The following is the fourth installation of a postcard series on this important topic.
The Sheetz ruling provides several potential benefits for developers, home builders, and ultimately home buyers:
- Increased Scrutiny of Impact Fees: The ruling subjects legislatively imposed impact fees to the Nollan/Dolan test, requiring governments to demonstrate an "essential nexus" and "rough proportionality" between the fee and the development's impact. This increased scrutiny may lead to more reasonable and justifiable fee structures.
- Burden of Proof Shift: The ruling likely shifts the burden of proof from developers to municipalities when impact fees are challenged. Municipalities now need to justify their fee calculations, potentially giving developers more leverage in fee disputes.
- Opportunity for Fee Challenges: Developers now have a stronger legal basis to challenge impact fees they believe are disproportionate or lack a clear nexus to their project's impacts.
- Potential for Reduced Fees: As municipalities review and adjust their fee structures to comply with the ruling, some developers may benefit from reduced fees in cases where previous fee levels cannot be justified under the new scrutiny.
- More Individualized Assessments: The ruling may encourage more tailored fee assessments, potentially benefiting developers whose projects have lower impacts than assumed in broad fee schedules.
- Improved Transparency: Municipalities may need to provide more detailed justifications for their fee calculations, giving developers better insight into how fees are determined.
- Potential for Negotiation: The increased need for municipalities to justify fees may create more opportunities for developers to negotiate fee amounts based on their project's specific impacts.
- Protection Against Arbitrary Fees:?The ruling provides developers with constitutional protection against arbitrary or excessive fees that are not closely tied to the actual impacts of their developments.
- Broader Application to Other Exactions: The decision may extend beyond just impact fees, potentially affecting other types of exactions or conditions placed on development approvals.
- Consistency Across Jurisdictions: The ruling may lead to more consistent application of impact fees across different jurisdictions, as all will need to meet the same constitutional standards.
While these benefits are potential outcomes of the Sheetz ruling, it's important to note that the full implications of the decision are still unfolding and may vary depending on how lower courts interpret and apply the Supreme Court's decision.
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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