NATIONAL IMPACT FEE ROUNDTABLE 2005 Litigation Legislation Developers

NATIONAL IMPACT FEE ROUNDTABLE, 2005 Litigation & Legislation: Developers Strike Back! The Florida Experience Gregory T. Stewart 1500 Mahan Drive, Suite 200 Tallahassee, Florida 32308 (850) 224 -4070 gstewart@ngn-tally. com

Brown v. Lee County (20 th Judicial Circuit - Florida) SUMMARY: Local builder association and others filed a class action contesting validity of school impact under the dual rational nexus test and impairment of contract clause.

ISSUES RAISED: A. Procedural Issues 1. 2. Local government has burden of proof at trial. Local government must establish elements under a strict scrutiny standard (Dolan).

B. Impairment of Contract

C. Methodological Issues 1. Credits a. b. c. 2. Must build in appreciation of taxable values Must use 30 year planning period for credit Must bring credits to present values using current interest rate Costs – Land, Construction Costs and Ancillary Cost inflated

C. Methodological Issues (Continued) 3. Student Generation a. b. 4. Fails to account for increase of students from existing units Use of 1990 census data improper Creation of Districts for expenditure of fees improper

DECISION: The trial court upheld methodology “by a nose. ” The Court found that the methodology used was reasonable and not arbitrary. Trial Court’s decision was affirmed without opinion by the Second District Court of Appeal.

Florida Home Builders Ass’n v. Osceola County (9 th Judicial Circuit - Florida) SUMMARY: Home Builders challenged validity of methodology utilized to calculate School Impact Ass’n Fee.

ISSUES RAISED: 1. 2. 3. The Global Approach to calculate credits is not appropriate. Use of a five year planning period for the purpose of analyzing credits is not lawful. School Board cannot adopt a policy as to the use of its revenues that results in depriving new development of impact fee credits.

ISSUES RAISED (Continued): 4. 5. Student generation rate fails to account for growth occurring in existing units. Methodological issues relating to Certificates of Participation.

DECISION: 1. 2. 3. The Global approach is a reasonable and accepted methodology. The five year planning period is consistent with the requirements of state statutes and school planning. The adoption by the school board of priorities for the spending of its revenues is a legislative function and not subject to judicial review.

4. 5. The student generation rate was calculated pursuant to a reasonable and appropriate methodology. The treatment of past indebtedness in the context of impact fee credits was reasonable.

Collier Building Industry Ass’n v. Collier County (20 th Judicial Circuit - Florida) SUMMARY: Building Industry filed suit contesting the validity of County’s Government Buildings Impact Fee.

ISSUES RAISED: 1. 2. There is no nexus between the need for government space and presence of people at a particular land use category. The use of impact fees cannot a substitute for ad valorem taxation. the be

Volusia Home Builders Association, Inc. v. School Board of Volusia County DOAH Case 05 -1507 RV (Division of Administrative Hearings Florida)

SUMMARY: Home Builders Association filed petition before Division of Administrative Hearings arguing that the adoption of a school impact fee update was a “rule” under the Administrative Procedures Act and had to go through a separate review process.

FINDINGS: The recommendation of the School Board to the County was a rule that must satisfy the statutory requirements for adoption of a rule.

I - HB 1173 / SB 2302 (2005 Florida Legislative Session) The proposed Legislation sets forth certain requirements for all impact fees. These consist of:

A. Based upon most recent data available. Credits must include a credit consisting of: 1. 2. the full present value of all taxes, fees, assessments, liens, charges or other payments of any kind that have been or will be directly paid by a fee payer or property owner to a local government; and used to construct capital facilities of the same type for which the impact fee is used.

C. D. Credits for a planning period of not less than 30 year [later reduced to 20 years]. Credits shall include adjustments for the following: 1. 2. 3. inflation; increased taxable values and increased payments; use of a discount rate no greater than current cost of borrowing.

E. F. G. A credit for all taxes and other payments of any kind indirectly paid by the fee payer or property owner through state, federal or other revenues anticipated to be expended to construct capital facilities of the same type [subsequently eliminated “indirectly” from legislation]. May only begin collecting 6 months after final adoption [subsequently amended to 120 days]. May not apply to any permit which has a previously filed application.

H. I. J. Limits administrative fees to be collected by the local government to 3%. Requires that the impact fees be expended within 6 years [subsequently amended to 7 years]. Allows fees to be paid in whole or in part following issuance of a Certificate of Occupancy, remainder to be collected on tax roll over a 10 to 20 year period.

II - Amendment to 1173 C/S (2005 Florida Legislative Session) Amendment to original house bill makes the following changes: A. Impact Fee must proportional to burdens created development. be directly the needs and by the

B. If the impact fee is collected within an incorporated area: 1. 2. If there is an interlocal agreement between the City and the County, it shall specify the area of impact either within or adjacent to the municipality where fees will be spent; If no interlocal, then fees must be spent either within municipality or outside municipality if it directly benefits the development;

3. C. D. Impact fees can be spent outside municipal limits if they directly benefit the development. Exempts from statute any municipal utility, electric, gas, water or wastewater impact or capacity fee. Requires that all impact fees adopted or updated after July 1, 2005 must comply with these requirements.

III - CS for SB CS for CS 360 (2005 Florida Legislative Session) Subsequent Amendment introduced to State’s Growth Management Act after impact fee legislation failed to pass committee. New Amendment provided:

A. In any challenge regarding the validity of an impact fee, the following shall apply: 1. The local government shall have the burden of proving, by clear and convincing evidence that the fee is: a) directly proportional to the need created by the development; and

b) c) B. the fee is based upon the actual cost of the required capital improvements, less all credits for which the fee payer is entitled; and the expenditure of the fees must directly benefit the development. Amendment failed - however, committee established to report to the Legislature on the need for impact fee legislation.