Agenda - Council - 08/13/1996 - Laserfiche WebLink

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MEMORkNDUM Ramsey City Council William K. Goodrich, City Attorney Development Impact Fees August 5, 1996 In March of 1996 the City. adopted a Resolution requiring a surcharge on building permits. The revenue from the surcharge is to help defray the cost of transportation facilities necessitated by development and the resulting increased population density. The City also adopted an ordinance requiring subdividers to pay a development assessment fee on all new subdivisions, the revenue from which is to be used for the same purposes as the building perm/t surcharge. On May 21, 1996, the Minnesota Court of Appeals issued an opinion wherein it ruled that the City of Eagan lacked statutory authority to impose its impact fees. This case is cited as Coun.~rv Joe, Inc., et al vs ~%ty of Eagan (Minn. 1996). The issue in the Eagan case was "Does a City have authority to raise revenue for its road system by imposing a charge as a condition to issuing a building permit?" As stated above, the Court of Appeals ruled that a City does not have such authority. The Appeals Court treated Eagan's impact fee as a tax and concluded that under Minnesota Statutes, Eagan, and all Minnesota cities, do not have the statutory authority to impose such a tax. Ramsey's building permit surcharge fee and development assessment fees are very similar in nature to those ruled invalid in the Eagan case. In general, both of Ramsey's f~e generating regulations would be classified as "impact fees" as defined by the Eagan Court. Finally, even though Ramsey is a charter city, the City still may not impose a tax which is not statutorily authorized. The Eagan case is on appeal to the Minnesota Supreme Court. As of this writing the Minnesota Supreme Court had not made a decision as to whether it will accept the appeal. If the appeal is not accepted, the Eagan case will remain as Minnesota law. If the appeal is accepted, then we must await the appeal process and a final decision which may take up to one year. It is my opinion that the City should repeal the resolution adopting the building permit surcharges and refund the amounts collected to the appropriate payors. With regard to public improvements necessitated as a result of a specific development/subdivision, the City should negotiate with the involved developers to require payment for the same within the framework of the development agreement and the City's subdivision ordinances. In addition, the council should consider revision of the development assessment ordinance.