A SPECIAL JOINT MEETING
WITH THE
BOARD OF
AND THE
APRIL 11, 2005
The
Lake County Board of
OPENING
AND WELCOME
Commr. Hill welcomed everyone and asked those who would
be participating in the discussion to introduce themselves at this time.
Ms. Becky Elswick, School Board member, introduced Mr. T.
J. Fish who was with her today as an intern from
Commr. Hill turned the meeting over to Mr. Sandy Minkoff,
County Attorney/Interim County Manager.
PRESENTATION BY ROBERT L. NABORS,
NABORS, GIBLIN & NICKERSON
Mr. Sandy Minkoff,
Mr. Minkoff stated that there is an Impact Fee Bill (HB
1173) pending in the legislature, and staff thought they would have Mr. Nabors
give them an update on it. He noted that
Mr. Nabors, a former
Mr. Nabors presented a copy of the Impact Fee Bill and noted
that it may not be the latest information, but he is going to talk about a
concept of early collection; the legislative act is an ordinance. Mr. Nabors stated that an impact fee is a home
rule revenue source, and the counties and cities, for years, have resisted any
legislation that attempts to define impact fee.
He explained that it has been a constant effort by the legislature to
try and write the rules and, anytime they write the rules, they try to treat
all governments the same, and it ends up taking away some of their power to be
flexible. During the last couple of
sessions, they matched up attempts to restrict impact fees, with another
revenue source like documentary stamps, and none of those efforts have been
successful, mainly because there is an effort in the legislature to not have
any taxes, and because there is a proprietary interest that the counties and
cities have on impact fees, which is having the ability to make growth pay
their fair share. The Impact Fee Bill tries
to define what credits are given when they calculate impact fees for
residential homes. An impact fee is a
fee that is imposed to regulate growth to make sure that growth pays for
facilities that it needs. Mr. Nabors
explained that an Impact Fee Study has been done and Lake County, as the first,
and now Orange, Osceola, and Clay counties have impact fees that have risen
dramatically to try and address the funding of schools needed by growth. The Impact Fee Bill brings down the impact
fees by expanding the credit concept, and it basically does it under the
capital improvement element, as he explained in further detail. Mr. Nabors stated that it also attempts to
allow some of it to be paid under an installment basis, but not in a very sound
way. It has provisions dealing with
administrative fees, time periods of when the impact fee has to be done, but the
primary debate in
Commr. Cadwell explained that the language in the Impact
Fee Bill says that the county and the city will enter into an interlocal
agreement to decide how the money is spent; if there is no interlocal
agreement, and there is no incentive for the city to enter into that interlocal
agreement, then the moneys have to be spent in the city where they were
collected and that would also include school impact fees.
SCHOOL BOARD MEMBERS
At 1:13 p.m., it was noted that Ms. Kyleen Fischer had
arrived for the meeting.
PRESENTATION
BY ROBERT L. NABORS, NABORS, GIBLIN & NICKERSON
(CONTINUED)
Commr. Cadwell explained that the League of Cities has
not really taken a position on this matter, and it is very important that the
School Board members know that there is no incentive for the city to enter into
any kind of an agreement with the county because, if they do not enter into an
agreement, then all of the money is spent in that city.
Mr. Strong stated that it would create an inequity
situation that they are required by law not to foster. He noted that one district is inherently more
prosperous than another, and their last impact fee analysis and recommendation to
do away with the districts, so that they would not create these types of
environments of disproportionate funding.
Mr. Nabors stated that he talked to Dr. Wayne Blanton,
Executive Director, Florida School Boards Association (FSCA), and he thinks
they are changing their position and will be opposed to it as well. He stated that the current growth management
bill has language to make concurrency applicable to schools; currently
concurrency is optional in local government planning acts; to have concurrency,
you have got to enter into an interlocal agreement with the cities and
establish a concurrency model. He
believes that
Commr. Cadwell referred to Page 2, Line 44 of HB 1173
noting the language “there is an insufficient oversight of local governments
who collect and use impact fees” and pointed out that the mindset in the
legislation is that they do not know what they are doing and they are not doing
a very good job. He stated that
Representative Alan Hayes called him to let him know that he voted against it
in his committee, so they need to keep the pressure on their representatives
because it is moving fast and, even though they are getting some “no” votes out
of certain committees, it is not yet over.
Mr. Strong wanted to know, if the Impact Fee Bill did go
through, whether there would be any ability for those who had already paid
impact fees in the last five years to go back and try to recover because they
had been collected inappropriately, but Mr. Nabors noted that really there
would be none.
Commr. Hanson stated that it looks like they have
exempted out the impact fees that have already been imposed for cities, and
also the fire districts, but they still have parks, roads, and libraries where
they could collect impact fees. She
stated that, if they have the choice of collecting fees at the time of transfer
of real estate, or certificate of occupancy, she would assume that would be the
choice of the buyer, but it is not clear; if it is the choice of the buyer, and
the buyer chooses to pay for it today when they close on the property yet not
build for ten years out, they would be paying at a much lower fee than if they
did it at certificate of occupancy, although the dollars would be available but
maybe not as much as in the future, so this would be another questionable item.
Mr. Nabors stated that, for example, with a multi-family
development, someone would not know at the real estate closing how many units
would be there, if they were just buying the land. Another problem exists in the language where
it indicates that part of it could be paid in installments over several years,
but it does not say how that decision would be made or how that would be done.
Commr. Cadwell reminded the Board how important it was last
time for the School Board to try and enact the process as quickly as possible and
they would have to wait six months before they could enact these changes.
Commr. Hill noted, for the School Board’s information, that
the Board did take action and sent a letter in opposition to this legislation, and
she does not know if that precludes them from doing the same, and Mr. Strong noted
that the School Board will discuss this with the Superintendent when she gets
back and will get a letter sent from the School Board.
Commr. Hill stated that she had wanted to make the School
Board aware of the new legislation and to allow them the opportunity to hear about
it from an expert. The Board would also like
to thank Commr. Cadwell, who attends meetings in
Ms. Fischer stated that, when she has been in
Commr. Stivender noted that the Board did have the
Chairman send a letter but, if each individual would send e-mails to all of the
Legislative Delegation, they will be bombarded with this and will be reminded
that they need to stay on top of it.
Mr. Conner stated that this is such an important piece of
legislation that he would like to ask for a consensus that they ask that the
Superintendent send a letter immediately and authorize the Chairman, on their
behalf, to send one, because he did not feel that the School Board should wait
on this issue.
Mr. Strong noted that it was the consensus of the School
Board members to take this direction immediately, as noted.
PROPOSED
CHANGES IN THE TIME AND MANNER OF COLLECTION OF
EDUCATIONAL
IMPACT FEES
CONCEPT
PAPER: COLLECTION OF IMPACT FEES
CONCURRENT WITH
DEMAND FOR NEW SCHOOLS
Mr. Nabors addressed the handout material, which was a concept
paper for the collection of impact fees concurrent with demand for new schools. He explained that, when you are doing
transportation and other types of impact fees at the County level, you have
other available revenue sources, or at least the potential of using other
revenue sources. He stated that there is
a problem with schools, because you have a limited number of funds that you can
use for capital outlay and, on the other hand, you are obligated statutorily to
have a capital facilities work plan five years out that is financially feasible. Since the St. Johns County case on impact
fees, there has been a movement to try to look at all of the revenue sources
available for schools, and then have a planning period; then determine how much
capacity is going to be created; and then drive an impact fee to pay for that;
but the problem with impact fees is that you still have no assurances it is
going to be received on a timely basis. For example, you cannot borrow money based
upon potential receipt of school impacts as the sole credit, because of the
fact that credit markets do not know when the money is going to get there for
the bonds to be paid. One of the tools
developed over the last few years is a certificate of participation concept,
which is basically based upon the size of your capital outlay. The impact fees have always been a cash way
to pay for growth as it occurs but it does not prevent overcrowding because, if
you receive it at building permit, the children are already there in a matter
of months; it takes awhile for the schools to be built, so there is always a
timing issue with it. The homebuilders have
a valid argument with this because, if you collect it at the building permit or
certificate of occupancy, it places the price on the home, because all of the
money comes due at the time it is sold and therefore, it sometimes puts their
homes in a noncompetitive situation with surrounding markets. Mr. Nabors noted
that the ability to do impact fees at the time of collection is a legislative
act by county ordinance.
Mr. Nabors found that, over time, this method would make
the School Board’s five year work plan workable because they will know that
they are going to be able to receive and have the ability to finance during
that five year period that those schools are represented by the impact
fees. It puts the burden on the “dirt”
developer to start carrying the obligation and periodically pay that on time,
and it is no different than what the legislature is trying to do to make the
concurrency apply to it; it is no different than what they have to do with
transportation as well.
Mr. Nabors stated that they have to work with the School
Board’s financial people to address the main issues, which have to do with the
procedures and accounting for the assessments and make sure all of that is in
place electronically. Their concept is,
if they do this every three or four years, they would have a revenue stream on
the tax bill that they would bundle up for a bond issue. They would have a reoccurring source of
revenue; it does not mean they have to bond; they could pay as they go but at
least get the money periodically earlier.
He explained that the amount someone would pay today is credit against
whatever the impact fee is at the time someone gets a building permit. He noted that the Board could also say that
they are only going to collect half of the impact fee this way.
Mr. Conner discussed the issues of interest and cost of
collection and questioned whether the School Board would be at any risk by
going into that interest component agreement, but
Mr. Nabors felt that the risk would be diminimus because it would depend on how
they structure it; they may have a provision in the consent form where there
could be a recalculation of the assessment that was unpaid based on prevailing
interest rates.
Mr. Conner clarified that the actual impact fees for a
subdivision would come due at the front end of the subdivision as opposed to
ten years down the road when someone might build and that would be an advantage
to the School Board.
Mr. Nabors reviewed the summary, as shown in the concept
paper, as follows:
·
For new
development, the full School Impact Fees would be collected at the time and as
a condition of development approval as defined in the implementing ordinance.
·
The property
owner or developer of the new development would be granted the option to pay
School Impact Fees in installments over a time period specified in the
implementing ordinance, plus interest and cost of collection.
·
To exercise the
installment payment option, the property owner or developer of new development
would execute a Certificate of Acknowledgement agreeing to the collection of
such installments as a non-ad valorem assessment under the Uniform Collection
Method.
·
Property that has
prior vested development approval (i.e., plat or site plan approval) for
residential development units would continue to pay School Impact Fees at
certificate of occupancy.
·
For new
development, the implementing ordinance would provide whether the remaining
assessment installments would become due at the time of certificate of
occupancy or could continue after certificate of occupancy for collection under
the Uniform Collection Method.
·
In the event the
School board elected to issue special assessment debt payable from the annual
non-ad valorem assessment installment payments, the County and the School Board
would enter into an agreement for the payment of the annual assessment proceeds
to the School Board to accommodate such financing plan or the County would
issue the required debt on behalf of the School Board.
Mr. Minkoff noted that the memo takes away a lot of the
advantages to the homebuilders and developers, because it does not treat it as
a prepayment but, in their discussions with them, he and Mr. Johnson indicated
that it would be treated as a prepayment, so it would be fixed; they would pay
the cost plus the interest component, but they would not go back and increase
it later when they came to get their building permit. They also talked about a trade off, perhaps a
ten year time period rather than 20 years.
They also did not see the need to force the payment at the certificate
of occupancy or building permit, because they are getting the interest, and they
could finance it, and it would be a substantial benefit to the homebuyer, or
the developer, to be able to use the full ten years.
Commr. Stivender asked whether they discussed the small
development as well as large development, and Mr. Minkoff explained that they
had one meeting where they invited large developers, medium developers, and
some homebuilders and, even though it is hard to say whether they represented
all the viewpoints, they tried to get a broad section of viewpoints in the
development community.
Mr. Minkoff addressed the issue
brought forth by Commr. Hanson regarding the Florida Bar/Florida Realtor
Contract, which says that a special assessment gets paid at closing, but Community
Development District (CDD) assessments typically do not get paid at closing
because they are not pending; they are assessed each year, so they are not
actually due. It would be a matter of
contract between whoever sold the lot, or sold the home, and who purchased it
as to who would pay. It could either be
paid at closing, or it could be assumed by the buyer to be paid over the
remainder of the term, and that would end up being a contract issue that they
would have to resolve.
It was clarified that, if the person does not build in
the ten years, and the property is sold after the lien is paid, then the lien
goes away. It was also noted that there
are a lot of developments that were approved a long time ago that have not been
developed out.
Mr. Conner stated that the School Board just had a growth
study done, and the new impact fee is a monumental help to them. According to the results of their growth
study, every time a house is built, it is still a negative capital impact to
the School Board. This idea is one that
he thinks merits a great deal of consideration, and he wanted to thank Mr.
Nabors,
Mr. Minkoff, and Mr. Johnson for their work on it. Mr. Conner stated that his primary concern is
that, in the real way that they do business on the School Board, if you have a
thousand development units, and you develop those in three phases, they would
take that money and bond it, and they would build schools. By the time they got to the second or third
phase of development, and it started bringing in students, they would not be
holding student stations open for those students. Mr. Conner also pointed out that, even five
to ten years down the road, the cost of building schools could be considerably
more so he wanted to know if there was a way to write this ordinance to where
they could implement it but not rule out the possibility of increasing impact
fees, as the cost increases for building schools.
Mr. Nabors explained that the issue is a trade off and
the theory of impact fees is to look at it every three years or so to see if
there are other revenues available that could be taken into consideration for
costs and construction.
Discussion occurred regarding the prepayment of fees,
which would allow the School Board to get the money up front for schools, with
Commr. Cadwell pointing out that they are at the point where, if they keep
raising impact fees, the legislature is going to take that ability away from
them. At some point, they are going to
be charging all they can charge for impact fees, and he thinks they are getting
close to that now, because he thinks that is what starts this pressure in
Mr. Strong explained that, if they implement this system,
they will get the money up front. He
stated that Sugarloaf is a good example because, if it was approved 15 years
ago, and this system was in place, they would have already gotten the proceeds,
and they could be investing it. They
have to really make sure that they can control and handle that money extremely
well because, if they spend it in some other area, or not for that particular
impact for which they received the funds, they could create a problem for
future school boards. He believes that
their board is capable of handling that, and that this system is going to solve
that problem of waiting until the student actually moves in and having a two
year process of trying to catch up. He
feels that there are a lot of advantages to the system and very few
disadvantages.
Mr. Conner agreed that it might be wise to bank some of
that money but they must realize the pressures of having money in the bank and
having a room full of 500 parents whose kids are going to schools in portables
saying you have a pile of money in the bank, and these lots are not even
developed yet. He suggested that they
really give this a lot of critical thinking, because he thinks it is a great
concept, but he also thinks that it is their obligation to look over the long
term and look at any potential downside.
Commr. Hanson stated that she would have some concerns with
long term investments of dollars, because then you defeat the purpose of paying
for the schools with the growth, but the investment of the funds would be good
short term.
Mr. Minkoff explained that he spoke to Mr. Bob McKee, Tax
Collector, and Mr. Ed Havill, Property Appraiser, to make sure there were no
tremendous issues, and it would be the County’s assessment employees who would
really be responsible for preparing these rolls each year, and the
municipalities would have to be involved.
He noted that it was the attorneys who thought that the municipalities
would be happy to get out of the collection business of School Impact Fees.
Mr. Johnson stated that, at this point, they need to know
if the School Board is interested in having them pursue this particular avenue
and Mr. Minkoff probably needs to go before the Impact Fee Committee and talk
to them about it. There are a number of
options they can do on some of the different provisions that probably need to
be outlined so they can choose which of the things they need to do, and then go
from there.
Commr. Hill stated that, if the Board does choose to go
forward, she would prefer that staff, with the County Attorney’s Office, draft
the ordinance and work out a lot of these details and then it be taken to the
Impact Fee Committee.
Mr. Minkoff stated that it might be better to bring the
concept to the Impact Fee Committee, because it will take considerable time and
effort to actually make the suggested changes to the ordinance.
Mr. Strong stated that the School Board has just finished
a pretty comprehensive study to 2020, and they could actually overlay new
figures.
Mr. Minkoff explained that they looked at this not as a
revenue enhancing method, but really as a revenue neutral issue; all it would
do is speed up the availability of the funding, so it should actually only
allow them to build the schools quicker at today’s cost, as opposed to later.
Mr. Johnson stated that, after talking to the School
Board’s financial staff, it is important that, one, it becomes due at time of
plat, and two, it is a special assessment against the property and, with those
two things, this becomes a part of the property that could be included in the
bonding.
Mr. Conner asked Mr. Nabors for his advice to them, with
regard to the inflation factor and locking in the impact fee at the initial
time of plat.
Mr. Nabors explained that this is really a policy
political decision, and he agrees with Commr. Cadwell, the legislature will
have to do something and, if anything, the impact fees will go down in the next
few years.
Mr. Conner interjected that, even though impact fees may
go down, it does not mean that the cost of school construction is going to go
down and his concern is that they are so far behind and they could use that
money and they would just be catching up; they would not be planning for what
is coming in ten years and, in ten years, they will be further behind than they
are right now.
Mr. Strong stated that, to address Mr. Conner’s concerns
as to what could be the downside for the School Board; it would be if they
actually built the schools in advance of the need and then the development did
not materialize, then they could have a school sitting there. He pointed out that there is some current
legislation that prevents them from doing that but, as Mr. Conner pointed out,
they are so short right now that they are not likely to get themselves into that
unless they geographically put something where it should not have been, but
that is not going to be a big problem for the School Board.
Mr. Metz stated that right now they have an impact fee
that has been determined at $7,055 and it is due upon certificate of occupancy
or building permit being issued, which is late in the developmental stage, so
the issue is that they are not getting the money soon enough to start getting
schools built so that they are on line when the children show up. The time they need the school stations on
line is when the student shows up so, if they go with the concept and have a
provision where someone can prepay at the current rate and never pay anything
more than that, he thinks that would be very short-sided for this School Board
to accept such a situation, because they could find themselves down the road
with an unfunded shortfall and they will never be able to catch up; it will just
add to their already existing shortfall.
What they have to do is say that the payment process for an impact fee
needs to be sooner in the process, but the actual amount is not going to be
known until they have to actually build schools. He is not suggesting that current status quo
is in the best interest of the School Board either; he thinks that is why they
are at this point where they are in such a dire situation, but he thinks that
having the payment obligation begin at the time of platting is a sound concept
but the actual amount should be at the time of certificate of occupancy. So they would start paying upon platting, and
they would finish paying with the amount adjusted up or down at the time of
certificate of occupancy. Mr. Metz
stated that this would be the only way that would protect them from not having
to build schools in 2010 with 2005 dollars, so they need to be really careful
and Mr. Conner’s point is well taken.
Discussion occurred regarding the construction inflation
cost, with Mr. Conner explaining that one of the problems that the School Board
finds themselves in is that, within the last 12 months, the supply and demand
and the cost of concrete and steel could not have been predicted. There might be a good way to structure this taken
into what was said by Mr. Metz that, while they may not be able to insulate
themselves from exorbitant costs, perhaps there could be in the ordinance some
type of a formula, or some type of approach of addressing a future impact fee
and putting a cap on it, or something along those lines, in the spirit of
compromising in trying to protect everyone’s interest. He thinks this is a great concept because
they need access to the money but, as Mr. Metz said, they do not want to be all
spent out and then have all of these needs, which is really where they are
right now.
Commr. Hanson stated that about half of the homes are in
subdivisions, and the other half are in unincorporated areas, or just previously
existing lots, and those previously existing lots will still remain at that fee
that could be increased and that might help to buffer some of those concerns.
Commr. Hill noted that the Board will need some direction
from the School Board as to whether they want them to go forward because it
does take a lot of staff time to work out those details, and there are quite a
few details to bring back to them; if they are totally against the whole idea,
they would like to know that up front.
Mr. Strong stated that the proposal being made to them is
flexible; it is a working document. He
would like to get consensus from the School Board, hopefully unanimous
consensus, for the School Board and the County to continue working on it and,
if there are any questions, this would be a good time to present them.
Mr. Conner stated that he felt that they would all want
to thank the County and encourage them to move forward but keeping in mind
their concern about the inflation factor and try to address that in some
way. He thinks it is an excellent idea
to pursue.
At this time, Mr. Strong stated that he would like to get
consensus from each individual School Board member, and it was noted that
consensus was unanimous.
Mr. Minkoff stated that he had
envisioned the School Board staff and their attorney,
Mr. Johnson, working with him and his staff, to try and identify
some of these issues, and then they will bring it to the Impact Fee Committee. He also envisioned perhaps another joint
meeting, once they can get a lot closer to finalizing the document.
Mr.
Strong stated, for the record, that he would like to apologize at this point
for not noting that the Superintendent is sick today, but they are going to
make sure that she is presented with the information as well, and Ms. Carmon
Arnold, who is representing the Superintendent today, can bring the
Superintendent up to speed on it. He
also interjected for the record that the Superintendent was on board with this
direction as well.
Mr.
Johnson noted that he had discussion with the Superintendent about the same
plan, and she thought it was a good idea, as well, to pursue it.
ADJOURNMENT
There
being no further business to be brought to the attention of the Board, the
meeting adjourned at 2:10 p.m.
___________________________
JENNIFER HILL, CHAIRMAN
ATTEST:
__________________________
JAMES
C. WATKINS, CLERK