Legal Scoop on Southwest Florida Real Estate

Lee County has taken several steps over the last few weeks to streamline the development permitting process and improve the regulatory "climate" for new businesses and development.

Land Development Code Amendments

 On February 12, the Lee County Commission approved a series of amendments to the Land Development Code (LDC) that were recommended by the Horizon Council, the County's economic development and business advisory board. The changes include streamlining the "sufficiency review" process for projects undergoing rezoning, providing greater flexibility to the zoning director to administratively approve changes to approved projects that formerly required a public hearing for approval, and eliminating the 5-year lifespan for planned development master plans, making these plans valid in perpetuity. The amendments were approved unanimously by the County Commission, and received support from Lee County staff and the Conservancy of Southwest Florida.

Impact Fees

 At its Management & Planning meeting on March 4, the County Commission continued its recent discussions on suspending or adjusting impact fees charged on new development. As previously reported in this blog, the Commission initiated discussions earlier this year with consideration of a 2-year suspension of all impact fees in an effort to spur development and economic growth. During public input at a workshop and public hearing, issues arose regarding the effect of such a suspension on municipalities, the school district, the fire districts and the holders of impact fee "credits" that had been issued by the County for previous improvements and land donations. In light of these concerns, the Commission reviewed its options on March 4, and a majority of commissioners appeared to reach some consensus that a significant reduction of current fees, perhaps by as much as 80%, would ameliorate some of the concerns of a complete suspension and still have the desired effect on development. Fire and EMS impact fees would be exempt from this reduction. The Commissioners requested additional information prior to the next, and possibly final, public hearing on this matter scheduled for Tuesday, March 12 at 9:30 a.m. in Commission chambers.

Plan Amendment Cycles

 On March 5, the County Commission approved a change to its administrative code to remove the "once per year" cycle for amendments to the Lee County Comprehensive Plan. Plan amendment applications will now be reviewed and processed by Lee County throughout the year as they are submitted. Previously, plan amendment applications were processed only once per calendar year beginning on September 30, potentially causing delay for those projects that required a plan amendment and missed the September 30 filing deadline. This change follows statutory revisions enacted by the Florida Legislature in recent years to loosen the plan amendment process.

As always, we will continue to update you as developments in Lee County occur.

The News-Press recently reported that the City of Cape Coral and Lee County are proposing changes to their land use and development regulations in order to be more flexible in how property is developed and redeveloped.

In the City of Cape Coral, new land use and development regulations concerning South Cape Coral were unanimously passed by the City's planning and zoning committee in June. The new regulations are part of the 2030 Vision Plan and will remove obstacles, such as committee hearings and unpredictable requirements, to developers obtaining approval of their projects in hopes of saving months from the development and permitting timeline.

John Jacobsen, Executive Director of the Cape Coral Community Redevelopment Agency, stated there have been times when owners/developers have spent hundreds of thousands to millions of dollars on design and related fees, which could prove worthless if a committee rejects a developer at the last stage in the review process. The new regulations should eliminate unpredictable requirements and therefore, save developers time and money.

The Cape Coral City Council held a public hearing on the new regulations on August 20, 2012. A final public hearing is scheduled for September 10, 2012, when the Council will vote on the new regulations.

In Lee County, the Lee County Department of Community Development has been working on revisions to parking requirements for new developments in order to provide more flexibility to developers. The News-Press reported that Lisa Sands, advisor for Fort Myers-based VIP Realty-Commercial, stated "I'm pleased with the county working with the commercial real estate community and recognizing the need to change with the times." The proposed changes will not only save developers money and provide them with more flexibility, but will also benefit the environment by decreasing the amount of impervious pavement required and therefore allow more water to seep into the ground.

A public hearing to approve the changes will be held on September 11 by the Lee County Board of Commissioners.

In our representation of developers and owners with development applications and due diligence matters, we have encountered situations where parking and development regulations have prevented the developer from pursuing the desired use of the property. I am hopeful the changes will facilitate more development in Cape Coral and Lee County, as development is needed for this area to continue to recover from the real estate downturn.

Our firm is available to assist property owners and developers with development and  due diligence matters, including development applications and permitting approvals.

During the latest law-making session, Florida's legislators authorized a means for landowners to seek extensions for certain state-regulated development permits, citing the struggling real estate market and likelihood that many permits may expire before market conditions improve. The Lee County Board of County Commissioners has taken note, and has a similar authorization for four-year local development approval extensions on its Tuesday, October 11 agenda.

The proposed resolution authorizes Department of Community Development Director Mary Gibbs to process requests to grant four-year extensions to expiration dates of:

• Development Orders
• Zoning Master Concept Plans, and
• Concurrency Certificates

The approvals must have been issued between January 2, 2006 and August 9, 2011, and the holder of a valid permit that is eligible for the extension must notify the county in writing no later than February 29, 2012, identifying "the specific authorization(s) for which the holder intends to use the extension and the anticipated timeframe for acting on the authorization."

If extended, the permits will be subject to the local development rules in effect at the time the county issued the permit, unless it can be demonstrated that those rules would create an immediate threat to public safety or health. Additionally, if a code violation exists on a property whose owner is seeking an extension under this provision, the violation must be abated prior to an extension approval.

Charles J. Basinait of Henderson Franklin's Land Use and Environmental Law Division spearheaded this effort to seek consideration of these extension provisions. We are pleased to have been a part of this effort that will benefit many of our clients and other permit holders within the county.

On a final note, not all permits may be extended and other factors such as comprehensive plan, land development code and statutory changes may affect these approvals. A time extension may not be enough to preserve a project's entitled development rights. Therefore, in addition to seeking time extensions, a comprehensive review of all project permits may be warranted to ensure that these entitlements are protected.

You may recall from my April 28th blog post that a recent study recommended an average 27% reduction in road impact fees imposed by Lee County. On Tuesday, June 14, in a 4-0 vote by County Commissioners (with Commissioner Hall being absent), the study's recommendations were adopted.

This is great news for the development community and may make an otherwise un-doable project now desirable once again. You can review and download a copy of the proposed ordinance with specific fee information here.

In light of the significant reduction in property values and construction costs across Lee County, a recent study conducted by Duncan Associates (a consulting firm based out of Texas) concluded that the Board of County Commissioners should consider similarly significant reductions in its road impact fees.

Road impact fees are generally assessed on new construction projects to mitigate the growth impacts associated with that development. Most notably, if your project is going to result in an increase in the usage of existing roads, or require that new roads be built, the idea is that the new project should pay for that impact. This "pay as you grow" fee is common across Florida, but the actual amount imposed for the fee varies greatly by jurisdiction. Typically, this impact fee is based upon such things as the construction costs in widening or creating roadways, or the purchase price for acquiring right-of-way if needed to improve the road. Since the costs of both have dropped, it naturally follows that this fee should drop as well.

On average, Duncan Associates is proposing a 27% reduction in the county's road impact fees. In addition to this reduction, the study also proposes to roll medical office into general office use. Traditionally, medical office uses have borne a higher road impact fee, so this would even further reduce development costs for potential medical uses, if adopted.

Specific proposed fee changes include:

• Single family detached: Drop 25% from $8,976 to $6,701
• Hotel/Motel: Drop 25% from $5,172 to $3,861
• Shopping Center/General Retail: Drop 28% from $10,983 to $7,933
• Banks: Drop 32% from $25,134 to $17,187
• Office: Drop 27% from $7,305 to $5,355

These proposals will be reviewed by various Advisory Committees before going before the Board of County Commissioners in June. You can obtain a complete copy of the 2011 Road Impact Fee Update here and find a listing of the Advisory Committee meetings here.

I was trading e-mails the other day with a general contractor friend of mine, Mark Stevens of Stevens Construction, Inc., and he took the words right out of my mouth: 

I wish these prospective buyers would do some more due diligence before buying these 'bargain' existing buildings."

We had been discussing new projects, and I was explaining to him that my zoning and land use law caseload has transitioned from focusing on new development and obtaining development entitlements to assisting owners (sometimes involuntary bank-owners) with code violations or development permit-related problems with their property. As a contractor who does a large amount of medical office construction, Mark was lamenting that he is seeing more buyers jumping on fantastic real estate bargains and purchasing existing distressed commercial and office buildings without diligently investigating whether the building may be used for the desired purpose. 

Buyers often think that because an existing building was previously used for medical offices or some other use, they may buy and remodel it for that same use. Unfortunately, they sometimes find out much too late that the previous use was a "grandfathered" or nonconforming use, and the new and improved use the buyer desires to put in is no longer allowed or is severely restricted due to a lack of parking or on-site open space. Sometimes the local codes have changed and require more square footage for a certain use or prohibit the use entirely. Often a solution might be to seek a variance and reduce the required number of parking spaces or seek a development approval to add more spaces, but it can be tough to convince the local government to approve this remedy when the buyer essentially created the very hardship he is seeking relief from. 

In the height of the real estate boom, I often assisted clients by providing a due diligence analysis regarding the existing entitlements or development potential, and they were happy to have me do it because it added value to projects, or provided a red flag to abandon the deal. As the market peaked and then careened over a cliff, due diligence investigation has sometimes been overlooked or relegated to those who may not be aware of the latest changes to a local government's land development code or comprehensive plan. Even worse, sometimes there is no actual change in the wording of a code, and it is the interpretation of the code that changes. Skipping a proper due diligence investigation is a huge risk for a buyer, and while it may add a few thousand dollars to a project's bottom line, denial of the desired use or a lengthy variance or special exception approval process can kill a project altogether.