212 [89 Op. Att’y
M UNI CI PALI TI ES I MP ACT F EES

– W HE T HE R I MP ACT F EES M AY B E U SED T O D E FRA Y C OST OF P OL I CE AN D F I RE P ROT E CT I ON S ERVICES

N ovember 18, 2004

A nn e-H erbertR oll i ns, Esquir e Ci t y o f T a n e y t o wn

O n be h a l f o f t h e Ci t y o f Ta n e y t o wn, y o u h a v e r e q u e s t ed our opi ni on on t he author i t yof t he muni ci pal i t yt o i m pos e deve l opm ent i m pactfee s forpol i ce a nd fi r e prot ect i on s er vi ces . Speci fi cal l y , y ou rai sed t he fo l l ow i ng qu est i on s: 1. M aya muni ci pal corpor at i on i m pos e an i m pactfee on r es i dent s of new devel opm ent s l ocat ed w i t hi n t h e m u n i ci pal corporat i on t o fu nd add i t i on al po l i ce and fi re s ervi ces? 2. I f s o, m ayt he muni ci pal corpor at i on i m pos e s uch a f ee f or addi t i onal fi r e ser vi ces w her e t he fi r e depar t m ent i s nota muni ci pal depar t m entbut , r at her , a l ocal vol unt eerfi r e depa r t m entt o w hi ch t he m uni ci pal corpor at i on cont r i but es fundi ng? Y ou pr ovi ded us w i t h y ourl egal anal y s i s , w hi ch con c l u d e d th at t he m un i c i pa l i t yl a c ks a utho r i t yt o i mpos e i mpac tfe e s fo rt hese p u rp o s e s w i t h o u te n a b l i n g l e g i s l a t i o n f r o m t h e G e n e r a l A s s e m b l y. For t he r eas ons expl ai ned bel ow , w e gener al l yagr ee w i t h y our c o n c lu s io n . A b s e n t a u th o ri z a tio n b yth e G e n e ra l A s s e m b ly, a m uni ci pal corpor at i on m aynoti m pos e a de vel opm enti m pactfee for anypurpos e, i f the l aw cr eat i ng t he fe e i s pr i m ar i l ya r evenue m eas ur e and the i m pactfee i s t her efor e a tax. T hus , enabl i ng l egis l at i on byt he G eneral A ssem bly w ou l d be nece ssaryt o im po se s uch a f ee. U nderexi s t i ng s t atut or yaut hori t y , a muni ci pal i t ym ay im p o se a n im p a c t f

e e a s p a rt o f

a re g u lato ry m e a su re . H o w e v e r, in t hatcas e, t her e mustbe an a dequat e nexus bet w een the cha r ge i m pos ed and the cos t of t he ser vi ces t o t he prope r t yas s es s ed, and t he re v e n u e m u st be a p p ro p ria tely e a rm a rk e d so a s to s u b sta n tially benef i tt hatpr oper t y . T hi s i s unl i kel yt o be t he ca s e forfee s r el at edG en. 212] 213
to th e p ro v isio n o f

p o lice a n d f

ire p ro tec tio n se rv ice s, p a rticu lar lyif t h e C i t y’ s c o n t r i b u t i o n s t o a v o l u n t e e rf i r e d e p a r t m e n ta r e v o l u n t a r y.

I D evel opm ent I m pact F ees A . I mpact Fees T h e p h ra se “ im p a c t f

e e ” is u se d to d e sc rib e a f e e th a t is tied to t he appr oval s r equi r ed fora new devel opm ent and t hati s i n addi t i on t o or di nar yfee s forr equi r ed perm i t s . 71 O p inion s o

f t he At t or ney G ener al21 4, 21 5 (198 6). Im pact fees ar e i m po sed t o o ffset t he co st of i nfr as t r uctur e orpubl i c fa ci l i t i es nece s s ar yt o s up p o rtnew d e v e lo p m e n t. See T ib u rz i, I m pact F ees i n Mar

yl and , 1 7 U. Ba l t

. L. R ev. 502 ( 1988)

. I n pr i nci pl e, an i m pactfee r efl ect s t he pr opor t i onat e shar e of t he capi t al cos t of pr ovi di ng a ce r t ai n s er vi ce to in d iv id u a l d w e lli n g u n its o r o th e r c o n su m in g u n its th a t b e g in u s i n g t h a t s e rv ic e f

o r t h e f ir s t tim e . I

d. at503. Fr om a muni ci pal f in a n c e p e rsp e c tiv e , th e re a re tw o a d v a n tag e s to im p a c t f e e s: F irst, t he cos tof i m pr ovement s i s s hi ft ed fr om exi s t i ng taxp ay er s or cus t om er s t o t hos e r es pons i bl e f o r new devel opm ent ; s econd, r evenue i s col l ect ed bef or e i m pr ovement s ar e cons t r uct ed, r at her th a n a f te rw a rd

. I

d. at502- 3. Pay m entof an i m p ac tfee m aybe a condi ti o n p rec edentt o cer t ai n act i on bym uni ci pal offi ci al s – i

. e. , iss u a n c e o f

a b u ild in g p e rm it o r a p p ro v a l o f a su b d iv isio n p lat. B . A uthorit

y to I mpos e I mpact Fee A l ocal gover nm entm aynoti m pos e a t ax or fee, i ncl udi ng an i m p a c tf e e , w i t h o u ta u t h o r i z a t i o n f r o m t h e G e n e r a l A s s e m b l y. A r t i cl e 14 of the M ar y l and D ecl ar at i on of R i ght s pr ovi des “[t ] hatno ai d, char ge, t ax, bur t hen orfee s ough t to be r at ed orl evi ed, under anypr et ens e, w i t houtt he cons entof t he Legi s l atur e. ” The 1954 const it ut i onal amendm entt hatgr ant ed home r ul e t o m uni ci pal corpor at i ons s et s for t h a si m i l arl i m i t at i on: “N o . . . m uni ci pal corpor at i on s hal l l evyanyt ype of t ax, l i cens e fe e, fr anchi s e t ax or fe e w h ich w as n o t i n ef

fe ct in suc h m u n ici p al co rpo rati o n o n Jan u ary 1, 1954, unl ess i ts hal l r ece i ve t he expr es s aut hor i zat i on of t he G e n e ra l A ss e m b lyf

o r su c h p u rp o se , b ya g e n e r a l la w w h ich in its t er m s and i t s eff

ect appl i es al i ke t o al l m uni ci pal corpor at i ons i n one214 [89 Op. Att’y

Article X I -E, §2 of the Mar yland Constitut ion require s that the 1 Gene ral Asse mbly

classify municipal corporations into not more than four c la sse s b a se d o n p op ulatio n. Th e Ge ne ral A sse mbly ha s c ompl ie d w ith this mandate by

decla ringthat all mun i cipal cor porations constitute a singleclass. Annotate d Code of Mar yland, Article23A, §10. o r m o re o f

th e c la s s e s p ro v id e d f o r i n S e c tio n 2 o f th is A rt ic le .” M ar y l and C ons t i t ut i on, A r t i cl e X I

- E , §5. 1 C . N ature of I

mpa ct Fee as T

ax or R egu latory Measu re T he c o n s t i tu t i o n a l r e s tr i ct i ons appl yr egar dl es s of w het hera fe e is a re g u la to ry m e a s u re o r a re v e n u e - r a i s in g ta x . C a m p b e ll v. C ity o f A n n a p o lis , 2 8 9 M d . 3 0 0 , 3 0 5 , 4 2 4 A .2 d 7 3 8 (1 9 8 1 ). H o w e v e r, in a par t i cul arcas e, t he val i di t yof an i m p ac t f ee m aydepend on w h ethe r i t i s m o re a p tl ych ara cterized as a re g u lato rym ea su re o r a t ax, si nce m un i ci pal corpo rat i on s hav e st at utor yauthori t yt o im po se re g u la to ry f

e e s , b u t la c k g e n e ra l ta x in g a u th o ri ty. A re g u lato ryf

e e m u st b e “ re a so n a b le a n d h a v e so m e d e f in ite r el at i on t o t he purpos e of [t he r egul at or y ] s cheme. ” M ayorof O cean C i t y v. P ur nel l

- Jar vis , Lt d. , 86 M d. A pp. 390, 404, 586 A

. 2d 816 ( 1991)

. I n cont r as t , a “r evenue - r ai s i ng” m eas ur e or t ax ( ot hert han a s peci al as s es s m ent ) nee d nothave a nyconnec t i on bet w een the s u b je c t o f th e ta x a n d u s e o f th e re s u ltin g re v e n u e . A lli e d A m . Mu t. F i r e I ns
. C o. v. C om m ’ rof

Mot orV ehi cl es , 219 M d. 607, 616, 150 A

. 2d 421 ( 1959)

. U nl i ke a r egul at oryfee , t he amount of a r evenue ra is in g m e a s u re is n o t s u bj e c t to ju d ic ia l r e v ie w . M ayorof O cean C ity , 8 6 M d . A p p . a t 4 0 5

. I n E a ste rn D ive rs ifi e d P ro p e rtie s, In c . v. Mo n tg o m e ry C o u n ty , 319 M d. 45, 570 A

. 2d 850 ( 1990) , t he C our tof A ppeal s hel d t hatan im p ac t fee i m pos ed t o payforr oad cons t r uct i on cons t i t ut ed a t ax, r at hert han a r egul at or ym eas ur e. I n thatcas e, t he i m pactfee w as i m pos ed pr i ort o t he i s s uance of a bui l di ng per m i t s i n t w o des i gnat ed “pl anni ng pol i cyar eas ” of M ont go m ery C o unt yt o payforr oad cons t r uct i on. T he fe e w as i nt ended t o r efl ecta pr o r at a s har e of the cos t s r es ul t i ng fr om new devel opm ent

. I n enac t i ng t he i m pactfee , th e C o u n tyre lied , n o t o n its tax in g a u th o rity , b u t o n “ its h o m e ru le pow er s , i ncl udi ng i t s pol i ce pow ert o ens ur e and c oor di nat e t he pr ovi s i ons of ade quat e t r an sp or t at i on fac i l i t i es w i t h new devel opm ent

. . . . ” 319 M d. at 49. R evenue col l ect ed fr om t he i m pactG en. 212] 215 f e e w as ded i cat ed t o r oad i m provem ents i n the pl ann i ng area in w h ic h th e f

e e w a s a s s e s s e d

. Id

. E as t er n D i ver s i fi ed cha l l enged the f e e , a rg u in g th a t it w a s a n u n a u th o ri z e d e x c is e ta x . Id

. at51. T he C ou rtno t ed thatt he clas si fi cat i on of an i m pact fee as a r egul at or ym eas ur e ora t ax depe nds on t he purpos e of the enac t m ent , r at her t han t he l abel at t ache d t o i t

. 319 M d. at53. T he C our tadopt ed t he fol l ow i ng bas i s fordi s t i ngui s hi ng t he t w o:

A r egu la t or ym eas ur e maypr oduce r evenue , buti n s u ch a cas e t he amount m us tbe re a so n a b le a n d h a v e so m e d e f in ite re latio n to t he purpos e of the A ct

. A r evenue m eas ur e, on t he ot her hand, m ay al s o pr ovide for r egul at i on, buti f t he r ai s i ng of r evenue i s t he pr i m ar ypurpos e, t he amount of t he t ax i s not re v iew a b le b yth e c o u rts. T h e re is n o se t ru le byw hi ch i tcan be det er m i ned i n w hi ch cat ego rya part i cularA ctpri m ari l ybelo ng s. In g en era l, it m ay b e said t h at w h en itap p ea rs f ro m th e A c t it se lf

th a t re v e n u e is its m a in obj ect i ve, t he enac t m ent i s a r evenue m eas ur e.

. . . [W ]her e t he fee i s i m po sed fo r the p urpose of r egul at i on , and t he s t atut e r equi r es compl i ance wi t h cer t ai n condi t i ons i n addi t i on t o t he paym entof t he pr es cr i bed s um , s uch s um i s a l i c e n s e p r o p e r , i mpo s e d b y v i r t u e of th e p o lic e p o w e r .... I d. a t 5 3 , ci t i ng Theat r i cal C or p. v. B r ennan , 180 M d. 377, 381- 82, 24 A

. 2d 911 ( 1942) ( i nt er nal ci t at i on om i t t ed)

. T he C our tconcl uded t hatt he i m pac t f

ee i m pos ed byM ont gom er yC ount yw as pr edomi nant l ya r evenue - r ai s i ng m eas ur e. N ot hi ng i n t he l ocal l egi s l at i on es t abl i s hi n g t he i m pactfee s ugges t ed t hatt he fe e w as char ged s ol el y bas ed on s er vi ce pr ovi ded t o new devel opm entort hat itw as d esig n ed to d ef

rayex p en ses o f th e d ev elop m en t r eg u lat o ry p ro c e ss . F u rth e rm o re , the so le c o n d iti o n im p o se d in c o n n e c tio n w ith t he fe e w as i t s pay m ent

. A l t hough t he C ount yar gued t hatt he p u rpo se o f th e f

ee w as to reg u lat e d ev elop m en t, the rev en u es w ere dev oted t o road c on stru c tio n i n a lar ge area. T o q uali fyas a r egul at or ym eas ur e, i tw as nots uffi cien tt hat“t he pr oper t yow ner r ece i ve s om e bene fi t fr om t he i m pr ovement

. ” R at her , t he amount of216 [89 Op. Att’y

The Court di d n o t n ee d to decide whether the impact fe e wa s 2 p r o p e rly c h ar a c te riz e d

a s a p r o p e rty tax, e xc is e tax, o r

other ty p e o f tax. Id. at 55, n.4. Howe ver, in a subsequent dec ision, the Court m ade c lear that the impact fe e at issue wa s an excise tax. W aters La n ding Ltd. Pa rtn e rsh ip v. Mon tgom e ry Cou nty , 337 Md. 15, 25, 650 A.2d 712 (1994). t he fe e w oul d need t o “be r eas onabl e and ha ve s om e def i ni t e r el at i on t o t he purpos e of the A ct

. ” I d. at53- 55. T hus , t he i m pactfee i n t hat c a s e c o n s titu te d a ta x th a t th e C o u n ty la c k e d a u th o ri ty to im p o s e . I d. at55. 2
T h e C o u rt’s d e c isio n d o e s n o t su g g e st th a t an im p a c t f e e c o u ld n e v e r b e im p o se d a s a v a lid re g u la to r y m e a su re . In re a c h in g its deci s i on, t he C our temphasi zed thatt he pr i m ar yp u rpose of t he M ont gom er yC ount yi m pactfee w as t o r ai se r evenue and t hatt he fee s w er e nots uffi ci ent l yl i nked t o s er vi ces pr ovi ded or to t he e x p e n s e o f

th e re g u la to ry p ro c e s s . 3 1 9 M d . a t 5 4 -5 5

.

II M uni ci pal A ut hori t y t o I m pose I m pact F ees A . L egis lati on A uthori z ing Impact

Fees U n les s a u th o riz e d b yp u b lic lo c a l law b e f o re 1 9 5 4 o r b yp u b lic gener al l aw , a muni ci pal corpor at i on l acks aut hor i t y t o i m pos e any for m of exci s e t ax, i ncl udi ng an i m pactfee t hatw oul d be cons t r ued as a tax u n d e r E as t er n D i ver s i f i ed Proper t i es . W hen t he G ener al A ss e m b ly h a s g ra n ted e x p licit a u th o rityto lo c a l g o v e rn m e n ts to im p o se im p a c t f

e e s, th a t au th o rityg e n e ra llyh a s b e e n lim ited to f in a n c in g c a p ita l im p ro v e m e n ts

. S e e , e .g ., A nnot at ed C ode of M ary l and , A rt i cl e 25 , §9 (aut ho ri t yof C a rr oll C ou ntyt o im po se i m pactfee s); A rt i cl e 25B , §13D ( author i t yof count i es t hathave a d o p ted c o d e h o m e ru le to im p o se im p a c t f e e s); buts ee A nnot at ed C ode of M ar y l and, A r t i cl e 23A , § 4 4 (b) ( aut hor i t yform uni ci pal corpor at i on to cre at e s peci al t axi ng di s t r i ctforbus orr i de s har i ng sy s t em; us e of i m pactfee s as w el l as ad val or em t axes t o s upp o rt b o th c a p ita l a n d o p e ra tin g c o s ts ).G en. 212] 217

Article 23A , §2(b)( 33) wa s enac ted as a n emerg ency measureafte r 3 the Court of Appe als struck down a feei mp o sed in conne ction with a municipal residential licensingscheme

. See Chapters 565 a nd 684, L aws of Mar yland 1981, superseding Cam pb e ll v. City

of A nn ap oli

s, 289 Md. 30 0, 42 4 A .2 d 7 38 (1 98 1) . T hat le g isl atio n w a s inte nd e d to “ re sto reto mun ic ipal c or

po ratio ns thebroa d autho ri ty ‘h e re tof or e tho ught to e xist’ to levy fee s and cha

rg es in conne ction with the exercise of their lawf

ul power s.” 67 Opinions of the Attorney Gene ral 307, 310 (1982). In a 19 86 op ini on , Atto rn ey Gen eral Sa c hs re lie d o n § 2(b) (3 3) to concludethat the Town of Oce an City could impose an impac t feeon new de ve lop me nt t o f

un d it s lo c a l sh are of the c os t of be a c h r e sto ratio n e ff

or ts. 71 Opinions of the Attorney Gene ral 214 (1986). That opinion prece ded the Ea s te rn D iversified

decision and did not foc us on the distinction betwee n a tax and a re gulatory fee . The c onclus i o n th at the propose d (continued...) B . A r ti cle 23A , §2(

b) ( 33) T he G ener al A s s embl yhas gr ant ed muni ci pal i t i es t he gene r al p o w e r to a ss e ss re g u lato ryf e e s: I n addi t i on t o, butnoti n s ubs t i t ut i on of, t he pow er s w hi ch have be en, orm ayher eaf t erbe, gr ant ed t o i t , [a muni ci pal ] l egi s l at i ve body al so shal l hav e t he fo l l ow i ng exp ress ordi nan ce-m aking po w ers :

. . . ( 3 3 ) Su b

j e c tt o t h e l i mi t a t i o n s i mpo s ed underA r t i cl e 24 of the C ode, t he Tax- G ener al A rticle , an d th e T a x -P ro p e rtyA rticle , to es t abl i s h and col l ectr eas onabl e fe es and charges:

... ( i i ) A s s oci at ed w i t h t he exe r ci s e of a ny gover nm ent al or pr opr i et ar y funct i on a u t h o r i z e d b y l a w t o b e e x e r c i s e d b y a m uni ci pal corpor at i on. A nnot at ed C ode o f M ar y l and, A r t i cl e 23A , §2( b) ( 33) ( i i )

. T he a u th o riz a tio n to im p o se “ re a so n a b le” f e e s a n d c h arges ind ica tes th a t, in e n a c tin g § 2 (b )(3 3 )(ii), the L e g isla tu re w a s co n f e rrin g a u th o rityto i m po se r egu l at orycharges rather t han t axes. 3218 [89 Op. Att’y

(...continued) 3 Oce an City

feewould be per

missibl e wa s supported in part by a provision in several bills then pending before the Gene ral Assembly (now c odified at Annotated Code o f M ary land, Natural Resourc es Article , §8-1103(i)( 2)(ii)2, that authorized reple nishment of the oce an bea ch and require d a loca l contribution, s p ec ifically ref ere ncing“fe es and c harg es authorized under Article 23A, §2(b)(33) .” Id. C . R ation al N

exu s T est T o just i fy i m po si t i on of i m pact fees on n ew dev el op m ent as a r egulatory m eas ur e underA r t i cl e 23A , §2( b) ( 33) , t her e mustbe a suffici ent nexu s bet w een the fee as sess ed and t he p roport i on al cost o f p ro v id in g th e b e n e f

its su p p o rte d b y th a t f

e e to a f f e c ted p ro p e rty ow ner s . T he C our t of A ppeal s al l uded t o t he need for s uch a ne xus i n E as t er n D i ver

s i f i ed , but di d not ar t i cul at e a s peci fi c st andar d for det er m i ni ng w het her a n exus exi s t s . W hi l e cour t s i n ot hers t at es have r el i ed on a numberof al t er nat i ve s t andar ds i n cons i der i ng t he v a lid ity o f

im p a c t f e e s , th e “ ra tio n a l n e x u s ” te s t p re d o m in a te s . See, e. g. , B la e s s e r & K e n to p p , Im p a c t F e e s : T

h e “ S e c o n d

G e n e r a tio n ,” 3 8 W ash

. U

. J. U rb. & C o n tem p . L

. 5 5 , 1 0 0 (19 9 0 ). U ndert he r at i onal nexus t es t , an i m pactfee is per m i s s i bl e as a r egul at or ym eas ur e, s o l ong as ( 1) the fe e re l at es t o needs a ttribu tab le to n e w d e v e lo p m e n t, a n d (2 ) th e re v e n u e c o llec ted is earm ar ked forthe su bs t ant i al benef i tof t he deve l opm entchar ged. 8 M c Q u illin , The Law of Muni ci palC or por at i ons § 2 5

. 1 1 8

. 6 0 (3rd ed

. rev . 2000)

. T hus , t her e ar e t w o s t eps i n t he ana l y s i s : fi r s t , t he m uni ci pal i t ym us tbe abl e t o demons t r at e a r eas onabl e conne ct i on, orr at i onal nexus , bet w een the popul at i on gr ow t h r es ul t i ng fr om new devel opm ent and t he need f oraddi t i onal fac i l i t i es ; and s econd, t he m uni ci pal i t ym us tbe abl e t o s how a r eas on abl e conne ct i on, or r at i onal nexus , bet w een us e of the re venue gener at ed by t he fe e and b e n e f its a c c ru in g th e p roje c t o r p ro p e rt ya s s e s s e d

. I d.

III P ol i ce and F i re Prot ect i on Servi ces T he i m pactfee cont empl at ed i n y ourr eques ti s unus ual i n t hat i tw ould rela t e t o t he muni ci pal i t y ’ s cos tof pr ovi di ng addi t i onalG en. 212] 219 pol i ce a nd fi r e pr ot ect i on s er vi ces , r at her t han t o t he cos tof ca pi t al im p ro v e m e n ts. A s n o ted a b o v e , im p a c t f e e s a re g e n e ra llyu se d to hel p defr ay t he costof i nfr as t r uctur e r equi r ed t o acc om m odat e new devel opm ent

. H ow ever , i t m ay be pos s i bl e t o r ecove rt he oper at i ng cos tof m uni ci pal s er vi ces r es ul t i ng fr om new devel opm entt hr ough a n im p a c t f

e e . A . I mpact Fees as an Excis e Tax - En abling L egis lati on B efor e ena ct i ng a l ocal or di nance t o i m pos e an i m pact fee for s er vi ces , t he muni ci pal i tyc o u l d s e e k e n a b l i n g l egi s l at i on t hr ough t he G ener al A s s embl yal l ow i ng i tt o i m pos e the fee as an exc i s e t ax. S u c h l e g i s l a t i o n wo u l d n e e d t o b e e n a c t e d a s a p u b l i c g e n e r a l l a w, a p p l i c a b l e t o e a c h mu n i c i p a l i t yg o v e r n e d u n d e rt h e mu n i c i p a l h o me ru le a m e n d m e n t. M a ry lan d C o n stitu tio n , A rticle X I-E , § 5 ; A rticle 23A , §10. T he ena bl i ng l egi s l at i on s houl d be dr aft ed t o des cr i be t he per m i s s i bl e us es forw hi ch i m pactfee s m igh t be i m pos ed. T he a d v a n t a g e o f

t h i s a p p r o a c h i s t h a t t h e r e wo u l d b e n o n e e d t o s h o w a n e x u s b e tw e e n th e a s s e s s m e n t a n d th e u s e o f th e re v e n u e . B . I mpact Fees as a R egulator

y Meas ure - A ddi ti onal P oli ce I n E as t er n D i ver

s i f i ed Proper t i es , t he C our tof A ppeal s m ade cl earthat a re gul at or yfee m us thave s om e conne ct i on t o t he under l y i ng purpos e of the l egi s l at i on, bey ond revenue ge ner at i on. 319 M d. at5 4 -55

. If the s ol e condi t i on r equi r ed byt he or di nance w oul d be paym entof an im p ac t fee t o obt ai n a bui l di ng or dev elopm entper m i t , t he fe e w oul d cons t i t ut e a t ax. O n t he ot her hand, i f t he or di nance pr es cr i bed m i ni m um pol i ce se r vi ce l evel s for t he muni ci pal i t y an d adopt ed a f or m ul a orm odel underw hi ch t he fee w oul d be ca l cul at ed, i n t heor yi tcoul d ref lectt he nee d for a d d iti o n a l p o lice se rv ice s b a se d o n th e im p a c t o f n e w d e v e lo p m e n t. See, e. g. , K ell y , D e v e lo

p m e n t I m p a c t F e e s : Mo d e li n gFu tu re G ro w th a n d E c o n o m ic D e v e lo

p m e n t in a S o u th C a ro li n a C o m m u n ity , 20 I nt ’ l

. J

. Pub. A dm i n. 1599, 1606 ( 1997) ( t r eat i ng cos t o f p o l i ce o f f ic e r a s c a p ita l a s s e t f

o r p u rp o s e s o f

c a lc u la tin g im p a c t f

e e ). T he s econd pa r t of t he r at i onal nexus t es tr equi r es t hatt her e be a r eas onabl e conne ct i on bet w een the us e of the r evenue s der i ved f ro m th e im p a c t f

e e a n d b e n e f

its a c c ru in g to th e p rojec t o r p ro p e rty as s es s ed. A r egul at or yfee m us tbe bas ed ei t heron t he expe ns e of220 [89 Op. Att’y
t he r egul at or ypr oces s or , i n t hi s cas e, on t h e co st o f ser vi ces pr ovi ded. H ow ever , i ti s nots uff ici en t t hatt he pr oper t yow ner r ece i ve s om e bene fi t f

r om t he s er vi ces . R at her , t he fe e mustbe r eas onab le a n d have s om e def i ni t e r el at i on t o t he purpos e of the o rd in a n c e . E as t er n D i ver s i f i ed, 319 M d. at 5 5

. St at ed ot her w i s e, r evenu es m us tbe ea r m ar ked t o pr ovi de pol i ce pr ot ect i on i n t he speci fi c area assessed, and t he fees m ust be propo rt i on al t o the cost of pr ovi di ng t he s er vi ces . U nl es s t he r evenue s w er e devot ed t o t he p r o v i s i o n o f

p o l i c e s e r v i c e s i n t h e s p e c i f i c a r e a o f a s s e s s e d p r o p e r t y, an im pact fee w ou l d li kelybe inval i dated as an un authori zed ex ci se ta x . C . I mpact Fees as a R egulator y Meas ure - Support

of Volunteer Fi r e D e pa r t m e nt Y o u a sk e d w h e th e r a m u n icip a litym a yim p o se im p a c t f e e s to s uppor t t he s er vi ces of a vol unt eer fi r e depar t m ent

. I t i s n o t cl ear w het hert he C i t yi s lega ll y obl i gat ed t o m ake pa y m ent s t o t he v o lunteer fi re com pan y based on propert i es ser ved , or w hetherits cont r i but i on i s vol unt ar y . I f t he paym ent s ar e vol unt ar y , i tdoes not appea r th at a n i m pactfee coul d be j us t i fi ed bas ed on t he m u n ic ip a lit y’ s c o s t o f

s e rv in g n e w d e v e lo p m e n t. I f th e ya re n o t, a reg u lat o ryfe e w o u ld n ee d to b e struc tured to sa ti sfy the tw o -p art re a s o n a b le n e x u s te s t.

I V C oncl usi on I f t he C i t yof Taney t ow n des i r es t o i m pos e deve l o p me n ti mpa ct fee s on new devel opm entt o hel p pay for pol i ce a nd fi r e pr ot ect i on servi ces , i tw oul d be prudentt o s eek e nabl i ng l egi s l at i on fr om t he G ener al A s s embl y , appl icab l e t o al l m uni ci pal i t i es , aut hor i zi ng i m pos i t i on of i m pactfee s as an exci s e t ax and addr es s i ng t he t ypes o f a c tiv iti e s th a t ca n b e f

in a n c e d in th is m a n n e r. In th e o ry , the C ity m igh t be a b le t o s tru cture an im p ac t fee as p art of a re g u lat o ry m eas ur e, i f t he fe e w er e bas ed on t he cos t s at t r i but abl e t o pr ovi di ng s er vi ces t o t he new devel opm entand t he re venues w er e ea r m ar ked to p rov ide th o se se rvice s to the d ev elop m e n t asse ssed

. H o w ev er, t his i s un l i kely t o be t he case w i t h m ost fees rel at ed to such servi ces,G en. 212] 221
p arti cu larl y if the C ity ’s p ay m en ts to a v o lun teer fire d ep artm en t are v o l u n t a r y.

J. Jo sep h C u rran , Jr. A t t or ney G ener al W i l l i am R

. V ar ga A s sista n t A tt o rn ey G eneral R o b e rt N . M c D o n a ld C hi ef C ouns el O pi ni ons and A dvi ce