SB0232 95TH GENERAL ASSEMBLY

LRB095 08534 BDD 28715 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
SB0232

Introduced 2/7/2007, by Sen. Chris Lauzen

SYNOPSIS AS INTRODUCED:

New Act

Creates the Development Impact Fee Authorization for Local Governments Act. Authorizes municipalities and counties to adopt ordinances to impose, on behalf of themselves or other local governments, development impact fees on new developments in the municipality or county. Sets forth requirements and procedures for adopting the fee ordinances, for the imposition, collection, and expenditure of the fees, for returning unexpended fees, and for appealing the imposition of the fees. Requires that, within 2 years after the effective date of this Act, all municipalities and counties must conform any existing impact fee ordinance with the provisions required under this Act. Effective immediately.

FISCAL NOTE ACT MAY APPLY

HOUSING AFFORDABILITY IMPACT NOTE ACT MAY APPLY

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

A BILL FOR

AN ACT concerning local government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Development Impact Fee Authorization for Local Governments Act.

Section 5. Statement of purpose and intent. The General Assembly finds that the purpose of this Act is to establish the criteria by which municipalities and counties, on behalf of themselves or other units of local government, may impose development impact fees on all developments. It is the intent of the General Assembly to:

(1) encourage economic growth by assuring that all developments bear their fair share of the costs associated with providing necessary capital improvements to serve a development;

(2) preserve the right of municipalities and counties to adopt and implement development impact fee ordinances that adhere to and meet the minimum requirements set forth in this Act;

(3) provide for a system of due process by which parties affected under this Act have fair and reasonable notice of, and an opportunity to participate in, the adoption of development impact fee ordinances, and the collection and use of these development impact fees; and

(4) preserve the right of municipalities and counties to negotiate annexation agreements within their planning jurisdiction, by providing that this Act does not affect the current law of annexation agreements or any annexation agreements existing on the effective date of this Act.

Section 10. Definitions. As used in this Act:

"Adopted capital improvement program or budget" is a document that sets out the need for public facility capital improvements, the cost of those improvements, and proposed funding sources. A capital improvement program or budget must include a needs assessment describing the service area or service areas and the public facilities required to maintain service standards in response to the introduction of new demand units. The adopted capital improvement program or budget must be consistent with an adopted comprehensive plan or plans. A capital improvement program or budget must specify actual and estimated public facility capital costs and must identify potential sources of funding including, but not limited to, external funding and development impact fees. A capital improvement program or budget must cover at least a 5 year period and be adopted by the governing body of the unit of local government.

"Adopted comprehensive plan" is a document that sets out the goals, objectives, and policies intended to guide the physical, economic, and social development of a community. At a minimum, the comprehensive plan must contain elements addressing land use, population, housing, and community facilities. The comprehensive plan must identify areas for new development and must designate generalized land uses for those areas. A comprehensive plan must project land development for at least a 5-year period of time and be adopted by the governing body of the municipality or county.

"Credits" means the present value of the contribution of money, dedication of land, debt service payment, or tax revenue generated by a development toward the cost of existing or planned capital improvements of a like nature to those for which an impact fee is imposed.

"Demand unit" means a unit associated with a development that generates the need for expansion or improvement to public facilities.

"Developer" means any corporation, organization, person, or other legal entity constructing or creating a development.

"Development" means any change to improved or unimproved real property, or the use of any principal structure or land, including the dividing of land into parcels.

"Development impact fees" means the cash payment or land dedication that is imposed on a development by a municipality or county to fund all or a portion of public facilities capital improvements that are necessary as a result of the development. Development impact fees are additional and supplemental to, and not in substitution of, any other requirements imposed by the municipality or county as a condition of development approval.

"Discount rate" means that interest rate, expressed in terms of percentage per annum, that is used to adjust past or future financial or monetary payments to present value.

"Encumbered" means to commit to use collected development impact fees by legal obligation, appropriation, or other official action of a unit of local government.

"Present owner" means the person or persons shown to be in title to the real estate subject to a refund as reflected in the official records of the county kept by the assessor as of the previous January 1, prior to any refund.

"Present value" means the current value of past, present, or future payments that are adjusted to a base period by a discount rate.

"Proportionate share" means that share or portion of total public-facilities-capital-improvement costs that bear a rational nexus to development, minus: (i) any credits for construction or dedication of public facility capital improvements; (ii) any credit for dedication of land for public facility capital improvements; and (iii) past or future payments for actual or estimated public-facility-capital-improvement costs made or reasonably anticipated to be made by a development in the form of debt service payments and taxes. Credits for past or future payments toward capital improvement costs must be adjusted to present value in order to make fair comparisons of monetary amounts paid or received at different times.

"Public facility" means any facility or equipment currently or hereafter owned or operated by a unit of local government and that serves the public as its primary purpose.

"Public facilities capital improvement" or "capital improvement" includes, but is not limited to, any construction, expansion, or enhancement of any public facility and the equipment, land acquisitions, and land improvements made necessary by development, excluding wetland enhancement or mitigation required under State or federal law. Qualifying capital equipment must have a minimum useful life of at least 5 years.

"Public-facilities-capital-improvement costs" include, but are not limited to, actual or estimated capital improvement costs associated with the construction, expansion, or enhancement of any public facility and the equipment, land acquisition, land improvement, design, engineering, and professional costs related thereto. The costs do not include routine and periodic maintenance expenditures or other operating costs.

"Rational nexus" means an established connection between a development and the new or expanded capital facilities required to accommodate the development, an identification of the cost of those new or expanded capital facilities required to accommodate the development, and an appropriate apportionment of that cost to development in relation to benefits reasonably received. A development impact fee is not invalid because payment of the fee may result in an incidental benefit to other owners or developers.

"Service area" means a geographic area delineated by a unit of local government in which a defined set of capital improvements or a defined amount of school lands, park lands, or other land usages provide service to a development within the area.

"Service standard" means the prevailing level of service delivery associated with a public facility for which a development impact fee is required. The service standard is based on a quantitative measure of service provided from existing public facilities to support existing development over a reasonable and recent period of time. A determination of the prevailing level of service must consider the quality of existing facilities in addition to the quantity.

"Unit of local government" means all units of local government as defined in Article VII, Section 1 of the Illinois Constitution and school districts.

Section 15. Authorization to impose development impact fee ordinances.

(a) Municipalities and counties, on behalf of themselves or other units of local government, are authorized to adopt development impact fee ordinances and to impose, collect, and expend development impact fees for all public facilities capital improvements. After the effective date of this Act, development impact fees may only be imposed by a municipality or county pursuant to the requirements and limitations set forth in this Act.

(b) Development impact fees may only be imposed for those projects specifically identified in or covered by a unit of local government's approved capital improvements program or budget. The program or budget must specify service standards, based on anticipated demand units, for each public facility that is to be the subject of a development impact fee, and these standards must apply equally to existing and new developments. The municipality or county must make an individualized determination that the development impact fee is related in both nature and extent to the impact imposed by the development.

(c) Payment of development impact fees in accordance with this Act shall be deemed in compliance with any requirements for adequate provisions established by municipalities or counties for such facilities as are covered by development impact fees.

(d) Development impact fees must be assessed in a non-discriminatory manner and must be imposed on residential and non-residential development consistent with an adopted capital improvement program or budget.

Section 20. Requirements for the adoption of development impact fee ordinances.

(a) A municipality or county or a unit of local government that desires a municipality or county to adopt a development impact fee ordinance shall conduct a needs assessment for the public facility or project for which the development impact fee is to be imposed. The needs assessment must distinguish existing needs from the projected needs of development and must describe an inventory of existing facilities, service standards upon which the development impact fee is to be based, and set forth a projection of demand units and community needs. On completion of a needs assessment and adoption of a capital improvement program or budget, and prior to imposing a development impact fee, the municipality or county shall incorporate the findings of the needs assessment in the formulation of its development impact fee program.

(b) In adopting a development impact fee ordinance, a municipality or county shall adhere to the following requirements:

(1) The creation, assessment, collection, and expenditure of any development impact fees pursuant to this Act must bear a rational nexus to the burden imposed upon the unit of local government to provide additional capital improvements to support the development. Adherence to the provisions of this Act shall be considered in determining whether a rational nexus exists.

(2) The development impact fees imposed upon a development may not exceed the proportionate share of the costs incurred or to be incurred by the unit of local government in accommodating development. In determining what is a proportionate share, a unit of local government shall take into account the actual or estimated cost of a public facility or capital improvement project that bears a rational nexus to a development after considering the generation of additional demand from the development and any appropriate credits for contribution of money, dedication of land, debt service payments, or taxes from the development dedicated for such projects.

(3) The amount of each development impact fee imposed under this Act must be based upon actual costs or reasonable estimates of costs for the creation or expansion of capital improvements to be incurred by the unit of local government as a result of development. Actual or estimated costs must be adjusted to consider any external funding secured or reasonably anticipated in support of the public facility.

(c) Municipalities and counties requiring the payment of development impact fees shall incorporate the fee requirements within their broader system of development and land use regulations in such a manner that developments, either collectively or individually, are not required to pay or otherwise contribute more than a proportionate share of capital improvement costs.

(d) Municipalities and counties shall develop a methodology in calculating development impact fees that is sensitive to demand, cost, and revenue considerations and consistent with the requirements of this Act.

(e) All documents enacted by a unit of local government pursuant to this Section must be on file within a unit of local government and available for public inspection.

Section 25. Use of development impact fees.

(a) Development impact fees may be imposed and expended for, but not limited to, the following purposes:

(1) Construction of public facilities capital improvements.

(2) Upgrading, updating, or expanding existing capital improvements to serve developments.

(3) Acquisition of lands for schools, parks, libraries, roads, capital-facility sites, and other necessities caused by development.

(4) General improvements to lands that are made necessary by development.

(5) Wastewater treatment facilities and sanitary sewer collection systems.

(6) Potable water extraction, treatment, storage facilities, and distribution systems.

(7) Stormwater management facilities and systems.

(8) Fees for independent engineers, financial contractors, and other contractual services.

(9) Planning, surveying, designing, engineering, and other like costs.

(10) Attorney's fee and costs.

(11) Payments advanced by a unit of local government and later reimbursed by the developer as part of an authorized development impact fee expenditure.

(b) Projected interest charges and other finance costs may be included in determining the amount of development impact fees to the extent the development impact fees are used for the payment of principal and interest on bonds, notes, or other obligations issued by or on behalf of a unit of local government and are used to finance capital improvements made necessary by development.

Section 30. Collection and; expenditure of development impacts fees accounting of funds.

(a) Development impact fees imposed pursuant to this Act shall be assessed prior to the issuance of a building permit or other appropriate permission to proceed with a development. A unit of local government may delay or extend the payment of development impact fees for a period of time not to exceed 10 years and may impose an interest rate on the delayed or extended payment.

(b) Moneys received from development impact fees assessed under this Act must be placed in a separate fund and accounted for separately, and may only be used for the purposes authorized by this Act. Interest earned on all moneys deposited in the separate fund shall be credited toward that account.

Section 35. Requirement of a public hearing. Municipalities and counties shall conduct a public hearing regarding any proposal for new or increased development impact fees and shall publish a notice 30 days in advance of the hearing in at least one newspaper of general circulation within the unit of local government. The notice must include the date, time, and location of the hearing as well as a general description of the development impact fee that is to be considered. The municipality or county shall conduct a public hearing on the proposal at any time after the expiration of 30 days' notice, and at least 14 days prior to the scheduled date of adoption of the new or increased development impact fee by the governing body. The requirement for new or increased development impact fees shall not be effective prior to 60 days following the date of adoption.

Section 40. Appeals process and judicial review.

(a) Any developer paying a development impact fee under this Act has the right to contest the imposition, collection, or use of the development impact fee, as well as other related matters. The initial appeal must be made to the governing body of the municipality or county responsible for creating the development impact fee and must be in accordance with any procedures adopted in the development impact fee ordinance. Any subsequent relief may be sought in a de novo proceeding in a court with proper jurisdiction and venue.

(b) If a developer pays any development impact fee under protest, the developer is not prohibited from exercising the right of appeal as provided by law.

Section 45. Intergovernmental agreements. Units of local government jointly affected by developments may enter into intergovernmental agreements with each other, with other governmental authorities, or with the State to create, assess, collect, and expend development impact fees consistent with the provisions of this Act.

Section 50. Service areas. If a municipality or county, in its sole discretion, requires the delineation of service areas, a unit of local government shall establish the service areas for the collection or expenditure of development impact fees, provided that a reasonable benefit is delivered to the development in the absence of such service areas. Any service areas must be appropriate to the nature of the particular capital improvement.

Section 55. Development impact fees and land dedications. A municipality or county, in its sole discretion, may require a developer to dedicate land in lieu of development impact fees. Land dedications may not exceed a development's proportionate share, must bear a rational nexus to the development, and must conform to the other requirements of this Act.

Section 60. Construction of capital improvements. This Act does not prevent a municipality from acting in accordance with Division 12 of Article 11 of the Illinois Municipal Code or a county from acting in accordance with 55 ILCS 5/5-12001.

Section 65. Limitation on municipalities or counties. Beginning one year after the effective date of this Act, a municipality or county may not include, as a condition of development approval, any requirement that a developer contribute or pay for land acquisition or construction or expansion of capital improvements or portions thereof unless the municipality or county has enacted an ordinance requiring all other similar (by land use category or nature of impact) developments to contribute a proportionate share of the funds, land, or public facilities necessary to accommodate any impact through the payment of development impact fees as described in this Act.

Section 70. Recoupment. A unit of local government may recoup costs of excess capacity in existing facilities, where such excess capacity has been provided in anticipation of the needs of a development, by requiring development impact fees for those portions of the facilities constructed for future users. The development impact fees imposed to recoup such costs must be based on the unit of local government's actual cost of acquiring or constructing the facility and must be no more than a proportionate share of such costs. That portion of a development impact fee deemed a recoupment is exempt from the Section 75.

Section 75. Reversion of unexpended or unencumbered funds; application for refunds.

(a) All development impact fee revenues collected under this Act must be expended or encumbered for capital improvements authorized herein within 10 years of the date of collection. If the development impact fee revenues are not expended or encumbered within 10 years of collection, then the unit of local government holding the funds shall return to the present owner, the amount of the unencumbered fee plus any interest collected upon proper request for a refund and a determination that a refund is proper. If land is dedicated in lieu of cash payments, then the unit of local government, at its option, may return either the land or the fair value of the land at the date on which it was dedicated.

(b) If eligible for a refund, a present owner must submit to the municipality or county a written request within one year of the date the right to claim a refund arises. If the refund is deemed proper, then the municipality or county shall return, or require a unit of local government to return, the amount to be refunded. All refunds due and not claimed within the required time period must remain in the special fund, and expended only as provided in this Act.

Section 80. Termination of development impact fee ordinances. The corporate authorities of a municipality or the governing body county may, by ordinance, terminate any or all development impact fee ordinances. Upon a finding that any development impact fee is to be terminated, the municipality or county shall publish notice of termination and the availability of any refunds in a newspaper of general circulation within the unit of local government. If at the end of one year no request for a refund is made, the remaining development impact fee funds may be transferred to the unit of local government's general fund, and used for any public purpose. A municipality or county is released from this notice requirement if there are no unexpended or unencumbered balances within a fund or funds being terminated.

Section 85. Compliance by municipalities or counties. No later than 2 years after the effective date of this Act, municipalities or counties shall conform all development impact fee ordinances in existence on the effective date of this Act to the provisions of this Act. Before that date, the failure of development impact fee ordinances that was adopted prior to the effective date of this Act to meet the requirements of a valid development impact fee set forth under this Act is not grounds for challenging the validity of those fees.

Section 97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 999. Effective date. This Act takes effect upon becoming law.