STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IN RE: A RULE TO ESTABLISH THE ) CROSSINGS AT FLEMING )

ISLAND COMMUNITY ) CASE NO. 89-1850

DEVELOPMENT DISTRICT )

)

REPORT OF FINDINGS AND CONCLUSIONS

On May 26, 1989, a public hearing was held in this case in Green Cove Springs, Florida, for the purpose of considering the petition of Champion Realty Corporation (Florida)(hereinafter referred to as the "Petitioner"), to establish The Crossings at Fleming Island Community Development District (hereinafter referred to as "CDD") in Clay County, Florida, pursuant to Chapter 190, Florida Statutes (1987). At hearing, the Petitioner was represented by Elizabeth C. Bowman, Esq. Petitioner presented the testimony of Joseph C. Kennedy, Roger B. Anderson, Sr., and Dr. Henry H. Fishkind. Their names and addresses are attached to this Report as Exhibit A. A summary of their testimony is contained in this Report. Petitioner also offered Exhibits 1-11, which were received into evidence. A list of those exhibits is attached to this Report as Exhibit B. This Report is submitted to Florida Land and Water Adjudicatory Commission in accordance with Rule 42-1.013, Florida Administrative Code.

Procedural Background

This proceeding began when Petitioner filed a Petition with Clay County and the Secretary of the Florida Land and Water Adjudicatory Commission (hereinafter referred to as the "Commission") on March 15, 1989, seeking authorization to establish a community development district in an unincorporated area of Clay County, Florida. The contents of the Petition are found in Petitioner's Composite Exhibit 1 received in evidence. After certifying that all elements and contents of the Petition were complete, the Secretary forwarded the Petition to the Division of Administrative Hearings on March 28, 1989. By order of the undersigned Hearing Officer dated April 18, 1989, a date and location of public hearing was established, and Petitioner was required to publish notice of the public hearing in a newspaper of general circulation in the affected area. Such notice was published in Clay Today, a daily newspaper in Clay County, Florida on May 1, 8, 15 and 22, 1989. Proof of publication is found in Petitioner's Composite Exhibit 4 received in evidence. In addition, and as required by Rule 42-1.011, Florida Administrative Code, copies of said notice were served upon all persons named in the Petition (prospective board members), all affected units of local government (Clay County) and the Secretary of the Department of Community Affairs. Proof of service of said notices has been received in evidence as Petitioner's Composite Exhibit 4. Finally, notice of the hearing was published by the Commission's Secretary in the Florida Administrative Weekly on April 28 and May 12, 1989 as required by Rule 42-1.010(1)(b), Florida Administrative Code. A copy of said notice is found in Petitioner's Composite Exhibit 4 received in evidence.

At the time of filing a copy of the Petition with the Clay County Commission, Petitioner paid the required $15,000 filing fee to Clay County. Proof of payment is in Petitioner's Exhibit 6 received in evidence. A public

hearing before the County Commission, which is optional under Chapter 190, was held on April 25, 1989. After the hearing was completed, the County Commission adopted Resolution No. 89-31R expressing support for the Petition. The resolution has been received in evidence as Petitioner's Exhibit 7.

The required hearing in this matter was conducted in accordance with the provisions of Subsection 190.005(1)(d), Florida Statutes (1987), and Rule 42- 1.012(4), Florida Administrative Code. A transcript of said hearing was filed with the undersigned on June 26, 1989 and is being transmitted with this Report and Conclusions. Other than Petitioner's witnesses, no other person testified or offered evidence in this cause. As required by Rule 42-1.012(3), Florida Administrative Code, the record was kept open for ten days after the public hearing so that interested parties, if any, could submit written statements concerning the petition. None were filed.

There are no written orders rendered by the Division of Administrative Hearings or the Commission in any related proceedings.

On June 26, 1989, the Petitioner filed a proposed Report of Findings and Conclusions with the Division of Administrative Hearings. Corrections to the Report were filed on June 27, 1989. The proposed report has been considered and accepted by the undersigned.

A Brief Overview of The District

By this Petition, Petitioner seeks to establish a community development district in Clay County. If approved, the District will be an independent special taxing district authorized by Chapter 190, Florida Statutes (1987). As such, it may plan, finance, construct, operate and maintain community-wide infrastructure in a planned community development to be constructed in the District.

The proposed district is located entirely within an unincorporated area of Clay County on Fleming Island. Encompassing some 2,600 acres, the District lies adjacent to portions of U.S. 17 and C.R. 220. The Crossings is an approved Development of Regional Impact (DRI), pursuant to Chapter 380, Florida Statutes. The CDD intends to finance construction of certain road, drainage, water and sewer, and fire protection facilities. The cost of all such improvements will be borne by the CDD through the issuance of revenue bonds and the assessment of benefit and maintenance taxes and user fees. Only those who receive the benefit of the services will pay the costs involved. It is noted that the sole purpose of this proceeding is to authorize the establishment of the CDD. Any other permits necessary for construction or planning purposes, which have not already been obtained, are not within the scope of this proceeding.

Sumarization of Evidence of Testimony (All references to the transcript of

the hearing are indicated by Tr.)

1. Joseph C. Kennedy: Mr. Kennedy is Vice President for Administration of Champion Realty Corporation (Florida), (hereinafter referred to as "Champion Realty"), the Petitioner. He had overall responsibility for planning the CDD and filing of the Petition. He identified Petitioner's Exhibit 1, the Petition to establish this CDD accompanied by 11 exhibits to the Petition. The Petition was filed at his direction and with the written consent of the Petitioner. The

   name of the proposed CDD is The Crossings at Fleming Island CDD. The Crossings at Fleming Island is the name of the related DRI development approved by Clay County. (Tr. 9-12)

   
   

   Champion Realty owns 100 percent of the land proposed for inclusion in the CDD. (Tr. 12) Composite Exhibit 3 to the Petition contains all the deeds necessary to confirm Champion Realty owns 100 percent of the land within the CDD. However, since filing of the Petition, a typographical error in one deed was corrected and the corrected deed was received into evidence as Petitioner's Exhibit 2. (Tr. 12-14) Mr. Kennedy identified Petitioner's Exhibit 3 as a legal description of the proposed CDD. It was the same as Composite Exhibit 2 to the Petition except that, since filing the Petition, a further survey has refined the legal description in the manner set forth in Petitioner's Exhibit 3. The CDD boundaries correspond generally to the DRI boundary except certain land within the DRI that is to be donated to the Clay County School Board has been excluded from the proposed CDD. There is no real property contained entirely within the boundaries of The Crossings CDD that is to be excluded from the CDD. (Tr. 12-15)

   
   

   Mr. Kennedy related the procedural history of the filing and processing of the CDD Petition as set forth above in this report, including the action of the Clay County Board of County Commissioners in support of the establishment of the CDD. (Tr. 15-18)

   
   

   There are five persons designated in the Petition as the Initial Board of Supervisors:

   
   

   William O. (Bill) Cannon 1109 Nestling Court

   Gulf Breeze, FL 32561 (904) 443-2911 (office)

   (904) 932-0884 (home)

   
   

   Gary Howell

   1144 Battle Cove

   Jacksonville, FL 32221

   (904) 768-3733

   
   

   G. Preston Keyes 3545 Pine Street

   Jacksonville, FL 32205

   (904) 359-7700 (office)

   
   

   Joan Meeks

   3872 Chestwood Avenue

   Jacksonville, FL 32221

   (904) 396-9401 (office)

   (904) 744-4195 (home)

   
   

   Frank D. Westmark

   P.O. Box 87 Muscogee Rd.

   Cantonment, FL 32533

   (904) 968-2121 (office)

   
   

   They are residents of the State of Florida and citizens of the United States. (Tr. 19)

   In general, the CDD proposes to provide infrastructure including certain roads, certain trunk water and sewer lines, a master drainage or surface water management system and a fire pumper truck. (Clay County has given the proposed CDD special authority to provide fire protection equipment). The CDD also is designed to implement certain commitments in the DRI development order. (Tr. 19- 21)

   
   

2. Roger B. Anderson, Sr.: Mr. Anderson is a senior environmental planner with Hunter Services, Inc. He has a wide range of experience as a land use planner and is a member of the American Institute of Certified Planners. He has designed or reviewed approximately 60 development projects including approximately 25 integrated self-sufficient, mixed-use communities and approximately 45 DRIs all over the state. He is the project manager for The Crossings development. He has been involved with The Crossings project since early 1987 and with the project's land use approvals and permitting. (Tr. 21-25)

   
   

   In general, The Crossings is located north of Green Cove Springs and south of Orange Park on Fleming Island as shown on the general location map that is Exhibit 1 to the CDD Petition. The Crossings DRI was approved by Clay County on October 11, 1988, as a mixed-use project containing residential, commercial, office, light industrial and recreational uses set forth in Composite Exhibit 5 to the CDD Petition. The land uses are designed to be complementary and create The Crossings as a self-sufficient community. The plan also includes a governmental center intended to make The Crossings the heart of Fleming Island. The Crossings is projected to develop in a single phase over 20 years. (Tr. 25- 28)

   
   

   Mr. Anderson noted that The Crossings is compatible with approved and proposed land uses surrounding The Crossings, which include other DRIs and residential development. (Tr. 29-30) The proposed CDD development also is compatible and consistent with the DRI-approved master plan for The Crossings; the State Comprehensive Plan adopted pursuant to Chapter 187, Florida Statutes; and the Clay County Local Comprehensive Plan adopted pursuant to Chapter 163, Florida Statutes. (Tr. 30-33) In his capacity as an expert land use planner, Mr. Anderson stated his opinion that: (1) the proposed CDD was of sufficient size, sufficiently compact and sufficiently contiguous to be developable as one functional interrelated community, regardless of the pace of other development on Fleming Island; and (2) the CDD was the best alternative to deliver community development services and facilities. (Tr. 33-35)

   
   

   Mr. Anderson then outlined the road, drainage, water and sewer and related engineering improvements proposed to be funded by the CDD. He and his firm supplied construction cost estimates and timetables for those improvements as input for Dr. Henry H. Fishkind's economic analysis. The timetable was designed to provide infrastructure within the timing required by the DRI development order. (Tr. 30, 35-39)

   
   

   Mr. Anderson concluded that the proposed CDD activities were not incompatible with existing regional or local community development facilities or services that were available and that, due to the location of The Crossings in the unincorporated area of Clay County, the proposed CDD area was amenable to special district government. He also reaffirmed that all the portions of the CDD Petition prepared under his supervision were still true and accurate. (Tr.

   39-40)

3. Dr. Henry H. Fishkind: Dr. Fishkind is president of Fishkind & Associates, an economic consulting firm that provides economic forecasting advice, financial advice concerning issuance of tax-exempt debt by public bodies including four CDDs, and economic consulting concerning land development feasibility. (Tr. 40-42) He did similar work in the private sector prior to forming Fishkind & Associates and was employed by the University of Florida from 1975 to 1984 as an associate professor in the Department of Economics and as associate director of the University's Bureau of Economic and Business Research. He has a Ph.D in economics with a specialization in urban and regional economics, has served as financial consultant for public agencies and private developers, published numerous professional literature and participated in the formation of IIa number of CDDs. (Tr. 42-49) He was accepted as an expert in economics, finance, and statistics, including specialization in the areas of real estate development, infrastructure financing and community development districts. (Tr. 49-50)

Concerning the proposed Crossings CDD, Dr. Fishkind prepared the economic impact statement (hereinafter referred to as "EIS"), for the CDD required by Chapters 190 and 120, Florida Statutes, and assessed the economic feasibility of the CDD. The EIS is still true and correct. (Tr. 50-52)

After reviewing the statutory criteria for an EIS, Dr. Fishkind stated that there were three primary governmental agencies that would be financially affected by the processing of the petition and ongoing oversight of the proposed CDD. Clay County and the Florida Land and Water Adjudicatory Commission must review and act upon the Petition. The $15,000 filing fee paid to Clay County should offset its costs and the Commission's expenses should be offset by general taxes. The State Division of Banking and the County also would review the CDD's budget at relatively little cost. Dr. Fishkind agreed with the Secretary of Florida Land and Water Adjudicatory Commission's similar economic assessment, as published in the Florida Administrative Weekly. (Tr. 52-55)

Dr. Fishkind's EIS contained in the Petition also analyzed the general costs and benefits of the proposed CDD to affected persons: the State of Florida, Clay County, residents or land users of The Crossings, and Champion Realty. The costs to the State are essentially zero, according to Dr. Fishkind, because a CDD is a vehicle for growth to pay for itself by the financing of community infrastructure by the CDD. While benefits to the State are difficult to quantify, they include encouragement of large master planned land developments, as opposed to piecemeal less well-planned developments. (Tr. 55-

1. Benefits to Clay County also include planned growth and self-funded infrastructure. Dr. Fishkind pointed out that there is no possibility that obligations of the CDD could become obligations of the County, although the County could take over District functions if it so desired. (Tr. 57-58) Land users within the CDD would gain the benefits of (1) setting their own levels for provision of infrastructure and services, which could be higher than that available from the County; (2) creating a mechanism to provide such infrastructure and services over a long period of time; and (3) receiving enhanced market values due to having a CDD in place. Costs to land users would include CDD taxes, in addition to County and School Board taxes, to be assessed in direct proportion to benefits provided. However, these same costs could be incurred by land users in some other form, such as through initial sales prices. (Tr. 58-61) Costs to Champion Realty include significant liability for CDD taxes as the principal landowner, particularly in the early years of the CDD; CDD formation costs; and land donation costs. Benefits to Champion Realty include availability of tax exempt financing and creation of a perpetual entity accepted by permitted agencies for maintenance of CDD facilities. (Tr. 61-63)

   As part of the EIS, Dr. Fishkind also analyzed the impact of the proposed CDD on competition and the open market for employment and determined that there would be little, if any, effect. There is no competitive advantage to Champion because other landowners could also petition to create a CDD. There is no effect on the open market for employment because the CDD is a governmental entity. (Tr. 63-64) The proposed CDD also would have a positive impact on small and minority businesses because it has open or competitive bidding for its purchases and professional services. (Tr. 64-65)

   
   

   Dr. Fishkind described the data and methodology he used in preparing the EIS as follows: Hunter Services supplied him with engineering and cost estimates for a $25 million infrastructure bond program as reflected on Table 3 of the EIS, which were placed in three bond issuance series. From these data, he prepared a detailed cash-flow model for the CDD over a 20-year planning horizon to determine debt service requirements for the $25 million of construction, operation and maintenance costs proposed to be incurred by the CDD. He then determined what special assessments (benefit and maintenance taxes) would need to be imposed on The Crossings property to retire this debt. These assessments were imposed on the property based on benefits received, such as the proportionate road capacity used by trips generated by each parcel of property. (Tr. 65-67)

   
   

   Dr. Fishkind explained that a CDD has two basic financing mechanisms: (1) general obligation bonds pledging the CDD's full faith and credit, which are typically supported by ad valorem taxation; and (2) revenue bonds pledging a revenue stream funded by sources, including benefit taxes, user fees or special assessments. The Crossings CDD proposes to use revenue bonds and does not propose to use general obligation bonds. The specific financing program is contained in Table 1 of the EIS. The proposed CDD road drainage and other infrastructure systems will be financed by revenue bonds retired by benefit and maintenance taxes, also known as special assessments. Ultimate ownership of the roads will belong to either the County or the State. Water and sewer lines will be owned by a private utility. (Tr. 67-70) The fire truck to be purchased by the CDD also will be financed through special assessments. (Tr. 70-71)

   
   

   Dr. Fishkind also explained that from a landowner's perspective, the CDD's special assessment will be included in the landowner's regular property tax bill from the County. He is aware of only one instance in which an owner of small parcel within a CDD did not pay CDD taxes; that delinquency was cured and did not affect the CDD's ability to meet its obligations. (Tr. 71-72)

   
   

   In Dr. Fishkind's opinion, the financial structure of the proposed CDD is very secure, because it will use revenue bonds pledging the special assessments as a revenue stream, rather than the full faith and credit of the CDD. In addition, the CDD has the power of the State behind it to collect special assessments. In addition, the resources of Champion Realty as the largest CDD landowner and taxpayer in the initial years provide stability. In his opinion, the proposed financial structure is the most secure way to finance CDD infrastructure; none of the CDDs using a similar structure have had any problem repaying their debt service, to his knowledge. (Tr. 72-75)

   
   

   Based on his experience, Dr. Fishkind stated that the CDD is of sufficient size and sufficiently compact and contiguous to function as an interrelated and economically viable community. He also felt that the CDD was the best alternative for providing community infrastructure. Alternatives include the County, which may be politically unable to provide services desired by CDD

   residents and also may lack resources to administer new infrastructure; a municipal service taxing unit or municipal service benefit unit which also would require the County to administer $25 million worth of construction; or the developer or neighborhood associations, which lack the taxing authority and perpetual status of a CDD. (Tr. 75-78) Finally, Dr. Fishkind stated that the area within The Crossings was amenable to a separate special district government. (Tr. 78-79)

   
   

   CONCLUSIONS

   
   

   Having considered the entire record in this cause, it is concluded

   
   

   1. That all statements contained within the Petition have been found to be true and correct.

      
      

   2. That the creation of the CDD is not inconsistent with applicable elements or portions of the State Comprehensive Plan and the Clay County Local Comprehensive Plan, as amended.

      
      

   3. That the area of land within the proposed CDD is of sufficient size, is sufficiently compact, and is sufficiently contiguous to be developable as one functional interrelated community.

      
      

   4. That the CDD is the best alternative available for delivering community development services and facilities to the area that will be served by the

      CDD.

      
      

   5. That the community development services and facilities of the CDD will be compatible with the capacity and uses of existing local and regional community development services and facilities.

      
      

   6. That the area that will be served by the CDD is amenable to separate special-district government.

DONE and ENTERED this 28th day of 1989, in Tallahassee, Leon County, Florida.

LARRY J. SARTIN

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 28th day of July, 1989.

COPIES FURNISHED:

Elizabeth C. Bowman, Esquire Post Office Box 6526 Tallahassee, Florida 32314

Patricia A. Woodworth, Secretary Florida Land and Water

Adjudicatory Commission The Capitol

Tallahassee, Florida 32399-0001

James Vaughn

Office of Planning and Budget Environmental Policy Unit Room 404

Carlton Building

501 South Gadsden Street Tallahassee, Florida 32399

Docket for Case No: 89-001850

Orders for Case No: 89-001850