Read Full Article: St. Johns County commissioners seem willing to bet commercial development will pay for itself, in the long run.
The board opted to continue the final hearing to adopt any changes to the county’s impact fee schedule to April 3, due to a couple shifts in direction outlined during Tuesday’s meeting, but restated its commitment to attracting and bolstering commercial development.
Impact fees — levied on developers to offset the costs of providing additional public services for new development — and transportation concurrency agreements pay for much of the recent growth the county has seen, at least in theory.
Many current residents see the fees as a fair way to pay for the increased strain on roads, schools, fire/police services and parks. Builders, in the meantime, have argued increasing the fees too much could negatively impact the county’s ability to attract businesses as well as new residents, jeopardizing future job growth and ad valorem and sales tax revenues.
Throughout the months-long debate on consultant James C. Nicholas’ latest impact fee assessment for the county, which included recommendations to generally increase fees on residential and non-residential construction, commissioners have repeatedly expressed hesitation about raising impact fees on commercial building. Considering economic development has consistently been identified as the board’s priority from year to year, the hesitation is not surprising.
At their Feb. 20 meeting, commissioners threw their support behind a fee schedule reflecting a reduction in fees for non-residential development of 40 percent from what Nicholas had proposed.
According to county documents, a 40 percent reduction would result in flat or reduced impact fees for 14 non-residential categories and modest increases ranging between 3.7 and 18.8 percent in the remaining 12 non-residential categories. This would have an annual budget impact of about $725,000 and require an alternative revenue source to subsidize the reduction.
Commissioner Jimmy Johns on Tuesday was looking for the break-even point, assuming the county reduces impact fees for non-residential development. He suggested tapping into other revenue sources that commercial development help generate, such as ad valorem and sales tax, to bridge the gap and asked how long it would take to recoup what the county wouldn’t collect in impact fees.
But Nicholas said the issue of cost recovery does not quite align with what Johns had expressed.
He said finding a replacement for the reduction of impact fees can be done, by using ad valorem or sales tax or gas tax revenues, but that doing so defeats the original intent of having impact fees.
Nicholas said he’s been working with the county on impact fees for three decades and that this all started because those “other” revenues they’re now considering using in order to buy-down reductions for impact fees on commercial development were not enough to meet the needs of the community.
Thirty years is a long time for things to work themselves out, but this picture hasn’t exactly improved. For instance, Nicholas said more efficient cars have led to lower yields of gas taxes for roads and then, when the gap could have been closed with revenues from property taxes, legislators passed property tax reforms (decreases) and the voters said “Yes.”
He said the impact fees he recommended were calculated considering all available revenues, including the additional half-cent sales tax increase passed by county voters in 2015 for school capital projects, which, he added, is why the school impact fees went down.
He said if commissioners choose not to implement his recommendations fully, they will have a gap and they will have to turn to the other sources to fill it, thus bringing the county back to something resembling the original problem.
Commissioners had no follow-up questions to Nicholas’ comments, although Commission Chair Henry Dean offered his rendition of an old quip on taxes from former Louisiana Senator Russell B. Long that ends “Don’t tax me, tax that fellow behind the tree.”
Tackling the issue of where the buy-down for reducing fees on non-residential construction will come from, Commissioner Jeb Smith suggested the county shift millage from the General Fund into Transportation Trust Fund reserves, much as it has for other purposes over the last couple of years.
Morris said the county can’t maintain its roads as it is, reminding fellow commissioners the public works department needs $10 million a year over next 10 years and that those projects aren’t even getting in the budget because the department knows the money’s not coming.
County Administrator Michael Wanchick told commissioners they’re only expecting growth in ad valorem revenues of 7 or 8 percent next year. He said the county could see a decrease in those collections by as much as $10 million if additional property tax cuts passed by the legislature are successful at the polls.
“We’ll be close to the line,” he said, adding that continuing to rely on policies that shift from reserves could be “devastating.”
Commissioners voted 3-2 to draw from reserves to buy down reductions, should they choose to move forward with the updated fee schedule on April 3. Johns and Waldron were in dissent.
After the vote, Smith called it “the first bite of apple” and said the county has “stolen from Peter to pay Paul for too long.” He said growth in commercial development is a good thing and imperative in order to make this plan work. He also warned fellow commissioners against being too shortsighted.
Whether to proceed with reduced impact fees for commercial development (and how to pay for that reduction) was only part of Tuesday’s wide-ranging discussion.
The sheriff’s office recently requested its existing portion of the revenues from impact fees collected for public buildings be shifted directly toward law enforcement.
Undersheriff Matt Cline on Tuesday told commissioners a lot of the money for capital projects for the sheriff’s office is currently housed within the county’s General Fund and that this arrangement provides little in terms of predictability.
“This will help us plan for the future,” he said. “It will keep our requests more reasonable and keep us in check as well.”
Commissioner Paul Waldron asked whether any requests for capital projects by the sheriff’s office have been denied, to which Cline said there’s a lot of back and forth each year regarding capital projects and plans may not necessarily even make to the point where they can be officially denied.
Commissioner Jimmy Johns acknowledged the sheriff’s office has “proactively” modified short-term and long-term plans to fit within the county’s revenues.
Waldron said he understands the need for such projects as a training facility but that he’s concerned with how the county will be able to pay for the long-term costs of operating and maintaining it. Johns said Waldron had a point but that the same could be said for any government-built facility.
Cline said there are several projects the sheriff’s office is looking at and training is a big part of it. He said the sheriff’s office spends in excess of $100,000 in rent a year to use the training facility at First Coast Technical Institute that’s starting to see some wear and tear.
“That money, it just goes ‘poof,’” Cline said.
The board approved including the sheriff’s request in the ordinance.
At the request of builders, the board has also weighed the possibility of phasing in collection of the updated residential fees, except those for schools, over time.
Staff on Tuesday presented two options: adopt a two-pronged phased-in approach in which collection of the updated fees would begin June 4 at a 25 percent reduction and stepped up to the full amount starting Jan. 1, 2019, or collecting the full amount starting Oct. 1 and keeping the fees as they are until then.
Commissioner Jay Morris said he had no big problem with phasing-in the fees on residential development and wanted to “make sure we’re in line with what the builders want.”
Suzanne Konchan, growth management director for the county, said the two-pronged phased-in approach can bring a “considerable administrative burden” to the county. She said the fewer times the fees change, the more practical, error-free and cost efficient the whole process is.
Morris later said the six-month waiting period to start collecting the full amount in October made more sense to him. But Dean said he liked the phased-in approach.
The board ultimately voted 3-2 to direct staff to craft the language for reflecting a two-prong phased-in approach effective in June, at which point the updated fees would be collected with a 25 percent reduction, and then stepping up to the full amount on Jan. 1, 2019. Morris and Waldron were in dissent.
Residential fees are proposed to be restructured from using two size categories — 1,800 square feet and under, and over 1,800 square feet — to seven size categories. These new categories break down as follows: under 800 square feet; 801 to 1,250 square feet; 1,251 to 1,800 square feet; 1,801 square feet to 2,500 square feet; 2,501 to 3,750 square feet; 3,751 to 5,000 square feet and over 5,001 square feet.
Most residential developments would see an increase in what they contribute toward services provided by the county, ranging between 15 and 68.9 percent. Only homes under 800 square feet would be paying less, with an 11 percent decrease overall. Others would see increases ranging from about 3.1 percent (for homes 1,801 to 2,500 square feet) to 68.9 percent (for homes 5,000 square feet and up).
During public comment, Jessie Spradley with the Northeast Florida Builders Association said they would prefer the phased-in approach, starting with the reduced amount in June and stepping up to the full amount in January. He cited fears of delays and the want for “some kind of relief” with the size of the fees coming. He said he’s representing 173 builders who added $1 billion in new housing value to the county last year.
Without the impact fee discussion even settled, Spradley and other representatives for the industry turned their attention to reducing regulations and speaking favorably of the county’s consideration to exempt non-residential construction from its transportation concurrency program and possibly substitute it with another program or fee.
Bill Lazar, executive director for the St. Johns Housing Partnership, said impact fees always impact affordable housing and that starting homes are going to see a 16 percent increase.
“That’s not really a help,” he said.
He said the county is lacking in ability to encourage new rental housing. He said part of the reason developers aren’t building rental housing is that they’re charged up front the full costs of adding the new units but unable to recoup the money through rent collection as fast as they could with home sales.
Lazar said the county really should decrease impact fees on commercial projects but that those businesses will have to pay one way or another if they want to retain employees. He said eventually they’ll have to increase wages to allow employees to move closer or to justify their commute from their more affordable out-of-county residences, which, he added, only contributes to the wear and tear of county roads.
He said the bottom line is the county needs to stimulate starter homes and rental apartments and that it should consider letting developers pay the costs for those kinds of housing over five or ten years.
Konchan said staff will present changes to the Land Development Code and possibly the Comprehensive Plan, which could include a reworking of transportation concurrency and consideration of housing linkage fees for affordable housing, to the board on May 1. She said the hope is that this process would conclude by early fall.