A Municipal Perspective on Senate Bill 15: Impact Fees

• Publication year: 2002
• Pages: 93
• Citation: Vol. 31 No. 5 Pg. 93

31 Colo.Law. 93 Colorado Lawyer 2002.

2002, May, Pg. 93. A Municipal Perspective on Senate Bill 15: Impact Fees

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93

Vol. 31, No. 5, Pg. 93

The Colorado Lawyer
May 2002
Vol. 31, No. 5 [Page 93]

Specialty Law Columns
Government and Administrative Law News
A Municipal Perspective on Senate Bill 15: Impact Fees
by Carolynne C. White

This column provides information to attorneys dealing with various state and federal administrative agencies, as well as attorneys representing public or private clients in the areas of municipal, county, and school or special district law

Column Editors

Carolynne C. White of the Colorado Municipal League?(303) 831-6411; Brad Bailey, Asst. City Attorney, City of Littleton?(303) 795-3725; Tiffanie Bleau, Asst. City Attorney, City of Arvada?(303) 431-3007; Column Ed. for Administrative Law: Steven H. Denman of Kutak Rock LLP Denver?(303) 297-2400

About The Author:

This month's article was written by Column Editor Carolynne C. White of the Colorado Municipal League?(303) 831-6411.

Senate Bill 15, which was passed in 2001, raises issues and questions about impact fee schedules that will affect administrative, planning, and legal personnel for all municipalities in Colorado. This article explains the restrictions and limitations imposed by the bill, administrative procedure for protests under the bill, and how the bill may apply to home rule cities.

During the second extraordinary session of 2001, the Colorado General Assembly passed Senate Bill 01S2-015 ("S.B. 15"). While the true impact of this legislation may not be known for several years, or until the Colorado Supreme Court has occasion to decide the issue, some preliminary conclusions can be drawn about how a legally defensible impact fee schedule should be constructed. This article discusses the sources of authority for impact fees and offers some considerations in creating a valid impact fee program under S.B. 15.

Overview of S.B. 15

S.B. 15 provides that a local government "may impose an impact fee or other similar development charge" to fund "expenditures by such local government on capital facilities needed to serve new development." The bill amends Title 29, the section of Colorado statutes governing both municipalities and counties, and defines "local government" to include "a county, home rule or statutory city, town, territorial charter city, or city and county." The bill does not change the law with respect to other types of governmental and quasi-governmental entities, such as school districts, Title 32 special districts, authorities, and other taxing districts.1

Restrictions and
Limitations

S.B. 15, for the first time in Colorado law, grants express impact fee authority to municipalities and counties. However, this authority is limited and restricted in several ways.

"Directly Related"
Impact Fees

S.B. 15 requires local governments to "quantify the reasonable impacts of proposed development on existing capital facilities and establish the impact fee or development charge at a level no greater than necessary to defray such impacts directly related to proposed development." The question of what "directly related" means has been the subject of much discussion and debate.

When the Colorado General Assembly has considered legislation relating to impact fees in the recent past, many of the proposals allowed impact fees only when a local government could demonstrate that there was an "essential nexus" between the fee charged and a particular development proposal. The government also had to show that the fee charged was "roughly proportional" to that development's impact on the infrastructure for which the fee was being collected. The Colorado Supreme Court in Krupp v. Breckenridge Sanitation District made it clear that an impact fee does not have to meet what has come to be known as the "Nollan/Dolan" test of essential nexus and rough proportionality in order to be valid.2

Instead, the Court said that an impact fee is valid if it is legislatively adopted, generally applicable to a broad class of property, and intended to defray the projected impacts on capital facilities caused by proposed development. Moreover, according to the Court, an impact fee must be fair and must rationally differentiate between types of development. S.B. 15 attempts to codify some of these requirements.3 The Krupp Court did not hold, and S.B. 15 does not require, that a local government engage in an individualized assessment of each proposed development to determine the reasonableness of the fee. Instead, the reasonableness of the costs to be recovered is determined in relation to the impacts of all potential development.

Therefore, it appears that an impact fee must be "directly related" to the cumulative impacts of development in general, or all proposed development in a community, not to a particular, individual development proposal. As a practical matter, an impact fee should be calculated based on all projected development for...