Wednesday, May 20, 2015

AECOM's Mythology of Fiscal Neutrality: Dan Lobeck

The Arduin scam:

See Cathy Antunes

See the Herald Tribune

From attorney Dan Lobeck:

Note: The Sarasota County Planning Commission will hold a public hearing on Fiscal Neutrality, the subject discussed below, Thursday, May 21, 2015, inconveniently placed near the end of its agenda at a meeting that begins at 6:30 at the Anderson Administration Building in Venice. Although concerned citizens are urged to appear and speak out, unfortunately another commitment prevents my participation at this meeting. Nevertheless, I have provided these comments for the record and urge others to do so, at the meeting or by email to Sarasota County Officials. The County Commission will have a public hearing on the Fiscal Neutrality changes which is tentatively scheduled for July 8.

Please note also that the County Commission has scheduled meetings on its Mobility Plan, a scheme to further slash road impact fees, relieve developers of traffic studies and their proportionate share of road improvements by repealing concurrency, and embrace traffic congestion by those actions as well as by abandoning most road improvements, on the premise that we should be forced to walk and bike wherever we go as well as take buses that get caught in gridlock too.

This outrageous proposal, which Commissioners Maio and Hines say “excites” them, is scheduled for a “workshop” (probably a walkaround to talk with staff) at 2 pm Thursday May 28 at the County Operations Center at 1001 Center Boulevard. A draft of the proposal will then be presented to the County Commission at its June 2 meeting. A public hearing for formal consideration will be scheduled at a future date.

I will seek to keep you posted.

-- Dan Lobeck
Control Growth Now Website

Gutting Fiscal Neutrality

After gutting the rest of the Sarasota 2050 Plan and some parts of fiscal neutrality, the County Commission hired political consultant Donna Arduin to review fiscal neutrality, the requirement that Sarasota 2050 developments (urban growth allowed in rural lands) pay their own way. She recommended that it be repealed, as well as virtually all other controls on development in the County. (The County Administrator Randy Reid had recommended that a neutral expert academic be hired for that review, but he was fired for that and for other postures that did not please the big developers). Next, the Commission hired AECOM, which has a history of giving a pass to developers in its “independent” reviews of their fiscal neutrality reports, despite demonstrated flaws.

Now as the County’s fiscal neutrality consultant, AECOM has produced a revised “methodology” for developers to prove their Sarasota 2050 developments are not a burden on the taxpayers. It is more a mythology than a methodology, a fiction designed to insure that developers pay no more than other developers in the County, which is far too low to make growth pay its own way, as evidenced by ever-growing shortfalls today in meeting the demands of new development.

Consider for example that the County Commission recently concluded that it is $350 million dollars short in funds for needed expansion of administrative and justice facilities, evidence that County impact fees for those purposes are inadequate. And the lack of sufficient impact fee revenue for a new fire station near the University Town Center Mall. And on and on. Impact fees are demonstrably insufficient for fiscal neutrality. That is why fiscal neutrality was created in the Sarasota 2050 Plan, to add revenue to that produced by impact fees in order to achieve true fiscal neutrality. Now AECOM, and the County Commission if it adopts its report, would throw fiscal neutrality in the trash.

For operating expenses in a fiscal neutrality report, AECOM requires merely a simple “per-capita” analysis. That simply divides the total County budget for each category of expense (law enforcement, fire and rescue, general government, etc.) by the total County population and then multiplies that by the number of residents in the new development, or the proportionate property value of nonresidential development.

AECOM rejects the “case study” approach which it says is used in some fiscal neutrality analyses, saying that is “difficult” for a developer because it “requires an ample amount of time and budget to conduct.” However, that ignores the fact that urban development in rural lands will be more expensive for the County to service in many regards, such as longer trips for law enforcement, fire and rescue, code enforcement and other purposes.

For capital expenses, AECOM says that impact fees will be deemed sufficient, except where County staff somehow identifies an “extraordinary expense” which it requires the developer to pay. Again, no specific study is required to determine each capital facility impact of the development.

This directly and indisputably violates Section 11.2.14.b.3 of the Sarasota County Zoning Code, which provides, “Fiscal Neutrality shall be determined for each development project on a case-by-case basis, considering the location, phasing, and development program of the project.” So AECOM rejects the “case study” approach to fiscal neutrality because it is difficult and expensive for the developer, even though the County Code requires it!

AECOM’s rejection of the “case study” approach also violates Policy VOS 2.9 of the Sarasota County Comprehensive Plan, which requires a detailed report of anticipated facility needs and expenses for each proposed Sarasota 2050 development “on a case-by case basis” for its impact on a list of public facilities depending on the location, phasing and program of the development, according to procedures adopted by the County. Very significantly, that legally binding and mandatory Comprehensive Plan policy then states: “For off-site impacts, the procedures will require that the total proportionate share cost of infrastructure be included and not simply the existing impact fee rates” (emphasis added). Not just “extraordinary expenses”, as AECOM would require, but all expenses for the expansion of public facilities.

For example, if impact fees for courts, jails and administrative facilities are too low, as is evident by the current large shortfall for those needs, a Sarasota 2050 developer would be required to pay nothing for those facilities beyond the lowballed impact fees, unless an “extraordinary expense” for those purposes was identified by County staff to be specifically triggered by that particular development. And the same for roads throughout the County and for all other facilities.

AECOM states in its initial draft that a detailed study should not be required because that would be costly to the developer and as such might “have the effect of deterring development.” Can the bias for the developer and against the taxpayer be any more evident?

Section 11.2.14 of the Sarasota County Zoning Code also provides at substantial length the requirements for a detailed analysis of the facility and service impacts of each Sarasota 2050 development, including a specific assessment of each facility impacted by the development according to the County’s adopted levels of service. It further provides, “The [Fiscal Neutrality] Plan shall include reasonable estimates of the cost of such facilities, prepared by a civil engineer, registered in the state of Florida.”

Indeed, AECOM itself, in providing a required independent review of one fiscal neutrality report, faulted it for failing to include those cost estimates by a civil engineer. (The County Commission ended up approving that report despite that legal violation, against the recommendation of its Planning Commission, which sought denial because of that violation and others).

It should also be noted that County financial staff, in reviewing a fiscal neutrality report by Henry Fishkind for Village of Lakewood Ranch South, faulted his conclusion that impact fees are adequate for fiscal neutrality, observing that in fact they are not because impact fees have been proven over time to produce inadequate revenues to pay for all required new public facilities.

Further, the Sarasota County Commission has never implemented full impact fees, most recently slashing already reduced road impact fees by 50% and now proposing to cut them even further, including for “mixed use” developments which may include Sarasota 2050 Villages.

AECOM even states that if impact fees are “temporarily” suspended or reduced even below the artificially reduced rate at which they are adopted, revenues from full impact fees shall be assumed. Although AECOM now states in its revised report that the developer in that instance shall provide a plan to “mitigate” that circumstance, it gives the developer an out. It provides that the developer, as an option to paying higher impact fees, may propose that the County reduce capital facility expenditures – even though that may inadequately handle the development’s impacts -- or “identify other revenue sources.”

Further, by accepting impact fees as adequate to pay for roads, other than “extraordinary expenses” of the County which immediately serve that development, AECOM ignores the requirement of the Comprehensive Plan that fiscal neutrality pay for “Countywide impacts on County, City, State and Federal transportation facilities.” Impact fees are levied only for County-funded roads, excluding for example I-75, on which Sarasota 2050 developments will have a huge impact. The Comprehensive Plan requires that Sarasota 2050 developers pay the County for those impacts, which the County then would contribute towards needed improvements of those state and federal roads.

Although AECOM states that if a developer is required to pay a proportionate share of the cost of any specific road improvement, that will be added to its fiscal neutrality payment. However, in its pending “Mobility Plan”, the Sarasota County Commission has proposed to repeal the current requirement for a developer to identify and pay for such costs, known as concurrency. Also, although that requirement was also contained in the state law for a Development of Regional Impact (which Sarasota 2050 Villages are generally big enough to fall under), that law was repealed by the 2015 Florida Legislature. So that proportionate share requirement will soon be meaningless.

Although the Sarasota County Comprehensive Plan explicitly requires that each fiscal neutrality analysis conduct an inventory of the facility improvements required for each Sarasota 2050 development, AECOM in its initial report dismissed that legally binding requirement as not “feasible” due to the time and cost of that study by the developer.

AECOM also violates the Comprehensive Plan by excluding public hospitals and transit as expenses for which the developer must pay its share, in AECOM’s latest draft of its Fiscal Neutrality Guide. Although AECOM begrudingly revised its Analysis to acknowledge that hospital and transit impacts are required (after its omission of those expenses in its initial draft was criticized) it continues to omit them in the AECOM Fiscal Neutrality Guide itself. Even in the revised analysis, AECOM states that only a “marginal” consideration of hospitals and transit should be provided, after interviews with hospital and transit staff, not based on a professional study of the development’s impacts on hospital and transit needs, as required by the Comprehensive Plan and County Code.

AECOM also violates the Comprehensive Plan by omitting water supply and delivery, sewage transmission and treatment, solid waste and storm and surface water management from fiscal neutrality analysis, again on the basis that there are impact fees for such facilities and that they are funded by utility rates. What this disregards is that taxes and utility rates are also used for those purposes. Fiscal neutrality requires that the applicant demonstrate that taxpayers and ratepayers will not have to pay for facility improvements required to serve the Sarasota 2050 development.

AECOM allows a developer to overestimate income by assuming tax revenues in the year occupied, even though AECOM acknowledges that “there is typically a ‘lag’ of one year” after occupancy for taxes to begin to be assessed. This is typical of AECOM overstating revenues and understating expenses, to the benefit of the developer and the detriment of the taxpayers. Because of the one year lag, tax revenues should be counted beginning in the year following occupancy. AECOM offers as its only explanation for its recommendation that it is a matter of “simplicity”. Starting tax revenues in the year after occupancy is not only also simple, it is by contrast accurate.

AECOM allows a developer to assume revenue from commercial development based on the gas tax and telecommunications tax paid by the employees. While there is some basis to allow a count of some portion of an employee’ gas tax, it overstates revenue to allow all of that gas tax because only part of the employee’s driving is to and from work. And there is no basis whatsoever for counting the telecommunication (phone and Internet bill) tax paid by the employees.

This gutting of fiscal neutrality, if approved by the County Commission, is a betrayal to the taxpayers as and a threat to the adequacy of public facilities. It well serves the big developers who are so influential in recruiting and bankrolling County Commission candidates but it ill serves those who our public servants are supposed to be elected to serve.

-- Dan Lobeck

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