Leery of Landowners and Litigation, Palm Coast Council Kills Latest Stormwater Proposal

When ITT built Palm Coast it also built a drainage system that included canals and swales. After Palm Coast incorporated, the city passed a stormwater ordinance to charge property owners a fee in exchange for having their properties drained—typically, $8 a month for a single family house, more for commercial properties. The boundaries in that stormwater service area were set too broadly. Two years ago some property owners whose lands got no benefit from Palm Coast’s drainage system complained that they were paying for a service they didn’t receive, and threatened to sue. The city got busy working on a new stormwater ordinance.

The service area was narrowed. Substantial city revenue would have been lost had the city not imposed the stormwater fee on some property owners who did not previously pay the fee—owners of vacant land within the city’s servicing district. By resolving one problem, the city created another, at least in the eyes of those disgruntled property owners who, on Tuesday, successfully scuttled Palm Coast’s latest attempt to write a new stormwater ordinance.

Capped by a long, technical, verbal dissertation  by City Council member Frank Meeker that he summed up in his thesis statement—“if we want to look at the drainage system as a utility, we should be asking how does vacant bulk land benefit from draining into our system, and in my mind, it doesn’t necessarily benefit at all”—the council’s discussion ended in a fatal silence for the proposed ordinance: no council member made a motion to approve it.  So the proposal died.

“It was clear that the council was taking its time talking through the issue,” said Jay Livingston, an attorney at Livingston & Wolverton in Palm Coast who represents some of the large land-owners objecting to the ordinance. “Our intention was never to take away a revenue source for the city. Our intention was to make sure that the revenue source was fair.”

Palm Coast has admitted that its existing stormwater ordinance is invalid. It can’t be without such an ordinance: Most property owners are still paying the assessed stormwater fee. “My understanding is that we have no choice but to adopt some version of this ordinance,” Netts said, “that you have to have a rational nexus between a fee and a benefit.”

That nexus was not to the council’s satisfaction. Which means the city must rewrite the ordinance once again, though most issues in contention (land owners had raised some 20 such issues) had been resolved in the past year. The sticking point is that ratio between fees and benefits. Landowners and city staff had reached a stalemate over that question. So the matter was brought to the council for a policy decision.

“We as anticipated aren’t going to make everybody happy on this one. It is a very complicated, very technically oriented issue,” City Manager Jim Landon said. But Meeker aside, several land-owners or their representatives lined up to object after Meeker asked the city’s attorney, William Reischmann, what chances the city had in prevailing in court if it was sued under the new ordinance.

“The Florida Supreme Court has never said that this type of regulation can’t include vacant land,” Reischmann said, “and indeed your engineering report specifically provides that only those properties that receive some benefit, they may not [be] all the same kinds of benefit, some benefit, are included in the area. And as I understand, I am not the engineer but as I understand it, there is a recognition that there are different levels of benefit, and therefore there will be different levels of payment, and that while those are not exact, they’re not—they don’t have to be exact under the Florida law. So with all that said—and I’m certainly not going to try to sit here and talk about all the engineering—there is clearly legal precedent supporting what we are doing, and that this ordinance is indeed trying to fix.”

Livingston disagreed.  “What the supreme court has never done is approve an ordinance of this type. All the cases that have come before the court have been based on an impervious surface calculation, not upon a volume calculation,” Livingston said, impervious surfaces meaning hart-top surfaces like concrete and asphalt that don’t let water through. “So this would be an entirely new analysis by the supreme court. They’ve never upheld an ordinance like this. Most importantly, and as the case that’s actually cited in your ordinance in support of it,  the court clearly indicated that undeveloped property, being exempt was a critical part of its decision in upholding that as a valid user fee. So that affirmative statement from the court that undeveloped property being exempt is important, we have on the books. We don’t have the opposite.”

Clint Smith, vice president of Palm Coast Holdings, objected on the more basic issue of benefits received: “If it rains today and your house floods, you get upset. You call the city, somebody comes out and does something,” Smith said. “If it rains 20 inches in a week like it did last year and our pine trees are flooded for two weeks, nobody gets upset, nobody comes out and does anything, and our pine trees really don’t care. They don’t care if the water goes down in a day, a week or several weeks. So the benefit is not there. Now, once the property is developed, people are living there, people care. Then there’s a benefit. The statement’s been made that undeveloped property or large property owners are trying to get a free ride, and that’s absolutely not true. The ordinance, as drafted right now, whether undeveloped property is exempt or not, we would be the single largest contributor to the stormwater fund either way, by far, and the money on the stormwater fee dwarfs the amount of property tax that we pay to the city every year. What do we get for that? Really nothing. We don’t demand any service. The property’s empty. There’s nobody out there asking for fire or police or anything else.”

Lea Stokes, who represents 17 property owners through Preferred Management Services, raised issues relating to developed properties that are being overcharged in what amounts to a system of double-taxation despite having their own stormwater permits or arrangements, and with recourses too complicated or expensive to get credit for what stormwater systems they have in place.

“It’s interesting listening to comments and misperceptions,” Landon said at the end of the comment period. For undeveloped areas, the proposed ordinance reduces fee by 70 percent if they don’t have swales, he said. Larger areas that retain water like wetlands, the fee goes down to zero. And the fee to apply for mitigation credits is $100, not larger, as some contended.

“But what is that other 30 percent? What is the benefit that is being generated for these vacant lands?” council member Holsey Moorman asked. “I’m not so sure and I’m not comfortable with this because listening to Frank I’m even in worse shape than I was at the beginning because he’s laid things out there have haven’t been laid out before.”

By then it was clear the ordinance wouldn’t float despite a brief attempt by Netts to discredit some misperceptions. He asked for a motion. Twice. “Hearing no motion,” Netts said, “the ordinance fails for lack of any action.”