Can growth pay for itself? The simple philosophy has been one of the most resonant political messages when it comes to development in Florida over the past 15 years, and many of the major initiatives in the state involving growth management—impact fees, concurrency requirements—have centered around finding ways to ensure developments when they rise from the ground also ensure costly infrastructure improvements are covered as part of construction instead of on the shoulders of taxpayers. But the presence of all those initiatives together, industry professionals complain, can make it more difficult than ever to get a project off the ground. Putting the cost on the developer places an extra financial burden on builders, who already deal in an entirely different regulatory environment than existed a generation ago.
Thus sets the dividing lines for one of the most contentious areas of debate in Sarasota County planning this year—fiscal neutrality. The requirement, found within the Sarasota County 2050 comprehensive plan, was among the most debated measures in the region this summer.
Now conservationists who long wondered if the 2050 plan was already too soft on developers fear a change in the provision will allow unrestrained development with no thought of the demands on roads, schools and government services, while business leaders say a regulation that makes the financing of construction nearly impossible in certain regions of the county is finally getting the scrutiny that it deserves. The policy itself can be found in the comprehensive plan’s resource management chapter. Like so many pieces of growth management legislation, the fiscal neutrality requirement seeks to identify the specific costs of the project and to calculate the cost upfront.
“Such procedures will require that Fiscal Neutrality be determined for each development project on a case-by-case basis, considering the location, phasing and development program of the project. For off-site impacts, the procedures will require that the total proportionate share cost of infrastructure be included and not simply the existing impact fee rates.” Measured impacts cover a range of government services from roads and bus service to jails and hospitals. But the part that developers say has proven most problematic is the demand regarding phasing. “The Fiscal Neutrality plans submitted as part of applications for development approval, and for each phase of each Village or Hamlet, will be reviewed and certified by independent advisors retained by Sarasota County at the expense of the landowner, developer or Community Development District prior to acceptance by the County,” reads the plan.
The demand to provide fiscal impact statements on every phase of construction creates a nightmare in terms of financing, according to Mary Dougherty-Slapp, executive director of the Gulf Coast Builders Exchange. She says the process needed streamlining. "We need to do this as expeditiously as possible," she said. In terms of specific changes needed, Dougherty-Slapp says the neutrality rules, which require reevaluation of construction projects every two years, are crippling the ability of developers to actually build the clustered villages envisioned in the 2050 plan.
Indeed, while the 2050 plan was designed to allow villages and hamlets to be developed in small clusters east of Interstate-75, in the nine years since 2050 went into effect very little construction has been seen that side of the interstate. Part of that surely is attributable to The Great Recession, which was led by a collapse in housing sales that hit the state of Florida especially hard. But the recession also tightened up lending practices across the board, and that made requirements on phasing all the more burdensome. In fact, the first village to be developed was done by Neal Communities, a developer with enough capital to build without financing.
Donald Neu, a development consultant working in Sarasota County, says the requirements made a genuine recovery in housing, at least of new housing communities, impossible with the current regulations. Of course, all of the hefty regulations are in significant ways part of the design of 2050. The plan was touted in 2005 and 2006 as a great compromise of the development and conservation communities—work on the plan earned recognition for Chamber of Commerce chairman Pam Truitt and conservation leaders Bill Zoller and Bill Earl in a 2006 issue of SRQ recognizing regional protagonists and featured a picture of the trio playing jump-rope together alongside an article about the atypical sense of cooperation employed to create a working plan. Last fall, the re-opening of that plan for scrutiny brought some of the figures back to the public stage wondering if the plan was just the opening of a Pandora’s box. Zoller told Sarasota County commissioners that if the plan was something that would be re-opened on a whim when developers complained about restrictions, rather than standing as intended until the year 2050, then maybe it was best that the plan be taken out of effect at all and the city just go back to rural zoning rules east of Interstate-75 that would allow development of small ranchettes instead of clustered subdivisions.
The reexamination of neutrality has proven the most contentious element of the plan altogether, a matter not especially helped by a controversial consultant report by Laffer Associates. The consulting firm, founded by Reagan Administration economist Arthur Laffer, put on the case Donna Arduin, an economist who had helped Gov. Rick Scott develop financial policy. Early drafts of the 2050 analysis spoke little of specific conditions in Sarasota and attacked planning philosophies from cities like Portland, Oregon, a city generally praised by New Urbanists and conservationists alike for its successes in promoting multimodal transportation. Eventually a final report was published which contained less controversial generalities, and that report recommended a significant rewriting of neutrality requirements to release the lending problems faced by developers.
Dan Lobeck, president of Control Growth Now, says the changes proposed will be disastrous for the region. Eliminating the phasing requirements for financial analysis, he says, will result in phasing for developments existing at all. “All development would be allowed at one time rather than phased out over decades,” he says. And the Arduin report, he notes, does show certain holes in how neutrality could be enforced. “Even the County’s own biased, pro-developer consultant Donna Arduin has acknowledged a fiscal neutrality report can show whatever the developer wants by making false assumptions that let the developer off the hook.”
Cathy Antunes, vice president of the Council of County Neighborhood Associations, says changing the neutrality requirements won’t eliminate the costs themselves. “Surplus infrastructure costs will be shifted to existing taxpayers,”she says, noting new roads and schools will have to be paid for through other sources of government funding. Especially since impact fees for the past five years have been kept at low levels to allow a rebound in construction, the burden of new demands from growth will have to be absorbed by existing residents, conservationists warn.
But business advocates remain concerned that right now, new growth cannot happen at all, and that in turn is impeding any economic growth in the region. Kevin Cooper, vice president of The Greater Sarasota Chamber of Commerce, notes nobody in a position of authority has ever suggested eliminating neutrality requirements entirely, but that right now that market is not competitive because of problems with the current regulations.
“Those in opposition to 2050 revisions would have the public believe that developers are pickpocketing taxpayers to pad their bottom line,” Cooper says. “When it comes to impact fees, the facts tell a different story: if you want to develop in Sarasota County, you’ll pay your own way.”
Ultimately, it will be county commissioners who decide what changes go into effect in 2050. And it may take another nine years before anyone can determine what the effects of those changes will be, though almost certainly development and conservation leaders will offer commentary along the way.
At least so far, efforts to soften the requirements of fiscal neutrality have moved forward with significant momentum. In late July, the Sarasota County Planning Commission approved changes to the language favored by the Gulf Coast Builders Exchange and The Greater Sarasota Chamber of Commerce. The measure was heard by the Sarasota County Commissioners for an initial hearing on Aug. 27 and then for final approval most likely in October. The changes drafted by county planners would allow for development in its early phases now be neutral, and allow that future phases of development will compensate for early shortfalls. Staff said that change was inrecognition that many developments take decades to complete. The changes also would establish monitoring procedures of actual revenue to detect any significant deviation from projected areas, something to make sure the process allows development to move forward but which does not, as critics fear, allow all burden to shift to the taxpayer.
“This is a journey we have to keep at,” said Planning Commissioner John Ask, but stressed the matter needs to carefully watched in the future. “Nobody wants to pay more taxes because of this.”
The prospect, according to Lobeck, will be long-lasting and will have negative consequences for taxpayers. “If they get away with this, the developers win and the rest of us lose,” he said unabashedly. “With over 6,000 new homes already allowed and moving forward on the Thomas Ranch and surrounding area in South County—with no plans for funding the roads, schools and other facilities need to handle that growth—is this really the time to drop the reins on eastern urban sprawl?”But at a time when construction is just getting back on its feet, proponents say it is important that the county ensures the actual visions for growth east of Interstate-75 come to fruition. Commercial and residential growth have seen a comeback in the last couple years, but very little has ever happened in the planned villages on the other side of the interstate. Indeed, the frequently-mentioned development of The Mall at University Town Center all sits west of 75, as does a rowing center at Nathan Benderson Park that has spurred activity along Cattlemen Road.
“No matter how many times he said it, Chicken Little was wrong; the sky was not falling,” said attorney Bill Merrill. “We can say we are gutting 2050 with these changes, but that doesn’t make it true. All requirements for fiscal neutrality will still be in there. This is a change in procedure. It’s improving something that has not worked to date.”Slapp wouldn’t predict whether county commissioners would approve the changes as staff wrote them and the planning commissioners approved them, but she was hopeful improvements would help taxpayers, not hurt them. “We are fortunate that Sarasota County has not raised the millage rate in 13 years,” she said. “Sarasota County has the second lowest millage rate in the State of Florida, so the rhetoric that growth has been on the ‘backs of the taxpayers’ simply is not borne out by the facts.”
The Words
2050 Plan Sarasota County’s comprehensive plan for managing growth up until the year 2050. The plan pays special attention to growth in the unincorporated areas east of Interstate-75.
Cluster Development Also called conservation development, such growth patterns call for grouping of residential and commercial units in pockets of a larger development in order to preserve open space.
Concurrency Requirements intended to ensure the pace of development does not outpace the ability of government to provide the services required by the related growth.
Fiscal Neutrality A requirement in the 2050 plan for all public costs associated with new development east of the urban service boundary be offset by the revenue anticipated to be generated by the development
Impact Fees Fees assessed when a permit is pulled to build a new structure, calculated based on the cost of new infrastructure required as a result of the development.
