Chapter 5 - § 5.1 • INTRODUCTION

• Jurisdiction: Colorado

§ 5.1 • INTRODUCTION

Local governments often place the costs of public improvements and community facilities required to serve new development onto the development itself through the land use approval process. In Colorado, the most common tools used to achieve this goal are requirements to dedicate land or improvements, or fees-in-lieu of dedication (collectively referred to in this chapter as "exactions"), and development impact fees. Exactions are the result of a discretionary adjudicative determination by which the governing body conditions future development on the exaction of private property for public use.¹ Exactions may include specific requirements placed on the developer by the local government as a condition of development approval, such as requiring the developer to construct a shopping center as a condition of shopping center rezoning approval,² or limiting access to new development as a condition of rezoning.³ Development impact fees, on the other hand, are legislatively created, generally applicable, one-time fees applied to all new development of a particular type, which will be served by the public improvements or services for which the fee is collected.⁴ It is important to keep this distinction between "exactions" and "impact fees" in mind throughout this chapter, because the laws and court decisions governing their adoption, enforcement, and defensibility differ, depending on whether an exaction or an impact fee is at issue.

The rationale behind exactions and impact fees is that the benefit of public improvements or facilities made necessary by the new development principally flows to the new development, and that the developer can pass the cost of the improvement to the ultimate user of the improvement, the developer's customer. This philosophy is often summarized in the adage that "growth should pay its own way." If the developer feels that the "price" of paying for public improvements necessary to serve the land is too high, the developer may decide not to develop until the value of the land or the anticipated value of the development rises.

While Colorado statutes clearly anticipate that local governments will use exactions and impact fees as part of the development approval process, there are limits on their authority to do so. As a result of those limits, exactions and impact fees are sometimes challenged as being beyond the powers of local government, as invalid delegations of police power, or as invalid taxes. In addition...