UPDATED: AUGUST 29, 2016 11:49 AM — A proposed second phase for Wood Partners' Rialto Apartments in Dr. Phillips set on the border of Orange County and Orlando has given both governments a shot at the development's future ad valorem tax revenue, with Orange County holding the advantage as of Friday.
Planned for about 6.7 upland acres of a 23-acre parcel on the eastern shore of Spring Lake, the new five-story, 325-unit development would lie northwest of the intersection of Sand Lake and Turkey Lake roads, and be built directly northeast of the first-phase Rialto Apartments (200 units). The property is in the county, but on the border of city limits.
National apartment developer and manager Wood Partners began trying to line up the project in July of last year, when it filed a Change Determination Request (CDR) with the county to add 325 multifamily dwelling units to the Majorca PD's development program.
A Wood Partners affiliate bought the site's two parcels totaling 24.31 acres in July 2015 for $26 million, and reached a school mitigation agreement with Orange County in November.
But the company and Jim Hall, urban planner for VHB, Inc., hit a wall of vocal opposition from Dr. Phillips residents in the five months that followed, distressed over the project's height and density disparity with nearby single-family.
The crux of the conflict were code waivers that would allow Wood Partners to build five-story buildings that neighbor single-family residential. County code would have limited the buildings to one or three stories at most, based on distance from the homes.
Five community meetings were held, and residents alleged to have had up to 9,000 signatures against the project. District 1 Commissioner Scott Boyd indicated to VHB's Hall he couldn't support the project.
Orange's Development Review Committee approved the LUP-PD amendment in December 2015. But by late January, Hall withdrew the CDR and Comp Plan Amendment (CPA) applications from the county.
Contiguous to the city limits, Hall and Wood Partners turned to Orlando early this year to offer the project to its tax roll, and ask for help with annexation.
The developer couldn't annex the property on its own, because years ago Orange County amended its charter to state that property owners in Dr. Phillips can't voluntarily annex unless they get approval from the Board of County Commissioners, and approval of voters that live in that district. But they could ask the city to initiate the process (involuntary annexation).
The city started that annexation, and City Council was ready to seal the deal in late July with a second reading of the ordinance. But county commissioner Boyd stepped in and asked Orlando Mayor Buddy Dyer to defer for 30 days, giving Orange County a chance to win back what will be an estimated $50 million project.
That second reading was set again for City Council this Monday, but VHB's Hall turned in renewed CPA and LUP-PD amendments to Orange County on Friday, asking to convert commercial and office entitlements to 325 multifamily units.
Dyer will defer the annexation second reading again on Monday to Oct. 24. Orlando may have missed its opportunity, as VHB and Wood Partners will proceed with their sixth Orange County community meeting for the project on Sept. 13.
"They want to see if they can get support at the county for development. If they can they'll choose to stay inside unincorporated Orange County. If they can't they may see if they can get approval by coming into the city," assistant city attorney Kyle Shephard told GrowthSpotter on Friday. "We just want to be good partners to the county, and to the applicant."
The city's Comprehensive Plan land use designations would allow even more density for the project than if it were in county territory, something county leaders realized that Dr. Phillips residents probably wouldn't like, said Chris Testerman, assistant county administrator.
"The issue here is the annexation that would allow for future annexations," he said. "The Board (of Commissioners) will have to measure now the impact of annexation," and if they want to find a happy medium with the developer to keep that property in county territory.
Keeping the project in Orange County would also allow for the developer to contribute funds to add a new lane to that portion of Sand Lake Road as a concurrency or zoning requirement, Testerman added.
Wood Partners did not respond to requests for comment late on Friday.
Multifamily is arguably the most bankable growth segment in Orlando commercial real estate today, and for the foreseeable future. Record-high occupancy rates are driving institutional investors to pay top dollar for existing properties.
After nearly 4,260 new units were delivered in Metro Orlando last year, builders are expected to construction 6,500 apartments in 2016, the highest number of completions since 2002, according to Marcus & Millichap's Q2 Multifamily Research Market Report.
The large number of deliveries should push vacancy up 50 basis points to 4.2 percent this year as properties enter a lease-up period, but strong demographic trends will help drive up average effective rent 5.3 percent, to $1,100 per month, per the report. That follows a 6.9 percent rise in average effective rent last year.