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Jacksonville developer Greg Matovina says Duval County's mobility fee system makes the cost to develop a lot a known quantity.
Jax Daily Record Friday, Aug. 29, 201412:00 PM EST

Counties finding balance to pay for growth

by: Carole Hawkins

Nassau County changed the system it uses to charge builders for impacts their developments have on roads.

The old system obligated a developer to pay for highway expansion when their project put a road over capacity. It was a policy that at times killed deals.

Nassau commissioners, by a 5-0 vote Monday, scrapped that for mobility fees. The new system charges a transportation fee to all developments, putting the money toward a countywide master plan for road improvement.

They aren’t the first county to do so. As the housing market recovers and impact fees return, some governments are retooling their growth policies.

Duval County adopted mobility fees in 2011.

Developers say it’s a fairer and simpler way to fund road construction. They say it will also encourage more retail development in bedroom communities and in Jacksonville’s urban core.

Impact fees: A way to fund growth

Growth costs money – money for roads, water and sewer systems, parks and schools.

Governments since the 1970s in fast-growing areas like Florida have turned to impact fees to finance growth when tax-averse electorates were unwilling to do so.

In 1985, Florida additionally passed the Growth Management Act, one of the country’s most comprehensive growth laws. A centerpiece of that law was concurrency, a policy that blocked new development until infrastructure like water, sewer, roads, and later, schools was in place to serve that development.

A 1999 update allowed development to go forward, but charged a “proportionate fair share” to developers for the cost of improvements when projects put infrastructure over capacity.

It was a system that created some unintended consequences for roads.

A formula for favoritism, sprawl

One of the main problems with the proportionate fair share system was it was a first-come,

first-served system, said Fred Atwill, who worked for the city of Jacksonville’s Planning and Development Department.

“There’s a finite amount of capacity on the roads. The first developers were allowed to lock in those trips, while the developers who came in at the end of the roads’ capacity were forced to pay a ‘fair share’ for upgrades,” he said.

The system created odd outcomes, like “ghost trips.” When developers left phased subdivisions unfinished, the entire development was still counted as trips on the roads, Atwill said.

It also created sprawl, as developers moved farther out to low-traffic areas, where roads still had plenty of capacity.

In 2011, Florida passed another law that let communities opt out of transportation concurrency and replace that with a mobility fee system. Local governments would create a mobility plan that outlined transportation projects two decades out. Every new development would be charged a mobility fee toward funding that road construction.

The new system allows counties to design the formula for calculating charges to developers impacting roads.

In Jacksonville, for example, mobility fees are charged by regional impact — multiplying the number of daily vehicle trips generated by a score for the development’s location. Those farther from the central part of the city are charged more, incentivizing urban infill development.

Assigning development a known cost

Developers like the fairness of mobility fees as compared to concurrency charges.

But more importantly, they say, it’s a simpler system that will give them more predictability in the marketplace.

Jacksonville developer Greg Matovina said when it comes to predictability, the concurrency system fails.

One reason is because of how long governments take to decide what the concurrency charges will be.

“There are time frames for things like zoning and concurrency and land use change,” Matovina said. “And, they don’t match with most landowners’ expectations of how long they want to give you to close on their property.”

In St. Johns County, which still operates under concurrency, fees can soar as high as $19,000 per lot when concurrency is an issue, according to some developers.

The cost isn’t known ahead of time because the county negotiates a fair share contract that is unique to each development’s situation.

That’s a lot of money hanging in the question mark column when trying to negotiate a land purchase.

“A lot of developers go to St. Johns County because there’s money to be made. But I think they take a much higher risk,” he said. “In St. Johns, there are guys who say, we can get their land use, zoning and concurrency done in nine months or a year, but I’ve seen situations where it’s taken two years.”

If a landowner wants to close sooner, the developer must either close without knowing what the project’s full cost will be or risk losing deposit money, Matovina said.

Worse, under concurrency a county can opt to deny a development altogether, he said.

That happened in Duval County in 2006, which operated at that time under the concurrency system. Developer D.R. Horton put the Baymeadows Golf Club under contract for $25 million and applied to pay a proportionate fair share for road improvements.

The City Council approved the measure, but the mayor vetoed it. The landowner dropped the price to $15 million to close quickly, and D.R. Horton did so, believing it could successfully appeal the city’s decision in court. D.R. Horton lost.

“To this day D.R. Horton owns a piece of property that they paid $15 million for and they still haven’t worked out what they can do with it,” Matovina said.

It’s a scenario that won’t happen under mobility fees.

Retail opportunity for bedroom communities

If concurrency made development unpredictable in Duval and St. Johns counties, in Nassau County it shut development down.

That’s because Nassau, a bedroom community to Duval, has high commuter traffic on its main east-west artery during peak hours.

Under concurrency rules, that places the road at capacity.

“It’s only for one hour — you could do pushups in the road in the afternoon and not be hit by a car,” said Mike Herzberg, director of development for Sleiman Enterprises, which builds and manages shopping centers.

Retailers want to develop on the Florida 200/A1A artery because highway traffic corridors are places where people will pull off the road to shop when they are on their way traveling to somewhere else.

“On your way to work, you stop and get gas, you stop and get doughnuts, you stop and get dry cleaning,” Herzberg said.

Absent such locations, retail developers and sales tax dollars move away. In the case of Nassau, it’s gone to Duval County’s River City Marketplace, Herzberg said.

Developers couldn’t opt to enter into a proportionate fair share contract either. That’s because the road is owned by the state, which has a system for prioritizing projects.

“Some of these smaller developers, their fair share might be $10,000,” Herzberg said. “The Florida Department of Transportation is not going to pool that $10,000 in an account somewhere and then wait for some other guy to come up with more. They’re not going to take those small incremental funds.”

Because of that, Nassau County had been forced to deny developments along the highway.

It’s a scenario that’s played out in northern St. Johns County as well, said Herzberg, a place where brisk residential development has filled connecting highway corridors with commuter traffic.

“There’s a complete lack of retail. I live in Nocatee and I find myself driving to Duval County or Ponte Vedra to go to a restaurant,” he said. “St. Johns has been a miserable failure in attracting commercial development, primarily because of these practices.”

For Nassau, that will now change. Under mobility fees, retailers will have opportunities to build, keeping more of the shopping traffic and tax dollars local, Herzberg said.

“As a bedroom community county, you have to grow to increase your tax base,” Herzberg said. “If you don’t grow, you eventually will die. It’s very difficult to fund the services that the residents want without that growth.”

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