is “turning over every rock” to find available dollars. Both he and Tara Tedrow, shareholder at Lowndes, specifically questioned the appropriateness of calculating interest costs into the impact fee. Marks said if the district wants to charge interest on school construction costs, that charge should be offset by the interest the district earns on impact fee money in its bank accounts, which at one point exceeded $200 million.

Assistant County Attorney Whitney Evers said Orange County must update its impact fee ordinance by the end of the year to comply with Florida law. The advisory committee has scheduled two more meetings and plans to issue a formal recommendation by late August so the school board and commissioners can meet that deadline.

EDITOR’S NOTE: This article has been updated to correctly identify Steven Thorp as an OCPS administrator. A quote attributed to Thorp was made by Steve Tindale.

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 Facebook, Twitter and LinkedIn.