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Dunedin amends land development fees
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DUNEDIN – For a few years, the Dunedin City Commission has struggled between the good intentions of the Parkland Dedication part of the Land Development Ordinance and the unintended consequences that it has on bringing desired businesses to downtown. So on Feb. 20, the commission unanimously approved the first hearing of an ordinance to amend this requirement. The second reading is set for Thursday, March 6.

A memo to the commission from City Manager Rob DiSpirito gave some background on this issue.

“While the LDO (land development ordinance) has positively impacted the landscape of Dunedin by helping to create unique parks, the changing financial and development climate led the city commission at its retreat in April 2013 to unanimously direct staff to explore ways to adjust the LDO in order to foster development, while not compromising the LDO’s ability to generate funds for parks,” the memo said.

The issues considered include that land prices in downtown have greatly increased and on average are much higher than the average prices in the rest of the city; many of the downtown buildings are older and perfect candidates for adaptive re-use; downtown would benefit from more residential uses because it would create a balanced downtown with year-round residents.

“(Also,) the term ‘parks’ in a downtown setting or along corridors has evolved to be more than just a green space and should include features such as public plazas, sitting areas and walking spaces,” the memo said.

It is difficult to dedicate enough land that meets the LDO in the community revitalization area, according to a memo to Lael Giebel, development services project coordinator, from Greg Rice, planning and development director.

“For many projects, there is simply not enough room for the combination of a viable project that would include stormwater management, parking, landscaping, and also meet parkland dedication requirements,” the memo said. “If land cannot be dedicated, the option of paying a fee in lieu of land is available. The formula used to calculate the fee in lieu of land, however, is based on the cost per acre of land. In high land value areas, like the CRA, the cost per acre of land causes the fee in lieu of dedication to be extraordinarily high, often dwarfing all of the other impact fees combined.”

Recently, the city had struggled for years to get the Gateway project in downtown moving forward with development, and in addition to the bad economy, one of the major hang-ups was that the LDO fees were so high that they significantly slowed down the process. The developer, Pizzuti Builders, Inc., had to pay $451,292 plus donate 0.619 acres of parkland to satisfy the LDO. In a post-recession climate, banks are no longer lending money for things like this, which are considered soft-costs, Bob Ironsmith, economic and housing director told the commission, and the way the LDO was set up, these fees must be paid up-front.

Therefore staff proposed two main changes to the LDO.

“(It) proposes that projects in the downtown core zoning district that have a residential component of five units or more receive a 50 percent discount in LDO fees based on the price of land in the CRA,” the memo said. “In addition, a developer would have the potential to further reduce their LDO obligation by up to 35 percent via incentives for projects exhibiting vertical mixed-use, high quality architecture and a great public space. This would be accomplished by a transfer of funds or a rebate from the CRA fund into the LDO fund, to cover this additional 35 percent potential incentive.”

Additionally, according to the memo from Rice, “using credits and incentives, the city will attract and obtain the quality projects it wants in the CRA; funding for parks continues to significantly accumulate with 50 percent of the LDO fee requirement for CRA projects; new residents would pay anywhere from 15 to 50 percent of the current fee based on developmental incentives; and after incentives, the remaining LDO balance will be paid to the LDO over five years with new CRA revenues generated from a city-desired development project featuring vertical mixed-use, high quality architecture and a great public space.”

Because of this, the memo added that the city could actually finally meet its goal of building a vertical parking garage because of these developmental incentives.

One big factor that comes to play in all of this is the CRA, said Bob Ironsmith, economic and housing development director. The CRA district was established in 1988 and works through a partnership with Pinellas County.

“It’s a great program that basically says the increase of assessed taxable value from the base year goes to the Community Redevelopment District to fund various investments that occur,” Ironsmith said. “In our case, our base year is 1988, and from that point on, the city and the county portions of the millage coming into the Community Redevelopment District to help with the streetscapes and the enhancements that you see in the downtown. The TIF is a unique focus tool that can be used in a variety of different ways.”

Currently, the amount of money the city gets in the Tax Increment Value in this way is $385,000, Ironsmith said. The first portion of the TIF, about $120,000 goes to the general fund, which represents the value prior to 1988. But the remaining portion goes to the CRA district, which is rewarding the district for making investments that create value, Ironsmith said.

“New projects create value to the TIF,” Ironsmith said. “… Each million dollars in new assessed property value creates approximately $9,000 that goes to the CRA fund investments. TIF can be used to fund bonding.”

Currently there are seven catalyst projects that could generate $435,000 in annual property revenue to the CRA, Ironsmith said.

“Over 15 years it could generate over 8.5 million dollars through the CRA to help fund large-scale projects,” Ironsmith said. “It also allows for bond leverage. We have the opportunity then to look at debt service to go after some larger-scale projects. Overall, all seven projects combined could create $56 million in new development, 360 temporary construction jobs – anywhere from a year to 18 months in duration. Also very substantial.”

Even if some of these developments get a 50 percent reduction in the LDO fee, the commission was told that in many instances the city will still receive about as much as it would get for any other similarly-sized project elsewhere in the city.

City staff presented this proposal to numerous citizen committees as well as stakeholders such as the Downtown Merchants Association, and each group unanimously supported the plan.

“This was a long, arduous effort, and I appreciate the diligence of going through that, and it was not easy,” said Commissioner Ron Barnette. “I was always concerned about this weakening the LDO. I’m a big believer in open spaces and public spaces, and quite frankly, I’m not going to give a blank check to any developer who comes to town. This seems to balance it out and is a win-win-win, and I’m very pleased to support this.”

Commissioner Heather Gracy also was happy to support the ordinance.

“I see a very reasonable connection between the real need for additional parks in our city … and I’d like to see that LDO funded, and if it’s going to be 50 percent as a catalyst, then I’m going to support that,” Gracy said.

Commissioner Julie Ward Bujalski said that the LDO was established for good reasons, but the economic world has changed. Private residents, governments and developers alike, have felt it, she said. Likewise, land values have changed, making it much more expensive to build downtown than anywhere else in the city. Banks will not lend for these fees and up-front costs, and she said this is inhibiting desired and needed developments in the city. Incentives like these can help get these projects off the ground, she said.

Mayor Dave Eggers said that he has questioned the continued existence of the LDO, even though he greatly values parkland. This solution, however, is a great compromise that keeps the integrity of the LDO while also taking away some of the stumbling blocks that developers have had in creating valuable projects, he said.

“It took us two years to negotiate some incentives on the (Gateway) project to offset the LDO fee that they had to fee,” Eggers said. “…It’s still a work in progress, but it certainly put a challenge out there where if we had this before, it could have gotten there quicker.”
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