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Are Flagler County Schools at Full Capacity or Not?

Two developers recently received unexpected letters from Flagler Schools requiring “Proportional Fair-Share” School Concurrency Mitigation Payments; one for $12.8M before proceeding to develop.

By Toby Tobin

PALM COAST, FL – November 7, 2020 – Flagler Schools recently concluded that the school district is essentially at full capacity. This finding triggered Concurrency, a complicated process authorized and largely controlled by Florida Statute.

Matanzas High SchoolIn general, concurrency is a process through which local governments assure that established service levels for public services (roads, parks, utilities, fire departments, etc.) be adequate to meet the demands of new development. If they are not, the developer may be required to pay to expand the services through Concurrency Mitigation. In 2005, public schools were added to the concurrency mandate.

More familiar most are impact fees, a fee paid by new residential and commercial developers and builders at the time of permit issuance. Impact fees are justified by the notion that growth should pay for itself. Flagler County’s current school impact fee is $3,600 for each single-family home building permit issued. Separate from impact fees, concurrency is designed to kick in only when defined service levels will no longer be met by existing facilities because of the proposed growth.

The Concurrency Process

The statute requires much of the school district and civil jurisdictions that they serve, including but not limited to the following.

  • Levels of Service must be established. For instance, the number of elementary, middle school, and high school seats required by each new dwelling unit type: single-family home, duplex, mobile home, apartment, condominium.
  • Interlocal agreements between the school district and affected jurisdictions
  • Extensive review and reporting mandates
  • Periodic Inventory of current facilities and establish service level capacities
  • Review all new development applications and measure the impact on existing capacity. A representative of the school district board sits on the Planning Board as a non-voting member.

Step 1: Developers may apply to the district for a non-binding determination of capacity availability.

Step 2: Developers must apply for a capacity reservation any time prior to applying for final plat approval.  

If there is enough existing capacity to meet the level of service dictated by the type and location of the development, the developer is awarded reserved capacity (student seats). The reserved capacity is valid for three years. That is to say that one developer’s reserved capacity diminishes the available capacity for three years, even if the development does not go forward.

Step 3: If there is insufficient capacity, in whole or in part, the developer must provide a Proportional Share Mitigation contribution toward the cost of additional facilities, either new schools or additions to present schools. The contribution is based on the locally established level of service and a state declaration of the “cost per student station.” This cost is derived from an analysis of current school construction costs. This is a volatile number and may change monthly.

There are many ways in which a developer can meet the concurrency obligation. Concurrency settlements are often the result of negotiations between the developer, the district, and affected municipalities. The simplest way is for the developer to write a check, but developers can donate land or even build a school. Neoga Lakes, in the northwest section of the county, is a large 7,000-residential unit development approved ten years ago. Stopped by the housing industry collapse, it has not moved forward. The Concurrency Proportional Share Mitigation Development Agreement, negotiated in 2010 between the developer, the school district, and the City of Palm Coast, specifies that the developer donates 115 acres of land, for a school and a park, site improvements, and a school impact fee surcharge to be added to the standard school impact fee when building permits are issued. The total mitigation amount negotiated for the entire development is $49,678,969.

Background

In the early 2000s, Flagler County and Palm Coast were the fastest growing county and city respectively in the country for two consecutive years. During that time, there was speculation that the district would have to build one new school each year to keep up with the growth. But the bubble burst. For the past 12 years, the district’s student population has fluctuated in a narrow range in the high 12,000s. Capacity from new private, parochial, and home-schooling options has apparently absorbed the additional student population created by population growth.

A 5-year Educational Plant Survey dated May 22, 2020, did not project the need for a new school within its 5-year planning horizon. A recent study by an outside consulting firm projected only a 1% per year growth in the student population for several years.

One of the factors in capacity determination is the utilization rate, which is set by the state. The utilization rate for elementary schools is set at 100%. The middle school rate is 90%. For high schools, 95%. Flagler’s elementary schools are K-6. The district had historically applied the 100% elementary school utilization rate to these facilities. Early this year, the state notified the district that this was the incorrect rate. The state standard for elementary schools is K-5, not K-6. Because Flagler’s 6th-grade students were attending elementary schools, the elementary schools must be classified as “blended” and must use the middle school rate of 90% of space utilization.

The effect of Florida's determination was a significant reduction in capacity at the elementary level and for the district as a whole. By applying the lower utilization rates to existing enrollment and to existing reserved capacity, it appeared that both the elementary schools and the high schools were at capacity. This judgment prompted unexpected fair share mitigation letters to at least two developers.

Since the letters, new 2020-21 enrollment data became available. The new data was applied to the established service levels and state-mandated utilization rates. Three elementary schools are at capacity or over capacity: Old Kings, Belle Terre, and Wadsworth. FPC high school is also over capacity but Matanzas is not. Across all elementary schools, capacity is at 94%. Middle schools are at 69%, and high schools are at 97%.

What are the district's options going forward?

The school district will be required to take all reasonable measures to mitigate overcrowding in its schools. Options available include:

  • Move grade six into the middle schools. This would lessen the capacity pressures on the elementary schools and move several students into the most underutilized middle school facilities. It would also allow the elementary schools to use the 100% utilization rate rather than the blended school rate of 90%.
  • Rezone the districts to better match the existing student population to existing facilities.
  • Add portable trailers, an economical quick fix, but portable trailers do not add to the school capacity for the purpose of utilization calculations.
  • Add pre-cast modular classrooms. While not aesthetic, they do qualify as permanent structures included in the overall capacity calculation.
  • Build architecturally integrated additions onto existing facilities.
  • Build new schools. This step requires permission from the state, which would likely not be forthcoming unless the district could show that all reasonable efforts to mitigate overcrowding had already been exhausted.

Commentary

Regardless of the district's course, state statute requires the district to use all reasonable methods to mitigate school overcrowding before requiring fair-share mitigation from developers. It seems that moving grade six to the middle school would be the most impactful first step, followed by rezoning the district. Both options will have a great impact on families, school staffing, and transportation and cannot reasonably be implemented during a school year.

Shifting grade six rebalances capacity at the elementary and middle school levels. While high school capacity is at 97%, expanding Matanzas High School is an available option. There is land available.

The January 2020 Florida Review and Adjustment for Cost per Student Station includes costs for new school construction. Here is the study’s breakdown by school classification:

Elementary Schools

  • Average Building Cost - $22,940,015
  • Average Cost per Square Foot - $208.55
  • Cost per Student Station - $20,939

Middle Schools

  • Average Building Cost - $34,354,656
  • Average Cost per Square Foot - $202.09
  • Cost per Student Station - $22,267

High Schools

  • Average Building Cost - $51,004,668
  • Average Cost per Square Foot - $213.56
  • Cost per Student Station - $28,733

Flagler’s school impact fee stands at $3,600 per single-family home building permit. For reference, Volusia County’s school impact fee is $2,941.75. St Johns County has a tiered school impact fee schedule based on the square footage of the new home as follows:

  • Under 800 SF - $1,523
  • 801 to 1,250 SF - $2,787
  • 1,251 to 1,800 SF - $4,027
  • 1,801 to 2,500 SF - $5,016
  • 2,501 to 3,750 SF - $7,036
  • 3,751 to 5,000 SF - $7,341
  • Over 5,000 SF - $7,463

Builders and developers are totally on board with quality education. Great schools attract homebuyers. Poor schools do not. Having said that, developers abhor uncertainty. Millions of dollars are at stake. The unexpected school concurrency mitigation letters recently issued pulled the rug out from under developers’ sense of certainty.

The school district will soon begin to evaluate its options. They should also do the following:

  • Evaluate their past and current processes to discover how capacity jumped from “no need to consider building a new school for at least five years” to issuing Fair Share School Concurrency Mitigation payment demand letters to developers.
  • Engage all stakeholders in the review process with an emphasis on transparency. An October 20 district workshop session was the first open discussion about the magnitude of the unintended consequences of the May utilization rate change.
  • The school board will likely take this opportunity to review the district’s current impact fee structure. (Impact fee reviews seldom result in a decrease in fees.) Impact fees affect housing affordability, not only of new housing but of the existing housing stock. Fee level changes should not be made until other mitigation efforts have been implemented, processes have been fine-tuned, and full transparency is no longer in doubt.

Toby Tobin: REALTOR®

I'm a licensed Florida REALTOR® affiliated with Grand Living Realty in Palm Coast, Fla. As a real estate consultant to developers/builders, homebuyers, and sellers, and as a journalist, I have years of experience and a treasure trove of relevant data and local institutional knowledge.

Call me at (386) 931-7124 or email me at Toby@GoToby.com.

Listen to my radio show, Real Estate Mattersevery Saturday morning right after the 11:00 A.M. news break on WNZF News Radio at 1550 AM or 94.9 FM. Download the Flagler Radio App from the App Store so you can hear Real Estate Matters from anywhere in the world.

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Don "Toby" Tobin is a licensed real estate professional affiliated with Grand Living Realty. Toby is a member of the Flagler County Association of Realtors®, the Florida Association of Realtors, Enterprise Flagler, Flagler Home Builders Association, and the National Association of Realtors.

GoToby.com proivdes real estate news, commentary, and analysis for Palm Coast and Flagler Country Florida, as well as Realtor® referrals and consultation to buyers, sellers, and developers.