Senate Bill 360: growth management reform arrives and it is all about infrastructure.

After a legislative session where most of the discussion about growth management focused on the inadequacy of state funding for infrastructure, the legislature enacted a bill (S.B. 360) that provides some additional funding, but falls far short of the total need. (1) As is customary, the bill was being amended and negotiated right up until the last minutes of the session. Most interested parties woke up on May 7, 2005, with no clear understanding of what actually was enacted. A 2006 glitch bill is likely, as has been the case with prior growth management bills enacted in Florida.

Infrastructure Funding

S.B. 360 provides $1.5 billion of new infrastructure funding for next year. Only $750 million is recurring revenue for what is generally estimated to be at least a $35 billion backlog in infrastructure investment statewide, due to opposition in the House of Representatives to further increases. (2) No dedicated source of future state funding is provided to address future infrastructure needs resulting from growth. Finally, the funding that is provided is primarily slated for state and regional roadway improvements; counties and municipalities are not given any direct funding for their infrastructure needs. Nor have they received any additional flexibility related to existing funding sources requiring a referendum, as had been considered earlier in the session. Three million dollars of recurring revenue is appropriated for the Department of Community Affairs (DCA) to provide technical assistance to local governments and school boards related to compliance with these statutory changes. (3)

Regulatory Changes

While the impact of S.B. 360 on infrastructure funding is relatively minor, its regulatory impact is significant for local governments. The most important changes relate to infrastructure funding and planning. Several changes affect the growth management act's concurrency requirement, which was intended to ensure that key public services and facilities were in place before, or no later than, the time that the impact of new development is experienced.

* Financial Feasibility

For the first time, S.B. 360 requires both the entire comprehensive plan and the capital improvements element (CIE) to be "financially feasible." (4) Relevant projects include committed items from the first three years of the adopted CIE, and committed or planned items from the fourth or fifth years of that element. All projects must be funded and, if a revenue source requiring a referendum is identified, alternative funding mechanisms must also be identified in the event the referendum is not successful. In addition, the element must contain improvements sufficient to maintain the adopted levels of service for public facilities and services in the comprehensive plan. (5)

S.B. 360 still requires an annual update of the CIE, but that update must now be accomplished by a comprehensive plan amendment which is not exempt from the twice-a-year time frame. Also, it will no longer be possible to change the date of construction of an improvement without a comprehensive plan amendment. As of December 2007, local governments will not be allowed to amend the future land use map until this CIE update is adopted. Therefore, from now on, the timing of each local government's comprehensive plan amendment cycle will be dictated by the timing of the update of the CIE. Also, the financial feasibility requirement opens up a new theory for comprehensive plan consistency challenges by third parties with new opportunities to challenge every year.

* Exemptions from State Review For several years, growth management laws have provided for voluntary visioning. (6) S.B. 360 encourages visioning and also encourages the designation of an urban service boundary (USB) on the future land use map, for areas that are appropriate for compact, contiguous urban development within 10 years. Development outside the USB line may not be prohibited, but S.B. 360 encourages the use of a full cost accounting model, such as the fiscal impact analysis model commissioned by DCA to determine whether such development is appropriate.

While neither of these provisions are mandates, it is likely that many local governments will choose to follow them. Under S.B. 360, if a local government has adopted a vision and a USB with the requisite public involvement, its plan amendments will no longer be subject to traditional DCA review. In contrast, under current growth management law, local governments have to complete an onerous qualification process and execute an agreement with DCA to become certified if they want to be exempt from traditional DCA review of plan amendments. (7) Future land use map amendments in designated urban infill and redevelopment areas are also exempted from traditional DCA review by S.B. 360, and may be handled through the small scale amendment process.

Under current growth management laws, many developments by definition are developments of regional impact (DRIs), (8) but are exempted from the DRI review procedures. S.B. 360 expands these statutory exemptions to include proposed developments: (a) which are located within an adopted USB, a designated urban infill and redevelopment area, or a rural land stewardship area; (b) where the local government has entered into a binding agreement with adjacent jurisdictions and the Florida Department of Transportation (FDOT) regarding the mitigation of impacts on state and regional transportation facilities; and (c) where the local government has adopted a proportionate share methodology.

* Concurrency

School concurrency was originally envisioned as part of Florida's growth management system, but was jettisoned in the political compromises necessary to adopt the 1985 Growth Management Act. In the years since, school overcrowding has become more and more of a problem for urban and high-growth counties. In the 1990s, Broward County sought to address the issue by adopting the first school concurrency program in Florida. Its 10-year effort to adopt public school concurrency was defeated in administrative challenges brought by the local and state organizations of builders and realtors.

In the mid- to late-90s, the legislature enacted a series of provisions that ultimately created a statutory option for school concurrency and an optional school facilities element. (9) Only Palm Beach County, however, was able to implement the option, which originally required that every local government in a county enter into an interlocal agreement establishing the requirement with the school board. (10) In urban counties with 30 or more local governments, this posed a substantial barrier to adoption.

In 2002, the legislature required the negotiation and adoption of school interlocal agreements among the county, school board, and most local governments. (11) Those local governments that did not host a public school or had minimal levels of development were exempted from the requirement to execute the agreement. The agreement addressed sharing of data and coordination of planning efforts between school boards and local governments. It allowed, but did not require, the school board to provide to local governments assessments of the impacts of proposed new residential development on school capacity.

S.B. 360 mandates school concurrency for the first time and is, thus, one of the most important changes enacted by the bill. However, it also provides that local governments must adopt proportionate share mitigation programs, which may involve dedication of land, construction of improvements, or payment of a fee. If the level of service is not being met by an improvement being either in place or under construction within three years after issuance of the plat or site plan, but the developer executes a legally binding commitment to provide its share of mitigation, then the local government may not deny approval based on school impacts. (12) The mitigation agreement may include a requirement for continuing renewals, and any mitigation must be credited against any school impact fee obligation at fair market value.

One issue is the scope of school board discretion over spending of mitigation payments. Some school boards already have mitigation policies, and have been reluctant to guarantee that mitigation money will be spent on the school being affected by the development. S.B. 360 requires that "any proportionate share mitigation must be directed ... toward a school capacity improvement ... which satisfies the demands created by that development in accordance with a binding developer's agreement." This language could be interpreted to require that the mitigation money be spent at the directly affected schools which "satisfy the demand created" by each development. Alternatively, it might be argued that any school that is in the same impact fee benefit district may be considered to "satisfy the demand created" by each development, because boundary changes within that district may be able to shift the new capacity to where it will benefit the development.

S.B. 360 builds on and modifies the existing statutory requirements for optional school facilities elements. For example, existing statutes encouraged the adoption of concurrency on a countywide basis. (13) If any student station was available anywhere in the county, no matter how far it might be from the development and its students, it would be considered available to meet the impacts of that development. S.B. 360 modifies that language to provide that school concurrency should be applied countywide for the first five years, but then should be applied on a less-than-countywide basis. This might be by school region, school feeder zone, or some other lesser area; the smaller the area, the more likely that capacity issues at one school could trigger an issue with concurrency resulting in either the denial of the development or the execution of a mitigation agreement.

The school interlocal agreement requirements in F.S. [section] 163.31777(2) were also revised. The exemption was narrowed, so that only those local governments issuing approvals for fewer than 50 units or generating less than 25 public school students over the preceding five years can qualify. (14)

If the school agreements and elements are not adopted and school concurrency is not implemented by December 1, 2008, then the local government will not be able to adopt plan amendments that increase residential density. (15) The amendment to adopt the school facilities element is exempt from the twice-a-year limitation.

Potable water has always been subject to concurrency review under F.S. [section] 163.3180(2). These facilities were required to be in place and available to serve new development no later than the issuance of the certificate of occupancy. This review has traditionally focused on the availability of water treatment and distribution facilities.

S.B. 360 requires, for the first time, that water supplies be shown to adequately serve new development no later than the issuance of the certificate of occupancy or its functional equivalent. The potable water subelement of the comprehensive plan must address water supply projects necessary to meet the projected need indicated in the water management district's regional water supply plan, and must include a 10-year work plan for building public, private, and regional water facilities. The bill encourages multi-jurisdictional water supply planning and development of alternative water sources.

By December 2006, all local governments must have adopted a methodology to assess proportionate share mitigation, which must be applied as a credit against any required impact fees or other exactions. Mitigation for state roadways requires the consent of FDOT. Importantly, S.B. 360 provides that a development shall be permitted to proceed upon payment of its proportionate share mitigation, even if the proceeds are inadequate to fully fund an improvement, as long as the monies are sufficient to pay for some improvement that the local government believes will significantly benefit the impacted roads. While this ensures that fewer developments will be stopped due to road impacts, it also creates a difficult situation for local governments in the event that they never amass enough proportionate share payments to complete the required improvements. The effect may be to obligate them to fund the remainder. Improvements funded by such mitigation must be incorporated into the CIE.

Early transportation concurrency resulted in perverse incentives to abandon downtown areas, where roads were congested and concurrency was difficult to achieve, in favor of suburban greenfield development in areas with under-utilized roadways. In response to this concern, the DCA adopted an anti-sprawl policy, (16) and the growth management laws were amended to provide for various exceptions from transportation concurrency for urban areas. (17) The earliest transportation concurrency exception areas (TCEAs), such as the ones covering the eastern halves of Miami-Dade and Broward counties, were quite large and had few constraints. Over time, DCA's process for approval of TCEAs became more demanding, due in part to concerns that they were being overused and adversely impacting the state road system.

S.B. 360 puts into statute much of what had been required of the more recent TCEAs; it also requires all existing TCEAs to meet these new requirements by July 2006 or the time of the next evaluation and appraisal report (EAR). It also requires that TCEAs, multimodal transportation districts, and transportation concurrency management areas be evaluated for impacts on state roadways, and that a plan be developed to mitigate these impacts. It further requires state reporting of development permitted under the de minimus provisions of transportation concurrency.

Under current growth management law, state transportation facilities must be in place or under actual construction no later than five years after the issuance of the certificate of occupancy. (18) Other transportation facilities are subject to a three-year requirement. S.B. 360 subjects all roads to the three-year requirement. (19)

In addition to applying the state's level of service to state and interstate roadways as is currently required, local governments must now apply levels of service established by FDOT to any road funded "in whole or in part" by the state. (20) The reference to "in part" greatly expands the list of roads affected by this provision. Levels of service for other roadways must be set in a manner compatible with adjacent jurisdictions, and all local governments must implement a concurrency management system. Finally, local governments are encouraged to use common methodologies for measuring impacts to roadways.

* Rural Area Planning

A few more requirements are added for designated rural land stewardship areas. (21) These areas must now adopt strategies to provide for mixed use development and affordable housing. The local government must also determine if listed species are present in the area and provide for their protection.

Finally, the local government must establish a methodology for the creation, conveyance, and use of land use credits, to be known as "stewardship credits," such that the long-term vision and goals for the area may be realized. Under current law, the methodology must give the largest number of credits to environmentally valuable lands. S.B. 360 provides that open spaces and agricultural lands must also generate the largest number of credits in areas where open space and agricultural land preservation are a priority.

* Other

S.B. 360 modifies the requirements for EARs in several ways to ensure that the changes described above are implemented into local comprehensive plans. It also requires that local governments timely adopt their EAR-based comprehensive plan amendments, or be prohibited from processing any other amendments to their comprehensive plans.

S.B. 360 creates three task forces: a permanent Century Commission for a Sustainable Florida, (22) a short-term Impact Fee Task Force, (23) and a short-term School Concurrency Task Force. (24) It also directs the Governor's Office of Program Policy Analysis and Governmental Accountability (OPPAGA) to study potential adjustments to the boundaries of the state's water management districts, Florida Department of Transportation districts, and regional planning councils.

S.B. 360 creates the Transportation Regional Incentive Program (TRIP) to provide funds for the improvement of regionally significant transportation facilities within regional transportation areas. (25) If the FDOT district meets the requisite criteria, the program provides a 50 percent match of project costs, or up to 50 percent of the nonfederal share of the eligible project cost for a public transportation facility project. These facilities must be consistent with the corridor management section of the applicable comprehensive plan and with the strategic intermodal system, and must appear in the applicable capital improvements element or long-term concurrency management system.

Also, regional transportation plans may be adopted by interlocal agreement among two or more metropolitan planning areas and in a few other circumstances. The agreement must specify such issues as the boundaries of the area, the coordinating entity, a process for development of a prioritized plan, dispute resolution, and a process for termination and amendment of the agreement. S.B. 360 provides that the affected local government sets the level of service and includes the planned facilities in its capital improvements element.

Conclusion

As a result of this year's session, the "to do" list for local government planners and attorneys just got longer and more complicated. Local governments have to:

* Develop financially feasible capital improvements elements by December 1, 2007.

* Incorporate water supply planning into the next version of the potable water element of the comprehensive plan.

* Adopt school concurrency in coordination with the school board and other affected local governments, including adoption of a revised public school facilities element and an update to the interlocal agreements between local governments and school boards, by December 1, 2008, according to a phased schedule to be developed by DCA, (26)

( Adopt a methodology for assessing proportionate fair-share mitigation options for transportation concurrency programs by December 1, 2006, after FDOT develops a rule on the subject.

* Update existing TCEAs and school facilities elements, and meet other changes in the EAR requirements at the time of the next EAR.

* Monitor reports of various new task forces that may lead to additional legislative initiatives, including the OPPAGA study of regional boundaries (January 15, 2006), the Century Commission for a Sustainable Florida (annually, beginning with January 16, 2007), the School Concurrency Task Force (December 1, 2005), and the Impact Fee Review Task Force (February 1, 2006).

* Watch the 2006 legislative session for a likely "glitch" bill and, perhaps, additional substantive changes to the growth management laws. Identify issues and suggest language for revising the bill.

The real world impact of these changes is yet to be determined, but it is clear the bill includes a number of protective measures that are likely to avoid any widespread moratoria. These measures also make it less likely that the implementation of these changes will lead to immediate or dramatic changes in the current, backlogged situation with public facilities and services statewide.

It remains to be seen how third party interests make use of their new-found ability to challenge the financial feasibility of capital improvements elements that will be updated every December, and how development may be able to proceed during the pendency of such litigation. Such litigation and increases in fees also have raised concerns about the impacts of S.B. 360 on affordable housing. Despite DCA recently placing a great deal of emphasis on issues of affordable housing, S.B. 360 does nothing to help and, arguably, much to hurt this issue.

A major gap in the school concurrency scheme is the failure to address improvements to, and the redevelopment of, existing schools, which are usually located in developed areas. Only those improvements that add capacity will qualify for mitigation and impact fee payments. The bill tightens the transportation concurrency exceptions, which were put in place to ensure that concurrency did not inadvertently cause suburban sprawl. Together, these aspects of S.B. 360 may stack the deck further against development in downtowns and urban infill areas, and encourage suburban sprawl. However, the provisions for exemption from full state review of comprehensive plans and from DRI review in urban areas provide some countervailing incentives for development in these areas.

(1) S.B. 360, 2005 Leg., 107 Sess. (Fla. 2005).

(2) The Senate's original proposal was for $4.5 billion of recurring revenue to be spent primarily in urban service areas and developed areas. A potential state bond program could further leverage these resources.

(3) An additional $3.35 million of nonrecurring revenue is also appropriated to DCA for technical assistance. While it is encouraging to see some money allocated for implementation of these legislative mandates, it is a fairly small amount in light of the fact that there are nearly 500 local governments in Florida, a large number of which do not have a staff planner. The governor vetoed a portion of this money related to the task forces.

(4) S.B. 360 at [section] 2, providing that financial feasibility shall be determined using professionally accepted methodologies.

(5) There appears to be an exemption from this requirement, where [subsection] 163.3180(12) and (16) are both in effect. Section 163.3180(12) is an existing statutory provision providing for proportionate share mitigation of transportation impacts in certain multi-use developments of regional impact (DRIs). Section 163.3180(16) is the new, generally applicable requirement for proportionate share mitigation of transportation impacts. There are likely to be few circumstances where both statutory sections apply, and the language seems a good candidate for the glitch bill.

(6) See FLA. SWAT. [section] 163.3167(11).

(7) See FLA. SWAT. [section] 163.3246.

(8) See FLA. SWAT. [section] 380.06.

(9) See FLA. SWAT. [section] 163.3180(13).

(10) Id. at (13)(g). It took over two years to obtain the consent of all the local governments in the county. Later, exemptions were provided for cities without schools or without growth.

(11) See FLA. SWAT. [subsection] 163.31777 and 163.3177(6)(h)4.

(12) Id. modifying FLA. SWAT. [section] 163.3180(13)(e). Subsection four specifically provides that (13)(e) does not limit the authority of a local government to deny development for some other reason, pursuant to its home rule powers.

(13) See FLA. SWAT. [section] 163.3180(13)(C)1.

(14) S.B. 360 at [section] 2. In order to be exempt, the local governments must also be able to show that they have not annexed land in land use categories allowing uses that impact public schools over the preceding five years, and they must not host a public school facility.

(15) Id.

(16) See Rule 9J-5.006(5), F.A.C.

(17) See FLA. SWAT. [section] 163.3180(5).

(18) FLA. SWAT. [section] 163.3180(2)(c).

(19) S.B. 360 at [section] 5.

(20) Id., and see [section] 12, creating FLA. SWAT. [section] 339.2819.

(21) Id. at [section] 2. These areas must be at least 10,000 acres in size, and are addressed in [subsection] 163.3177(6)(a) and (11)(d) of the current growth management laws. S.B. 360 also increases the threshold for small scale plan amendments in Rural Areas of Critical Economic Concern from 10 to 20 acres.

(22) Id. at [section] 11. The commission is charged with 25-year and 50-year growth planning. It is budgeted for $250,000 of recurring revenue. See [section] 27.

(23) Id. at [section] 31. This task force replaces an effort by Senator Mike Bennett to adopt statutory limitations on impact fees this session. See [section] 27.

(24) Id. at [section] 30. See [section] 27.

(25) Id. at [section] 12, to be funded by real estate transfer fees and gas taxes.

(26) A draft schedule circulated by DCA in July established deadlines ranging from January 2, 2008, through December 1, 2008. Pilot communities will be selected and a best practices manual prepared by DCA. DCA plans to hold workshops around the state beginning in August 2006 and provide incentives for early adoption.

Susan L. Trevarthen, AICP, is board certified in city, county, and local government and primarily represents local governments in the areas of land use, local government, and related environmental and constitutional law. She is a shareholder with Weiss Serota Helfman Pastoriza Cole & Boniske, P.A., in Ft. Lauderdale.

Chad Friedman is an associate with Weiss Serota Helfman Pastoriza Cole & Boniske, P.A. His practice focuses on representing local governments in land use and zoning matters. Mr. Friedman received his B.S.B.A. from the University of Florida, with honors, and his J.D., cum laude, from Stetson University College of Law.

This column is submitted on behalf of the City, County, and Local Government Law Section, Kathryn K. Collie, chair, and Jewel W Cole, editor.