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IMPACT FEES AND OTHER RESPONSES TO GROWTH ILLINOIS MUNICIPAL LEAGUE SEPTEMBER 26, 2008 Richard IMPACT FEES AND OTHER RESPONSES TO GROWTH ILLINOIS MUNICIPAL LEAGUE SEPTEMBER 26, 2008 Richard G. Flood Ruth A. Schlossberg Zukowski, Rogers, Flood & Mc. Ardle 50 Virginia Street, Crystal Lake, IL 60014 815/459 -2050 [email protected] com/[email protected] com Harold W. Francke DLA Piper LLP (US) 203 N. La. Salle Street, Suite 1900 Chicago, IL 60601 312 -368 -4047 Harold. [email protected] com

What Are Impact Fees? What Are Impact Fees?

What Are Impact Fees? A. Exactions imposed on a developer as a condition of What Are Impact Fees? A. Exactions imposed on a developer as a condition of developing property 1. School and park fees 2. Sewer and water infrastructure costs 3. Sewer and water “tap on” fees 4. Internal roads costs 5. Contributions towards arterial roads 6. Intersection improvements 7. Wetland dedications 8. Drainage improvements (internal and external) 9. Library, fire, police and administrative facility exactions 10. Platting fees

What Are Impact Fees? Comments today apply to most impact fees However, we will What Are Impact Fees? Comments today apply to most impact fees However, we will focus on school impact fees….

Expanded Use of Impact Fees A. Reason for rise in popularity of impact fees: Expanded Use of Impact Fees A. Reason for rise in popularity of impact fees: 1. Large scale nature of developments and rapid need for infrastructure vs. Gradual development in the past 2. Need for renovated or expanded infrastructure 3. Changes in federal and state funding and tax caps B. Result has been expansion in use, kind and scope of fees and dedications 1. Cost shifting: general population→→ to developers

Impact Fees Do Not Measure Impact: Most impact fees are in the $2, 000 Impact Fees Do Not Measure Impact: Most impact fees are in the $2, 000 -5, 000 range, which is inadequate to meet the needs of the schools. Why is that?

Dillon’s Rule: Not that Dylan! Dillon’s Rule: Not that Dylan!

This Dillon! • Iowa Supreme Court Justice Dillon • A non-home rule municipality may This Dillon! • Iowa Supreme Court Justice Dillon • A non-home rule municipality may only exercise those powers which are specifically granted to it by statute or necessarily implied from statutes or other grants of power

Illinois Statutory Authority Imposed pursuant to subdivision statute: 65 ILCS 5/11 -12 -5 & Illinois Statutory Authority Imposed pursuant to subdivision statute: 65 ILCS 5/11 -12 -5 & 8 As a condition of subdivision may require dedication of land for: i. iii. School Parks Public lands Applies throughout municipality's planning jurisdiction up to 1½ miles from municipal boundaries REMEMBER: ANNEXATION AGREEMENTS ARE CONTRACTUAL!

Constitutional Limitations • Takings Law: a government mandated transfer of private property without due Constitutional Limitations • Takings Law: a government mandated transfer of private property without due process of law or just compensation • So…when does a fee become a “taking”?

Illinois Takings Standards 1. Non-Home Rule: specifically and uniquely attributable - Very high standard Illinois Takings Standards 1. Non-Home Rule: specifically and uniquely attributable - Very high standard 2. Home Rule: Still specifically and uniquely attributable, but more flexible…. 1. Different timing 2. Not just at subdivision platting 3. May be for more than just land

From Land to Fees • Fee in Lieu of Land Dedication – Naperville Formula From Land to Fees • Fee in Lieu of Land Dedication – Naperville Formula

Use of Fees: Land: YES Fee is collected based on land costs Use of Fees: Land: YES Fee is collected based on land costs

Use of Fees: Buildings & Infrastructure: Yes for Schools only (used to be NO!) Use of Fees: Buildings & Infrastructure: Yes for Schools only (used to be NO!) – pursuant to PA 93 -330 (65 ILCS 5 -11 -12 -5(7)) – although calculated based on LAND may be used for “school buildings or other infrastructure” Fee is collected based on land costs

Use of Fees: • Other capital facilities NO – except Home Rule – not Use of Fees: • Other capital facilities NO – except Home Rule – not desks and lockers – Capital facilities vs. capital infrastructure • What is a parking lot? • What is a desk? • What is a playground? Fee is collected based on land costs

Use of Fees: • Operating expenses: No – That’s what taxes are for! Use of Fees: • Operating expenses: No – That’s what taxes are for!

Theory to Reality: Model Impact Fee Ordinance Theory to Reality: Model Impact Fee Ordinance

Theory to Reality: Model Impact Fee Ordinance How much land does school need per Theory to Reality: Model Impact Fee Ordinance How much land does school need per student? School Tables How much does that land cost? Fair Market Value How many students will each house generate? Demographics

Model Ordinance: School Tables Incorporates acreage requirements for schools and parks How is it Model Ordinance: School Tables Incorporates acreage requirements for schools and parks How is it determined? Illinois, National, Local Standards & Studies

: Model Ordinance: School Tables School Classification by Grades Maximum Number of Students for : Model Ordinance: School Tables School Classification by Grades Maximum Number of Students for Each Such School Classification Appropriate Number of Acres of Land for Each School Site of Such Classification Elementary school: grades kindergarten through 5 th or 6 th 450 students 20 acres Middle school: grades 6 th through 8 th or 7 th and 8 th grades 600 students 35 acres High school: grades 9 th through 12 th 1, 500 students 90 acres

Model Ordinance: Fair Market Value § How much would it cost to buy this Model Ordinance: Fair Market Value § How much would it cost to buy this land for the school site? § What type of land/cash will be required? Good land like you would actually need. § § § Subdivided Zoned Buildable Like residential property, not just agricultural land way out away from everything Not just left-over land § Appraisal Services § Annual adjustment of fees based on CPI § Regular Review

Model Ordinance: Demographics • Incorporates the Illinois School Consulting Service/Ehlers table of estimated ultimate Model Ordinance: Demographics • Incorporates the Illinois School Consulting Service/Ehlers table of estimated ultimate population: • Specific data in new subdivisions may yield more density and thus, higher fees • consult recent census data. • Consider exceptions for agerestricted/extended care developments

Model Ordinance: Demographics TABLE OF ESTIMATED ULTIMATE SCHOOL POPULATION PER DWELLING UNIT Type of Model Ordinance: Demographics TABLE OF ESTIMATED ULTIMATE SCHOOL POPULATION PER DWELLING UNIT Type of unit Children per Unit Preschool 0 -4 years Elementary Grades K-5 5 -10 years Middle Grades 6 -8 11 -13 years Total Grades K-8 5 -13 years High School Grades, 9 -12 14 -17 years 0. 136 0. 369 0. 530 0. 345 0. 048 0. 173 0. 298 0. 248 0. 184 0. 542 0. 828 0. 593 0. 020 0. 184 0. 360 0. 300 Adults 18 years + Total per Dwelling Unit Detached Single-Family: 2 bedroom 0. 113 3 -bedroom 0. 292 4 -bedroom 0. 418 5 -bedroom 0. 283 Attached Single-Family: 1. 700 1. 881 2. 158 2. 594 2. 017 2. 899 3. 764 3. 770

Model Ordinance: Objection Procedure • Procedure for objections to any part of the ordinance Model Ordinance: Objection Procedure • Procedure for objections to any part of the ordinance • Gives developer and municipality opportunity to correct any deficiencies without law suits • New recommendation: Provide administrative recommendation for exempting senior and assisted living communities subject to approval by corporate authorities

Model Ordinance: Indemnification Requires the school and park districts to indemnify municipality. Model Ordinance: Indemnification Requires the school and park districts to indemnify municipality.

Model Ordinance: Needs Assessment School obligations: Ongoing needs assessment Maintain capital facilities plans Share Model Ordinance: Needs Assessment School obligations: Ongoing needs assessment Maintain capital facilities plans Share this information with municipality.

Model Ordinance: Timing All dedications and fees are due at platting But: May delay Model Ordinance: Timing All dedications and fees are due at platting But: May delay payment to permitting if developer agrees fees are properly calculated.

More Things to Think About More Things to Think About

Some things to think about: • Home Rule vs. Non-Home Rule – Non-Home Rule Some things to think about: • Home Rule vs. Non-Home Rule – Non-Home Rule Fee based on cost of land not cost of Buildings • Annexation Agreements 1. Voluntary 2. Must not be against public policy 3. Crystal Lake problem 4. CPI

Some things to think about: • “Lag” or “Transition” fees – Cannot be imposed Some things to think about: • “Lag” or “Transition” fees – Cannot be imposed pursuant to ordinance • Pertain to powers of municipalities? • Double taxation question – Only in Annexation Agreements

Important Litigation on School Fees A. American National Bank v. City of Crystal Lake Important Litigation on School Fees A. American National Bank v. City of Crystal Lake 1. Impact fee held invalid a. b. One size cannot fit all Land only B. Thompson v. Newark, 768 N. E. 2 d 856 (2002) 1. School impact fee cannot be based on cost of buildings 2. Can fee be recalculated?

Recent Litigation, cont. . . C. Attainable Housing Alliance v. County of Mc. Henry Recent Litigation, cont. . . C. Attainable Housing Alliance v. County of Mc. Henry 1. Substantive allegations a. b. c. Fees are not “specifically and uniquely attributable” because fees do not recognize impact with each category imposed, based on dwelling type, number of bedrooms, assessed value and number of school age children anticipated Improper inclusion of capital facilities in fees Cannot be applied to non-subdividers

Other Proposals A. Limit Lawsuits: Proposal on Statute of Limitations, SB 2777 B. Reconceptualize Other Proposals A. Limit Lawsuits: Proposal on Statute of Limitations, SB 2777 B. Reconceptualize who should pay: Homebuilders Association SB 2904 School Land Capital Facilities Assessment Act C. Other solutions: Pingree Grove Charter School, etc.

The Developer’s Perspective The Developer’s Perspective

The Homebuilder Response Proposed Legislation The Illinois School Capital Facilities Assessment Fee Act The Homebuilder Response Proposed Legislation The Illinois School Capital Facilities Assessment Fee Act

IMPACT FEES AND OTHER RESPONSES TO GROWTH ILLINOIS MUNICIPAL LEAGUE SEPTEMBER 26, 2008 Richard IMPACT FEES AND OTHER RESPONSES TO GROWTH ILLINOIS MUNICIPAL LEAGUE SEPTEMBER 26, 2008 Richard G. Flood Ruth A. Schlossberg Zukowski, Rogers, Flood & Mc. Ardle 50 Virginia Street, Crystal Lake, IL 60014 815/459 -2050 [email protected] com/[email protected] com Harold W. Francke DLA Piper LLP (US) 203 N. La. Salle Street, Suite 1900 Chicago, IL 60601 312 -368 -4047 Harold. [email protected] com