In a five-day trial that drilled deep into concerns over how governments charge developers for the impacts of their projects, lawyers for Palm Beach Gardens and Palm Beach County hashed out what could be the future of growth management countywide.
At issue in the first stage of a lawsuit the county filed against the city on May 18 is whether a county system in place since the late 1980s can withstand pressure from cities looking to allow more dense developments and to free residents from reliance on cars.
Citing a 2013 state law, Gardens enacted mobility fees to charge developers for projects determined by the city to improve roads, bike paths and pedestrian walkways in the city. That’s fine, the county said.
But the city stopped collecting impact fees charged by the county for road work that could happen well beyond city borders. That’s not fine, the county said.
After years of talks, the county sued.
While Gardens went first, other cities, such as Boynton Beach and Lake Park, are moving forward with mobility plans of their own and watching the court action closely.
The county wants Palm Beach County Circuit Judge Paige Gillman to grant a temporary injunction to force the city to resume sending impact fee payments to the county. The trial closed Nov. 5 after five days of testimony, twice its allotted time.
If the judge grants the temporary injunction, it means she believes the county is going to prevail in the overall lawsuit. If she doesn’t, it signals that the city’s arguments undermining the county’s system of collecting impact fees has traction.
Gillman, a former Treasure Coast prosecutor appointed by Gov. Ron DeSantis to the circuit bench in 2020, gave both sides until Nov. 15 to submit proposed orders and post-trial briefs before she rules. UPDATE after initial publication: Gillman accepted a request from both sides to push the deadline back to Nov. 19. After both sides sought a second extension, she gave them until Dec. 1.
The attorneys presented eight witnesses, including Gardens City Manager Ron Ferris, and sparred over arcane matters of law while debating interpretations of state statute, the supremacy of the county’s charter, the size of impact fee benefit zones and, of course, the “dual rational nexus” (more on that later).
While the hearing sounded “dry and technical,” Assistant County Attorney Scott Holtz told Gillman in closing arguments, the case “remains a simple one that ultimately can be resolved with a plain reading of clear and unambiguous law.”
The city’s attack on the county’s impact fee rules were meant to “muddy the water and confuse the issue,” said Holtz, co-counsel with Assistant County Attorney Anaili Cure.
Attorneys for the city maintained that the Legislature gave cities the power to break off from the old approach.
“The county wants to keep in place a rather paternalistic approach that has existed for 42 years,” said Jones Foster attorney Scott Hawkins, co-counsel with City Attorney Max Lohman.
“The county has become dependent on being paid those fees,” Hawkins said. “The Legislature changed that.”
Who is harmed here?
To get the injunction, the county must show the city’s action caused irreparable harm.
Aside from refusing to collect impact fees for the county starting in January 2020, the city also stopped submitting developer traffic plans to the county for review.
Those reviews tell the county where growth is occurring so that it can use impact fees to pay for road improvements to respond to that growth. Without the review, “there’s no way of knowing how much traffic is being added to the county road network,” Holtz argued, which throws regional planning into turmoil.
Because the city stopped those reviews, the county argued it — and the public — suffer irreparable harm because the county isn’t able to plan ahead for growth. “It doesn’t serve the public interest,” Holtz said.
An example of a county project in Palm Beach Gardens is the addition of a right-turn lane from southbound Military Trail to westbound PGA Boulevard. The county recently moved forward on that $1.3 million job.
When asked about it, Ferris testified that it would add capacity but pointed out the city had been waiting “for six, seven, maybe even 10 years for that.”
An injunction also would force the city to pay the county $1.7 million in impact fees and interest dating to January 2020 and resume passing on the fees from developers to the county, despite the city’s collection of nearly identical amounts for its mobility plan. The city replaced its own impact fee with its mobility fee in portions of the city east of the Beeline Highway.
Unless the city council wants to charge developers both city mobility and county impact fees, that outcome would gut the city’s mobility plan.
The failure to pay hasn’t caused the county irreparable harm, the city countered, because the county could just bill the developers directly. In fact, the county did just that starting last fall, collecting $72,000 out of $1.6 million owed and threatening non-paying developers with liens.
However, the lien threat, initiated by county staff, caused such blowback from the business community at a county commission meeting in March that the county quietly backed off.
Palm Beach Gardens ‘going vertical’
The city’s decision to move forward with a mobility plan, first spelled out in 2016 planning documents, emerged from discussions with the Treasure Coast Regional Planning Council over plans to add a Tri-Rail station in the city, Ferris testified.
“The city would be going vertical, increasing density, to provide additional housing,” Ferris said. That meant the need for alternative ways to move people to get them out of cars, not continued payment into a system designed to add road capacity far from the city center, he said.
“Instead of increasing capacity, we’re looking at ways of taking people out of their cars,” he said. “So, the concept is, like for instance, … could we provide for bicycle paths? Bigger sidewalks to allow for golf carts or motorbikes? Landscape to provide shade?”
The county’s impact fees historically do not pay for such expenses. They are typically tied to work that increases road capacity. But the city’s mobility plan focuses on just such improvements.
An example is PGA Station, the Catalfumo apartment-and-office-building project at the proposed Tri-Rail stop, which the city council approved Nov. 4. Its $275,000 worth of mobility fees would go toward a roundabout, a pedestrian crosswalk and bike paths, as well as a new turn lane.
The city relied on consultant Jonathan Paul to develop the mobility plan, the same consultant now engaged by Lake Park and Boynton Beach.
Ferris, who has the strong support of the city council for the mobility plan, told county attorneys who objected to his lengthy answer to a question about the plan that he apologized for talking too long.
“I’m kind of proud of this whole concept so if you give me a chance I’m going to talk about it,” he said.
Who is the ‘local government’?
County attorneys argued the city misinterpreted a clause in the state law allowing mobility fees for its decision to stop submitting traffic plans.
“If a local government elects to repeal transportation concurrency (which requires submission of traffic plans), it is encouraged to adopt an alternative mobility funding system,” the statute says.
“The local government in question here is the city,” Hawkins said in his closings. “And there’s nothing in this legislation that says the county has the ability to trump the city’s election of a mobility plan.”
But, the county countered, the state does not give one local government, such as Palm Beach Gardens, the right to repeal the rules of another local government, such as the county.
“As long as they didn’t cross the Rubicon and come into the county’s own decision-making … for issues related to the county’s road network, we would not be here,” Holtz told the judge.
‘Outdated’ or ‘most recent’?
Contrary to state law, the city said, the fees aren’t based on the “most recent and localized data.” The studies and data behind the fees predated 2015, the city argued.
“What sense would it make to base it on fees adopted in 2013 for roads occurring in 2021?” Hawkins asked in his closing arguments. “Does that make sense?”
An exchange between City Attorney Lohman and county expert James Nicholas showed the difficulty of answering that question. Nicholas, a retired University of Florida growth management studies director, oversaw county impact fee studies from the late 1970s until 2012.
“Was it an outdated data and analysis set?” Lohman asked, generating a long pause from Nicholas, before he answered “I think that would probably be accurate, yes.”
“The fees weren’t based on the most recent data?” Lohman asked.
“Certainly they were,” Nicholas replied.
“But you just agreed with me saying it was based on outdated data and analysis,” Lohman responded.
“I said old. There’s an implication about outdated that somehow they are wrong. They were the most recent data calculated. When the fee was adopted they were calculated using the most recent information. New information is the reason you do updates.”
“But the data was four years old, correct?” Lohman asked.
“Yes. It just has to be the most recent when it was calculated,” Nicholas replied
“So, six years ago?”
“At some point it would get to be too old. It would no longer be relevant. I don’t think anyone knows when that would be,” Nicholas said. “But at some point, you have to draw a line.”
The county seized on the definition in state statute saying it is “the calculation of” the impact fee that must be based on the most recent data.
“It would be an unworkable standard for a local government to spend hundreds of thousands of dollars on conducting an impact fee study, only to scrap it and start anew if new data or studies come out once the study is completed but before the fee is adopted,” the county wrote in a pre-trial brief.
The city’s argument, the county wrote, amounts to a complaint that the county commission took too long to decide.
Additionally, county attorneys pointed out that the city used the same dated studies for its own road impact fees, which it still charges in some places.
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The city also argued that the county zones, which determine where fees are spent, were too big, meaning the county fails the “dual rational nexus” test established in a 1980s court ruling.
The test says there must be a connection between where the fees are collected and where the money is spent so that the fee-payer (the developer and subsequent property owners) benefit from the improvement.
Initially, the county had 40 zones. Officials later cut it to 19 zones but now there are just five, meaning fees paid by developers in the Gardens could be spent anywhere in a 150-square-mile area.
“The county’s logic is the money could be spent at Jupiter Inlet Colony. Would that satisfy the dual rational nexus test?” Hawkins asked county witness Patrick Rutter, an assistant county administrator. Rutter said it would.
Also, the city argued the county proposed changing the zone boundaries arbitrarily to move Avenir, the burgeoning development within city limits but closer to The Acreage than to the city center, into the city’s zone and out of The Acreage’s zone.
The city did not include Avenir, its biggest ongoing development, in its mobility plan and continues to collect impact fees for the county in Avenir as well as in Alton, its second-biggest development. Those fees are estimated to bring in $46 million.
The city said Avenir must pay impact fees because it directly impacts county roads and Alton had already reached an agreement to pay when the mobility plan went into place.
But the county argued that the city decision to keep collecting those fees shows that the fees must not be illegal.
“If the county fees are so atrocious, how can the city keep that collection in place in any portion of the city?” Holtz asked the judge. “They’re trying to have their cake and eat it, too.”
For its part, the city argued, the county failed to prove any of the factors needed to obtain a temporary injunction. “We have a frame,” Hawkins said, “without a picture.”
In his comments to the Palm Beach Gardens City Council on Nov. 4, a day before closing arguments, Lohman explained that the ruling would not end the lawsuit.
“This is just the very, very beginning,” he said. “I do not believe we will win this case at this hearing. Our objective is to make sure that the county doesn’t get their temporary injunction granted. That’s our goal.”
But he assured the council that the city is in the fight for the long haul.
“What I can promise you is I’ll keep fighting until you tell me to quit or there are no avenues left in the courts,” Lohman said.
© 2021 Joel Engelhardt. All rights reserved.
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