Agenda - Planning Commission - 08/03/2017

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!Pr anaging Strategic Growth !:Jsing Lawful impact Fees By Paige H. Gosney and Martin P. Stratte When assessing a development plan for a proposed residential, commercial, or industrial project, planners are faced with a multitude of questions related to how the proposed project may impact existing infrastructure and facilities, including roads, utilities, and sewer and water treatment systems. If the proposed development is residential, there are additional questions, such as whether there are adequate schools, parks, and police and fire resources available to ser- vice the proposed project and the residents who would reside there. When existing facilities and municipal service capabilities are inadequate, and new or additional infrastructure is necessary to support a proposed project, agencies can use development impact fees to secure the fund- ing to construct the facilities and provide the services. A development impact fee is a mon- etary exaction other than a tax or special as- sessment that a local governmental agency charges a project applicant in connection with approval of a project. The purpose of a devel- opment impact fee is to defray all or a portion of the cost of public facilities related to the proposed project or to accumulate the funds necessary for new capital improvements that will serve the proposed project. A development impact fee is voluntary and must be reasonably related to the cost of the service that will be provided by the local agency. If a development impact fee does not relate to the impact created by the project, or exceeds the reasonable cost of providing the public service, then the fee may be declared a special tax and be subject to voter approval requirements. The power to exact development impact fees arises from a local agency's police power to protect public health, safety, and welfare. This police power allows a city or other local agency to act in the interest of its citizenry and to enact and enforce ordinances and regulations that are not in conflict with state or federal law. When calculated in accordance with clear, well -reasoned methodologies and de- veloped in conjunction with local land -use regulations and comprehensive zoning plans, impact fees can provide the financing neces- sary to construct and expand public facilities and infrastructure. However, as the use of impact fees has increased —often becoming a necessary tool used by local agencies to fund the infrastruc- ture to support and sustain new develop- ment —so has the level of scrutiny on the part of developers suspicious of planning agency overreach. This has inevitably led to an in- crease in lawsuits that seek to challenge the amount of impact fees assessed. This article discusses the legal standards applicable to impact fee programs, includ- ing constitutional requirements; identifies distinctions between development impact fees and other land -use -related exactions; examines commonalities between impact fee programs used in jurisdictions across the country; and provides recommendations for local agencies seeking to establish a valid impact fee program. CONSTITUTIONAL REQUIREMENTS The U.S. Supreme Court has issued three significant decisions that are fundamental to understanding the lawful imposition of development impact fees: Nollan v. California Coastal Comm'n, 483 U.S. 825,107 S. Ct. 3141, 97 L. Ed. 2d.677 (1987); Dolan v. City of Tigard, 512 U.S. 374, 114 S. Ct. 2309, 129 L. Ed. 2d 304 (1994); and Koontz v. St. Johns River Water Mgmt. Dist., 133 S. Ct. 2586, 57o U.S. 2588, 186 L. Ed. 2d 697 (2013). Nollan In Notion, landowners proposed the construc- tion of a two-story home within the same foot- print as their existing one-story beachfront house. As a condition of issuing a coastal development permit, the California Coastal Commission required that the property own- ers grant a public access easement across the beach in front of their house. The property owners successfully ar- gued, and the U.S. Supreme Court affirmed, that the exaction (i.e., the grant of a public easement) was not related to the impact cre- ated by the development (i.e., the increased building height). In so doing, the U.S. Supreme Court held that proof of such an "essential nexus" was required if an exaction was to be lawful. However, the court, did not specify or discuss exactly how close or precise the nexus must be. Dolan In Dolan, the owner of a hardware store ap- plied for an expansion of her downtown store, which was located in a floodplain. The city wanted her to dedicate a bike path and a gre- enway along a stream that bordered her prop- erty to the city as a condition of approval. The U.S. Supreme Court crafted a more refined test for the exaction of real property, ruling that in order for the government to require project -specific exactions, the govern- ment must demonstrate that (1) an essential nexus exists between the legitimate state ZONINGPRACTICE 7.17 AMERICAN PLANNING ASSOCIATION I page 2