Roadway Agreements

5/30/2015 – How do Impact Fees and Road Agreements really work

There seems to be a misconception on how Impact Fees work as well as Roadway Agreements.  Some think that the developer ends up paying nothing or very little.  I have found this to be very far from the truth.  I hope this blog helps clear this up.

It would be absolutely absurd to think that the developer will get a free pass when the county is relying heavily on the developer to fund the roadway especially in the case of Lake Pickett.  It is also preposterous to think that the county and developers will enter into a roadway agreement and spends thousands of dollars and time to draft it only to give it all back!  There is so much attention on this now that if this is approved for transmittal and ultimately adoption every bit of money available will be funneled to these roads for improvements.  We have seen to that already with the signs and attendance at the meetings.  I think it is top priority down at the county right now and the iron is red hot thanks to us.

I think a lengthy explanation is in order.

How are impact fees used?
Impact fees are set using the transportation impact fee schedule. and are currently at $3,761 per single family detached home.  So let’s do a little math.  2,256 units for LPS and 1,999 units for LPN times $3,761 = $16.003,005 for roads.   These fees go into a pot that can be used anywhere in the county and have most definitely been used elsewhere and not on our roads.  Considering the “unwritten taboo rule” that has dominated this area for years and years there is no question they have been used elsewhere.  In case you are wondering what the “unwritten taboo rule” is, it is that there is a sort of verbal agreement that no development occur east of the Econ.  This “rule” has been in effect for many many years and is why we are so far behind the curve in terms of road improvements.  With the fever pitch of the residents over the years demanding no change to the rural area, there have been no road improvements so the impact fee money from sub-divisions that have popped up along N. Tanner and other sub-divisions just west of the Econ as well as the “entitlements” of Corner Lakes and Cypress Lakes has been spent in other areas of Orange County because the residents effectively didn’t want it spent here.  This money is irretrievable.

How much will the developers pay in the case of Lake Pickett?
A single family detached home has a fee of $3,761.  This is non-refundable and is paid by the builder.  There are certain credits that can be applied but I think it is a stretch to assume that the entire amount paid will be offset by credits.  In the case of LPS that has 2,256 units, they would end up paying $8,484, 816 in impact fees.  LPN has 1,999 units and will pay $7,518,239.  And this does not include the commercial impact fees LPS will pay so their number is higher.  I have heard that LPN and LPS are not asking for credits because they understand the road situation.  So just in impact fees alone, LPN and LPS will pay close to $20 million that will not be refunded.  Here is the caveat about this money.  It can be used anywhere in the county.  It is up to us to demand it be used in and around these properties.  I know the developers want the impact fees used for these roadways also.  We haven’t even talked about the additional money the developers are going to pay which is part of the roadway agreement and is called proportional share agreement.  Read about it below.  It is very significant in terms of dollars and will probably add another $20+ million to the pot for roads.  The key to this is to see if with all monies combined we have enough to fix the roads.

Here are the cold hard facts when it comes to the roads.
If nothing happens out here and we cannot find a way to fix this, we will be left holding the bag and traffic will get much much worse and something will have to be done.  What, I am not sure but if you want any say in how this is done, now is the time.  If you wait until it is too late then it will most likely be dictated to you and you may not like what happens.

I believe as residents we will have to make a choice.  Do you want the roads fixed or do you want the area to remain “rural”.  If you want the area to remain rural then you cannot complain about traffic to the county anytime in the future and you surely will not have a say in what is done when the county is forced by law to fix what it can when roads fail.  The county is required by law to maintain the roads to a certain standard.  I want this to move forward so we have a say in how these roads are fixed and not live in this problem for many years to come.  I am very tired of watching the never-ending stream of cars on McCulloch Road.

Here is an explanation on how impact fees work from someone very close to the action.  This is what is really happening behind the scenes.  Sometimes just talking to people who actually know what is going on and getting the straight facts is the best thing to do.  Enjoy!

The big picture is that the developers will pay tens of millions of dollars to build roads.  The “typical” development merely pays so-called impact fees which are a per house or per square foot (for non-residential)  charge to fund transportation capital costs (i.e. roads).  Sometimes a development is located where one or more of the “significantly” impacted roads is not operating at the County’s adopted level of service.  This is the case, obviously, around the Lake Pickett properties.  Such other developments may elect to pay a so-called “proportionate (or “prop”) share and move forward with development.  Such developers, per state law, get a credit against the transportation impact fees the County will charge at the time the actual building permit is pulled.  Such developers merely “pay and go” and never have to worry about whether the County actually uses the money to improve the failing road.  In other words, their right to begin development is not tied to actual road improvements but merely the payment of the money. 

The general game plan for the Lake Pickett projects is that the developers will pay a combination of impact fees and extra dollars.  By way of example and not necessarily exact numbers, it is estimated that based on current impact fee rates, LPS will pay around $8MM – $10MM in impact fees.  LPS’s dollar specific commitment to build off-site roads such as SR 50 might be $20MM (again, this is a number merely for example purposes).  Accordingly, LPS would pay about $12MM in extraordinary monies to fund road improvement costs.  This is true of LPN also.  The catch will be that portions of the proposed developments will be tied to certain of the road improvements assigned to the developments.  As noted above, this is not typically required of other developments.  This is very significant because, according to some in the community, roads promised in connection with previously approved developments didn’t materialize and the impact fees and any other prop share fees paid by the developers essentially vanished and must have been used by the County elsewhere.  LPS and LPN has as much interest in seeing that the County spends the money here as does the community.  It would be a lot easier for the developer and less risky to simply cut a check and go.  But that would not fix our problem.

The developers are not asking for any credits for land that might be needed in order to build a road improvement.  They both know that they need some money to build roads.   If somehow the developers are “crediting” against these needed funds, they  wouldn’t have the money necessary to build the roads.  This makes no sense, obviously.

As for the proposed funding plan for SR 50 specifically, through the developer negotiations with FDOT, they are willing to refund to the County the money the developers spend on SR 50 (today’s FDOT estimate is $16MM).  This is a HUGE “get” for everyone because we’ve essentially created another source of funds to help build roads in the area.  It is envisioned (of course, the County has to agree) that the terms of the LPS funding agreement will provide that the net funds available to the County will be immediately directed to construct another identified road improvement on the improvements map.  Essentially, all of us (i.e. the community, developers and the County) are getting what is called a “twofer”, meaning that we will get 2 improved roads as a result of LPS’s initial funding of 1 road.”

Posted in East Orange County Traffic, Lake Pickett Properties.