The following is the fifth and final installation of a postcard series on this important topic.
To ensure that impact fees comply with the Supreme Court's ruling in Sheetz, local governments are encouraged to consider taking the following steps when preparing their impact fee studies:
- Conduct Detailed Nexus Studies: Local governments should perform thorough nexus studies to establish a clear connection between the impact fees imposed and the specific impacts of the development. This involves demonstrating an "essential nexus" between the fee and the government's land-use interest, ensuring the fee is directly related to the development's impact on public infrastructure like roads and utilities.
- Ensure Rough Proportionality: Fees must be "roughly proportional" to the impact of the development. This means the amount charged should correspond to the extent of the impact the development will have on the community. Governments need to avoid arbitrary or excessive fees that do not reflect the actual burden imposed by the development.
- Individualized Determinations: While the ruling does not mandate individualized determinations for each permit, it emphasizes the need for a more specific and careful examination of the impacts. Local governments should consider making individualized assessments where feasible to better justify the fees imposed.
- Review and Adjust Existing Fee Structures: Governments should review their current impact fee structures and adjust them to comply with the Nollan and Dolan standards. This might involve reducing fees that cannot be justified under the new scrutiny or restructuring them to better align with the actual impacts of developments.
- Legal and Policy Guidance: Seeking legal and policy guidance to ensure compliance with the new requirements is crucial. Local governments should collaborate with legal experts to understand the implications of the ruling and to develop policies that withstand judicial scrutiny.
- Transparency and Documentation: Maintaining transparency in how fees are calculated and documenting the rationale behind them can help defend against potential legal challenges. Clear documentation showing the relationship between the fee and the development's impact will be essential.
- Stakeholder Engagement: Engaging with developers and community stakeholders can help in understanding the impacts and in designing fee structures that are fair and justifiable. Collaborative approaches can also reduce resistance and legal challenges.
By implementing these steps, local governments can better align their impact fee programs with constitutional requirements, potentially avoiding costly litigation and ensuring that development continues to support necessary public infrastructure improvements.
Carter Froelich
, CPA, is the author of the National Association of Home Builder’s "Impact Fee Handbook"?and has been representing the private sector in matters surrounding impact fees for over 35 years. Contact Carter at [email protected].
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