International Municipal Lawyers Association 2012 New England Regional

International Municipal Lawyers Association 2012 New England Regional Land Use CLE June 22, 2012 Work Session 8 Imposition of Conditions Blanket Dedication, TIFs, Impact Fees & (hopefully) Guidance Daniel D. Crean, Pembroke, New Hampshire

Topics for this work session Work Session 8 addresses the manner in which conditions may be imposed, generally, and with specific reference to certain concerns. Mike Donahue will address imposition of conditions generally. Dan Crean will address issues selected issues relating to blanket exactions, financial matters such as TIFs and impact fees, and guidance in imposing fees. 2

Part 1: Blanket Exactions Nollan, Dolan, and Land/Vest ◦ Requirements addressed in general in work session # 7 – tie between condition and needs/benefits and consideration of magnitude of exaction. ◦ Whether conditions are imposed legislatively or administratively, these cases suggest that there can be problems with the “easy way” to impose on developers some portion of development costs. ◦ The “easy way” means that simple fees or exactions that do not consider rational nexus or rough proportionality may be problematic, even when following legislative imposition of exaction. 3

Exactions in context To avoid (i. e. , minimize) problems, some form of individualized assessment is required even in the use of such commonly viewed “blanket” exactions as impact fees. For example, ◦ RSA 674: 21, V. Impact fees By ordinance Proportional amount of specific capital items Separate account Time requirements for usage & potential return 4

Avoiding Blanket Exaction Issues Though no community, today, would ever consider use of extortion, it is well to recall how the New Hampshire Supreme Court characterized blanket exactions in the 1981 case of J. E. D. Associates, Inc. v. Atkinson ◦ Subd. Reg. required dedication of 71/2 % of land area in order to subdivide land No regard for whether town needed land or coordination with other public land In lieu of land dedication, town would accept $ = to land 5

Judicial Reaction This appears to us to be an out-and-out plan of extortion whereby developers are required to pay for the privilege of using their land for valid and reasonable purposes even though it satisfies all other requirements of the town's zoning and subdivision regulations. So the Town bids its $ farewell. 6

Paart 2: Impact fees v. taxes In addition to consideration of relationship and amount, another consideration with respect to impact fees is whether they constitute tax or fee. 7

Ohio case: Drees Co. v. Hamilton Provides guidance on distinction, including: ◦ Test 1 Consider: (1) whether imposed as part of regulatory program to insure payment of obligations by payers, (2) fees not placed in general fund but segregated for narrow, delineated purposes, (3) payers received assurance that funds would be used for those purposes, (4) amount of assessment based on status of available funds – i. e. , need. ◦ Test 2 Consider: (1) the entity that imposes the assessment; (2) the parties upon whom the assessment is imposed; (3) whether the assessment is expended for general public purposes, or used for the regulation or benefit of the parties upon whom the assessment is imposed 8

Another short aside on Impact Fees What a wonderful world this would be if judges could understand impact fees! Well, maybe not so wonderful unless local governments understand them as well! 9

And let’s not forget judicial views 2010 NH Case of Clare v. Hudson ◦ Interchangeable use of impact fee and surety for performance (also attributable to municipality’s lack of clarity in record-keeping) ◦ Use of performance bond v. imposition of impact fee ◦ Former involves surety for performance - latter is a different animal Work session 11 identifies some additional concerns and speaks to some methods that seek to prevent problems 10

Part 3 Tax Increment Financing Another way to get tied up? 11

TIFs are not exactions, per se Don’t shift costs of development May provide means of raising funds for infrastructure to assist in future development Require municipal planning and recordkeeping to function properly Pembroke, NH TIF plan included in materials 12

Part 4: Guidance: Seeking to Avoid (or Win) Challenges Keep public purpose foremost in studies, findings, and wording ◦ WORDS DO MATTER Tie conditions (performance of developer obligations) to a public purpose or use – other than “show me the money!” Understand use it or lose it standards & Maintain ability to refund Record-keeping essential 13

Thank You Questions, Comments, Concerns Contact: Attorney Daniel Crean Law Office Pembroke, NH 03275 928 -7760 creanlaw@comcast. net www. creanlaw. com 14