Water War Flares Again Between Palm Coast and County Over Planned Shops Near Airport

Palm Coast and Flagler County government are again in a water war.

The front this time is a 57-acre property along State Road 100, adjacent to the Flagler County Executive Airport. It’s in unincorporated Flagler, right across from where Wawa is expected to anchor a new commercial development on land the city just sold to that developer.

The 57 acres on the county’s side of 100 are owned by Property Appraiser Jim Gardner and his family. The property is under contract to a buyer who plans to develop the acreage into a commercial strip with shops. The development plans have been going through the county’s various regulatory steps, in cooperation with city regulations, because the property is within a few feet of city boundaries.

All issues have been resolved between the city and the county, with one exception: water service. The property falls within the city’s water-service area. But to be hooked up to city water, Palm Coast government says the parcel must annex into the city. If it annexes into the city, the developer must pay $180,000 in transportation impact fees—the one-time levy on development that goes to defray the cost of transportation “impacts” caused by the new development.

The developer doesn’t want to annex into the city because he doesn’t want to pay that impact fee as the additional price of annexation—or as the price of getting city water. According to County Administrator Craig Coffey, there’s a “tipping point” that makes the site work—or not work, depending on how expensive it would be to develop it. The cost of impact fees would make it unfeasible.

The county has considered extending its own water line from the county airport to the development. But the county is getting its water from the city. If it were to extend the water line to  a customer, it would be violating the agreement with the city, among other rules, since the county is not supposed to wholesale city water. It would be doing an end run around the law, and Palm Coast is prepared to take the county to court over the proposed development if the county were to go ahead with that plan.

City Attorney Bill Reischmann threatened litigation today during a city council workshop.

As much as the two sides are prepared to do battle, there’s also little eagerness to do battle on either side. At the same time, both sides are using very firm language that suggests little give at this point.

The matter was not on today’s workshop agenda. City Manager Jim Landon brought it up at the end of the meeting, under his portion of the agenda, in what turned into a 50-minute discussion which he laid out the issue as he and Reischmann see it, less than a day after meeting with Coffey, though that meeting did not end well: Coffey saw Landon as intransigent and refusing to compromise after getting what Coffey sees as a series of concessions from the county, while Landon described it as the county trying to pick favorites and skirting a 2007 agreement that gives the city the authority to exercise its annexation provision when providing water.

The city council largely supported Landon’s and Reischmann’s approach, with Mayor Milissa Holland echoing the threat of litigation and repeatedly relying on the 2007 agreement between the city and the county that lays out the rules of where annexation is allowed and where it isn’t.

“We went through a very extensive dialogue many years ago with the county, they knew right up front where these water agreements were,” Holland said of the 2007 agreement, “and we did that precisely because we knew where growth was going to happen in our city, and they agreed to it. So to now go back and say we don’t recognize interlocal agreement[s], and we’re trying to help a developer so he doesn’t have to pay transportation impact fees, that’s not a philosophy that I think we need to even create that conversation.”

Holland’s use of the word “we” was ironic. In 2007, she was a Flagler County Commissioner. She was on the other side of the water war, advocating for the county and against annexation by Palm Coast, winning, as part of that agreement, vast exceptions to the legally-permissible annexation imposition, what county officials are now calling “weaponizing” water service. In 2010, still as a county commissioner, Holland walked out of a city council meeting in disgust at the way Landon was re-writing the history of another skirmish in the water wars at the time, when Palm Coast was trying to annex a 55-acre parcel at the south end of the county airport, where the National Guard was to build its new facility. Holland urged County Attorney Al Hadeed to draft a memo laying out the county’s position. The county fought the city’s claim and won.

Holland’s signature as a county commission chairman is on the document that rezoned the Gardner property into a planned unit development parcel. Today, Holland was singing a far different tune. As categorical as she was in advocating for the county half a decade ago, she was categorical this morning in advocating for the city.

“I am not willing to compromise and give a pass to one particular developer that’s trying to skirt the impact that he’s creating within our jurisdictional boundaries within the city of Palm Coast,” Holland said. “I am not in favor in any way shape or form of picking winners and losers and showing favoritism to one developer to say: you’re not required to pay impact fees, but RaceTrac, down the street, you are required to pay those transportation impact fees. That is not a good philosophy. That is not a good stance we will be making.”

But the city isn’t above picking winners and losers itself: it owned the parcel on which the Wawa development is to go, but did so at a huge loss, calculating that it was good for economic development.

With the county project across the street, though identical in scope and type, Landon was more derisive: “What is being proposed is a fast-food restaurant with a drive-through, a strip center with two small shops, and possibly a tire store,” the city manager said. “So from an equity standpoint, it’s not like it’s something exciting where you want to do economic development. There’s just a lot of disturbing things about trying to make an exception for one property, because everything else up and down 100, Palm Coast Parkway, they all had to pay that.” (Again, not entirely accurate: the development across the street will pay impact fees, but while getting what amounts to a substantial subsidy on the selling price of the parcel.)

After negotiating with Landon, Coffey was left under the impression that the developer would be allowed to bring in a pre-annexation agreement and leave it up to the city council to decide whether to go for it or not. The agreement would presumably have included a waiver on the impact fees. That’s not how today’s city workshop developed—with the threats of litigation and what Coffey described as other inaccuracies. “There were some things said like maybe weren’t  100 percent accurate,”  he said. “It’d be a shame to hurt a developer trying to invest in our county or to get that reputation that we’d rather fight than to get along, because our approach has been to try to get along.”

In light of today’s meeting, Coffey said, the county will likely “back up” and reconsider its approach. He was not convinced that the parcel was outside the exceptions of the 2007 agreements, saying it left that question “moot,” and citing the National Guard issue as an example of city overreach. “It’s the same issue, same service area.”

As he sees it, the county has tried to work with the city to resolve all issues. “We’re down to that one issue.”

But it’s a significant one, and even city council members like Steven Nobile, who would have been willing to give the county more room as long as the developer was paying impact fees, said the city should “stand our ground” on the matter.

Only council member Bob Cuff, an attorney, sounded caution about the city’s approach—an approach with a long history of heavy-handedness and the damage of backfires: “The real issue is the impact fees but the stick we’re going to beat them with is the water supply,” Cuff said. “Well, if we can and we need to, then fine, but if what the county is doing and they just approved it under their ordinances and it stays in the county, then I think we just need to be very careful about getting into all of this because all of us that ran in 2016 got an earful in both ears about the city and the county cooperation and why they can’t get along. I’m not saying to get along just to get along, I’m saying we need to approach this in a professional , governmental, perhaps even statesman-person way, so we don’t end up looking like a bunch of kids fighting in a sandbox down at Holland Park—that we’re addressing the correct issues and we’re addressing the correct reasons.”

The way the discussion ended, however, was less on a note of statesmanship and more on a a suggestion of litigation ahead.