Item No: 5D.

Meeting Date: May 14May 29, 2012

From: Jay M. Evans, City Manager

Subject: Ordinance extending for an additional year the waiver on the collection of municipal impact fees up to $100,000 per project for all projects within Leesburg’s city limits     

Staff Recommendation:

Staff recommends approval of the ordinance extending the one year waiver on the collection of municipal impact fees up to $100,000 per project for all projects within Leesburg’s city limits.

Analysis:

On April 26, 2010, the City Commission waived impact fees for a one year period up to a maximum amount of $100,000 per project. The waiver was extended for a second year on May 23, 2011. This ordinance would extend the waiver for a third year.

Impact fees are a necessary and vital instrument employed by cities to mitigate the financial impact of new development on city resources.  The absence of impact fees means that all current residents (and in the case of utility impact fees, all current customers) of the city subsidize growth through increases in their rates.  Leesburg’s impact fees are designed to make growth pay for itself, or at least with regard to their impact on water, wastewater, police, fire, and parks and recreation resources.

With the advent of the economic recession, the City experienced a considerable decline in business activity, including a profound number of business closures and a halt in new construction.  It is believed that these extreme conditions merit extreme measures in an effort to stimulate the City’s economy.  This ordinance would waive the impact fees up to $100,000 for all projects within city limits for another year.  The reason for limiting the waiver to projects within the Leesburg city limits is so that economic development is directed toward the city, and not toward the unincorporated county.

It is important to note there are consequences to impact fee waivers.  The obvious impact is that funds are not available to construct additional facilities (ie: Fountain Lake Trail or Canal Street Wastewater plant expansion).  However, the utilities also use a portion of impact fees collected to off-set debt service for capacity improvements that have already been constructed.  Without any impact fees, the entirety of the debt service must be shouldered by our ratepayers, possibly accelerating future rate increases. 

Options:

1.  Approve the ordinance establishing the one year impact fee waiver; or

2.  Such alternative action as the Commission may deem appropriate

Fiscal Impact: 

Fiscal impact is unknown, due to the uncertainty of the economy and other influences on new construction decision making.  If the City does not waive the fees and nothing gets built, there is no impact.  If the City does waive the fees and construction is stimulated that would have not otherwise moved forward, then ad valorem taxes will benefit in future years.  The cost to this latter scenario is that the City will have contributed up to $100,000 worth of available capacity to each project.

Submission Date and Time:    5/10/2010 5:05 PM____

Department: ________________________ Prepared by:_ _____________                      Attachments:         Yes____   No ______ Advertised:   ____Not Required Dates:   _____________________                      Attorney Review :       Yes___  No ____ _________________________________            Revised 6/10/04

Reviewed by: Dept. Head ________ Finance  Dept. __________________                                  Deputy C.M. __                                          Submitted by: City Manager ___________________

Account No. __________________ Project No. ___________________ WF No. ______________________ Budget  ______________________ Available _____________________

ORDINANCE NO.

AN ORDINANCE OF THE CITY OF LEESBURG, FLORIDA, EXTENDING A PREVIOUSLY ADOPTED WAIVER ON COLLECTION OF CITY IMPACT FEES FROM MAY 10, 2012 TO MAY 10, 2013 UP TO A SPECIFIED AMOUNT PER PROJECT, SETTING FORTH LEGISLATIVE FINDINGS, SUSPENDING COLLECTION OF WATER, WASTEWATER, AND MUNICIPAL SERVICES IMPACT FEES FOR THE SAME PERIOD TO A MAXIMUM AMOUNT, LIMITING THE WAIVER OF IMPACT FEES UNDER THIS ORDINANCE TO PROJECTS CONSTRUCTED WITHIN THE MUNICIPAL LIMITS OF THE CITY OF LEESBURG, PLACING A MAXIMUM AMOUNT ON THE IMPACT FEES WHICH ARE WAIVED UNDER THIS ORDINANCE, PROVIDING FOR REINSTATEMENT OF IMPACT FEES AFTER MAY 10, 2012, REQUIRING PAYMENT OF IMPACT FEES SUSPENDED BY THIS ORDINANCE IF A CERTIFICATE OF OCCUPANCY FOR THE PROJECT IS NOT ISSUED WITHIN EIGHTEEN MONTHS OF ISSUANCE OF A BUILDING PERMIT FOR THE PROJECT, PROVIDING A SAVINGS CLAUSE, AND PROVIDING AN EFFECTIVE DATE.

            WHEREAS, on May 10, 2010 the City Commission adopted Ordinance 10-42, waiving impact fees for a period of one year in order to stimulate economic development within City limits; and

WHEREAS, the economic conditions precipitating the adoption of the impact fee waiver have not abated in the year since adoption; and

WHEREAS, the City of Leesburg had previously been collecting impact fees on all new residential, commercial and industrial development within its boundaries, for water, wastewater, and municipal services – including police services, fire and rescue services, and recreation services, and

WHEREAS, impact fees are a vital part of the City’s efforts to plan and pay for municipal services required by new development, and have been utilized successfully for those purposes, and

WHEREAS, beginning in 2008 the City of Leesburg, along with the rest of the United States of America, experienced a serious economic downturn which has resulted in numerous deleterious consequences including the closing of businesses, a precipitous decline in all categories of construction, severely high unemployment, and a crippling decline in ad valorem tax revenues, which has not yet abated, and

WHEREAS, the City Commission wishes to further attract commercial, industrial and residential development to the City of Leesburg, and to encourage economic growth in the area, as well as to add value to the ad valorem tax rolls within the City in order to increase the revenue available for the provision of ongoing municipal services, and

WHEREAS, the City Commission has determined that during this economic downturn the cost of impact fees is a deterrent to new construction and development, and

WHEREAS, the City Commission believes a further temporary suspension of impact fees will encourage new construction and development within the City and assist in overall economic development efforts,

NOW THEREFORE, BE IT ENACTED BY THE PEOPLE OF THE CITY OF LEESBURG, FLORIDA:

SECTION I.

For the period of May 10, 2012 to May 10, 2013, the City of Leesburg waives collection of any impact fees imposed under its Code of Ordinances, including but not limited to the Water System Capacity Impact Fee under §22 – 324, the Wastewater System Capacity Impact Fee under §22 – 325, and the Municipal Services Impact fees for police services, fire and rescue services, and recreation services, under §§7 – 251 and 7 – 252, up to the maximum amount specified in Section II below.  This waiver shall apply only to projects constructed within City limits of the City of Leesburg.

SECTION II.

In no case shall the total impact fees waived under this Ordinance for any single project exceed $100,000.00. If the total impact fees due on a single project are in excess of $100,000.00 then the developer of the project shall be required to pay the amount of impact fees which exceeds $100,000.00 and the amount paid will be allocated among the Water, Wastewater and Municipal Services impact fee categories, ratably according to the percentage of the total impact fees which would have been paid on the project but for the suspension created by this Ordinance. For the purposes of this Section II the term “project” shall mean: (i) any commercial or industrial building or group of commercial or industrial buildings on the same parcel of real property or on contiguous parcels of real property under common ownership or owned by more than one entity when the two or more entity owners have common equity owners; or (ii) any residential development on a single parcel of real property or within a single platted subdivision, or within multiple, contiguous parcels of real property or multiple subdivisions under common ownership or owned by more than one entity when the two or more entity owners have common equity owners.

SECTION III.

To take advantage of the waiver of impact fees created by this Ordinance, construction must substantially commence on the development or project for which a permit was obtained, within 90 days from the date the permit is issued, and be prosecuted diligently to completion, with substantial completion to be no more than eighteen months after issuance of the building permit. If the project is not issued a certificate of occupancy within eighteen months after issuance of the building permit, the developer shall be required to remit the impact fees in full as a condition of issuance of the certificate of occupancy. For projects requiring multiple certificates of occupancy, if the entire project is not completed within eighteen months of permit issuance, certificates of occupancy for those portions completed within the eighteen months shall be valid but no further certificates of occupancy will be issued after expiration of the eighteen months until all impact fees attributable to the remaining portions of the project are paid in full.

SECTION IV.

On May 10, 2013, this Ordinance shall expire and the impact fees payable in accordance with the City Code shall once again be due and collectible on all developments and projects to which they apply by law.

SECTION V.

If any portion of this Ordinance is declared invalid or unenforceable, and to the extent that it is possible to do so without destroying the overall intent and effect of this Ordinance, the portion deemed invalid or unenforceable shall be severed herefrom and the remainder of the ordinance shall continue in full force and effect as if it were enacted without including the portion found to be invalid or unenforceable.

SECTION VI.

This Ordinance shall become effective upon its passage and adoption according to law, and shall remain in effect for one year after it is adopted on second reading.

PASSED AND ADOPTED at the regular meeting of the City Commission of the City of Leesburg, Florida, held on the  day of May, 2012.

                                                                                    THE CITY OF LEESBURG, FLORIDA

                                                                                    BY:

                                                                                                MAYOR

Attest:

            CITY CLERK