By Alex Soderstrom – Staff writer, Orlando Business Journal
A bureaucratic snafu has halted the approval of new residential developments in parts of Orange County — and the problem may get worse before it gets better.
This holdup is causing issues for developers in the county and stalling the construction of housing needed to accommodate the region’s rapid growth. And the issue could worsen, Lee Steinhauer, government and legal affairs director for the Greater Orlando Builders Association, told Orlando Business Journal. “The scope is already large. The longer it goes, the more it’s going to grow.”
There are roughly 20 housing projects on hold because the builders cannot get Orange County School Board approval due to a change in state law last summer, Steinhauer said. And more projects likely will become entangled, as well. “Development coming through the pipeline will hit that wall.”
‘Hindering economic development’
For example, more than 500 apartments and townhomes are on hold in Ocoee due to this issue. That’s because Ocoee Village Center, a proposed $100-million, mixed-use development, cannot get a capacity enhancement agreement. The project was approved by the city last year, subject to the agreement.
“This is hindering economic development and affects the ability to provide approvals for projects on a timely basis,” Angel de la Portilla, president of Orlando-based government consulting firm Central Florida Strategies, told OBJ. He represents the City of Ocoee as an economic development consultant.
This situation has resulted in a “quasi-moratorium” on residential development in the county, de la Portilla said. What’s more, builders and investors are concerned about investing in residential projects in the county due to the problem, Steinhauer said. “The effects are all the way down.”
Local housing is needed right now. The Orlando area ranked the fifth-fastest growing metro area in the nation between 2017-2018, according to a 2019 report by the U.S. Census Bureau. Orlando’s hot residential real estate market is seeing rising prices, growing sales and shrinking inventory. The overall median price of Orlando homes sold in January was $245,000, up 7.9% from the January 2019 median price of $227,000. The number of homes available for purchase in January — 7,030 — is down 14.7% when compared to January 2019 and up 0.1% from last month.
How we got here
The housing slowdown is due to the role the school board plays in the approval of new residential developments. Projects proposed in Orange County are reviewed to determine how many students they likely will add to local schools.
If the nearby schools can’t accommodate the influx, developers must pay a mitigation fee that varies, based on the size of the project and type of housing. The school board uses this money to improve schools so they can handle more students. This fee came about as the result of a 2004 charter amendment approved by a voter referendum that sought to make developers pay more money if their projects contribute to school overcrowding.
The charter amendment resulted in an interlocal agreement between the county and the city governments located within it. This means any residential project in the county that impacts local schools cannot get rezoning approval from the local jurisdiction without paying the fee. Orange County is the only county in Florida with this process.
But a bill signed into law last year by Gov. Ron DeSantis effectively requires local governments to give school impact fee credits to developers who pay mitigation fees, which would negate the school capacity impact fees. As a result, the school board since has stopped processing capacity enhancement agreements due to the contradiction between the county charter and the state law, and thus, local governments have stopped rezoning hearings for new housing.
Representatives of Orange County could not be reached for comment.
There has not been an immediate solution proposed. The county has no intentions of changing its charter. So one solution is passing a new state law to modify the bill signed into law last year. But it would have to pass before the legislative session ends March 13.
The builders association has met with county officials and the school board to try to find local solutions, Steinhauer said. The problem was unanticipated, he said, and it’ll take all parties to find a solution. “It’s just one of those things that’s unintended. I think everyone is focused on coming to a resolution.”
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