Developer Exactions and Impact Fees
| Jurisdiction | Colorado,United States |
| Citation | Vol. 01 No. 1990 Pg. 67 |
| Pages | 67 |
| Publication year | 1990 |
1990, January, Pg. 67. Developer Exactions and Impact Fees
The theory of developer exactions is simple and appealing: New development generally impacts city services and facilities and, therefore, should share proportionately in the costs of providing those services and facilities. However, cities and counties that have sought to implement this theory frequently face challenges that they have gone "too far" in imposing conditions on the approval of developments. Developers feel they are unfairly required to satisfy the general, pre-existing needs of the communities---needs that should be met from general revenue sources.
Developer exactions generally are imposed at the time of subdivision approval and must be satisfied prior to obtaining building permits or certificates of occupancy. They may be non-monetary, such as dedication or construction requirements, or monetary, such as impact fees or fees in lieu of dedication.
There are two primary legal principles that such exactions must satisfy. First, sufficient legal authority for their imposition must exist. Second, the exactions must be constitutionally permissible.
This article explores how various state courts have approached this issue. It also evaluates the direction in which Colorado courts may be headed in light of the U.S. Supreme Court decision in Nollan v. California Coastal Commission.(fn1)
In Colorado, as in most jurisdictions, courts generally have had little trouble finding sufficient authority for the more traditional forms of exactions. These include requiring developers to dedicate land or provide facilities such as streets, sidewalks, trails, utilities and open space.(fn2) When the power of a county or municipality to impose dedication or construction requirements is not explicit, it has been implied from broad statutory schemes.(fn3)
Generally, the courts have required the statutory authority for monetary exactions to be more explicit than the authority for non-monetary exactions.(fn4) However, for home rule municipalities, the need for state statutory authority to impose monetary exactions is not as great as for statutory cities. This is true because home rule cities have "the full right of self-government in local and municipal matters."(fn5) Thus, for home rule cities, the authority for exactions may be found in their own legislative enactments, as long as these pass constitutional muster.(fn6)
Objections to both monetary and non-monetary exactions usually concern questions of fundamental fairness and the constitutional issues of procedural and substantive due process, equal protection and just compensation. Three basic constitutional tests have been used by various state courts to determine whether particular exactions "over-reach." The application of these tests has brought about widely divergent results. The tests are as follows:
1. The "specifically and uniquely attributable" test. This is the most restrictive test. An exaction survives its scrutiny only if the exaction alleviates impacts that are specifically and uniquely attributable to the particular development.(fn7) There is no latitude under this test for offsetting the cumulative impacts that a development may have in combination with others.
2. The "reasonable relationship" test. This is the least restrictive test. Until the Nollan decision (discussed below), it afforded governmental entities great latitude in imposing conditions which merely bore some rational relationship to the needs generated by the development.(fn8) Cumulative impacts clearly can be considered under this test. An exaction can be justified on the basis of a general public need caused by present and even future subdivisions.(fn9)
3. The "rational nexus" test. This is an "in-between" test. Its premise is that a subdivider may be required to bear "only 'that portion of the cost [of off-site improvements] that bears a rational nexus to the needs created by, and special benefits conferred upon, the subdivision.'"(fn10)
Colorado decisions appear to fall somewhere between the rational nexus test and the reasonable relationship test. Like the rational nexus jurisdictions, Colorado requires a tighter fit between a particular condition of approval and the impacts of the particular development than would be required under the reasonable relationship test.(fn11) However, as discussed below, the traditional, two-pronged rational nexus test may be more relaxed in Colorado with regard to the benefits which must be conferred on the development by the funded facilities or improvements, especially in light of the Nollan decision.
In Nollan, against the backdrop of these divergent state tests, the U.S. Supreme Court rejected an easement dedication requirement imposed by the California Coastal Commission ("Commission"). It invalidated the development condition as an unconstitutional taking under the just compensation clause of the Fifth Amendment because the required easement was not designed to...
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