Agenda - 10-07-2008 - 4n - Laserfiche WebLink

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DRAFT SCHOOL IMPACT FEES: Cwaee~ Hiu.-Cau~soeo Crrr SCHOOLS Orange County, North Carolina INTRODUCTION TO IMPACT FEES DEFINITION Impact fees, also known as facility or development fees, are one-time payments used to fund capital improvements necessitated by new growth. Impact fees have been utilized by local goverrunents in various forms for at least fifty years. Impact fees do have limitations, and should not be regarded as the total solution for infrastructure financing needs. Rather, they should be considered one component of a comprehensive portfolio to ensure adequate provision of public facilities with the goal of maintaining current levels of service in a community. Any community considering impact fees should note the following limitations: ^ Impact fees can only be used to finance capital infrastructure and cannot be used to finance ongoing operations and/or maintenance and rehabilitation costs; ^ Impact fees cannot be deposited in the ,local government's General Fund. The funds must be accounted for separately in individual accounts and earmarked for the capital expenses for which they were collected; and ^ Impact fees cannot be used to correct existing infrastructure deficiencies unless there is a funding plan in place to correct the deficiency for all current residents and businesses in the community. LEGAL FRAMEWORK U. S. Constitution. Like all land use regulations, development exactions-including impact fees-are subject to the Fifth Amendment prohibition on taking of private property for public use without just compensation. Both state and federal courts have recognized the imposition of impact fees on development as a legitimate form of land use regulation, provided the fees meet standards intended to protect against regulatory takings. To comply with the Fifth Amendment, development regulations must be shown to substantially advance a legitimate governmental interest. In the case of impact fees, that interest is in the protection of public health, safety, and welfare by ensuring that development is not detrimental to the quality of essential public services. There is little federal case law specifically dealing with impact fees, although other rulings on other types of exactions (e.g., land dedication requirements) are relevant. Tn one of the most important exaction cases, the U. S. Supreme Court found that a government agency imposing exactions on development must demonstrate an "essential nexus" between the exaction and the YISCh~el'~tS~ 4 tlscd,[cotl~njic&. PlSnntng Chnwfl~nli.