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Real Estate Development: Frederick City Passes School Mitigation Fee Ordinance

Will Mitigation Fees Provide Enough Funds to Hasten Renovations to Frederick High School?

Frederick City Passes School Mitigation Fee OrdinanceAfter months of workshops and meetings, the mayor and the board of aldermen of the City of Frederick approved a modification to the Adequate Public Facilities Ordinance (APFO) that includes a mitigation fee ordinance allowing developers to move forward with projects instead of waiting three years to build in areas where schools exceed capacity.

The city is following the lead of Frederick County in this, as MacRo Report covered in “Real Estate  Development:  Can More Housing Mitigate School Infrastructure Problems?” Check it out for an overview of the struggle faced by Frederick County Public Schools (FCPS) in finding adequate capital improvement funds (CIP) in the wake of declining state contributions, tax revenues, and the crash of the housing market.

The newly-adopted ordinances of both Frederick County and Frederick City allow developers of new housing projects built within overcrowded school districts to have the option to pay a mitigation fee (in addition to impact fees) in order to start projects right away, instead of waiting three years to proceed.

This may sound counter-intuitive— how on earth is increasing development in overcrowded areas going to help the school system fund building and renovation projects in the city that are already in some cases painfully overdue (i.e. Frederick High School)?

Won’t it instead create a bigger problem, with the mitigation fees commandeered to compensate for exacerbating already overcrowded school conditions?

The answer is that mitigation fees can be collected at the time subdivision plats are recorded—which usually takes place years in advance of breaking ground on the first lots. Typically, city housing projects are developed on a much smaller scale—we are talking 5-25 lots on smaller “infill” pieces of land, instead of the thousand-lot Planned Unit Developments (PUDs) developed in outlying rural areas of the county.  And most importantly, according to Alderman Karen Young (D), the city government will have control over which schools these fees will be allocated to.

“Right now, the county government determines the Frederick County Board of Education (BoE) budget and the City has no control of that budget.  But we will have control over the fees collected through this mitigation ordinance”, said Young.  “We can ensure that these funds go to renovations or additions to city schools, or to schools served by city residents.  We will have an annual meeting with the BoE to ensure that city schools are adequate.”

“That kind of flexibility is a very positive step for Frederick City schools,” said Leslie Mansfield, a former member of the BoE and a parent of a Frederick High student. “Historically, renovations take a back seat to overcrowding. Right now the CIP budget is hampered by funds that were floated to build Oakdale High, but the State of Maryland is behind in reimbursing Frederick County.  CIP funding is being used to carry debt service instead of bumping renovation projects up.”

The aldermen and city planners are not concerned that this change to the city’s APFO will exacerbate overcrowding.

“We work-shopped this concept seven times,” said Alderman Karen Young (D).  “We met with the Frederick County Commissioners, and separately with the Frederick County Board of Education. Under the existing APFO, developers are able to build regardless of overcrowding if they just wait three years.  If they can build anyway, we should at least be able to collect a fee for the schools.”

Does this mean that the proposed renovations to Frederick High School are on the horizon?

Joe Adkins, deputy director for planning, was , and 5,000 of those are too far along in the development process to be affected by the new ordinance. That’s about a five-year supply, or more, depending upon future market conditions.

“We don’t anticipate we will see anything substantial from this ordinance for at least 5-7 years,” said Young. “It was developed as a tool for strategic flexibility for future development.”

Given that the new ordinance has a “sunset” date of 2016, it is possible that no developers will take advantage of paying mitigation fees before it expires, unless the City votes to extend it.

What is important about the school mitigation fee ordinance is that our community leaders have found a creative way to resolve a number of problems at once:

  1. increasing funds available for long-overdue school  improvement projects;
  2. providing CIP funds earmarked specifically for Frederick City schools; and
  3. providing an incentive for developers to begin building new projects sooner rather than later. More houses in the city means more local construction jobs and ultimately more income tax revenue for the city and the public school system—what comes around goes around.

Frederick County schools are at about 88% capacity overall, which does not bode well for an influx of state funding.

Redistricting students to schools with additional capacity will likely not happen, as it has proven to be a very unpopular option to relieving the issue of overcrowding. Historically, the political will to take such a bold step that is often routine in other jurisdictions, is quickly overridden by the desire of individual BoE members’ hopes to be re-elected.

Using land development activity as a creative solution is a step in the right direction.  But why stop there?  What other creative ideas are out there to raise the much-needed funds to begin improvement projects like the one Frederick High School has waited decades for?

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Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He is an appointed member of the Frederick County Charter Board. He also writes for

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