An agreement involving a developer under the city’s subdivision incentive program put staff members and elected officials on opposite sides during Tuesday’s meeting.
The agenda item in question appeared in response to the prohibition of renting units for up to one year in incentivized subdivisions.
Consideration of a motion to approve Resolution 2022-15: A Resolution to waive Section 62-2(j)(6) of the Statesboro Code of Ordinances to allow for a maximum of 20% rental occupancy for the development of Fernhill Farms Subdivision by L&S Acquisitions, LLC (Tax Parcels # MS57000004 000 & MS57000006 000) under the Subdivision Incentive Program.
Section 62-2(j)(6) prohibits rental of units in incentivized subdivisions for a period of one year after City acceptance of roads. Due to current housing market conditions, particularly lack of available housing, it is recommended that City modify this requirement in this particular circumstance and allow up to 20% of units to be offered for long-term rental.
City manager Charles Penny said the desire of city staff is to encourage home ownership over renting but that local developers need to be able to rent the homes if they don’t sell the properties. Currently, 65% of the city’s population rents. The city came up with the arbitrary number of 20% to appease the developer at a percentage the city felt was acceptable and ‘reasonable.’
He said a project has already been approved under the incentive grant but the developer won’t move forward with this. ‘Single family housing is a premium, so with that, we recommend moving forward with this agreement and the incentive project.’
Boyum Presses on the Process
Councilman Phil Boyum asked what processes were in place to ensure only 20% of units are rented.
Penny said the best way to monitor the process and compliance is to ensure the money isn’t handed over to developers up front. Of 80 lots, 16 would be permissible for rentals. “Some of it will depend on the developer being true to their word, but we could hold back 20% of the money, too,” Penny said.
Assistant City Manager Jason Boyles said the 20% wouldn’t be any more difficult to monitor than 0% rentals at all.
The answers didn’t appear to answer Boyum’s question.
“Before we make the decision, shouldn’t we at least consider how we are going to monitor this? I appreciate what you said there, but the idea that we’re going to take the word of developers, I mean, historically speaking, anyone in here, you know, if you don’t write it down, they’re not going to do it. It’s just that easy. It doesn’t matter if it’s a tree, a sidewalk, or 20%. So we need an agreement, but we have to have a process…the truth is our neighborhoods are getting decimated by rentals. And they are. Our homeowners, and the people that I represent, these are people that live in the city. They’re tired of these rentals making their properties go down. Everywhere else, properties are going up. And these folks are hurting because we’ve got these rental properties and we’re not protecting our homeowners…I’m not against this, I’m concerned,” he said.
[CLIP] Statesboro City Council Meeting – 04/05/22 – Subdivision Incentive Program
Boyles said the city would regulate the mentioned issues through the certificate of occupancy process, first as well as on the civil suit side.
“But the courts, through the homeowner’s association as well.”
Boyum also mentioned the trend of developers managing developments until 80 or 90% of the units are sold.
“There’s details in here that I’m concerned about that we’re like ‘hey, let’s’ just build this!’
Penny replied that he understood, but that the move forward was critical because there is a developer willing to go forward with the business transaction under these conditions. “I believe staff, we are not in any way ignoring your concern, we will work with the developer, the key, I believe, is the money we control. That he’s not going to move forward without $800,000 being available to him.”
“How do we hold that back from them?” Boyum asked.
McCollar said staff needed the opportunity to handle that. “It’s our task to create the policy, it’s staff’s task to handle the operations, so with that being said, I believe staff can decide if that’s code enforcement, or
I think this is something we need to go ahead and move forward and staff can follow up with us.”
Boyum said, “We’re not setting policy here, we’re making an exception for a developer.”
“I didn’t say we’re setting policy, I said we’re dealing with policy,” McCollar replied.
“When you pass something like this, if the city and the developer don’t have something in writing, we’ve committed to something and we can’t roll back without any agreement. I’ve said it’s happened before, I’m concerned in this situation.”
Councilwoman Shari Barr asked if he had a recommendation for a process.
“I’d like to see a process. Here’s how we’re going to handle it. Here’s the penalty if you don’t meet the penalty,” Boyum said.
McCollar asked, “Do we need to table this until the staff comes back with a recommendation? Or do we want to move forward and have staff come back after?”
“I believe the money is the key,” Penny said. “We can table it, but we may end up losing the property. There’s back and forth between the business funds and this is a sticking point. I understand the concern. I do believe the money would be the key.”
City Attorney Cain Smith said the matter to vote on Tuesday was solely to enter into the next agenda item, including the development agreement.
“When we’re going against our own ordinances, we need to admit that openly, which is what we’re doing here…In this situation, we allow up to 20% rentals during that one year and all of that is spelled out in the development agreement. So there are teeth to this because there is an enforceable agreement that has to be entered into before those funds can be expended to the developer. This is extremely limited in time and scope. We were specific that this is solely due to current, temporary conditions such as supply chain and housing market crunch, Smith told the council.
“Any further discussion by council?” McCollar followed.
A motion was made and seconded and the measure voted 4-1 with Boyum dissenting.
The vote was followed by the next related agenda item:
Consideration of a motion to approve a development agreement between the City of Statesboro and L&S Acquisitions, LLC for installation of public infrastructure for the development of Fernhill Farms Subdivision by L&S Acquisitions, LLC (Tax Parcels # MS57000004 000 & MS57000006 000) under the Subdivision Incentive Program.
Staff recommended approval of a Development Agreement with L&S Acquisitions, LLC in the not to exceed amount of $800,000 for installation of public infrastructure associated with the development of an 80 lot subdivision, Fernhill Farms Subdivision, on parcels on Lakeview Road.
After staff approval, NeSmith Properties entered into a sales agreement with L&S Acquisitions, LLC. Staff has since been working with L&S Acquisitions LLC partners, Lisa Hodges and Stephen Sauers, in preparing the development agreement to receive incentives. The Fernhill Farms Subdivision plans, incentive application, and development agreement are in conformance with the Program.
If approved, City staff would be responsible for overseeing development of infrastructure in accordance with City policies and standards and payment will not be made until infrastructure is complete, either in whole or development phases. As stated in the Program and Development Agreement payment will be made for public infrastructure in an amount equivalent to $10,000 per lot but not to exceed actual cost of construction as competitively bid. This subdivision will be the fourth subdivision to receive incentives since the program began in 2001 (Pepperidge, Myrtle Crossing, and Moss Creek).
The budget impact was listed at a total of $800,000 in funding from TSPLOST (roadway construction) and Water and Sewer revenues (water and sewer infrastructure); plus up to $320,000 from Natural Gas revenues (as necessary).
During the discussion, Boyum asked if the developer had to build the houses in order to get their money back from the infrastructure.
Staff replied that developers only have to complete all of the infrastructure itself.
“So all of the incentive money is given to them after they’ve built the roads but before they build a single house?” Boyum pressed.
“Correct,” Boyles said.
“But we can make a recommendation to amend that,” Penny said. “Maybe we need to add that to this agreement. Maybe a section that says we would hold that 20%, that would be paid out as they comply with that section about not going beyond 20%. That might be a deal breaker though.”
Ultimately, the agreement was approved 4-1, with Boyum opposing.