9/9 FRI 2:45 | How to Pay for Growth - Impact Fees 1


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Craig Richardson

Since the 1980s, impact fees have been an important tool to fund infrastructure needs created by development. The landscape for local governments use of impact fees in Florida has changed over the past several years. There has been an economic downturn. Legislative and state referenda have limited local government’s
ability to generate revenue to fund infrastructure. Given these new circumstances, does the use of impact fees need to be rethought, and if so how? Given the changing climate in Florida, this session will provide planners and planning lawyers the tools to rethink their use of this critical infrastructure funding tool.

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9/9 FRI 2:45 | How to Pay for Growth - Impact Fees 1

  1. 1. Impact Fees: Moving Forward 2011 FAPA Conference, Palm Beach, FL Craig Richardson
  2. 2. Introduction Introduction Background Current Environment Relationship of Fees and Growth/Development Conclusions
  3. 3. Background 1970s: Growth in Florida places tremendous pressures on demand for public facilities  State and local government structure for funding public facilities  Local political conditions Late 1970s: Handful of local governments explore use of impact fees to fund public facilities, and adopt ordinances  Palm Beach and Broward counties lead the way  Impact fees untested in courts Early 1980s: Palm Beach and Broward county ordinances challenged in courts
  4. 4. Background Early 1980s: Broward and Palm Beach counties successfully defend local governments use of impact fees Early 1980s: Cases established fundamental ground rules for local government use of impact fees  Local government powers to adopt impact fees emanate for state constitutional home rule powers
  5. 5. Background Early 1980s: Cases established fundamental ground rules (cont.)  Compliance with dual rational nexus standard required… the local government must demonstrate a reasonable connection, or rational nexus, between the need for additional capital facilities and the growth in population generated by the subdivision. In addition, the government must show a reasonable connection, or rational nexus between the expenditure of the funds collected and the benefits accruing to the subdivision. In order to satisfy this later requirement, the ordinance must specifically earmark the funds collected for use in acquiring capital facilities to benefit the new residents.” Hollywood, Inc.  General presumption of validity
  6. 6. Background Balance of 1980s: Significant expansion of local government use of impact fees, extending into 1990s  Heaviest use in coastal communities in southeast and southwest Florida  Use expanded to include a number of additional public facilities:  Roads  Parks  Water/Sewage  Police  Fire/EMS  Schools  Other (Solid Wastes, Libraries, Government Buildings)
  7. 7. Background Balance of 1980s into 90s:Limited litigation over impact fees during these years, with one exception  Local governments authority and right to adopt school fees upheld by Florida Supreme Court in St Johns County v. Northeast Florida Homebuilders  Justice Grimes, who wrote the appellate court opinion in Dunedin, wrote the opinion for the court  Reaffirmed rational nexus standard applies to impact fees, while establishing additional parameters for school fees  Decision opened the door even more for local governments use of impact fees  At this point question was whether or if state legislature would step in and attempt to place limits on the imposition of fees – which they did not
  8. 8. Background Balance of 1990s into 2000s: Local governments continued to expand the use of impact fees  By 2007, 42 counties had adopted e fee programs  Many local governments updated and added fees  In most instances updates resulted in increases in fee amounts (especially as costs and housing prices continued to rise)  Not unusua, by the early 2000s in many counties for the total fees to be over $15,000  Resulted in some litigation  School fees  Primary issue -- whether calculations complied with rational nexus standard  In mid 2000s several local governments adopted affordable housing fee programs
  9. 9. Current Environment Great Recession and Aftermath  Substantial economic downturn and decrease in home values  In many communities, substantial inventory of housing  Dramatic decrease in building  Political attitude about imposition of fees changed  Fee suspensions, reductions, and in limited instances abolishment  State legislature shifts burden to local governments to demonstrate compliance with rational nexus standards  Continued limitations on local government capacity to raise revenue for capital public facilities  Significant amendments to growth management laws, including general loss of concurrency mandate (even though can still impose requirements)
  10. 10. Conclusions While economic and legislative climate toward growth management has changed, much has not with respect to impact fees  When growth and development picks up, there will be a need for funding for capital facilities to accommodate  Limited state funding  Continued legal limitations on local government ability to raise revenue  Local political considerations  Impact fees still a viable source of funding for capital public facilities  The concept that growth should pay for itself is alive and well, and impact fees are a way to ensure it does
  11. 11. Conclusions While economic and legislative climate toward growth management has changed, much has not with respect to impact fees (cont.)  Even with the shifting of burden to local government to demonstrate compliance with rational nexus standard, standard for adoption has not changed  Good local government support studies met this burden  Important to remember burden has shifted, and support studies must use professionally accepted methods and reasonable/sound information to calculate fees  Good news: methods are available; sound information can be found  Authority to adopt fees emanates from state constitution  Some local governments might rely more on assessments
  12. 12. QUESTIONS