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Tom B
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Posted - 12/24/2007 :  01:55:18 AM  Show Profile  Visit Tom B's Homepage  Reply with Quote Report Abuse

Again all, I apologize for the length, but it is a big topic, and deserves full discussion. (tom)

Impact Fees. Were it only so simple.

First, there is no legal basis for an Ohio school district to asses impact fees. While the Ohio Supreme Court found that cities could assess impact fees, the very stringent legal requirements then imposed by the court just don't apply easily to school districts. If it were legally possible for a school district to collect impact fees, don't you think every rapidly growing district would be doing so already?

Our school district has never ignored the subject of impact fees. It twice evaluated the legal requirements, seeking analysis and opinions from two different law firms. Both stated that our school district's adoption of an impact fee would not meet the requirements of case law, defined in Homebuilders Association of Dayton vs Beavercreek, the ruling that enabled municipalities to collect them. In the second evaluation, the district specifically asked, and was just as specifically advised, that using the city as a collection medium, to get around its lack of legal basis for our school's collecting impact fees, would not survive certain legal challenge by builders. Regardless of what government collects the fees, if the funding goes to the schools, the court standards must be applied to the school situation, and met.

Some have argued that the district should have ignored our legal advice and proceeded regardless. Before jumping to that conclusion consider the big picture. Imagine the impact to the district, if it had collected millions in impact fees, spent the money, and then later had courts order its return. Legal counsel made it clear that this would be the outcome of such collections, if indeed we were ever permitted to go that far before being stopped. Further, it was made very clear to us that legally pursuing and defending a school impact fee would be quite expensive, and would in all but complete certainty, never survive legal challenge. Given such strong advice, do you think it prudent for the district to have spent hundreds of thousands of dollars in a supporting legal effort, with such a very very low chance of success? The board conclusion, on Mr. Elam's recommendation, was to stop impact fee pursuit until the Ohio legislature makes it possible for schools to collect impact fees.

Here is the root problem. The basis for the court ruling permitting cities to collect impact fees is that new construction causes "direct and unique" costs to local governments. The terms direct and unique are critical here. It is fairly easy for a city to meet the court imposed requirement that impact fees fund infrastructure needs required for, and used only by, a new home subdivision. Examples of this are its new roads, water, and sewer lines. These are used only to support the new subdivisions, and meet the court's requirements. While on the surface it might seem that this applies to our schools, it turns out that for Monroe at least, that is a huge stretch. The problem is that our school enrollment growth, while indeed coming from new subdivisions, has been also come in large numbers from old established neighborhoods as well, yet the impact fees would be applied only to new housing.

One of the requirements that the court imposed, as loaner pointed out the other day, was an equal protection test. That is to say such impact fees must be imposed equally, across the parts of the community receiving benefit from the fees. While a municipality can clearly point directly to roads and sewers used just for new subdivisions paying the impact fees, schools don't share that same clarity. A new school facility serves the broad community, old subdivisions as well as new ones. Bus pick-ups document that a considerable portion of the district's enrollment growth is coming from older areas, where established and nearly child devoid subdivisions are being "turned over", to new families with kids. Unlike an impact fee funded road or sewer system that serves just the new subdivisions, any school impact fee on new construction would also be funding enrollment growth in older areas. The district simply does not have a means directly tying the requirements for a new school, to just a new subdivision. And the court rulings absolutely require just that.

Bob Kelley has correctly raised the issue that the first step is conducting a study, showing that we meet the multiple court requirements, especially in our case, equal protection and use. However, for this to go anywhere productive, the study would have to show that any imposed impact fees would be equally applied to all areas with school enrollment growth. Given the strong enrollment growth from established neighborhoods, that is impossible to demonstrate.

An example? Take the city of Pickerington. The city is in a fast growth county outside of Columbus. The local school district determined it needed a new elementary and middle school to meet growing demand. The city wanted to help fund the new facilities, so it tried to levy a fee on new homes. Yet, data gathered from the school district-funded study showed that the students in the new buildings would come not just from the new subdivisions where the tax would be collected, but other areas of the district as well. This very Monroe-like situation resulted in their not meeting the legal standard for impact fees.

I rarely quote Journal articles here, but there is an outstanding one on this subject,

The article is almost two years old. It describes the general subject of impact fees, and specifically how Ohio Rep. Jon Peterson, R-Delaware, introduced a bill that would allow school districts to levy impact fees against new development areas. But unfortunately, the bill went nowhere, easily defeated by Ohio's largest lobby, the construction industry. This is one of the areas Steve Urso addressed the other night, where successful legislative action will be required to change the system. Unfortunately, the largest legislative lobby in Ohio is the construction industry. You can count on them spending lots of cash to defeat any effort to broaden impact fee use.

I greatly appreciate that members of council, Bob Kelly especially, were and are willing to pursue city collection of impact fees for the school district, but like in the case of Pickerington, our district just does not meet the court imposed standards. I wish it were otherwise.

Tom Birdwell

Opinions written here are mine alone, and may not reflect the views of other board members.

Tom B
Senior Member

5357 Posts

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Posted - 12/24/2007 :  02:20:55 AM  Show Profile  Visit Tom B's Homepage  Reply with Quote Report Abuse

Following is a list of web resources for the study of Impact Fees.

OSU Fact sheet on impact fees

Discusses Ohio Surpreme Court Ruling approving impact fees for communities

Stinging rebuke editorial of impact fees

Legislative Proposal for school impact fee.

Cox Article on Impact fees. Butler Warren County

House Bill 299 proposal 2005-06

Anti Impact Fee article/paper Buckeye Institute

Discussion of impact fees "As of 2003 Ohio had no statute legislation permitting impact fees" Discusses beavercreek expenses in defense of fees.

OSBA paper on impact fees

Pulse Journal article on Fairfield schools and city working on Impact fees. $23,000 study.

Analysis of House Bill 299 Impact Fees

Tom Birdwell

Opinions written here are mine alone, and may not reflect the views of other board members.

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