Transportation impact fees in Orange County could more than double, in some cases nearly quadruple, and real estate players are fearful the latest hike could curb development in a COVID economy.
At a Board of County Commissioners meeting, Tuesday evening, developers and industry representatives expressed concern about the most recent transportation impact fee study that’s set to lay the foundation of how fees will be applied to new real estate projects.
Greater Orlando Builders Association, the Apartment Association of Greater Orlando, NAIOP Central Florida, the Commercial Real Estate Development Association, Building Owners and Managers Association, Florida CCIM Chapter Central District, and the International Council of Shopping Centers all jointly submitted a letter to commissioners late last week asking them to consider waiting for a later date to adjust the fees.
“While we understand and appreciate the need to periodically adjust transportation impact fees to account for transportation related costs, we do not believe that now is the appropriate time to increase the fees on development, particularly to the levels currently being proposed,” the letter reads.
It states the pandemic and its economic repercussions have produced a challenging situation for developers, and members are struggling to build and finance new commercial and residential projects.
“To add significant additional costs at this time will make it even more difficult," the associations agreed.
At the hearing, Orange County commissioners voted to delay a decision updating the fees. Mayor Jerry Demings directed staff to bring back a deferment and options that would phase the fees over a several-year period of time.
The proposal will come back in late October for a vote.
Along the lines discussed, no increase would occur until at least summer of 2021, with additional increases over the next two or three subsequent years, for an ultimate result of 75% adoption of the proposed fees at end of multi-year period.
In an email to GrowthSpotter, Lee Steinhauer, who serves as government & legal affairs director for GOBA, said the commission responded well to the industry’s concerns.
“The proposed approach to be evaluated in October by the board appears far more reasonable, and appropriate,” he said.
Developers who provided public comment at the meeting include Justin Sand, president of Winter Park-based Epoch Residential, Bryan Borland, director for Wood Partners in North Florida, and Brock Nicholas, chairman of the Development Advisory Board and Lennar’s local division president.
“As you are aware, today’s policy decisions lead to tomorrow’s market behaviors, which take a few years to play out after new policies are adopted,” Nicholas' letter read. “Why make this policy decision now, knowing it influences the next several years of economic investment behavior when there’s so much 2020 data unfolding now, and available, but not considered in the analysis?”
The newly proposed transportation fee increase will pile on top of Orange County’s school impact fee hikes that are set to be adopted around the same time, and add to the recently approved impact fee increases for parks, fire stations and deputy gear.
“Residential development projects, in particular, are already struggling to remain viable in the face of declining rent expectations for the foreseeable future in the wake of COVID,” Borland said in his public comment. “Compounding that, our industry is currently experiencing a generational increase in the cost of lumber, which has more than doubled since April due to COVID-related factors.”
A proposed ordinance updating Orange County’s transportation fees draws from a study conducted by consultant Tindale Oliver, which recommends upping the cost for fees across all sectors, except hardware paint stores, bank walk-in stores and in some areas, drug stores.
The new ordinance also does away with previous designated Alternative Mobility Areas (AMAs), which were established to encourage infill and redevelopment in certain sectors by lowering transportation impact fees.
Instead, the study presents separate fee variation options that would expand the urban areas and create suburban and rural assessment areas.
Earlier at the meeting commissioners voted unanimously to transmit the change from using AMAs and non-AMAs to the Florida Department of Economic Opportunity for review. The Comprehensive Plan Amendment will be finalized on Dec. 15.
According to the most recent Transportation Impact Fee study: Single-family homes between 1,201 square feet to 2,000 square feet, that sit in a designated urban area, would see rates increase by about 111% to $8,218 per dwelling unit from the previous base rate of about $3,898 per unit.
If similar sized homes are located in the sub-urban area, then transportation impact fees would increase by 161% from $3,898 to $10,183 per dwelling unit. And the transportation fee for homes in rural areas would be $10,640 per dwelling unit, which is an increase by about 173%.
Rates for new single-family homes between 2,001 square feet to 3,500 square feet in rural areas would increase by 266.7% from $3,898 to $14,294 per dwelling unit. And single-family homes greater than 3,500 square feet in rural areas will increase 283.5% to $14,494 per dwelling unit, which is almost quadruple the current impact fee of $3,898.
A deferral of transportation fees will be given to certified affordable housing projects, according to the draft ordinance.
The fees are intended to help make new development pitch in for road-related services, such as expanding roads and intersections. The current fees in place today were adopted by commissioners in 2012 at a discounted rate.
Pasco County, which created mobility fees, was the first to introduce a different rate structure based on urbanization. Other counties, such as Lake, charge higher impact fees in the southern third of the county where there’s more intense development. Osceola County commissioners voted earlier this month on a mobility fee update that raised some fees and lowered others. That ordinance goes into effect March 1, 2020.
If the Orange County board were to adopt the rate fully, then transportation impact fees for a mid-rise multifamily development (3-10 floors) in a suburban zone would jump from $2,524 per unit to $5,421 per unit. That’s more than a 114% increase. And a high-rise multifamily development (10 floors or greater) in an urban area could be charged $3,580 per unit, which reflects a 124% increase.
Under the ordinance, mixed-use developments that contain retail on its ground floor has its own category, and could be charged between $2,744 per unit to $3,909 per unit for mid-rise categories and $1,571 to $2,274 per unit for high-rise developments.
The information used to develop the Orange County Transportation Impact Fee schedule is based mostly on data received through November 2019.
For that reason, industry stakeholders believe the proposed fees are based upon pre-COVID data and do not account for changes that have occurred to transportation needs and costs since the onset of the pandemic.
“The data is no longer relevant or applicable to our current situation,” Sand said in his public comment. “It would make greater sense for the county to wait to a later date to adjust the fees based upon relevant data more reflective of our current world and improved economic conditions.”
EDITOR’S NOTE: An earlier version of this story lacked details about the commissioners' discussion on implementation options of the new impact fee ordinance.