House bill stalls development in Orange County

A few lines of text have left some development projects at a standstill in Orange County.

Leaders in the development community, Orange County Public Schools and Orange County Government are searching for a way forward after House Bill 7103 introduced language last year that hinders the ability of developers to mitigate capacity impacts to nearby schools.

“We’re in a serious predicament right this minute as a result of the legislation that passed last year,” Orange County School Board Chair Teresa Jacobs said. “Nobody involved in that legislation had any idea the impact it would have, because it really only impacted Orange County.”

In 2004, Orange County passed a charter amendment dealing with school overcrowding. The amendment affects developers seeking a future land use amendment or zoning amendment that would increase residential density near an overcrowded school — though 15% or more of the student population in that overcrowded school must reside in another governmental jurisdiction for the amendment to take effect. 

To move forward, developers can either seek approval from both governmental jurisdictions impacted by the project — an option that never is taken because of growing capacity issues, Jacobs said — or they can mitigate the impact of the project through a capacity enhancement agreement, in addition to impact fees. That entails paying an amount of money — about 22% of the cost of an impact fee — that allows the district to rent portables for schools potentially impacted by the influx of new students.

“It’s not something that any of us created. It’s the result of six lines in a bill that went through very quickly and unintentionally resulted in creating a very, very difficult situation for us here in Orange County.” 

— Teresa Jacobs, Orange County School Board chair

Jacobs stressed the mitigation from capacity enhancement agreements also is important, because it offsets having to pull from money that goes toward building new schools.

“Every time that we have to put kids in portables, not only is it not our preferred environment for our students to be in … we are now spending money on a portable that is taking away from the source of revenue that we rely on to build the new school,” Jacobs said. “Through these mitigation fees, one of the things that we’re able to do is balance out some of that cost. We also use that to try to advance the schedule of a school.”

Language in House Bill 7103 brings the option of capacity enhancement agreements to a standstill, Jacobs said.

“The local government must credit against the collection of the impact fee any contribution, whether identified in a proportionate share agreement or other form of exaction, related to public education facilities, including land dedication, site planning and design, or construction,” the House bill reads. “Any contribution must be applied to reduce any education-based impact fees on a dollar-for-dollar basis at fair market value.”

Jacob said that means any money contributed by a developer must instead go toward lowering impact fees.

Capacity issues can’t be mitigated without that additional mitigation revenue, and therefore, the Orange County School Board cannot approve any capacity enhancement agreements, Jacobs said.

“The legal team with Orange County Public Schools and the legal team in Orange County Government have looked at the language, and neither can find a way where the school district can accept (and keep) the mitigation payment,” Jacobs said. “It comes into one pot called ‘mitigation,’ and the same amount is reduced in the other pot called ‘impact fees.’ The fact is we didn’t get any mitigation. There’s no additional revenue to help offset those additional costs that come with the school overcrowding.”

An Orange County comprehensive plan policy also prohibits land use or zoning changes where schools are overcrowded. The School Board must give a certification that there is capacity before a request can move forward, Orange County Deputy County Administrator Chris Testerman said.

Jacobs noted Orange County has at least 12 applications for land use or zoning that aren’t moving forward because of the language in House Bill 7103.

Although the House bill really hinders builders in Orange County and not the School Board, the impacts of housing projects coming to a halt will be felt throughout the county, Jacobs said.

“We are already facing a shortage of housing, which has caused a significant rise in rental rates and housing costs,” she said. 

A WAY FORWARD?

Orange County Public Schools officials has met with Greater Orlando Builders Association representatives to discuss and clarify the issue, Jacobs said. Currently, Orange County Public Schools is lobbying to have the House bill amended.

Testerman said discussions with the GOBA and OCPS have focused on crafting a carve-out amendment that would exclude Orange County from the portion of the House bill that created the issue.

Lee Steinhauer — director of government and legal affairs for the Greater Orlando Builders Association, as well as government affairs and legal counsel for the Apartment Association of Greater Orlando — said the development community is working alongside OCPS and Orange County Government to find a solution.

“We’ve really tried — and continue to try — to come up with a solution that kind of works for everybody,” Steinhauer said. “We want to make sure the schools have what they need, and we want to make sure that the developments can move forward, because right now they’re stuck. You can imagine the costs that these folks are having to bear as a result of not being given a pathway forward.”

Jacobs stressed neither side is happy with the current situation.

“This isn’t a standstill that Orange County Public Schools wants or asked for,” Jacobs said. “It’s not a standstill that Orange County Government wants or asked for. It’s not something that (builders) want. It’s not something that any of us created. It’s the result of six lines in a bill that went through very quickly and unintentionally resulted in creating a very, very difficult situation for us here in Orange County.”