ATTORNEY GENERAL OF TEXAS GREG ABBOTT



### September 20,2010

The Honorable Eddie Lucio, Jr. Opinion No. GA-0797 Chair, Committee on International Relations and Trade Texas State Senate Post Office Box 12068 Austin, Texas 78711 Dear Senator Lucio: Re: Calculation of impact fees for a platted subdivision (RQ-0854-GA)

Onbehalfofthe City ofBrownsville'sPublicUtilitiesBoard,you ask severalquestions about chapters 245 and 395 ofthe Local Government Code.! Chapter 245 is commonly referred to as the "vested rights statutes" and grants a project "grandfathered" status. See 

### TEx. Loc. GOy'rCoDEANN. §§ 

### 245.001-.007 (West 2005); Milestone Patranca Dev., Ltd. 

### v. City of SanAntonio, 

### 298 S.W.3d 242, 248 (Tex. App.-SanAntonio 2009, pet. denied) (referring to chapter 245 as "the vested rights statutes"); Save Our Springs Alliance 

### v. City of Austin, 

### 149 S.W.3d 674, 681 (Tex. App.-Austin 2004, no pet.) (referring to chapter 245 as containing a "grandfather clause" that protects owners from changes in laws that occur during the pendency of a development project). As one court explains, "[ c]hapter 245

... recognizes a developer's vested rights andrequires a regulatory agency to consider approval or disapproval ofan application for a permit, such as a subdivision plat, based onregulations and ordinances in effect at the time the original application is filed." Milestone Potranco Dev., Ltd, 

### 298 S.W.3d at 248; see 

### Tex. Att'y Gen. Op. No. JC-0425 (2001) at 1 (explaining that chapter 245 works to "Iock[] in, for the duration of a real-property 'project,' the development regulations in effect when the original application for the first necessary permit is filed"). Chapter 395 governs the imposition of impact fees by municipalities as well as other governmental entities. See 

### TEx. Loc. GOy'r CODE ANN. §§ 

### 395.001-.082 (West 2005 & 

### Supp. 2010). "An impact fee is generally described in one Texas case as a charge 'on new development to pay for new public facilities that become necessary as the result of city growth in a particular area.'" Tex. Att'y Gen. Op. No. GA-0577 (2007) at 2 (citing DeSoto Wildwood Dev., Inc. 

### v. City of Lewisville, 

### 184 S.W.3d 814, 820 n.3 (Tex. App.-Fort Worth 2006, no pet.)).

lRequest Letter at 1-2 (available at http://www.texasattorneygeneral.gov).The Honorable Eddie Lucio, 

### Jr.

- Page 2 (GA-0797)



### I. First Series ofQuestions Asa preliminarymatter, we

### clarify thecontextinwhichyouaskyourfirst series ofquestions. Inrelationto your first three questions, youaskthat we assume "adeveloper initiates a development plan, pays the impact fees applicable at the time ofinitiation, and retains ownership ofthe property, but allows a development plan to lapse due to inactivity under local ordinances and regulations." Request Letter at 1. We understand the initiation ofa development planto meanthat the developer in your scenario filed some type ofpreliminary plan or plat that triggered statutory vesting rights underchapter245. See TEx. Loc. GOV'T CODEANN. 

### §245.002(b) (West2005) ("Preliminaryplans and related subdivision plats, site plans, and all other development permits for land covered by the preliminary plans or subdivision plats are considered collectively to be one series ofpermits for a project."); City of SanAntonio v. En Seguido, Ltd, 227 S.W.3d 237,244 (Tex. App.-SanAntonio 2007, no pet.) ("Reading

... [sub]sections [245.002(a) and 

### (b)] together, the filing ofa plan for development or plat application, including preliminary plans and plats, gives rise to vested rights regardless ofwhether the plan orplat was required to be filed. "). We understand your reference to the payment of impact fees to mean statutory impact fees imposed under chapter 395 and, furthermore, we assumethatthe fees were collected incompliance with chapter 395. See TEx. Loc. GOV'TCODEANN. 

### §§ 395.016, .019 (West2005)(addressingthecollectionofimpactfees). Finally, we understand the "lapse" ofthe development plan "due to inactivity under local ordinances and regulations'" to mean that the project is dormant under Local Government Code section 245.005. 3 See id 

### § 245.005 (authorizing a regulatory agency to place an expiration date on permits); see also BrieffromRichard O'Neil, onbehalfof the CityofBrownsville andthe City'sPublicUtilitiesBoard at 2 (Mar. 26, 2010) (on file with the Opinion Committee) [hereinafter City Brief] (indicating that he too understands your scenario to involve a dormant project). 

### A. Question l(a) Having clarified the context, we now consider your first series ofquestions. You want to know if, in this context, "the developer [is] entitledto a refund ofthe impact fees ifthe municipality andthemunicipalutilityhave spentthe impactfees previouslycollectedto constructregional capital improvements associated with anticipated new growth[.]" Request Letter at 2. Chapter 395 provides for the refund ofimpactfees in specific circumstances. See TEx. Loc. GOv'T CODE ANN. § 395.025(a), (c) (West 2005) (providing for a refund where a municipality denies service, fails to cornmence construction within a certaintime, fails to make service available

'Neither chapter 245 nor chapter 395 uses the tenn "lapse" or "inactive." See TEX. Loc. GOy'T CODE ANN. §§ 245.001-.007 (West 2005), id. §§ 395.001-.082 (West 2005 & Supp. 2010). 'It is not altogether clear to us how the project has become donnant under chapter 245 in light ofthe fact that impact fees have been paid. See TEX. LOC. GOy'T CODE ANN. § 245.005 (West2005) (authorizingthe placement ofan expiration date on a pennit ifno progress has been made towards completion ofthe project and providing that the payment ofirnpact fees to a regulatory agency constitutes progress towards completion ofaproject). However, we will assume for purposes ofthis opinion that the facts articulated in your request are correct. CfTex. Att'y Gen. Op. No. GA-0249 (2004) at 2 (assuming the facts provided by the requestor are correct).

### The Honorable Eddie Lucio, 

### Jr.

- Page 3 (GA-0797)

within a certain time, or fails to spend fees as authorized by chapter 395 within a certain time). Section 395.025 addresses the refund ofan impact fee and provides:

[d. 

### (a) On the request of an owner of the property on which an impact fee has been paid, the political subdivision shall refund the impact fee ifexisting facilities are available and service is denied or the political subdivision has, after collecting the fee when service is not ayailable, failed to commence construction within two years or service is not available within a reasonable period considering the type ofcapital improvement or facility expansion to be constructed, but in no event later than five years from the date ofpayment under Section 395.019(1).

(c) The political subdivision shall refund any impact fee or part ofit that is not spent as authorized by this chapter within 10 years after the date ofpayment.

The municipality must refund the impact fees under chapter 395 only ifyour scenario fits within section 395.025. 

### See id.; TEx. GOV'TCODEANN. 

### § 31l.016(2) (West 2005)(explainingthat the term "shall" is construed to impose a duty unless the context or statnte provides otherwise). If it does not, we find no otherrequirementinchapter 395 that a municipalityrefundimpactfees. That a project becomes dormant under Local Government Code section 245.005 is not, standing alone, one ofthe circumstances thattriggers a refund under section 395.025. Ultimately, however, you do not provide sufficient information to determine ifthe sitnation you describe fits within the refund provisions ofsection 395.025: B. Question 

### l(b) Younextinquirewhether "thedeveloperwho laterattempts to reinstatethe developmentplan afterthe municipality adopts additional or increasedimpact fees [is

## 1 entitledto grandfathered statns or a vested right to be subject to the originally assessed impact fees[.]" Request Letter at 2. We understand the terms "grandfathered" or "vested" to refer to rights acquired under chapter 245.

'We note that, in any particular circumstance, factors other than chapter 395's refund provisions may be important in answering this question, such as the terms ofany agreement between the developer and municipality and relevantordinances andregulations adoptedbythe municipality. C/, e.g., McNairv. City o/CedarPark, 993 F.2d 1217, 1219 (5th Cir. 1993) (noting that the municipality's ordinance made no mention ofrefunds and rejecting developer's claims that municipality was unjustly enriched when it failed to retnrn impact fees after the developer abandoned the development because ofbad economic conditions and business disputes); DeSoto WildwoodDev., Inc., 184 S.W.3d at 824-25 (involving a developer's breach ofcontract claims against a municipality regarding the use ofimpact fees).The Honorable Eddie Lucio, Jr.

- Page 4 (GA-0797)

Milestone Patranca Dev., Ltd, 298 S.W.3d at 248 (referring to chapter 245 as "the vested rights statutes"); Save Our SpringsAlliance, 149 S.W.3d at 681 (referring to chapter 245 as containing a "grandfather clause" that protects owners from changes in laws that occur during the pendency of a development project). Evenassumingchapter245 appliestoimpactfees,' your scenario involves a dormantproject for which the permit has expired under section 245.005. 6 See Request Letter at 1 (asking that we assume the development plan has lapsed due to inactivity). Thus, so long as the facts are as you describe and there is no contractual or extra-statutory basis for preserving the original application, the developerhas no grandfathered status orvestedrights intheprojectunder chapter245. See Tex. Att'y Gen. Op. No. JC-0425 (2001) at 3 (explaining that a "project would be subject to current development regulations" if the permit has expired and the project is dormant under section 245.005). Because we answer question l(b) in the negative, we do not address question l(c). 

### II. Second Series ofQuestions Inyour second series ofquestions, you ask us to assume "a platted subdivision is assessed impact fees under Section 395.016(d), Local Government Code, but no impact fees are actually collected because ofsubdivision inactivity (for example, no requests for building permits orutility connections), and the municipality adopts additional or increased impact fees during the inactivity period." Request Letter at 2; see also TEx. Loc. GOV'T CODE ANN. 

### § 395.016(d) (West 2005) (providing that a municipality may assess impact fees before or at the time of recordation of a subdivision plat and collect the fees when a building permit is issued or an application for an individual water meter connection is filed). 

### A. Question 2(a) You ask whether "adistinction [should] be made between an 'assessment' ordetermination ofimpact fees and an actual collection ofimpact fees under [subsections] 395.016(d) and (f), Local Government Code." Request Letter at 2. Subsection (d) provides that a municipality may assess impact fees before or at the time ofrecordation ofa subdivision plat, but may collectthe fees when a buildingpermitis issued or an application for an individual water meter connection is filed. TEx. Loc. GOV'T CODE ANN. § 395.016(d) (West 2005). Subsection (f) defines the term "assessment" to mean "a determination of the amount of the impact fee in effect on the date or occurrence provided in this section and is the maximum amount that can be charged per service unit of such development." Id. 

### § 395.016(f). 

### In a prior opinion, this office concluded that the collection ofan
'It is not clear and we find no court that has addressed whether chapter 245 applies to impact fees. See TEx. Loc. GOy'T CODE ANN. §§ 245.004(6) (West 2005) (explaining that chapter 245 "does not apply to
... fees imposed in conjunction with development permits"); 395.001(4) (defming "impact fee" as a fee imposed against new development); 395.0 16(e) ("Thepolitical subdivisionmay assess the impact fees at anytime duringthe development and building process ...."). 'Section 245.005 is entitled "DormantProjects" and authorizes a regulatory agency to place an expiration date on a permit. Id § 245.005(a)-(b). Here, we understand thatthe preliminary plan orplat that triggered statutory vesting rights under chapter 245 has now expired leaving the project dormant. See discussion supra p. 2.The Honorable Eddie Lucio, Jr.

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impact fee refers to the time the governmental entity receives payment ofthe fees. Tex. Att'y Gen. Op. No. GA-0577 (2007) at 2. In sum, the express language ofthe statute reflects, and a prior opinion ofthis office recognizes, a distinction between the assessment of an impact fee and the collection ofan impact fee under subsections 395.016(d) and (1). B. Question 2(b) You next ask whether "the enactment of an impact fee ordinance by a municipality constitute[s] an 'assessment' ofan impact fee without any other specific actbythe municipality[.]" Request Letter at 2. Considered as a whole, chapter 395 contemplates that the act ofadopting an impact fee and the act of assessing an impact fee are separate activities. See Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 493 (Tex. 2001) (stating that in determining legislative intent, a court "must always consider the statute as a whole rather than its isolated provisions"). First, the act ofassessing an impactfee appears to relateto a specificnewdevelopmentwhereasthe actofadopting an impactfee generally relates to a larger area. As previously set out, section 395.016(1) defines the term assessment to mean "a determination of the amount of the impact fee in effect on the date or occurrence provided inthis section and is the maximum amountthatcanbe chargedper service unit ofsuch development." TEx. Loc. GOy'T CODE ANN. § 395.016(1) (West 2005) (emphasis added); see also id. 

### § 395.001(10) (defining the term "service unit"). This indicates that the assessment of animpact fee is a calculationrelated to a specific new development. Similarly, section 395.016(d), upon which your scenario is based, indicates that an assessment is made against a particular subdivision plat. 

### !d. § 395.016(d) ("The political subdivision shall assess the impact fees before or at the time of recordation of a subdivision plat or other plat under Subchapter A, Chapter 212

.... "); see also Request Letter at 2 (asking that we assume "aplatted subdivision is assessed impact fees under Section 395.016( d), Local Government Code"). In contrast, the act ofadopting an impact fee is generally applicable to an area broader in scope than one particular development. For instance, the adoption ofan impact fee is precededby and basedupon the adoption oflanduse assumptions and a capital improvementplan. TEx. Loc. GOy'TCODE

### ANN. 

### § 395.045 (West2005). The landuse assumptions include a description ofa service area. 

### ld. 

### § 395.001(5). The service area is the entire area "to be served by the capital improvements orfacilities expansions specified in the capital improvement plan." 

### ld. 

### § 395.001(9). Second, chapter 395 requires an entity to take specific action when adopting an impact fee but not when assessing an impact fee. The act ofadopting an impact fee must be reflected in an ordinance, order, orresolution,whereas, section 395.016(1)providesthat, inregardto anassessment, "[n]o specific act by the political subdivision is required." 

### ld. §§ 395.051, .016(1). Third, chapter 395 does not use the term "assessment" whenreferring to the adoption ofan impact fee. See Laidlaw Waste Sys. (Dallas), Inc., v. City o/Wilmer, 904 S.W.2d 656, 659 (Tex. 1995) ("[E]very word ofa statute must be presumed to have been used for a purpose."). Section 395.051, for instance, provides that "[t]lie political subdivision, within 30 days after the date ofthe public hearing onthe imposition ofan impact fee, shall approve or disapprove the imposition ofan impactfee" and prohibits the "ordinance, order, orresolution approvingthe imposition ofanimpactThe Honorable Eddie Lucio, Jr.

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fee" from being "adoptedas anemergencymeasure." TEx.Loc.GOy'TCODEANN. § 395.051 (West 2005) (emphasis added). Section395.024providesthat "[t]heorder, ordinance, orresolutionlevying an impact fee must provide that all funds collected through the adoption ofan impact fee shall be deposited in interest-bearing accounts." Id. 

### §395.024(a) (emphasis added). The act ofassessing an impact fee is, in contrast, referred to in a limited number ofprovisions ofchapter 395-sections 395.016 and 395.0 1 7-and is not referred to in provisions related to the act ofadopting an impact fee. See id. §§ 395.016-.017. In sum, we conclude that the acts ofadopting an impact fee and assessing an impact fee are distinct activities. However, wefind nothing inchapter 395 thatwouldprohibita singleordinancefrom serving as both the means by which a municipality imposes and assesses an impact fee. Whether any particular ordinance both imposes and assesses an impact fee is an issue this office cannot resolve. See Tex. Att'y Gen. Op. No. GA-0648 (2008) at 6 (explaining that this office generally does not construe city ordinances and cannot answer questions that require the resolution offact questions). 

### C. Question 2(c) Finally, you askwhetherthe developer" inyour scenario pays "the originally assessedimpact fees orthe additional orincreased impact fees" "when subdivision activitybegins, assuming that no increased subdivision use density requires any consumption of additional utility service units." Request Letter at 2. Section 395.017 expresslyprovides that "[aJfter assessment of the impactfees attributable to the new development or execution of an agreement for payment of impact fees,

. additional impact fees or increases infeesmaynotbe assessedagainstthetractfor anyreasonunless the number ofservice units to be developed on the tract increases." TEx. Loc. GOy'T CODE ANN. 

### § 395.017 (West 2005) (emphasis added). Under the express language ofthe statute, no additional impact fees or increases may be assessed against a tract after the original assessment and thus, the developer in your scenario would pay the originally assessed impact fees. 8 See Galbraith Eng 'g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex. 2009) (explaining that, when construing a statute, the "primary objective is to give effect to the Legislature's intent as expressed in the statute's language").

'0ne briefreceived by our office contends that it is the builder not the developer who pays impact fees. See Brieffrom NedMuIloz, Yice President ofRegulatory Affairs and General Counsel, Texas Association ofBuilders at 6 (Mar. 3, 20I0) (onfile withthe OpinionCommittee). However, wewill assume for purposes of this opinionthatthe facts articulated in your request are correct and thatthe developer in your scenario is responsible for paying the impact fees. C! Tex. Att'y Gen. Op. No. GA-0249 (2004) at 2 (assuming the facts provided by the requestor are correct). 'Werecognizethat section 395.0 17 is arguablyinconsistentwith otherprovisions in chapter 395. See TEX. Lac. GOV'T CODE ANN. §§ 395.055-.057 (West 2005); City Briefat 9 ("A plain reading ofLGC Section 395.017 seems contrary to the overall intent ofLGC Chapter 395 for cities to keep impact fees reflective ofcurrentutility infrastructure costs.").

### The Honorable Eddie Lucio, Ir.

- 

### Page 7 (GA-0797)



### SUMMARY Local Government Code chapter 245 recognizes a developer's vestedrights andrequires a regulatory agency to considerapproval or disapproval ofan application for a permit based on regulations and ordinances 

### in effect at the time an original application is filed. A developer has no vested rights in a project under chapter 245 ifthe project is dormant under section 245.005. Local Government Code chapter 395 governs the imposition ofimpactfees by municipalities. Impactfees are, as a generalmatter, charges on new development to pay for public facilities that become necessary as the result ofgrowth in a particular area. A municipality must refund impact fees as provided in section 395.025. There is, as reflected in the express language ofchapter 395 and in prior attorney general opinions, a distinction between the assessment 

### ofan impact fee and the collection 

### ofan impactfee. Chapter 395 indicates thatthe act ofadopting an impact fee and the act ofassessing an impact fee are distinct activities. However, we cannot say as a matteroflawthat a single ordinance could not serve as both the means by which a municipality imposes and assesses an impact fee. By its express terms, section 395.017 prohibits the imposition of additional or increased impact fees against a tract afterthe fees have been assessed unless the number of service units to be developed on the tract increases.

DANIEL T. HODGE First Assistant Attorney General DAVID I. 

### SCHENCK Deputy Attorney General for Legal Counsel NANCY S. FULLER Chair, Opinion Committee Christy Drake-Adams Assistant Attorney General, Opinion Committee