1. 1 An Overview of Impact Fees in Colorado Eric Bergman, Moderator Tina Axelrad, Panelist Carolynne White, Panelist 2005 Impact Fee Roundtable October 6, 2005

2. 2 Overview of Panel Discussion  Today’s Landscape in Colorado (Tina Axelrad)  The Legal Landscape in Colorado (Carolynne White)  Colorado’s Use of Impact Fees (Eric Bergman)  Lessons Learned: Considerations During Implementation  Questions and Answers

3. 3 Today’s Landscape in Colorado Tina Axelrad Principal, Clarion Associates taxelrad@clarionassociates.com 2005 Impact Fee Roundtable October 6, 2005

4. 4 The Impact Fee  Regulatory device  Encourages orderly development of land  Coordinates development/facilities  Features distinguish it as a land use regulation: –Only exacted on new growth –Only exacted for capital facilities –Fees do not exceed costs to accommodate growth (proportionate share) –Fees spent for capital facilities: benefit

5. 5 Colorado Landscape  Pre-SB 15 - Impact fees under home rule powers or implied authority –Imposed on new development to fund capital facilities –Rational nexus principles govern  Impact fees adopted under SB 15 –Imposed as condition of development permit issuance –Imposed to fund capital facilities to serve new development – Legislatively adopted

6. 6 Colorado Landscape  Impact fees under SB 15 (cont.) –Imposed to fund any capital facility:  Directly related to service local government authorized to provide;  Estimated life of at least five (5) years  Required by charter or policy –Fees established at level no greater than necessary to defray impacts directly related to proposed development. –Cannot use fee to remedy deficiencies.

7. 7 Colorado Landscape  Impact fees under SB 15 (cont’d) –Cannot “double dip” (by requiring fee payer to pay fees and also provide site-specific improvement for which fees will pay for). –Must collect and account for fees consistent with state law.

8. 8 Colorado Statutory and Case Law on Impact Fees Carolynne C. White Brownstein, Hyatt & Farber, PC cwhite@bhf-law.com 2005 Impact Fee Roundtable October 6, 2005

9. 9 Krupp v. Breckenridge Sanitation District, 19 P. 3d 687 (Colo. 2001) Issue: Whether an impact fee levied against a development by a special district is a development exaction subject to a constitutional takings analysis under Nollan and Dolan

10. 10 Krupp v. Breckenridge Sanitation District, 19 P. 3d 687 (Colo. 2001)  Special District = “local government” –BUT, special district is not a “local government” under SB 15  23,500 acre Service Area  Town permit conditioned on payment of “Plant Investment Fee” (PIF)  Fee Schedule based on: Demand Unit (in Single Family Equivalents) X Cost ($4,000/SFE)

11. 11 Nollan & Dolan  Nollan – dedication of an easement a taking for its lack of an “essential nexus” between stated objective and the exaction  Dolan – dedication of land a taking for failure of the government to demonstrate that the dedication was “roughly proportional” in amount to the impact of the development

12. 12 Dolan’s Facts  Non-Legislative Adjudication, or ad hoc application, of a pre- existing, generally applicable law  Possessory Exaction Required Mrs. Dolan to “deed portions of the property to the city.”

13. 13 What are the Issues?  Risk of leveraging/Extortion – Do Nolan/Dollan apply to impact fees in Colorado?  Time of imposition  What is a “Capital Facility?”  What is “directly related?”  Collection and Accounting  Affordable Housing Waivers  Can special districts impose impact fees under SB 15?

14. 14 “… risk of leveraging or extortion…” Contrast: A legislatively-adopted, generally- applicable fee schedule ensures that: “a specific landowner cannot be singled out for extraordinary concessions as a condition of development.” Krupp v. Breckenridge Sanitation District, 19 P. 3d 687 (Colo. 2001) see also San Remo Hotel v. City and County of San Francisco, 41 P.3d 87 (2002)

15. 15 Time of Imposition  “… as a condition of issuance of a development permit …” Colo. Rev. Stat. § 29-20-104.5.  Development Permit : “any preliminary or final approval of an application for rezoning, PUD, conditional or special use permit, subdivision, development or site plan, or similar application for new construction.” Colo. Rev. Stat. § 29-20-103. 

16. 16 Time of Imposition continued  Is a building permit a “development permit”?  Can an impact fee be imposed at subdivision?  Who is exempt from paying impact fees?  Can counties impose impact fees on 35 acre parcels that are exempt from subdivision requirements?  Political v. legal considerations?

17. 17 “… capital facilities…”  “… any improvement or facility that: –is directly related to any service that a local government is authorized to provide; –has estimated life of five (5) years; –is required by charter or general policy  Is equipment “capital facilities”?  When must impact fee funds be expended?

18. 18 “…directly related…” The impact fee can be “no greater than necessary to defray such impacts directly related to the proposed development.” Colo. Rev. Stat. § 29-20-104.5(2). The charge “was primarily of benefit to the Krupps and directly related to their project development.” Krupp v. Breckenridge San. Dist., 1 P. 3d 178,182 (Colo. Ct. App. 2000).

19. 19 Collection and Accounting  “… interest-bearing account which clearly identifies the category, account, or fund of capital expenditure for which such charge was imposed.” Colo. Rev. Stat. § 29-1-803(1).  Accounting standards to ensure “fairness in the use” of land development charges. Colo. Rev. Stat. § 29-1-801.  Bloom v. City of Ft. Collins, 784 P. 2d 304 (Colo. 1989).

20. 20 Affordable Housing Waivers  “… may waive an impact fee … on the development of low- or moderate-income housing or affordable employee housing …”  What about economic development; growth management policies; preferred land uses?  Douglas Co. Sch. Dist. v. Bainbridge, Inc., 929 P. 2d 691 (Colo. 1997)

21. 21 Can special districts impose impact fees under SB 15?  Statute does not expressly authorize  Legislative history does not support  BUT...  Krupp court approved of impact fee imposed by special district  Special districts may have authority under enabling legislation  Answer: municipality or county and special district to design most appropriate arrangement

22. 22 Colorado Communities Use of Impact Fees Eric Bergman Office of Smart Growth, Colorado Heritage Planning Grants Eric.Bergman@state.co.us 2005 Impact Fee Roundtable October 6, 2005

23. 23 Land Use Planning Survey County Survey: Undertaken April, 2004 by interns with the Office of Smart Growth

24. 24 Land Use Planning Survey Municipal Survey: Undertaken July – September, 2004, by Carolynne White in cooperation with the Office of Smart Growth

25. 25 Land Use Planning Survey County Survey:  64 Counties surveyed  59 Counties responded

26. 26 Land Use Planning Survey County Survey:  Of those 59 counties, 20 indicated they were using impact fees (34%)

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29. 29 Land Use Planning Survey Municipal Survey:  270 municipalities surveyed  To date, 153 have responded

30. 30 Land Use Planning Survey Municipal Survey:  Of those 153, 94 indicated they were using impact fees (61%)

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32. 32 Lessons Learned: Considerations for Implementation Eric Bergman Tina Axelrad Carolynne White 2005 Impact Fee Roundtable October 6, 2005

33. 33 Considerations During Implementation  Fully consider legal limitations and implications –How are benefits and burdens of impact fees allocated?  Work with counsel in design of fee program  Prepare and adopt support study –Base fees on up-to-date CIP or LOS –Comply with “directly related” nexus standard –Identify past deficiencies, and correct –Ensure benefit; consider benefit districts as option  If waivers are provided, must replenish impact fee account with non-impact fee revenues

34. 34 Considerations During Implementation  Draft detailed legislative findings: –that the fees are “directly related to” new development –that all impact fee eligible expenditures are for “capital facilities” –that facilities for which impact fees are collected are required by the charter or general policy –that fees will not be used to cure past deficiencies

35. 35 Considerations During Implementation  Draft fee ordinance carefully and thoughtfully… –Incorporate fee schedule by reference into fee ordinance –Consider provision for automatic inflation adjustments –Allow independent analysis  Be prepared for careful administration –Keep good records; track fees paid and revenues spent in the event of challenge   Provide for refunds if monies not spent

36. 36 Questions and Discussion