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Introduction to Development Impact Fees and Other Development Charges

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3. Legal Issues and Legislative Needs

Legal basis for charging DIFs is well established

Legal basis
Nolan - Essential Nexus Tests [Nollan v. CA Coastal Commission (1987)]; Dolan - Rough Proportionality Test [Dolan v. City of Tigard (1994)]; Nexus studies help establish Nollan/Dolan legal basis; Koontz - Reasonable Relationship Test (Program vs. Project)[Koontz v. St. John River (2013)]

Three U.S. Supreme Court cases address regulatory takings concerns that limit owners’ (developers’) use of their properties, ensure paying fair share of public improvements

Judge's hammer icon

Legal Guidelines—Program vs. Project

Citywide Legislated Policy (All Developers)

Reasonable Relationship Test (Koontz)

Project-Level Requirements (Single Developer)

Essential Nexus/Rough Proportionality Test (Nollan/Dolan)

When DIF legislated into local ordinance, burden of proof resides with developers; When adjudicated without ordinance, burden of proof resides with local agencies

Some 30 States have DIF enabling legislation

Timeline

Examples: CA—early adopter, case laws FL—late adopter, existing statute TX—restrictive initially, later amended IL & NJ—transportation focus NM & IN—affordable housing focus AR—water/wastewater only, counties excluded; Timeline image - starting at 1920 (In-lieu fees for infrastructure (police power); prior to 1980 - limits on property taxes. 1987 - Nollan, 1993 - Dolan, 2013 - Koontz

Local DIF Ordinance Examples and Features

State

City

Key Features of Local DIF Legislation

Local vs. State

CA

San Francisco
  • Long established transportation impact fees
  • Capital, O&M, and overhead costs
  • Apply only to non-residential; some areas exempt

Local ordinance (1981) preceded State
(1989)

Oakland
  • New City-wide impact fees for capital costs only
  • Affordable housing and transportation

State DIF legislation specifies local eligibility criteria

Los Angeles
  • New City-wide impact fees
  • Parks and affordable housing

OR

Portland
  • First transportation system development charges (SDC)
  • Multi-modal transportation improvements
  • Exclude maintenance costs

FL

Aventura
  • Transportation mitigation impact fees
  • Capital, O&M, and administration costs of public transit

State legislation ambiguous on local eligibility criteria

Broward (County)
  • County’s DIF authority established over municipalities’ authority through County-level Land Development Code

OH

Beavercreek
  • Impact fee ordinance and special impact fee district
  • New roads/transportation improvements for new developments
  • Exclude maintenance costs

No State DIF enabling legislation

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