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~J1lIJI8.liopment Dear Reader: This article is from the National Association of Home Builders quarterly magazine, Land Develop- ment. Tischler & Associates, Inc. (TA) is a fiscal, economic, and planning consulting firm specializ- ing in fiscal impact analysis and the development/ critique of impact fees. Our other major services are market feasibility studies, economic develop- ment analysis, capital improvement programming, revenue strategies, and growth policy planning. TA has analyzed impact fees for the following services: . schools . roads . water . sewer . libraries · parks and recreation . police . fire · general government · transit TA's impact fee studies include the following states: . Arizona · Montana . California · New Mexico . Colorado · New York · Georgia . North Carolina . Idaho . Pennsylvania . Florida . Virginia . Maryland · West Virginia Our private sector impact fee clients include: Home Builders Associations; NAIOP Chapters; Private Developers; Senior Housing Corporations; and others. Given the recent Dolan v. Tigard Supreme Court decision, Nancy Stroud, a partner in the legal firm of Burke, Weaver and Prell, provided these comments. "In Dolan v. Tigard, the court adds another part to the constitutional test, requiring that the degree of exaction be 'roughly proportional' to the impact of the development. The 'rough proportionality' requirement appears to be the same 'rational nexus' or 'reasonable relationship' test that Florida and the majority of other states have evolved for dedica- tions, impact fees and other exactions. . . . The Court has also made it clear that the burden is on the government to prove the requisite nexus. As a result, governments need to be more careful in preparing and implementing regulatory conditions such as impact fees and other exactions." Please call TA at 800/424-4318 to obtain further information or to discuss TA's impact fee consulting services as well as fulI fiscal impact evaluations. IMPACT FEES- UNDERSTAND THEM OR BE SORRY by Paul S. Tischler Anyone who has developed land in the last 10 to 15 years knows that the popularity of impact fees as a local government revenue source has skyrocketed. The three major reasons for the proliferation of fees are state and local limitations on tax hike,S; federal, state, and local mandates against increasing costs with- out a concomitant increase in accompanying revenues; and, perhaps most importantly, the great reluctance of elected officials to raise taxes. Impact fees are espe- cialIy appealing because they are passed onto future 'to Development impact fees are growing increasingly attractive to local governments. Developers need to understand impact fees if they are to spot illegal uses and improper calculation of the fees. (absentee) voters. Therefore, it is imperative that de- velopers understand fees or risk becoming the victim of either their illegal use or the improper calculation of fee amounts. This article provides some examples of illegal fees, discusses caveats pertaining to the cal- culation and use of impact fees, and offers a set of recommendations for ensuring the equitable applica- tion of fees. lIIegallmpad Fees Hundreds of today's impact fees are probably il- legal; yet, for two major reasons, the fees remain largely unchallenged. First, the fee amounts are no- ticeably small and thus are not particularly burden- some. Second, developers and builders are fearful of delaying development by bringing a legal challenge against a fee. One of the more blatant examples of an illegal fee is the fee for public art in a California juris- diction. The impact fee, calculated only against non- residential space, pays for art exhibited in such public (continued on next page)