Florida Bar Journal

Florida’s Evolving Transportation Funding Mechanisms — An Attempt To Introduce Sanity to the Method of Charging for and Utilizing Transportation Fees

During the 2024 Florida Legislative Session, I had the privilege of sponsoring House Bill 479, which passed and was signed into law as F.S. Ch. 2024-266 by the governor to take effect on October 1, 2024. The bill dealt primarily with transportation impact fees and their application by local governments.^[1] F.S. Ch. 2024-266 represents a substantial overhaul of Florida’s growth management laws. It significantly changes the way impact fees are calculated and applied to development as well as requiring local governments to develop interlocal agreements as was first mandated in 2011 under F.S. §163.3177(6)(h).^[2] As the House sponsor, I write to share the intent of the policy discussions that occurred between members and stakeholders as well as to highlight the final structure of the bill concerning its application for local governments.

The journey to better define Florida’s growth management policy on transportation mitigation began because of a belief that a regulatory framework only addressing mobility systems would be the best alternative. However, after consultation with the Florida Senate, other interested parties, and debate in House committees, Ch. 2024-266 (H.B. 479 at the time) was offered as a comprehensive approach to all transportation mitigation fee systems, including correcting misapplications of proportionate share, defining “mobility plans” and “mobility fees,” clarifying the allowable types of transportation mitigation identified under §163.3180(5)(i), further defining impact fee credit language, and creating the new subsection 5(j) in §163.3180.

In developing this bill, I was guided by the principles of the Community Planning Act (F.S. Ch. 2011-139);^[3] the Community Transportation Projects Act (F.S. Ch. 2013-78),^[4] which established mobility plans and fees; the subsequent changes in impact fee laws in the 2019-2020 legislative sessions; and the recent Florida court decisions that continue to highlight the growing schism between strict requirements of state law and the arbitrary application of such law by many local governments. The intent was to eliminate any existing interpretive latitude in mobility plans/fees and concurrency laws by clarifying and unifying the law to provide a clear regulatory framework that better defines transportation impact fees and the options that local governments may exercise for the implementation and collection of said impact fees.

History

In 1985, the State of Florida passed the Local Government Comprehensive Planning and Land Development Regulation Act, which required all local governments in Florida to adopt comprehensive plans to provide a framework for each local government’s future development. The act mandated that adequate public facilities must be provided “concurrent” with the impacts of new development. State mandated “concurrency” was adopted to ensure the health, safety, and general welfare of the public by ensuring that adequate public facilities would be in place to accommodate the demand for public facilities created by new development. Transportation concurrency became the measure used by the Florida Department of Community Affairs (DCA), Florida Department of Transportation (FDOT), Regional Planning Councils (RPCs), and local governments to ensure that adequate road capacity was available to meet the transportation demands from new development. The primary means of achieving transportation concurrency was addressed by constructing new roads and widening existing roads contemporaneously with construction of the new development. Traditional transportation concurrency allowed government entities to deny development where road capacity was not sufficient to meet the travel demands from new development. Transportation concurrency also allowed government entities to require that developments be timed or phased concurrent with the addition of new road capacity. In addition, transportation concurrency also allowed government entities to require new development to improve (widen) roads that were already overcapacity (a.k.a., “deficient” or “backlogged”).^[5]

In 2007, the Florida Legislature introduced the concept of mobility plans and mobility fees as a method to mitigate transportation impacts caused by new development and placed additional restrictions on the ability of local governments to charge new development for roadways that were already over capacity. The legislature directed the DCA and FDOT to evaluate mobility plans and mobility fees and report the finding to the legislature in 2009. The legislature accepted the findings of the DCA and FDOT analysis for mobility plans and mobility fees but did not take any formal action as the state was in the middle of the great recession; however, the legislature added specificity in §163.3180 through new changes in proportionate share law and how overcapacity roadways are addressed.

In 2011, the Florida Legislature adopted Ch. 2011-139, also known as the “Community Planning Act,”^[6] which implemented the most substantial changes to Florida’s growth management laws since the original 1985 legislation. The 2011 legislative session eliminated state-mandated concurrency, made concurrency optional for local governments, and eliminated the DCA and replaced it with the Florida Department of Economic Opportunity (DEO). The act essentially removed the DEO, FDOT, and regional planning councils (RPC) from the transportation concurrency review process.

Of significance for this article, the Community Planning Act did not grandfather any local governments’ existing transportation concurrency systems and did not place restrictions on any local government from repealing transportation concurrency or adopting an alternative mobility funding system in Ch. 2011-139,^[7] or when Ch. 2013-78 was adopted in 2013^[8] and rewritten in 2024 in Ch. 2024-266. After roughly 20 years of amending §163.3180, the legislature was fully aware that one-size-fits-all did not work and that local governments across Florida had begun implementation of alternatives to transportation concurrency. The legislature chose not to provide any exemptions in 2013 or in Ch. 2024-266 as it had in the 2009 legislation for Miami-Dade and Broward counties. The legislature had clearly established prior precedent in exempting certain local governments from growth management requirements under F.S. §163.3180 and elected not to do so in 2011, 2013, and 2019-2021. In Ch. 2024-266, the legislature provided only a limited exemption to the provisions of §163.3180(5)(j).

In 2013, the State of Florida identified mobility plans and fees as an alternative transportation option available to any local governments that chose to waive concurrency. This option set Florida on a path of divergence in transportation impact fee application that since 2013 has led to differing local government views for how to measure, charge for, and construct transportation mitigation. These various transportation visions often led to competing local government agendas as to who had jurisdiction in determining proper impact fees, how those fees were collected, and where and in what manner they could be applied. When local courts intervened, it sometimes added to the confusion with varying interpretations of legislative intent and real-world applicability since no definition of “mobility plan” or “mobility fee” existed in law, the absence of which has now been addressed in Ch. 2024-266.

Impact Fee and Mobility Fee Components 

The Florida Constitution grants local governments broad home rule authority to establish special assessments, impact fees, mobility fees, franchise fees, user fees, and service charges as revenue sources to fund specific government functions and capital infrastructure.^[9] Payment of impact fees or mobility fees are one of the primary ways local governments can require new development, along with redevelopment or expansion of existing land uses, which generates additional transportation demand, to mitigate its impact to a local government’s transportation system. While road impact fees and mobility fees are both intended to be means in which a development can mitigate its transportation impact, the following are the major differences between the two fees: Road impact fees are used to partially or fully fund road capacity improvements, including new roads, the widening of existing roads, and the addition or extension of turn lanes at intersections to help move vehicles. Road impact fees are based on increases in trip generation, vehicle trip length, and road capacity, along with the cost of road capacity improvements and the projected vehicle miles of travel from development. Finally, road impact fees may be based on either an adopted level of service standard (a.k.a., standards or consumption-based fee) or on future road improvements (a.k.a., plan or improvements-based fee).

Mobility fees are used to partially or fully fund multimodal improvements, including sidewalks, paths, trails, bike lanes, streetscape and landscape, complete and low-speed streets, micromobility devices (i.e., electric bikes, electric scooters), programs and services, micro transit circulators (i.e., golf carts, neighborhood electric vehicles, autonomous transit shuttles, trolleys), services and vehicles, new roads, transit facilities and mobility hubs the widening of existing roads, and turn lanes, signals, roundabouts, and ADA upgrades at intersections. Mobility fees are based on increases in person trips, person trip lengths, and person miles of capacity from multimodal projects, along with projected person miles of travel from development. The assessment areas may include all or portions of a municipality or county, and may vary based on geographic location (e.g., downtown) or type of development (e.g., mixed-use). The fees must be based on future multimodal projects (plan-based methodology) adopted as part of a mobility plan and incorporated or referenced in the local government comprehensive plan.

Since the two systems are not in agreement on potential uses or modes of improvements and presumably, based on differing transportation visions for the future, the several governments using the two types of systems were generally headed in different directions with different goals in mind. This was not a situation, in my opinion, that the State of Florida could or should tolerate in law as it would lead to confusion and endless legal disagreement.

Legal Background of Transportation Fees

The first problem with analyzing Florida caselaw surrounding mobility plans and fees is that there is little that directly applies to this relatively new transportation mitigation system. When the legislature directed that mobility fees were impact fees, it acknowledged the defined process and procedure to be utilized in adoption and application. It meant that existing caselaw could now be applied to the new mobility systems. It did not mean that they were entirely the same entity since otherwise there would be no need to list them separately in the Florida Statutes. Part of the purpose of Ch. 2024-266 was to further define and to provide additional statutory reference to mobility fees to allow a legal framework to exist even though the mitigation system is an impact fee as per §163.31801.

The first time the courts recognized the authority of a local government to impose impact fees in Florida occurred in 1975 in City of Dunedin v. Contractors and Builders Association of Pinellas County, 312 So. 2d 763 (Fla. 2d DCA 1975), in which the court stated that fees such as these involved in this case did not constitute a tax, but a charge for the use of utility services under Ch. 180.13 (1971):

[W]here the growth patterns are such that an existing water or sewer system will have to be expanded in the near future, a municipality may properly charge for the privilege of connecting to the system a fee which is in excess of the physical cost of connection, if this fee does not exceed a proportionate part of the amount reasonably necessary to finance the expansion and is earmarked for that purpose.^[10]

The case was appealed to the Florida Supreme Court and a decision rendered in the case of Contractors and Builders Association of Pinellas County v. City of Dunedin, 329 So. 2d 314 (Fla. 1976), in which the Second District Court of Appeal’s decision was reversed. The Second DCA held that “impact fees” did not constitute a tax; that they were user charges analogous to fees collected by privately owned utilities for services rendered. However, the supreme court reversed the decision, based on the finding that the city did not create a separate fund where impact fees collected would be deposited and earmarked for the specific purpose for which they were collected, finding:

The failure to include necessary restrictions on the use of the fund is bound to result in confusion, at best. City personnel may come and go before the fund is exhausted, yet there is nothing in writing to guide their use of these monies, although certain uses, even within the water and sewer systems, would undercut the legal basis for the fund’s existence. There is no justification for such casual handling of public monies, and we therefore hold that the ordinance is defective for failure to spell out necessary restrictions on the use of fees it authorizes to be collected. Nothing we decide, however, prevents Dunedin from adopting another sewer connection charge ordinance, incorporating appropriate restrictions on use of the revenues it produces. Dunedin is at liberty, moreover, to adopt an ordinance restricting the use of monies already collected. We pretermit any discussion of refunds for that reason.^[11]

The case tied impact fees directly to growth and recognized the authority of a local government to impose fees to provide capacity to accommodate new growth and to base the fee on a proportionate share of the cost of the needed capacity.

In 2021, the legislature again amended the impact fee statutes. The changes required that impact fees be based on planned improvements and that there be a clear nexus between the need for improvements and the impacts generated from new development. The legislative changes defined a greater impact on increases to existing impact fees and contained phasing requirements for increases to existing fees. The bill contained an additional provision for some flexibility allowing a local government new or updated fees based on a finding of extraordinary circumstances but requiring a super-majority approval.

Of equal importance in the discussion of Ch. 2024-266 are two recent Florida opinions that had a profound bearing on discussions attendant the new legislation. First, in Board of County Commissioners v. Home Builders Association of West Florida, 325 So. 3d 981 (Fla. 1st DCA 2021), the First District Court of Appeal reaffirmed two specific provisions of caselaw.^[12] First:

[T]he local government must demonstrate a reasonable connection, or rational nexus, between the need for additional capital facilities and the growth in population generated by the subdivision. In addition, the government must show a reasonable connection, or rational nexus, between the expenditures of the funds collected and the benefits accruing to the subdivision.^[13]

The second affirmed provision regarding impact fees was that unlike taxes, fees “must confer a special benefit on feepayers in a manner not shared by those not paying the fee.”^[14] Unquoted in the First DCA ruling, but equally as important for purposes of this discussion, was the preamble to the sentence above that stated, “reasonable dedication or impact fee requirements are permissible as long as they offset needs sufficiently attributable to the subdivision and so long as the funds collected are sufficiently earmarked for the substantial benefit of the subdivision residents.”^[15] This language conforms to the special benefit point of the Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 135 (Fla. 2000), ruling quoted above. The “substantial benefit” language is most revealing as it does not apply to a benefit to the citizens of a local government in general, but rather to the feepayer in a manner specific to them for an improvement identified to provide mitigation for the new development. This is a strict standard and was meant to be as demonstrated by the court in explaining its decision. Impact fees cannot be taxes, and if they are applied in such a manner as to provide that definition, they are not legal.^[16]

Second, in the still pending 2021 case in the 15th Judicial Circuit, Palm Beach County v. City of Palm Beach Gardens, 50-2021-CA 0006276-XXXX-MB, the trial court ruled on several points significantly calling into question the past intent of the legislature. By declaring that a local government could unilaterally decide it wanted to adopt mobility fees, the court provided much needed clarity about the supposed supremacy of charter counties. However, in ruling that the city must still pay the county impact fees, the court did not address the ability of a local government to determine its mobility fee was 100% of the developers’ owed cost. If it was 100%, there would be nothing left for the county to collect even if there were outside (extra jurisdictional) impacts. A double charge would be contrary to established caselaw, but capacity mitigation should still be accommodated. Further, the court allowed “most recent and localized data” to mean data that was over five years old to be used as the basis for adoption or execution of a current impact fee when such data is updated annually and is already two years old upon adoption.

For these reasons, the 2024 legislature determined to make changes to clarify several issues related to Florida’s growth management law. The adoption of §§163.3164(32) and (33), 163.3180(5)(h) 1 c. (I) and (II), (5)(i) and (j), 163.31801(4)(a), (5)(a), and (7), was the product of that decision. Included in the new legislation was a definition for “mobility plan” and “mobility fees,” a clarification of “proportionate share” and its applicability, a cleanup of the proscribed methods of transportation mitigation systems available for local governments to include concurrency and only two other types of alternative transportation (mobility or non-mobility) systems, a further clarification on how impact fee credits must be applied, an update on how “most recent and local data” language can be interpreted, and a new subsection to guide local governments in applying impact fees and requirements between jurisdictions, which must be handled through an interlocal agreement process and with a defined penalty for failure to execute such agreements.

To Whom Does Ch. 2024-266 Apply?

When the legislature passes a bill of general application, it sometimes provides additional guidance as to its applicability for local government. In growth management policy, the state retains preeminence in providing direction for local governments in applying any new law. Charter governments have been granted special statutory authority and with regard to growth management they have been provided some discretion in certain cases. For the purposes of this discussion, only two limited exceptions were provided in Ch. 2024-266.

Ch. 2024-266 Analysis

Based on Florida legislative history, and using caselaw as precedent, it is important to frame any discussion about Ch. 2024-266 as an iterative step in Florida’s growth management process. As always, the law must be read in pari materia with regard to Fla. Const. art VIII, §1(g),^[17] and four general laws of Florida, F.S. §§163.3171, 163.3177, 163.3180, and 163.31801.

The most significant problem the new legislation was designed to address was the overlapping charges assigned to development by various local governments and the legally required connectivity between impact fees and constructed mitigation projects. These misunderstandings generally occurred between cities and counties and reflected the differing nature of transportation mitigation required in a city and that required in a more open, or possibly rural, county. The language below was designed to provide clarity to existing law and offer new language as direction for development. Since this is general law, any charter county primacy is not a factor except as defined by the exemption section of the new bill, and only for the provisions of (j):

(j) 1. If a county and municipality charge the developer of a new development or redevelopment a fee for transportation capacity impacts, the county and municipality must create and execute an interlocal agreement to coordinate the mitigation of their respective transportation capacity impacts.

2. The interlocal agreement must, at a minimum:

a. Ensure that any new development or redevelopment is not charged twice for the same transportation capacity impacts.

b. Establish a plan-based methodology for determining the legally permissible fee to be charged to a new development or redevelopment.

c. Require the county or municipality issuing the building permit to collect the fee, unless agreed to otherwise.

d. Provide a method for the proportionate distribution of the revenue collected by the county or municipality to address the transportation capacity impacts of a new development or redevelopment or provide a method of assigning responsibility for the mitigation of the transportation capacity impacts belonging to the county and the municipality.

3. By October 1, 2025, if an interlocal agreement is not executed pursuant to this paragraph:

a. The fee charged to a new development or redevelopment shall be based on the transportation capacity impacts apportioned to the county and municipality as identified in the developer’s traffic impact study or the mobility plan adopted by the county or municipality.

b. The developer shall receive a 10 percent reduction in the total fee calculated pursuant to sub-subparagraph a.

c. The county or municipality issuing the building permit must collect the fee charged pursuant to sub-subparagraphs a. and b. and distribute the proceeds of such fee to the county and municipality within 60 days after the developer’s payment.

4. This paragraph does not apply to:

a. A county as defined in s. 125.011(1).

b. A county or municipality that has entered into, or otherwise updated, an existing interlocal agreement, as of October 1, 2024, to coordinate the mitigation of transportation impacts. However, if such existing interlocal agreement is terminated, the affected county and municipality that have entered into the agreement shall be subject to the requirements of this paragraph unless the county and municipality mutually agree to extend the existing interlocal agreement before the expiration of the agreement.

Subsection (5)(j)(1) indicates that all local governments must enter into an interlocal agreement to mitigate their respective impacts in the jurisdiction of the other entity unless they fit the exemptions listed below and with the caveat that once an agreement is no longer valid, the local governments will default to this requirement.

Subsection (5)(j)(2)(a) provides that when counting trip capacity totals, not specific projects, a new development cannot be charged more than its total capacity requirements. Example: A new development may generate 100 trips of capacity requirement. Those 100 trips of capacity mitigation may occur in whatever mode the local government issuing the building permit decides, and wherever the transportation mitigation plan identifies the need for such improvements in the timeframe identified by the interlocal agreement. Extrajurisdictional requirements will be handled through the above identified interlocal agreement process and must be accounted for under existing law prior to the adoption of Ch. 2024-266.

Subsection (5)(j)(2)(b) says the impact fee to be charged by all local governments must be plan-based.  Any local government that has a capacity consumption fee system is required by Ch. 2024-266 to have a plan-based system upon which to determine any appropriate impact fee and to, thus, be capable of negotiating the required interlocal agreement. A capacity consumption system does not meet the requirements of the new law regarding negotiating a new interlocal agreement nor in establishing a new impact fee to be charged. A plan-based system must identify projects to be constructed to meet the demand of the capacity requirement identified by anticipated new development and, thus, be the basis of the fee to be charged the developers in its jurisdiction.

Subsection (5)(j)(2)(c) states only the local government issuing the building permit may establish and collect a transportation capacity fee to developers within its jurisdiction, unless that issue has been negotiated through a plan-based interlocal agreement that defines and offers mitigation in any mode to the capacity impacts where they occur, or equivalent if constructed elsewhere. This means that even if a local government collects the fee on behalf of another government, the fee is not all their money to be spent as they determine. Building upon (a) and (b), a plan-based methodology will identify where the development impacts occur, the capacity projects necessary to be built, and when those mitigation projects will be built within the scope of the length of the interlocal agreement, consistent with rational nexus and identified special benefit as established by Florida court caselaw in prior rulings. The capacity mitigation projects in the interlocal agreement are not a CIP list. They are a commitment by the local government to build a specific capacity improvement in the identified timeframe.

Subsection (5)(j)(2)(d) states that all local governments that have impacts in other jurisdictions will be responsible for mitigating those impacts through the adopted plan-based interlocal agreement and will be responsible for funding those improvements whether they are in another city, city to county, county to city, or county to another county as per §163.3177(6)(h). The interlocal agreement process must establish a system whereby a developer pays one fee, knows what capacity mitigation they have paid for, and when the local government improvement can reasonably be anticipated to be built. Such a system will meet the stated state legislative goal of transparency throughout the process from both sides of the negotiation.

Section (5)(j)(3) is the penalty provision established in the new state law for failure to enact the interlocal agreement and is quite severe and somewhat different than the above process.

Subsection (5)(j)(3)(a) states the local government within its jurisdiction must by law default to the developer’s identified traffic impacts as defined in the developer traffic-prepared analysis, or likewise, as measured and identified in the local government adopted mobility plan, whichever system is applicable in the current scheme in use by the local government. The capacity impacts will be determined by that respective document for the eligible fee to be charged any developer, and they will be based on the projects to be built.

Subsection (5)(j)(3)(b) states whatever the established fee identified to be charged by a local government, the developer receives a 10% discount on that fee established by (a). This penalty reflects the failure of the local government(s) to enact the required interlocal agreement. Importantly, the local government remains responsible for the 10% of funds that were not collected since they must fully mitigate development impacts through some form of capacity mitigation. Another developer may not be charged for that created backlog as they are not responsible for other development traffic, only their own.

Subsection (5)(j)(3)(c), a penalty provision, is different than the provisions under a negotiated interlocal agreement. A local government collecting the transportation fee absent an interlocal agreement will still be responsible for identifying and distributing the funds collected, if any extra-jurisdictional impacts have been identified to be mitigated that meet rational nexus and the special benefit provisions of the impact fee law, to the affected local government even in the absence of an interlocal agreement, and they must do so within 60 days after receipt of payment from the developer if extra-jurisdictional impacts need be addressed under the developer traffic study or the adopted mobility plan of the local government.

Subsection (f)(j)(4)(a): Miami-Dade County appears to be the only county exempted from the stand-alone provisions of (j). Since the legislature chose to specifically create an exemption and limit it to a specific section of law, it removes all other counties from consideration for an exemption based on charter or the Florida Constitution, since this is a general law dealing with a required application of growth management where the Florida Legislature has a long history of preeminence over local government provisions.

Subsection (5)(j)(4)(b) recognizes the sanctity of existing legal agreements, while providing a mechanism to bring all local governments under the provisions of this law. Any local government with an existing interlocal agreement as of October 1, 2024, unless the interlocal is terminated as per its written requirements contained in the agreement at a later date or lapses as per its existing defined limits provisions, may continue under the current interlocal agreement. However, at that time of revocation or lapse, local governments will be bound by the provisions of §163.3180(5)(j) and must still execute all the provisions of that law to comply with §163.3177(6)(h). This latter provision may call into question the legality of any existing interlocal agreement document since both local governments are responsible for extra-jurisdictional mitigation as per the 2011 law. If such provision is not in the current agreement or has not been executed under existing caselaw application, it would not comply with the previous statutory requirement and be null.

Conclusion 

Chapter 2024-266 is an attempt to stay consistent with both previous legislation and caselaw. While it represents a substantial change from how many local governments were charging and collecting transportation impact fees, it is a logical extension to prior precedent and an effort to provide clarity to court decisions. The goal is that the legislation will provide much needed transparency for both developers and local governments alike in how they apply one of the most important tools available to address growth in our state.