The County Commission splits over how to proceed on two offers involving developments east of Interstate 75
It took two split votes and one unanimous decision on Sept. 8, but the Sarasota County Commission finally agreed to the pricing of its first sets of Transfer of Development Rights (TDRs) under the county’s 2050 plan.
After about 75 minutes of discussion, the board voted to allow the sale of 89 TDRs to CWES IX LLC at a price of $4,462.50 each, based on a commission decision in 2013, with the deal to be concluded within two years of the board’s approval of the final plat of the firm’s Hidden Creek development east of Interstate 75. The vote was 3-2, with Vice Chairman Al Maio and Commissioners Paul Caragiulo and Charles Hines in the majority and Chairwoman Carolyn Mason and Commissioner Christine Robinson in opposition.
A second vote to sell a total of 376 TDRs to Lindvest Fruitville LTD, with the first 100 at $4,462.50 each and the remainder at $8,925 each in the second year after final plat approval for its proposed development, Fruitville Road Properties — also east of I-75 — failed on a 2-3 vote. Hines joined Mason and Robinson in the majority. That motion also called for the price to escalate by 2.5 percent each year for the third, fourth and fifth years of a five-year deal.
A revised motion by Robinson won unanimous approval. It called for the county to sell Lindvest the first 100 TDRs for $4,462 each, with the purchase to take place within the first year after the final plat approval. Further, the additional 276 TDRs would start at $17,850 each, with a 3-percent price escalation for each subsequent year of a five-year agreement.
“I’m not trying to punish anybody,” Robinson told her colleagues, “but I’m trying to protect the interests of the county.”
During his Sept. 8 presentation, Allen Parsons, manager of the county’s Planning Division, explained that a TDR is “the right to construct a single housing unit. It is the critical component of Sarasota 2050. It is the mechanism in 2050 for how you build up density in ‘Village’ developments. The intent behind it is to incentivize the protection of open space.”
Parsons added that TDRs can be taken from habitat or open space on the site of a project, or a developer can purchase the rights off-site. Estimates have determined that the county may have up to 19,000 TDRs, he said.
Lands eligible to be designated as “sending sites” for publicly owned TDRs are those acquired by the county after July 7, 2002, Parsons pointed out to the County Commission on Sept. 8. Sending sites are those areas that will not be developed.
Parsons also noted that all revenue from the sale of the publicly owned TDRs would be allocated to the county’s Environmentally Sensitive Lands Protection Program.
The goal, county staff has explained, is to protect open space while encouraging urban infill.
During public comments at the opening of the County Commission’s afternoon session on Sept. 8, former county Planning Commission member Roland Piccone referenced public misunderstanding of TDRs. While some people have voiced concern that the mechanism will lead to the degradation of the county’s environmentally sensitive lands, he said, TDRs will enable those lands to remain “pristine and undisturbed for perpetuity.”
CWES IX plans for Hidden Creek to comprise 178 dwelling units on about 43.19 acres in the design of a “Village” under Sarasota 2050 provisions. The property is located north of Fruitville Road and east of Deer Run Drive.
Lindvest has filed a rezoning petition to develop 900 dwelling units in a 2050 Village on approximately 253.5 acres north of Fruitville Road and west of Dog Kennel/Lorraine Road, Parsons pointed out in a memo to the County Commission. The project was referred to in documentation as Fruitville Road Properties.
Parsons explained on Sept. 8 that county staff members had worked over the past two years to determine how to value the county’s TDRs. Finally, he said, they settled on a method used by Palm Beach County, which sets the price at 10 percent of the median cost of a house sold in the month with the highest recorded sales in a given year.
That month for county purposes was June 2012, he added, when the median was $178,500. In 2015, the median was $230,000. Staff recommended using the 2012 price, Parsons said, as past County Commission discussions had called for creating incentives to developers to build projects under the 2050 regulations.
Staff also suggested that the price of a TDR rise to $17,850 in the 10th year of a purchase agreement with a developer, Parsons continued.
In July 2013, Parsons reminded the commissioners, the county board agreed to price the first 100 TDRs at $4,462.50 each as another incentive for a 2050 Village development.
Because the CWES IX and Lindvest proposals came in so close together, he continued, staff recommended the low price for the first 100 TDRs purchased by each.
A private landowner named Jim Gabbert, who is considering offering TDRs, met with county staff and followed up with a letter saying he felt he would seek $8,000 to $10,000 per unit, Parsons told the commissioners. In his letter, Gabbert called that price “more in keeping with what I see their potential value to be in the open market.”
Gabbert added, “My experience in residential development in Sarasota leads me to believe that it is even difficult to find raw units being sold for $8,000-$10,000 per unit in our County, so I believe the value I have placed on [my] TDR units is relatively conservative.”
The two offers
Parsons explained in another memo that on Aug. 6, CWES IX submitted to the county its proposal to purchase up to 89 TDRs from the county TDR Bank, which has 642 TDRs for sale. The total price would be $397,162.50, with the TDRs to be bought in two transactions.
Lindvest submitted its proposal to the county on Aug. 8, Parsons wrote in yet another memo to the board. It proposed to complete its purchases of the 376 TDRs over a 10-year period for a total price of $1,677,900.
During public comments on Sept. 8 — which the board allowed even though it was not holding a public hearing — Alex Hofstedter of Lindvest agreed to increase the firm’s offer to $8,925 for each TDR it purchased after the initial 100, adding that the firm would make a decision within five years instead of 10 on whether to purchase all 376 TDRs.
In the wake of the board vote on Lindvest’s offer, Dan Bailey, a Sarasota attorney representing the firm, told The Sarasota News Leader in a Sept. 9 telephone interview that he hoped to confer with his clients later that day; they had had to return to Toronto right after the board meeting. “We just don’t know what direction we can go at this point,” Bailey added, though he and his clients would try to arrive at a solution.
Both the CWES IX and Lindvest proposals are to come back to the County Commission on Sept. 22, Parsons pointed out on Sept. 8.
Weighing the options
In considering the low pricing for the first two offers, Commissioner Maio said, “My intent was not to extend this to everybody, [but] just to get us going.”
He added, “If everybody tees up at $4,462.50, we’re taking the legs out from under the private sector completely.”
Referring to CWES IX and Lindvest, he said later, “I am uncomfortable on their behalf that they’re entering the final leg of their process not knowing whether they’re actually going to get a price that they can handle.”
Chairwoman Mason, Commissioner Caragiulo and County Administrator Tom Harmer all voiced discomfort at what Harmer referred to as “negotiating from the dais with individual applicants.”
Commissioner Hines said he did not want to see either firm given more than five years to finalize a deal with the county. At the end of that period, he added, they could withdraw from their agreements without penalty if they could purchase TDRs through the private sector.
Maio made the motion to approve the sale of the TDRs to CWES IX for $4,462.50 each, with the caveat that the deal be concluded within two years after approval of the final plat. Caragiulo seconded the motion, which passed 3-2.
On the next motion, for the Lindvest deal, Caragiulo directed the county administrator to allow the first 100 TDRs to be purchased at $4,462.50 each in the initial year after the approval of the final plat, with the remainder priced at $8,925 each in the second year. If transactions were not concluded in that second year, he said, the price should escalate in the third, fourth and fifth years according to figures prepared by staff. (Parsons provided a chart showing an escalation of 2.5 percent per year from the second through 10th years of an agreement, starting at $13,833.75.)
That vote failed 2-3.
In response to a question from Hines, County Attorney Stephen DeMarsh told the board, “You’re not forced to have a contract. It may not be convenient for the party, but that’s the nature of a negotiated transaction and a contract.”
Hines then said he was fine with Caragiulo’s terms except for the price.
“I’m not happy with the price,” Mason added, except for the initial 100.
Robinson concurred. Unless Lindvest wants to purchase the TDRs right away, Robinson added, “I’m present market value … and escalators after that” following the sale of the initial 100 TDRs.
Robinson then made the motion to sell the first 100 TDRs to Lindvest for $4,462.50 each within the first year after the plat is approved. Any additional county TDRs would be sold to Lindvest at a starting price of $17,850, with a 3-percent price escalation each year up to the fifth year of the agreement. No penalty would be imposed on Lindvest if it opted out of the deal before the end of the five-year period.
Mason seconded the motion.
“If the goal is to protect greenway areas on lands other than county lands,” Hines said, “this is the only way to do it.”
“I’m still uncomfortable,” Maio told his colleagues. “I think we all want to protect the county and its money, and I like the idea of the county selling some of these [TDRs] because [the money] goes back to [the county’s Environmentally Sensitive Lands Protection Program] … I’m just uncomfortable with the $17,850.”
In spite of those comments, Maio joined his colleagues in approving the motion.