Part 1
Foundations
Part 1 provides the Foundations that shape the evolving discussions of proportionate-share development fees from impact fees to new and evolving applications. Chapter 1 provides the background on impact fees and how they have evolved over time. It includes data on how impact fees are being assessed today with tables summarizing national data and several useful local examples illustrating specific impact fee structures. Chapter 2 summarizes the results of a detailed survey of impact fees that individual jurisdictions across the country are charging. The results of the survey reveal where impact fees are most common, how much jurisdictions in various states are charging, and the types of facilities for which fees are being charged. The chapter provides an opportunity to observe changes over time in the types and amounts of impact fees charged in different parts of the country. Chapter 3 provides perspectives on the evolving legal principles surrounding impact fees. It includes important historical contexts, identifies some debates that courts have essentially settledânamely the big ones relating to authority and general mitigation guidance, and emerging legal discussions. A review of state impact fee enabling acts is presented in Chapter 4, focusing on several areas of commonality among the states and commenting on nuances in some states.
Chapter 1
The Progression of Impact Fees
Impact fees result from several factors but the chief one is obviously that, in many communities, traditional sources of revenueâprincipally local taxesâhave proven to be insufficient to finance new or expanded facilities to meet the needs of growth. In addition, the publicâs expectations for the quantity and quality of facilities increase and, along with it, costs rise. This chapter reviews the principal epochs of development exactions associated with impact fees, summarizes the current state of affairs in meeting the needs of new development within the context of a public finance system in the United States that is changing fundamentally, introduces the experience of Florida with impact feesâan experience that is instructive nationallyâand outlines new directions in impact fee designs.
Let us first put the discussion into the context of growth patterns. In 1900, the Census Bureau classified 60 percent of the U.S. population as rural but, by 2006, more than 93 percent was considered metropolitan. A century ago, most people did not use automobiles, most of the nationâs population did not have public water or wastewater service, fire protection was spotty, libraries were limited mostly to larger cities, and generally the public did not receive modern public services perhaps because they were either considered unneeded or unaffordable, or both.
What a difference a century makes! Between 1900 and 2006, the United States evolved from a mostly rural country to a nearly completely metropolitan one. Indeed, growth in metropolitan areas and cities appears to be increasing, as shown in Table 1-1. Between 1980 and 2006, for instance, metropolitan areas accounted for practically all the nationâs growth. Incorporated places accounted for nearly two-thirds of all metropolitan growth. It is unlikely that these trends will reverse themselves. It is more likely that, as more people are added to metropolitan areas, local governments may be increasingly stressed to accommodate their facility demands. As the next section shows, local government has been struggling for decades trying to find ways in which to meet this challenge, with limited success overall.
The Evolutionary Process
Development impact fees are a product of evolution in public policy toward land use and provision of public facilities. Before the U.S. Commerce Departmentâs model planning and zoning enabling acts of the 1920s, most growing communities had no effective land-use controls. It was not uncommon to find speculators, for example, subdividing vast tracts of land considerable distances from cities in anticipation that purchasers and home builders would eventually receive city services (Nelson (1988a)). There were no land-use regulations controlling the location, timing, or dimensions of those developments, nor were public facility extension policies linked to land-use regulation. The model acts are the genesis of modern land-use regulation. They were adopted by most states, many verbatim. Today a person can travel to virtually any state and find commonalities in land-use regulation process and substance that are rooted in the model acts.
Table 1-1 Metropolitan and Incorporated Population Trends, 1980-2006
An immediate outcome of the model acts were regulations requiring developers to provide necessary facilities on-site. Prior to the model acts, developers often demanded and received street, water, sewer, and drainage facilities to each part of their development. The model acts gave public officials legal rationale for requiring developers to internalize that cost.
It must always be remembered that development impact fees are land development regulations and have evolved just as the regulation of land development has evolved. The object of development regulations is to protect the public. In certain circumstances, protecting the public has required the prohibition of certain types of developments in certain locations.
Requiring developers to provide adequate facilities is common. In fact, subdivision regulations typically mandate that the subdivider must provide a number of public facilities as a condition of development approval. Initially, required dedications were confined to improvements on-site (i.e., within the bounds of the property to be subdivided).
Concern about the adequacy of public facilities extends beyond the limits of the subdivided property. As zoning and other land-use regulatory forms evolved, so did required improvements, or exactions. Developers are now required to provide property or improvements that were external (i.e., outside of the subdivision). Such requirements are found to be within the authority of a local jurisdiction if there was a valid public purpose and the result was reasonable.
First Era: Mandatory Land Dedication and In-Lieu Fees
The four decades following the 1920s saw public officials wrestle with providing facilities outside the boundaries of the development. For example, local officials discovered that fiscal resources could not satisfy the appetite generated by new development for new parks and schools. The initial resolution of this problem was to require developers of residential subdivisions to dedicate land for park and school use, which is usually facilitated by state enabling legislation.
Sometimes land dedicated by development was in the wrong place, was too small, or for other reasons could not be reasonably used to satisfy community demand for parks and schools. As an adjunct to subdivision dedications, therefore, a system of payment in lieu of dedication came into use. Payment in lieu is employed when actual dedication or provision of land or improvements is not practical or feasible. For example, under a requirement to set aside 5 percent of a developmentâs land area as open space, a five-acre subdivision would reserve one-quarter acre. Such a site might prove to be totally impractical for both the subdivision and the community. The alternatives were ...