County Commission authorizes first steps in TDR pilot program

Board splits over funding for land management

The Sarasota County Commission sits in session in Sarasota. Photo by Norman Schimmel

Given the continuing fluctuations in the housing market, the Sarasota County commissioners agreed July 11 that it was too soon to put a price on any transfer of development rights from lands the county owns.

Nonetheless, they also agreed unanimously to authorize staff to develop a pilot program for the potential sale of publicly owned TDRs and to bring that back as soon as possible for their review.

With a potential 10,000 TDR units that could be developed, commissioners said they wanted to get a program under way shortly. Commissioner Joe Barbetta pointed out, “In reality, we’ve been about this for six or seven or eight years.”

Moreover, by his calculations, with a 5% cost for a TDR, the county’s property could bring in about $50 million, he said.

If the board calculated 5% of a $200,000 sales price for a home, as a consultant had suggested, the actual estimate would be about $100 million, Commissioner Nora Patterson said.

Barbetta also requested staff check out the best practices of pricing TDRs in programs throughout the United States and report back on their findings.

“I’ll support that,” Patterson said.

Chairwoman Christine Robinson asked Tom Polk, general manager of planning services, to include in that report information staff already had obtained about pricing.

Patterson clarified that to include successful TDR programs.

The TDR policy applies to the county’s 2050 Plan, which involves development east of Interstate 75. It would allow developers to increase density on parcels by paying a percentage of the cost of the extra dwelling units. The revenue would be used to preserve more environmentally sensitive lands in the county.

However, the commissioners disagreed over how much of the proceeds from the TDR sales should be allocated to land management expenses associated with the county’s Environmentally Sensitive Lands Program.

Both staff and the county’s Environmentally Sensitive Lands Oversight Committee had recommended that the proposed policy change in the county’s Comprehensive Plan allow for no more than 10% of the revenue to be used for management purposes.

On a 3-2 vote, the board approved a motion without a figure.

Cost of management

Commissioner Jon Thaxton initially made a motion to include 10% of the proceeds as the maximum, with Patterson seconding the motion.

“I think it’s reasonable and consistent with policy,” he said.

“I agree,” Patterson responded.

However, Robinson voiced concerns about whether the county budget could support that figure. “We don’t have enough money now,” she said, to handle maintenance of all the county’s environmentally sensitive lands.

When Patterson said she did not believe approval of the motion with the figure would preclude changing the policy later, County Attorney Stephen DeMarsh said the change would be binding.

Then Patterson suggested an amendment specify no more than 10% or the actual cost of maintaining conservation easements on the land in question.

Amy Meese, the county’s manager of natural resources, clarified that staff simply was seeking the amendment to the 2050 Plan section of the Comprehensive Plan to make the 2050 Plan consistent with the county’s zoning code. All staff wanted, Meese said, was a provision to allowing for some funds to be used for land maintenance.

“You don’t need to establish a percentage in the conservation plan,” she added.

At that point, Patterson made a motion to remove the 10% figure from Thaxton’s motion and insert in its place “a portion of sales revenue may be used” for maintenance.

Commissioner Carolyn Mason seconded that amendment.

“In the end,” Patterson said, “we may settle on 10%,” but the commission needed more information first.

Thaxton protested, saying, “I just don’t think we should be leaving the door wide open … to having excessive amounts of the money that was supposed to be used to preserve environmentally sensitive land to be used for management.”

Patterson countered that because the TDR policy would enable the county to purchase a lot more environmentally sensitive lands, the county would be expected to maintain a higher standard of upkeep on that new property.

“I don’t think it’s a higher standard,” Thaxton said.

Barbetta concurred with Thaxton in being unable to support the amendment.

The amendment passed, with Thaxton and Barbetta opposing it.

When Robinson asked for a vote on the motion as amended, that result also was 3-2; Thaxton and Barbetta once again were in the minority.

Debating the price

Regarding the pricing of the TDRs, Polk referenced a report prepared for the county by Hettema Saba Commercial Real Estate Valuation Advisory Services, which was presented to the board in May. The consultant who prepared the report, Roger L. Hettema, had suggested the county price a TDR at 5% of the sale price of the dwelling unit built through use of the TDR.

“We need to come up with a method of evaluation that everybody’s comfortable with,” Barbetta said. “I don’t think we can guess at the valuation of the finished product. That’s why people are having consternation about [the pricing methodology].”

John Herrli, the county’s land acquisition manager, told Barbetta, “Everyone’s got an opinion about how [the appraisals] should be done.”

By asking for the TDR payment in two steps, as proposed, Herrli said, the county ultimately would reap more revenue if the dwelling sold for more money than the developer had expected at the outset of the TDR transaction.

Barbetta said he felt the county needed to get all of the revenue at the outset of the deal.

“It’s a really, really difficult thing to figure out how to do,” Patterson said.

During its June 7 meeting, an initial ESLOC motion on the pricing recommended a TDR represent 7.5% to 12% of the sale price of the dwelling unit, with the majority of the payment made at the outset of the deal and a minor “true-up” payment following at the time of the actual sale, according to a staff memo. That motion failed.

Subsequently, the memo said, the ESLOC recommended the County Commission approve the use of two additional appraisals for the dwelling unit when it was ready for sale.

Patterson expressed reservations about the latter approach, saying she wasn’t sure she wanted to wait years “to know what price I’m going to get.”

However, she agreed “the concerns of the ESLOC … are valid.”

Thaxton voiced concern about the county’s becoming a competitor in the real estate market. “My preference all along was that the market was going to set the price.”

Polk reminded the commissioners that no TDR would be sold without their approval.