Public Finance News

Tindale-Oliver & Associates, Inc. 1000 N. Ashley Drive Suite 100 Tampa, FL 33602-3059

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October 2009

Public Finance News

Return Service Requested

ISO Ratings and Insurance Costs

By Skip Starling and Nilgün Kamp, AICP Fire insurance rates charged for structures within a community are based on several factors. One of these is the rating given to the community’s fire rescue service provider by the Insurance Service Office (ISO).

ISO is a private company that provides information about property/casualty insurance risk. The information provided by ISO is used in several fields, including insurance, finance, real estate, and others. ISO’s Public Protection Classification (PPC) system ranks fire departments in terms of their capabilities to respond to fire incidents. The ranking relies on the following variables: 

   

TOA Locations

TOA Selected for Orlando’s Multi-Modal Transportation Impact Fee In August 2009, TOA was selected by the City of Orlando to update the City’s transportation impact fee program and transition the impact fee calculation from a “road-based” fee to a multi-modal fee, incorporating vehicular, transit, bicycle, and pedestrian modes of travel.

The study tasks include conducting nationwide research on methodologies used to calculate multi-modal fees in other jurisdictions, estimating the asset value of the existing transportation infrastructure and developing level of service standards for each mode, and calculating fees that vary geographically, as necessary. The study also will address alternative funding methods to address the City’s transportation infrastructure needs.

Tampa: 1000 N. Ashley Dr., #100 Tampa, FL 33602 (813) 224-8862



Contact: Nilgün Kamp, AICP nkamp@tindaleoliver.com Orlando: 1595 S. Semoran Blvd., #1540 Winter Park, FL 32792 (407) 657-9210 Contact: Bob Wallace, P.E., AICP bwallace@tindaleoliver.com Bartow: 195 S. Central Ave. Bartow, FL 33830 (863) 533-8454 Contact: Richard Dreyer, AICP rdreyer@tindaleoliver.com

Fire Alarms – 10% of the overall grading is based on how well the fire department receives fire alarms and dispatches its firefighting resources. Some of the variables evaluated to address this category include the following:

Engine Companies – 50% of the overall grading is based on the number of engine companies and the amount of water a community needs to fight a fire. ISO reviews the distribution of fire companies throughout the area and checks that the fire department tests its pumps regularly and inventories each engine company’s nozzles, hoses, breathing apparatus, and other equipment. In addition, the records of the fire-company are reviewed to determine:    



the communication center in terms of number of operators at the center the telephone service, including the number of telephone lines coming into the center the listing of emergency numbers in the telephone book dispatch circuits and how the center notifies firefighters about the location of the emergency

type and extent of training provided to fire company personnel number of people who participate in training firefighter response to emergencies maintenance and testing of the fire department’s equipment

Water Supply – 40% of the grading is based on the community’s water supply. This part of the classification focuses on whether the community has sufficient water supply for fire suppression beyond daily maximum consumption. All components of the water supply system are reviewed, including pumps, storage, and filtration. The rate of flow the water mains provide is determined through fire-flow tests at representative locations in the community. In addition, the distribution of fire hydrants is evaluated.

The resulting classification ranges from 1 to 10, with Class 1 representing the best public protection, and Class 10 indicating no recognized protection.

The evaluation process is rather complex, and requirements could be significantly different from one community to the next, depending on the community’s

www.tindaleoliver.com Page 4 Tindale-Oliver & Associates, Inc. is an Equal Opportunity Employer without regard for race, religion, gender, or age.

www.tindaleoliver.com

Inside TOA SB360 Article Series 2 Developments in Impact Fee Case Law: 2008 and 2009 3 TOA Selected for Orlando’s Multi-Modal Transportation Impact Fee 4

Public Finance News is a newsletter of Tindale-Oliver & Associates, Inc.

October 2009

geography and type of development. Some of the issues involve number of insufficient fire stations or poorly placed fire stations, lack of the necessary number of fire hydrants, or hydrants that are too spread out. Similarly, a fire hydrant that is located more than 7.7 miles from the closest station is likely to require the availability of an extra engine company.

If there are chicken houses, hog farms, or tall warehouses in the service area, up to three engine companies and a ladder truck may be required because of flammable products and the extended burn time of these types of structures. Given the complexity and number of variables that are included in the rating, many communities find it useful to hire consultants to assist them with the rating process.

best they can to earn the lowest ISO score possible.

Improving ISO ratings can result in significant insurance cost savings for the residents. For example, to receive an ISO Class 3 (a commercial rate), the fire department must earn at least 70 points; a Class 7 rating would require 30 to 39 points. The insurance premium cost differential between Class 7 and Class 4 is up to a 50% reduction. Given that 97% of all insurance companies use ISO rate data, it is critical that fire departments do the

Simply stated, for local governments or fire districts that are considering implementing a fire fee or assessment and trying to obtain public support, it is key to explain the rate of return the residents will obtain from the necessary investment into fire facilities, both in terms of reduced insurance costs and better fire rescue service.

TOA SB360 Article Series

The publicity surrounding SB 360 and the mobility fee concept is focusing attention on the issue of adequate transportation planning and finance. Hopefully, the debate will be healthy and result in positive outcomes, improving how Florida deals with:

By Bill Oliver, P.E., PTOE The passage of the 2009 Community Renewal Act (SB 360) has created many questions about what effect the legislation has on local governments’ ability to manage the approval of new development. Depending on how the considerations unfold, SB 360 has the potential to require significant changes to the State’s traditional positions on the ability of local governments to manage growth in their communities. To identify some of the issues and questions that need to be addressed during the upcoming consideration, TOA is preparing a series of articles that address the following topics:

At times, ratings can improve with relatively minor investments or staff additions. In others, the necessary investment levels could be more substantial. To fund these changes, the jurisdictions may need to increase their millage or general fund contribution toward fire rescue services or implement a fire assessment, which may be viewed as a burden on the community.

However, if the funding obtained through an assessment or other means improves the department’s rating and results in insurance cost savings for the residents, everyone benefits.

   

the need to realistically plan and finance transportation systems improving the quality of transportation planning enhancing the transportation finance system creating a less burdensome development review process



Replacing Transportation Concurrency with a Mobility Fee

We hope this series of articles will highlight pertinent issues of the debate relating to the requirements of SB 360, mobility fee concepts, and concurrency concepts.



Mobility Fee Methodology, Implementation, and Mobility Plans

Please refer to TOA’s website (www.tindaleoliver.com) for copies of the published articles.



Factors to be Considered in Transitioning from a Road Impact Fee to a Mobility Fee

www.tindaleoliver.com

Page 2

Developments in Impact Fee Case Law: 2008 and 2009

By Tyson Smith, Esq., AICP In anticipation of the 2009 National Impact Fee Roundtable in Phoenix, “Infrastructure Finance and Impact Fees in the New Economy,” several of us are preparing our comments on how state legislatures and courts are responding to the “new economy” vis-à-vis impact fees.

Developers are tied to foundering projects. Local governments relying on impact fees are faced with severely diminished revenue streams.

Certainly, developers are fighting each other as the tides have turned (see Caldera Properties-Lewes/Rehoboth, VII, LLC v. Ridings Development, LLC, 2009 WL 2231716, Del. Super., May 29, 2009 [C.A. No. 07-C-12002 THG]), but the industry also has launched a fight against impact fees themselves. The likely results of this engagement and the veracity of the arguments proffered inevitably will be a topic of hot debate among the developers, planners, economists, and attorneys in our group.

As one of the attorneys in the conversation, I will cover the impact fee cases decided over the last year from Hawaii to Illinois to Maryland and in between.

One of the more lengthy lawsuits to be resolved also was one of the more instructive—Anne Arundel County v.

Halle Development Inc., 408 Md. 539, 971 A.2d 214, May 6, 2009 (Md. 2009).

This is the second time in recent years Anne Arundel’s impact fees have been a topic of the annual case law update. In 2005, the Federal District Court upheld the County’s fee expenditure policies, but found the plaintiff in that case lacked standing because her builder actually paid the impact fees (and therefore suffered the alleged injury) and the plaintiff failed to show that those fees were somehow “passed through” to her sufficient to give her standing. Herron v. Annapolis, et al, 388 F.Supp.2d 565, 2005 WL 2319214 (D. Md 2005).

This decision was upheld by the Fourth Circuit in 2006.

Herron v. Annapolis, 198 Fed.Appx. 301, 2006 WL 2226573 (4th Cir. 2006). This time, however, the issue was the County’s failure to expend collected impact fees in accordance with the timeframes set forth in the fee ordinance.

The ordinance provided that fees were to be refunded if they were not “expended or encumbered by the end of the sixth fiscal year following collection….” Anne Arundel Co., 971 A.2d at 217. The County could extend this period for up to three years by showing that within the extended timeframe, “certain capital improvements are planned to be constructed that will be of direct benefit to the property against which the fees were charged.” Id. at 218. By interoffice memoranda, the County attempted to make six extensions. Id. The class action lawsuit was Page 3

filed in 2001 alleging federal and state constitutional violations and an action in assumpsit resulting from the County’s failure to grant refunds of unspent impact fees or to properly grant extensions for doing so. Id. at 219.

Eight years of acrimony (in the courtroom and the halls of local government) eventually resulted in a judicial determination that the County staff’s attempts to extend the timeframes were ineffective because the necessary findings were not made; specifically, staff failed to reference any “specific property that would be directly benefitted by the planned capital improvement.” Id. at 220.

For practitioners, the more interesting aspect of the decision is the unfortunate chain of events and the costly result of the County’s misapplication of its ordinance. Ultimately, the Court of Appeals held that (1) the decision would not be remanded to staff for a second chance to handle the extension as prescribed by ordinance; (2) this type of legal claim could properly be brought as a class action; and (3) the legal claim to challenge the refund did not accrue upon the mere passage of the six-year expenditure timeframe (which could have barred the claim under a statute of limitation), but not until the County’s publication of notice of the expiration of the timeframe. Id. at 229. In other words, without published notice of the timeframe having passed, those who paid impact fees could reasonably assume that either (a) the fees had been timely expended or encumbered or (b) that a proper extension of the timeframe had been made. We will explore this case in detail at the Roundtable, as its implications are significant and its fact background sometimes familiar.

Also, over the last year, three trial court decisions have been made that currently are on appeal or are expected to be appealed, each addressing points of law relevant to the impact fee practitioner: The Drees Company, et al. v.

Hamilton Township, Ohio, et al., Case No. 07CV70181 (Ct. Common Pleas, Sept. 30, 2009); HBA of Central Arizona v. City of Mesa, Case No. LC2007-000559-001 DT (Sup. Ct, June 12, 2009); and HBA of Central Arizona v.

Prescott and Prescott Valley, Case No. CV 2006-1259 (Sup. Ct., March 25, 2009).

If you would like a copy of the case law overview and are not attending this year’s Roundtable, feel free to contact me at tsmith@planningandlaw.com or (843) 937-0201.

www.tindaleoliver.com

Public Finance News is a newsletter of Tindale-Oliver & Associates, Inc.

October 2009

geography and type of development. Some of the issues involve number of insufficient fire stations or poorly placed fire stations, lack of the necessary number of fire hydrants, or hydrants that are too spread out. Similarly, a fire hydrant that is located more than 7.7 miles from the closest station is likely to require the availability of an extra engine company.

If there are chicken houses, hog farms, or tall warehouses in the service area, up to three engine companies and a ladder truck may be required because of flammable products and the extended burn time of these types of structures. Given the complexity and number of variables that are included in the rating, many communities find it useful to hire consultants to assist them with the rating process.

best they can to earn the lowest ISO score possible.

Improving ISO ratings can result in significant insurance cost savings for the residents. For example, to receive an ISO Class 3 (a commercial rate), the fire department must earn at least 70 points; a Class 7 rating would require 30 to 39 points. The insurance premium cost differential between Class 7 and Class 4 is up to a 50% reduction. Given that 97% of all insurance companies use ISO rate data, it is critical that fire departments do the

Simply stated, for local governments or fire districts that are considering implementing a fire fee or assessment and trying to obtain public support, it is key to explain the rate of return the residents will obtain from the necessary investment into fire facilities, both in terms of reduced insurance costs and better fire rescue service.

TOA SB360 Article Series

The publicity surrounding SB 360 and the mobility fee concept is focusing attention on the issue of adequate transportation planning and finance. Hopefully, the debate will be healthy and result in positive outcomes, improving how Florida deals with:

By Bill Oliver, P.E., PTOE The passage of the 2009 Community Renewal Act (SB 360) has created many questions about what effect the legislation has on local governments’ ability to manage the approval of new development. Depending on how the considerations unfold, SB 360 has the potential to require significant changes to the State’s traditional positions on the ability of local governments to manage growth in their communities. To identify some of the issues and questions that need to be addressed during the upcoming consideration, TOA is preparing a series of articles that address the following topics:

At times, ratings can improve with relatively minor investments or staff additions. In others, the necessary investment levels could be more substantial. To fund these changes, the jurisdictions may need to increase their millage or general fund contribution toward fire rescue services or implement a fire assessment, which may be viewed as a burden on the community.

However, if the funding obtained through an assessment or other means improves the department’s rating and results in insurance cost savings for the residents, everyone benefits.

   

the need to realistically plan and finance transportation systems improving the quality of transportation planning enhancing the transportation finance system creating a less burdensome development review process



Replacing Transportation Concurrency with a Mobility Fee

We hope this series of articles will highlight pertinent issues of the debate relating to the requirements of SB 360, mobility fee concepts, and concurrency concepts.



Mobility Fee Methodology, Implementation, and Mobility Plans

Please refer to TOA’s website (www.tindaleoliver.com) for copies of the published articles.



Factors to be Considered in Transitioning from a Road Impact Fee to a Mobility Fee

www.tindaleoliver.com

Page 2

Developments in Impact Fee Case Law: 2008 and 2009

By Tyson Smith, Esq., AICP In anticipation of the 2009 National Impact Fee Roundtable in Phoenix, “Infrastructure Finance and Impact Fees in the New Economy,” several of us are preparing our comments on how state legislatures and courts are responding to the “new economy” vis-à-vis impact fees.

Developers are tied to foundering projects. Local governments relying on impact fees are faced with severely diminished revenue streams.

Certainly, developers are fighting each other as the tides have turned (see Caldera Properties-Lewes/Rehoboth, VII, LLC v. Ridings Development, LLC, 2009 WL 2231716, Del. Super., May 29, 2009 [C.A. No. 07-C-12002 THG]), but the industry also has launched a fight against impact fees themselves. The likely results of this engagement and the veracity of the arguments proffered inevitably will be a topic of hot debate among the developers, planners, economists, and attorneys in our group.

As one of the attorneys in the conversation, I will cover the impact fee cases decided over the last year from Hawaii to Illinois to Maryland and in between.

One of the more lengthy lawsuits to be resolved also was one of the more instructive—Anne Arundel County v.

Halle Development Inc., 408 Md. 539, 971 A.2d 214, May 6, 2009 (Md. 2009).

This is the second time in recent years Anne Arundel’s impact fees have been a topic of the annual case law update. In 2005, the Federal District Court upheld the County’s fee expenditure policies, but found the plaintiff in that case lacked standing because her builder actually paid the impact fees (and therefore suffered the alleged injury) and the plaintiff failed to show that those fees were somehow “passed through” to her sufficient to give her standing. Herron v. Annapolis, et al, 388 F.Supp.2d 565, 2005 WL 2319214 (D. Md 2005).

This decision was upheld by the Fourth Circuit in 2006.

Herron v. Annapolis, 198 Fed.Appx. 301, 2006 WL 2226573 (4th Cir. 2006). This time, however, the issue was the County’s failure to expend collected impact fees in accordance with the timeframes set forth in the fee ordinance.

The ordinance provided that fees were to be refunded if they were not “expended or encumbered by the end of the sixth fiscal year following collection….” Anne Arundel Co., 971 A.2d at 217. The County could extend this period for up to three years by showing that within the extended timeframe, “certain capital improvements are planned to be constructed that will be of direct benefit to the property against which the fees were charged.” Id. at 218. By interoffice memoranda, the County attempted to make six extensions. Id. The class action lawsuit was Page 3

filed in 2001 alleging federal and state constitutional violations and an action in assumpsit resulting from the County’s failure to grant refunds of unspent impact fees or to properly grant extensions for doing so. Id. at 219.

Eight years of acrimony (in the courtroom and the halls of local government) eventually resulted in a judicial determination that the County staff’s attempts to extend the timeframes were ineffective because the necessary findings were not made; specifically, staff failed to reference any “specific property that would be directly benefitted by the planned capital improvement.” Id. at 220.

For practitioners, the more interesting aspect of the decision is the unfortunate chain of events and the costly result of the County’s misapplication of its ordinance. Ultimately, the Court of Appeals held that (1) the decision would not be remanded to staff for a second chance to handle the extension as prescribed by ordinance; (2) this type of legal claim could properly be brought as a class action; and (3) the legal claim to challenge the refund did not accrue upon the mere passage of the six-year expenditure timeframe (which could have barred the claim under a statute of limitation), but not until the County’s publication of notice of the expiration of the timeframe. Id. at 229. In other words, without published notice of the timeframe having passed, those who paid impact fees could reasonably assume that either (a) the fees had been timely expended or encumbered or (b) that a proper extension of the timeframe had been made. We will explore this case in detail at the Roundtable, as its implications are significant and its fact background sometimes familiar.

Also, over the last year, three trial court decisions have been made that currently are on appeal or are expected to be appealed, each addressing points of law relevant to the impact fee practitioner: The Drees Company, et al. v.

Hamilton Township, Ohio, et al., Case No. 07CV70181 (Ct. Common Pleas, Sept. 30, 2009); HBA of Central Arizona v. City of Mesa, Case No. LC2007-000559-001 DT (Sup. Ct, June 12, 2009); and HBA of Central Arizona v.

Prescott and Prescott Valley, Case No. CV 2006-1259 (Sup. Ct., March 25, 2009).

If you would like a copy of the case law overview and are not attending this year’s Roundtable, feel free to contact me at tsmith@planningandlaw.com or (843) 937-0201.

www.tindaleoliver.com

Tindale-Oliver & Associates, Inc. 1000 N. Ashley Drive Suite 100 Tampa, FL 33602-3059

PRSRT STD U S POSTAGE PAID TAMPA FL PERMIT NO 778

October 2009

Public Finance News

Return Service Requested

ISO Ratings and Insurance Costs

By Skip Starling and Nilgün Kamp, AICP Fire insurance rates charged for structures within a community are based on several factors. One of these is the rating given to the community’s fire rescue service provider by the Insurance Service Office (ISO).

ISO is a private company that provides information about property/casualty insurance risk. The information provided by ISO is used in several fields, including insurance, finance, real estate, and others. ISO’s Public Protection Classification (PPC) system ranks fire departments in terms of their capabilities to respond to fire incidents. The ranking relies on the following variables: 

   

TOA Locations

TOA Selected for Orlando’s Multi-Modal Transportation Impact Fee In August 2009, TOA was selected by the City of Orlando to update the City’s transportation impact fee program and transition the impact fee calculation from a “road-based” fee to a multi-modal fee, incorporating vehicular, transit, bicycle, and pedestrian modes of travel.

The study tasks include conducting nationwide research on methodologies used to calculate multi-modal fees in other jurisdictions, estimating the asset value of the existing transportation infrastructure and developing level of service standards for each mode, and calculating fees that vary geographically, as necessary. The study also will address alternative funding methods to address the City’s transportation infrastructure needs.

Tampa: 1000 N. Ashley Dr., #100 Tampa, FL 33602 (813) 224-8862



Contact: Nilgün Kamp, AICP nkamp@tindaleoliver.com Orlando: 1595 S. Semoran Blvd., #1540 Winter Park, FL 32792 (407) 657-9210 Contact: Bob Wallace, P.E., AICP bwallace@tindaleoliver.com Bartow: 195 S. Central Ave. Bartow, FL 33830 (863) 533-8454 Contact: Richard Dreyer, AICP rdreyer@tindaleoliver.com

Fire Alarms – 10% of the overall grading is based on how well the fire department receives fire alarms and dispatches its firefighting resources. Some of the variables evaluated to address this category include the following:

Engine Companies – 50% of the overall grading is based on the number of engine companies and the amount of water a community needs to fight a fire. ISO reviews the distribution of fire companies throughout the area and checks that the fire department tests its pumps regularly and inventories each engine company’s nozzles, hoses, breathing apparatus, and other equipment. In addition, the records of the fire-company are reviewed to determine:    



the communication center in terms of number of operators at the center the telephone service, including the number of telephone lines coming into the center the listing of emergency numbers in the telephone book dispatch circuits and how the center notifies firefighters about the location of the emergency

type and extent of training provided to fire company personnel number of people who participate in training firefighter response to emergencies maintenance and testing of the fire department’s equipment

Water Supply – 40% of the grading is based on the community’s water supply. This part of the classification focuses on whether the community has sufficient water supply for fire suppression beyond daily maximum consumption. All components of the water supply system are reviewed, including pumps, storage, and filtration. The rate of flow the water mains provide is determined through fire-flow tests at representative locations in the community. In addition, the distribution of fire hydrants is evaluated.

The resulting classification ranges from 1 to 10, with Class 1 representing the best public protection, and Class 10 indicating no recognized protection.

The evaluation process is rather complex, and requirements could be significantly different from one community to the next, depending on the community’s

www.tindaleoliver.com Page 4 Tindale-Oliver & Associates, Inc. is an Equal Opportunity Employer without regard for race, religion, gender, or age.

www.tindaleoliver.com

Inside TOA SB360 Article Series 2 Developments in Impact Fee Case Law: 2008 and 2009 3 TOA Selected for Orlando’s Multi-Modal Transportation Impact Fee 4