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Impact Fee BasicsImpact Fee Basics
Deborah Galardi, Galardi Consulting, LLC
Rick Giardina, Rick Giardina & Assoc.
Tyson Smith, Freilich, Leitner & Carlisle
20032003
Impact Fee Impact Fee RoundtableRoundtableOctober 16, 2003October 16, 2003
Presentation Outline
Trends Legal Environment Methodological Practices
– Fee Structure– Fee Schedule– Offsets/Credits– Exemptions & Waivers
Case Studies
IMPACT FEE TRENDSIMPACT FEE TRENDS
More States Adopting Enabling LegislationMore Local Communities Using Impact Fees Impact Fees Being Used for Greater Variety
of FacilitiesGreater Linkage Between Impact Fees/CIP/
Comprehensive Plans2nd and 3rd Phase of Program to increase
fees
WHY CONSIDER IMPACT FEES?WHY CONSIDER IMPACT FEES?
Significant Actual/Projected Growth RateNeed for Costly Public Facilities Due to New
GrowthNeed for Equity Between Existing Residents
and New GrowthLimited Alternative Revenue SourcesMaintenance of Quality of Life, as Defined
by Public Facilities and Services
Legal EnvironmentLegal Environment
General Legal ConsiderationsGeneral Legal Considerations
Implemented as a Regulatory technique, NOT a financing mechanism
Structured based on “impact” on facilities, NOT, e.g., on building value, frontage
Can NOT be used on existing or to increase LOS to existing development
Should be based on rational planning process and adopted CIP/capital budget
AuthorityAuthority
Home Rule Power– Ohio– Florida
Special Acts– North Carolina– Tennessee
Statutes– Georgia– California– South Carolina– Texas
Limitations on AuthorityLimitations on Authority
Reasonableness/NexusStatutory Limitations
3 Tests of Constitutionality3 Tests of Constitutionality
Specifically & Uniquely Attributable– Pioneer Trust & Sav. Bank v. Mt. Prospect, 22 Ill.2d 375,
176 N.E.2d 799 (1961) Rationally-Related
– Associated Home Builders v. Walnut Creek, 4 Cal. 3d 633, 94 Cal.Rptr. 630, 484 P.2d 606 (1971)
– Government Code sections 66001 thru 66005 Dual Rational Nexus Test
– Nollan and Dolan– Hollywood, Inc. v. Broward Co., 431 So.2d 606 (Fla. 4th
DCA 1983)
Dual Rational Nexus TestDual Rational Nexus Test
The 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; and
the expenditures of the funds collected and the benefits accruing to the subdivision
– Hollywood, Inc. v. Broward County, 431 So.2d 606 (Fla. 4th DCA 1983)
– HBA v. W. Des Moines, 644 N.W. 2d 339 (Iowa 2002)
Fee v. TaxFee v. Tax
Taxes – Primarily revenue-raising– Authority must be explicit– Proportionality not required
Impact Fees – Land use regulations that mitigates off-site impacts
– POLICE POWER– Authority may be implied– Rough Proportionality is required
“Planning is Politics …”
Dr. Ernest Bartley, PhD
Professor of Urban and Regional Planning
University of Florida
Methodological PracticesMethodological Practices
Improvements Required to Service New Development
Improvements Required to ServiceExisting Development (Deficiencies)
Excess Capacityof Existing Facilities(Recoupment)
Maintenance and Repairs
Costs Fundable by Impact FeesCosts Fundable by Impact Fees
No!
No!
Yes!
Yes!
Fee StructureFee Structure
System Buy-In (Recoupment) Approach
Improvements (CIP) Approach
} Combined Approach
Consumption (Level of Service/Demand) Approach
Fee Structure ConsiderationsFee Structure Considerations
What is standard in the industry/allowable by law? How is system planned/built?
– Large blocks of capacity– Incrementally, as growth occurs
Where will capacity for growth come from?– Existing available capacity (recoupment)– Future capacity (improvement/CIP based)– Combination
Fee Structure Considerations Fee Structure Considerations (Continued)(Continued)
What data is available to support the methodology?– Existing inventory/assets (recoupment and
consumption approaches)– Long-term capital improvement plan (improvement
approach)
Fee Structures Other IssuesFee Structures Other Issues
System Buy-In (Recoupment) Approach– Selection of system valuation approach
Improvements (CIP) Approach– Allocation of improvement costs between growth and
existing system users Combined Approach
– Explicit calculation of capacity needed for growth Consumption
– How does planned LOS compare to existing?
Fee ScheduleFee Schedule
Scaling fees for sizes of developments
Fees by development typeSystem-wide fees vs. geographically
differentiated fees
Impact Fee Schedule
$_ $_ $_
Fee Schedule ConsiderationsFee Schedule Considerations
Defensibility/Legal Requirements– Standard and uniform application – Fees relate to potential use/benefit
Administrative feasibility– Fee assessed before use occurs– Ongoing information requirements
Offsets/CreditsOffsets/Credits
Past payments by newly developed properties
Future payments by newly developed properties
Grants Contributions
Exemptions and WaiversExemptions and Waivers
Exemptions – Uses to which the impact fee ordinance does not apply, based on a finding of No Impact
Waivers – Uses otherwise subject to the impact fee ordinance, but for which payment is not required, in order to advance Planning objectives
ExemptionsExemptions
No Impact on Facilities Senior Housing on Schools Commercial Uses on Schools Nonresidential Uses on Parks Suburban Residential Uses on:
Neighborhood/Urban Parks Central Sewer
Jurisdictional
WaiversWaivers
Statute-driven Schools Governmental uses
Smart Growth-driven Affordable Housing Infill/Compact Development Economic Development
Jurisdiction/Authority-driven
ADMINISTRATIVE ISSUES
Earmarking of funds Expenditure of funds Offsets Credits Refunds Appeals/Administrative Process/Protests Administrative Guidelines Annual Audit and Report
Practice TipsPractice Tips
Identify Policy Objectives EarlyMethodology Report should incorporate
& cross-reference Policy ObjectivesOrdinance should adopt Methodology
ReportForms and Administration
Case StudiesCase Studies
Intergovernmental Consistency
Preserving the “essential nexus.”
St. Johns Co. v. Northeast Florida Builders Ass’n, Inc.
“Needs” Prong met “Benefit” Prong not met Fee v. Tax Free Public Schools Uniform School System
583 So.2d 635 (Fla. 1991)
but see, Cherokee Co. v. Greater Atlanta HBA, 566 S.E. 2d 470 (June 13, 2002)
Fee Structure
Accounting for capacity.
Oregon Home Builders Association vs. City of Newberg
Double charging for capacity by charging both:– Buy-in fee (based on existing system TOTAL value
and capacity)– Improvement fee
Methodology revised to:– Explicitly calculate available capacity in system
components– Spread available capacity and new costs over
projected growth
Fee Schedule
Estimating claims on capacity.
Krupp v. Breckenridge Sanitation District (Colorado)
1999 case before Colorado Supreme Court Key Issues before the Court
– District policy that growth pays for growth– Controversial single-family equivalent assessment
schedule for Plant Investment Fee (PIF)– Krupp et al. argued unconstitutional taking, i.e.,
that Nollan and Dolan applies
The Colorado Supreme Court Decision
The District’s PIF is a “service fee” The setting of service fees is a legislative
function that involves many questions of judgment and discretion and the court will not set aside the methodology chosen unless it is inherently unsound
Service fees are valid if they are reasonably related to the overall cost of the services provided
The Nollan and Dolan test does not apply to service fees like the District’s PIF.
Credits/Offsets
A question of reasonableness.
Valley Children’s Hosp. v. Madera Co., 2002 WL 31484784 (Cal. App. 5 Dist.)
“approved roads” entitled to road impact fee credit
“Approved Road” defined:– Constructed by a non-governmental agency– Listed in the “Road Impact Fee Study”
“… an additional two lanes…” Strength of CIP-based approach Importance of Study
Incorporate Policies Include Basis for Terms
Exemptions
Volusia Co. v. Aberdeen at Ormond Beach
Covenants, Conditions, and Restrictions 30 years a magic number? Unit not the user “Potential” impact Community-based analysis rejected Specific Need/Special Benefit adopted
– a.k.a. “subdivision-based” standard
760 So.2d 126 (Fla. 2000)
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