Separating water, sewer and transportation fee credits from the property they belong to so that they can be sold as credit isn’t something Maitland, or any other local city, has tried before. City Council isn’t sure it wants to start now.
The city is scheduled to issue Ravaudage developer Dan Bellows an estimated $1.5 million in impact fee credits when he cuts off utility service at Gem Lake Apartments, which will be torn down to make way for his $500 million mixed-use Ravaudage project.
Bellows asked City Council members during Monday’s meeting to consider instead allowing him to sell the credits to another Maitland developer for cash to generate funding to move his project along.
“This is a way to simply raise some capital to continue the development process,” Bellows said.
After Community Development Director Dick Wells raised concerns over lack of city codes addressing crediting of impact fees, tracking of credit ownership and potential future costs to the city, the City Council agreed to further assess the idea, if Bellows can secure a city-approved buyer of the fees, and pay for the time the city attorney and staff will take to develop a code and process for such transactions.
“We have to balance our risk and cost with this,” Councilman Phil Bonus said. “There’s no reason to definitely say no right now, but I don’t know if I have a reason to say yes, either.”
City Attorney Cliff Shepard said the deal would in essence have the city acting as a financer of the project, by allowing the sale of credits for cash. He cautioned that the city would be “flying blind,” as city staffers could find no other local cities that have taken up such a deal, and advised the Council to proceed carefully. Although he said he sees no legal reason why it can’t be done, they should explore all avenues before committing to a deal.
For example, he said, without having a buyer secured ahead of time, the city would have no idea when or if the city would be repaid the value of those credits.
“It would be like having a gift card that a vendor won’t honor,” Shepard said.
Bellows said he would not be seeking out this sort of deal if he didn’t need the money to continue to further the development of Ravaudage, which would be built on 23 acres in Maitland and about 50 acres in unincorporated Orange County that’s scheduled to be annexed into Winter Park.
“I can run out of money on it, bulldoze it and just pay my taxes and cut the lawn,” Bellows said, “Or we can work through this.”
Mayor Howard Schieferdecker and Councilwoman Bev Reponen agreed that the Council should proceed with caution before moving forward with considering this new type of deal.
With money already tight for the city, Reponen said she was wary of entering an agreement not knowing what it could cost the city in the future.
“You have to understand our position. We want to develop our downtown location too,” Reponen said, “but we don’t even have enough money to do our own infrastructure … it’s hard to give something away that we don’t have ourselves.”
Bonus said he is open to looking into moving forward with Bellows to do what the city can to secure the future success of the south side of Maitland, where the Ravaudage project is planned, but that more talk as to how it will be done is needed in the future.
“It’s creative, but I’m not sure the city is in the position to take that risk with you, but we do want Ravaudage to succeed,” Bonus said, “whether this is the next step for that I’m not so sure.”
When and if Bellows secures a buyer for the credits, the Council members said they would look into the possibility of arranging a fee-credit-for-capital exchange process.