Pat Neal and county’s impact fee administrator explain how such districts pay for new roads and utility lines
Item No. 28 on the Sarasota County Commission’s Nov. 5 Consent Agenda of routine business items called for the setting of a public hearing on a topic Commissioner Nancy Detert felt needed some public illumination.
As a result, not only the county’s impact fee administrator but also former state Sen. Pat Neal, president and CEO of Neal Communities, took a turn at the podium for that bit of education.
After all that discussion, the commissioners unanimously approved a Dec. 11 public hearing on the proposal that prompted the discussion.
After asking that Item 28 be pulled from the Consent Agenda, before the balance of the latter was approved, Detert explained, “I am not objecting to [this] at all.” Instead, she said, she saw its exclusion on the agenda as an opportunity for staff to explain what Community Development District (CDD) fees are.
She had received questions from three constituents the previous week, she continued, adding that people do not understand the difference between those fees and county property taxes.
“Ah, I see I’ve upset Pat Neal,” she pointed out with a laugh as she looked out at the audience.
The staff memo provided to the board in advance of the Nov. 5 meeting called for authorization for a public hearing on “establishing the Lakes of Sarasota Community Development District, for property located east of [Interstate] 75, between Telegraph Road and Ibis Street [in] Sarasota.”
In July 2018, Neal Communities won commission approval of its plans for a 1,097-home community called Grand Lakes east of I-75 and south of Clark Road. The proposal then survived two legal challenges.
The Nov. 5 memo noted that the property at the heart of the CDD hearing comprises approximately 533.3 acres.
Then the memo explained that Neal Communities of Southwest Florida LLC had requested that the County Commission adopt an ordinance to establish a CDD, which would designate the land area for which the district would “manage and finance basic infrastructure systems, facilities and services” for Grand Lakes, as allowed under Chapter 190 of the Florida Statutes.
If the commissioners authorized the public hearing, it would be conducted during the morning session of the board’s regular meeting on Dec. 11.
At Detert’s behest on Nov. 5, Tom Polk, the county’s impact fee administrator, stepped to the podium in the Commission Chambers at the R.L. Anderson Administration Center in Venice. Polk explained that a CDD has some governmental abilities and it can issue bonds to pay for infrastructure such as water and sewer lines and roads. “We have several examples of that in the county,” he added of such districts.
Under the terms of a CDD, Polk continued, the residents have the responsibility of paying off the bonds.
A question with which staff has become familiar — after the Tax Collector’s Office issues the annual tax bills, Polk pointed out — is why a homeowner has to make two separate payments. One is for property taxes; the second, for the CDD. “They think there’s an association with the county to the CDD,” Polk added. “That’s … where a large amount of the confusion is taking place.”
Polk said that it is his understanding that developers have to disclose the existence of a CDD to anyone buying a home in a new community that is governed by a CDD. Yet, he conceded, “When you’re signing a lot of documents, that [CDD agreement] may get missed in the conversation.”
Deputy County Attorney Karl A. Senkow also explained that the law says that within 30 days of a local government board’s approval of an ordinance establishing a CDD, “The district is responsible for recording a notice of such an establishment in the public record.” That information should be “captured in the title” to a parcel in a CDD, Senkow added.
Years ago, Detert indicated her recollection that a developer would consider how much water and sewer lines and roads would cost for a new subdivision and then divide that expense among the homes, so buyers would pay for the infrastructure.
“That’s correct,” Polk responded.
“Are CDDs a different way of doing that?” Detert asked.
Polk indicated that that also was correct.
Park amenities also can be covered by CDD bonds, he added. “Each CDD is different.”
Polk also explained that even internal roads in a neighborhood are considered public roads. Thus, he said, though a community may be gated, a member of the people is entitled to access to the internal roads.
External roads that lead to a new development are constructed generally in coordination with a county or a municipality, Polk continued; such roads are public thoroughfares.
Does the expense of internal roads ever fall on the shoulders of the county, Detert asked.
“No,” Polk replied.
“I think this is a good opportunity to educate the public,” Chair Charles Hines pointed out, especially as the commission often hears comments that “new growth should pay for itself …”
Then Pat Neal took his turn at the podium.
Neal explained that his company builds about two-thirds of its homes in CDDs. “We’ll do about 1,100 homes this year, Sen. Detert,” he added, with about 750 in CDDs. (Since Neal and Detert both formerly served in the Florida Senate, they often use the honorific with each other.)
Typically, he continued, one or two people a year will call Neal Communities after getting their tax bills and ask, “What is this?!” referring to the CDD assessment. The real answer, Neal told the commissioners, is “‘You didn’t read the contract before you signed the line in three different places.’”
People interested in buying homes in Grand Palm — a Neal Communities development in Venice — “get a brochure that explains the Community Development District,” Neal said.
He also showed the board members a copy of a contract that, he noted, was on top of the pile of documents for a buyer of a Grand Palm home to sign the previous week. Neal pointed to the three places the person had to sign in regard to the CDD disclosure.
Yet another document had “a whole different set of disclosures,” he added. “If [the buyer] didn’t read any of these six disclosures, shame on them.”
“I think we’ve solved the disclosure problem as an industry,” Neal told the board.
One big benefit of a CDD to a homeowner, Neal continued, is that even if the economy takes a downturn, “You pretty much have to build things upfront,” referring to the infrastructure.
He also noted that the county’s regulations for Sarasota 2050 communities planned east of Interstate 75 call the CDD the preferred form of infrastructure development.
Both Hines and Detert thanked Neal for his explanation.
“I feel capitalism means you can charge whatever you want to charge as long as people understand what they’re getting into,” Detert added. “My thinking always is disclosure, disclosure, disclosure; if people understand, then they are less upset later on.”
She also told Neal that none of the three complaints she had received were directed at any of his developments.
“I’m glad you actually gave us a chance to do this presentation,” Neal responded.
Detert then made the motion to authorize the public hearing, and it passed 5-0.