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Agenda 03/23/2010 Item #10B Agenda Item No. 10B March 23, 2010 Page 1 of 10 EXECUTIVE SUMMARY Recommendation to accept the first annual report on the "Impact Fee Program for Existing Commercial Redevelopment" and to consider two proposed changes to the Consolidated Impact Fee Ordinance which would (1) extend to Redevelopment Program for all buildings which are five years and older on a continuing basis, and (2) eliminate the expiration date of impact fee credits so that they run with the land until used or transferred. OBJECTIVE: That the Board of County Commissioners (Board) accepts the first annual report on the "Impact Fee Program for Existing Commercial Redevelopment." CONSIDERATIONS: On December 3,2008, during the regular meeting of the Board of County Commissioners, the Board directed staff to develop an option, for consideration by the Board, for a change in the current requirements for the assessment of impact fees for changes of use within existing buildings. The current regulations are set forth in Section 74-201 (c) of the Collier County Code of Laws and Ordinances (Code), which is the Collier County Consolidated Impact Fee Ordinance, which states: (c) Change of size or use. 1mpactfees shall be imposed and calculatedfor net increase, alteration, expansion, or replacement of a use or a building, or part of a building (including dwelling unit), and each accessory or non- accessory building, provided such net increase, alteration, expansion or replacement of the use, building, or part thereof or therein, by applying this chapter results in " (1) a net increase in the number of dwelling units; (2) a net increase in the size or square footage of a building; (3) a net increase in the size of the use; or (4) intensification of the use as to constitute an expansion of the same use category or result in a change to a higher impact fee land use category; or (5) otherwise create additional demand or additional impacts on any of the public facilities. Staff reviews and assesses impact fees for changes of use via the review of all applications for Zoning Certificates/Business Tax Receipts and Development Orders (Building Permits, Site Plans, Site Plan Amendments, etc.) In order to assess impact fees for a change of use, first the lawfully existing land use must be determined. Staff researches information provided by applicant, site plans, building permits, Property Appraiser's records, etc., in order to make this determination. The impact fees are then calculated for the existing use based on current rates. The impact fees are then calculated for the proposed new use. If the development contemplates a land use that is of a higher intensity use and therefore creates additional impacts on public facilities, impact fees are required to be assessed for the net increase in demand. Therefore, the impact fees are assessed by applying the impact fees that are calculated for the existing use against the impact fees that are calculated for the new use. Agenda Item NO.1 OB March 23, 2010 Page 2 of 10 Based on the direction of the Board, staff and the County Attorney developed the following Program for the Board's consideration. The scope of the Program is limited to commercial uses and the requirements for assessment for "intensification of the use" or changes that "otherwise create additional demand or additional impacts on any of the public facilities. " Prol!ram: Elil!ibilitv: Limitations: Applicable Tvpes of Impact Fees: Lenl!th of Prol!ram: "Impact Fee Program for Existing Commercial Redevelopment" which provides applicants meeting the requirements below an exemption from assessments for "intensification of the use" or changes that "otherwise create additional demand or additional impacts on any of the public facilities. " Commercial buildings that have had a Certificate of Occupancy for a minimum of five (5) years. The building must have been permitted and paid the then applicable impact fees. Program is limited to changes within existing commercial buildings, for example tenant build-outs, tenant improvements, etc. Additions to existing buildings and demolition/replacement of buildings will not be eligible for this Pro!,'l'am. Applicable to all impact fees (excluding water-sewer) assessed for commercial changes of use, based on land use. This typically consists of Transportation, EMS, Government Buildings, Law Enforcement and Jail. These provisions will not apply to assessments for Water and Sewer Impact Fees. Initial term of Program two (2) years from adoption date, with a report to the Board on the usage of the Program after one year and again prior to the sunset date. The Board could then elect to extend the Program or allow it to sunset. On February 24, 2009, during the discussion of item lOA, the Board directed the County Manager, or his designee, and the County Attorney to implement the Program as detailed above. In addition the Board directed that a status report be presented to the Board in one Agenda Item NO.1 08 March 23, 2010 Page 3 of 10 year, including detailed information on the participation in the Program and the fiscal impact on each of the affected impact fee trust funds. On March 24,2009, the Board adopted Ordinance No. 2009-14 establishing the above Program which became effective March 30, 2009, upon filing with the Florida Secretary of State. During the Program's fITst year, 40 applicants participated with 20 of the applicants being new businesses. The majority of the applicants were referred to the Impact Fee Administration Office through the Zoning Certificate process and were unaware of the potential impact fee assessments related to changes of use. However, the applicants also stated that they would be unable to move forward with the proposed business, at the specified location, if the "Impact Fee Program for Existing Commercial Redevelopment" was not available. Of the 20 applicants that were existing businesses relocating to new space, none of the applicants indicated that they were receiving a lower rent or lease rate due to the Program. In fact, the majority of applicants in this category were also unaware of the potential impact fee assessments related to changes of use and also stated that they would be unable to move forward with the proposed business relocation if the Program was not available. Staff has fielded numerous inquiries during this one-year period related to newer buildings participating in the Program. As stated above, the Program is limited to commercial buildings that have had a Certificate of Occupancy for a minimum of five (5) years. The building must have been permitted and paid the then applicable impact fees. Included with this Executive Summary is a protest letter provided by the owner of a newer building that did not meet the age requirements of the Program. The property owner elected to pay impact fees related to a change of use for a tenant "under protest" pending the Board's review of the Program. As indicated in the attached correspondence, the property owner believes that the Program should also apply to newer construction. The following chart provides a list of the types, and amounts by type, of changes of use that are participating in this Program. The land uses indicated correspond to the closest applicable land use for establishing the impact fee rates to be applied. These categories do not dictate the land use classifications for zoning purposes. Change of Use Number of Applicants in Program Church to General Office I General Light Industrial to Auto Sales I General Light Industrial to Church 1 General Light Industrial to Gymnastics 3 Agenda Item No. 10B March 23, 2010 Page 4 of 10 Change of Use (cont'd) Number of Applicants in Program General Light Industrial to General Office 17 General Light Industrial to Retail 7 General Light Industrial to Tire Store 1 General Office to Medical Office 8 General Office to Day Care 1 The Program was initially established for a two-year period, with a report to the Board after one year and again prior to the sunset.. At that time, the Board could then elect to extend the program or allow it to sunset. If the Board accepts this first annual report, staff will continue to track the qualifYing participants in the program and report back to the Board in March of2011, which is prior to the sunset date for the Program. FISCAL IMPACT: The following is a breakdown, by impact fee type, of the total impact fees that were not assessed for the qualifYing changes of use. Impact Fee Type Amount Correctional Facilities (Jail) $26,174.52 Emergency Medical Services $11,398.70 Government Buildings $59,786.64 Law Enforcement $21,065.73 Road $1,147,851.95 Cumulative Total $1,266,277. 54 As stated in the Considerations Section (above), staff spoke directly with many of the customers that qualified for the Program. The customers indicated that if the Program was not in place, and they were required to pay additional impact fees in order to open or relocate their business to a particular building, they would have elected not to move forward with the proposed use. Another option for such customers would have been to continue seeking out tenant spaces in which the impact fees had been paid for a use similar to the type they were proposing, and therefore the payment of additional impact fees would not be required. In either case, the County would not collect any additional impact fees and in many cases businesses would be unable to open or relocate/expand. Therefore, the benefits of the Proi,'1'am, which include encouraging new business within Collier County, retention and expansion of existing businesses in Collier County and Agenda Item NO.1 OB March 23, 2010 Page 5 of 10 absorption of a portion of the supply of vacant commercial lease space, in older buildings, minimize the implied fiscal impact on the respective impact fee trust funds. GROWTH MANAGEMENT IMPACT: Impact Fees generate funds to be expended for capital improvements to public facilities necessitated by growth which is consistent with Policy 2 of the Capital Improvement Element (CIE) of the Collier County Growth Management Plan (GMP), which states: "Future development will bear a proportionate cost of facility improvements necessitated by growth." While many of the new and existing business noted that the program was a key factor in their decision to proceed, it should also be noted that their corresponding increase in impacts to public facilities, especially roads, were not addressed. Long term, this could negatively impact the County's ability to address any potential transportation infrastructure improvements necessitated by the changes in use. Although the Program limits the additional impact fees that will be assessed for changes of use, despite the intensification of use and demand on public facilities, this type of program for redevelopment is consistent with Policy 3.12 of the Economic Element of the GMP which states: "Collier County, in coordination with other appropriate entities, will support the establishment and retention of small businesses throughout the County. " Additionally, this Program does not in any way negate or waive existing zoning laws. Any relocation of a new or existing business into an existing facility generates the need for a Zoning Certificate from the Zoning Department and the subsequent issuing of a Business Tax Receipt from the Collier County Tax Collector. Staff, through issuing the Zoning Certificate, verifies that the new business location is properly zoned to allow for the business to legally operate at a new location. Additionally, prior to issuing a Zoning Certificate, staff reviews the proposed business location to ensure that the site provides the required number of parking spaces and meets the minimum landscape code requirements. If the new business location is not located within a zoning district that permits the proposed use, the Zoning Certificate is dcnied and the business owner is directed to consider other areas within the County that are appropriately zoned for the proposed use. In the alternative, the applicant is advised of the option to seek to rezone the property to a zoning district that would allow the proposed commercial use. All rezoning applications first have to be found consistent with the applicable elements of the Collier County Growth Management Plan (GMP) as well as found to be compatible with the adjacent land uses. If deemed inconsistent with the Comprehensive Plan, the applicant would have to seek an amendment to the GMP. LEGAL CONSIDERA nONS: In light of continuing issues caused by this unprecedented economic slowdown, there are two proposed changes to the Consolidated Impact Fee Ordinance that Ms. Patterson and I have been discussing for some time. l. The first change we would like to propose is to the Redevelopment Program. As currently written, the Program is limited to existing buildings which had an existing certificate of occupancy for at least 5 years prior to the commencement of the Program. Agenda Item NO.1 OB March 23, 2010 Page 6 of 10 As time passes, more and more buildings will have certificates of occupancy in excess of 5 years but which will not qualify for the Program. Given the Program's success, it is recommended that the Board extend this to all buildings with a certificates of occupancy in excess of 5 years. The change to the Ordinance would read as follows: "Development is proposed within a lawfully existing building which has had a Certificate of Occupancy issued for at least 5 years. prior t8 the eomHlllHeem8Rt sf this ~ 2. The second change we would like to propose is to amend the Consolidated Impact Fee Ordinance to eliminate the sunsetting of impact fee credits. Section 73-203(f) of the Consolidated Ordinance provides in relevant part as follows: "The impact fee collected pursuant to this chapter (including all predecessor ordinances that are hereby being consolidated into this chapter) shall be returned to the then current owner of the property for which such fee was paid if which fees have not been expended or encumbered prior to the end of the fiscal year immediately following the sixth anniversary of the date when the respective impact fee was paid. Refunds shall be made only in accordance with the following procedure: (1) The then current owner shall petition the board for the refund prior to the end 0 f the fiscal year immediately following the sixth anniversary of the date of the payment of the respective impact fee." The ordinance goes on to set forth the requirements of the petition, which we believe need to be maintained to properly administer the request. The problem of course is that if you do not petition the Board for a refund by the end of the sixth year, any right to a refund expires, effectively creating a sunset provision on impact fee credits. Impact fee credits are typically given by the County in lieu of cash payment for land or construction projects which benefit the County. Given the economic slowdown, many Developers who obtained Impact Fee Credits are presently unable to use them. We believe that as a matter of fairness they should not lose the benefit of their bargain through the expiration of these credits. The proposed change to the Ordinance would read as follows: "The impact fee collected pursuant to this chapter (including all predecessor ordinances that are hereby being consolidated into this chapter) shall be returned to the then current owner of the property for which such fee was paid if which fees have not been expended or encumbered prior to the end of the fiscal year at any time iHlffieaiately following the sixth anniversary of the date when the respective impact fee was paid. Refunds shall be made only in accordance with the following procedure: (1) The then current owner shall petition the board for the refund. prior to the ena of tee fiseal yom- immeaiately followillg the si][th annivofGal')' of the Gate of the payment sf the respeetive imflaet fee." If approved, this change would effectively result in impact fee credits running in perpetuity with the land until used or transferred. This concept could also be extended to existing Developer Contribution Agreements, some of which have specific expiration Agenda Item No. 10B March 23, 2010 Page 7 of 10 dates to utilize the credits. Such changes to existing DCAs would come back to the Board on a case-by-case basis as amendments to the Agreements. - JAK RECOMMENDATION: That the Board of County Commissioners accepts the first annual report on the "Impact Fee Program for Existing Commercial Redevelopment" and the proposed changes to the Consolidated Impact Fee Ordinance. Prepared by: Amy Patterson, Impact Fee and Economic Development Manager, CDES, and Jeffrey A. Klatzkow, County Attorney Item Number: Item Summary: Meeting Date: Agenda Item No. 10B March 23, 2010 Page 8 of 10 COLLIER COUNTY BOARD OF COUNTY COMMISSIONERS lOB Recommendation to accept the first annual report on the Impact Fee Program for Existing Commercial Redevelopment. (Amy Patterson, Manager Impact Fees & EDC, CDES) 3/23/2010 9:00:00 AM Manager ~ Impact Fees & EDC Date Prepared By Amy Patterson Community Development & Environmental Services Business Management & Budget Office 2/25/2010 11 :34:42 AM Approved By Date Judy Puig Community Development & Environmental Services Operations Analyst Community Development & Environmental Services 2/26/2010 11 :05 AM Nick Casalanguida Director - Transportation Planning Date Approved By Transportation Division Transportation Planning 3/9/20103:19 PM Approved By OMS Coordinator County Manager's Office Date Office of Management & Budget 3/10/20109:17 AM County Attorney Date Approved By Jeff Klatzkow 3/11/20109:57 AM Approved By Date Susan Usher Office of Management & Budget Management/Budget Analyst, Senior Office of Management & Budget 3/11/20107:29 PM Date Approved By James W. Delany County Attorney County Attorney 3/15/201010:20 AM Date Approved By Dan E. Summers Bureau of Emergency SelVices and Emergency Management Director of Emergency Services Bureau of Emergency Services and Emergency Management 311S/2010 10:30 AM Administrator M Public Services Date Approved By Marla Ramsey Public Services Division Agenda Item No. 10B March 23, 2010 Page 9 of 10 PubliC Services Division 3/16/20104:03 PM Len Golden Price Date Approved By Administrative Services Division Administrator ~ Administrative Services Administrative Services Division 3/16/20104:15 PM Leo E. Ochs, Jr. Date Approved By County Managers Office County Manager County Managers Office 3/16/20104:20 PM Agenda Item NO.1 OB March 23, 2010 Page 10 of 10 February 2, 2010 Amy Patterson, Manager Collier County Impact Fee & Economic Development Horseshoe Drive Naples, FL Re: 5465 Jaegar Road, Unit 10 Dear Ms. Patterson: Please accept my check in the amount of $/~ !j f J /{, as payment in full for the impact fees due on the lease of Unit 10, 5465 Jaegar Road, to Elizabeth and Jason Anderson. Please know that this payment is made under protest and I expect to revisit the issue in the near future to obtain a full refund of this amount. I believe there is no basis for this fee for several reasons, one being that my neighbor's building, built more than five years ago, is exempt from these fees by Collier County Board decree. Therefore, I feel this is unjust and discriminatory. Yours truly, Arthur H. Brandt 26221 Mira Way Bonita Springs, FL 34134 (' -0---- .- ---'- "..., ..... PI~~~~_5239) 221-733~ /') MI_;t'~ Deliver acknowledgement JMu Date