Opinion ID: 1119655
Heading Depth: 2
Heading Rank: 1

Heading: cases governing the legality of impact fees

Text: ¶ 7 Both parties rely on Banberry to support their arguments on appeal. After the conclusion of briefing in this case but shortly before oral argument, we handed down a decision in Home Builders Ass'n v. City of American Fork, 973 P.2d 425, 430-31 (Utah 1999). Banberry, as illuminated by American Fork, provides the governing law for this case. American Fork involved the same plaintiff, Home Builders, in the same type of proceeding, litigating a declaratory action for relief from allegedly illegal impact fees. [3] In American Fork, Home Builders offered arguments based on Banberry that are virtually identical to its arguments in the instant case. Because American Fork addressed and rejected many of the same arguments Home Builders now presents, we review Banberry and American Fork only insofar as they pertain to the unique issues in this appeal. ¶ 8 Banberry established procedural and substantive guidelines for cases where impact fees are challenged. As a procedural matter, Banberry allocated burdens of proof between municipalities and challengers of fees. The municipality must first disclose the basis of its calculations to [whoever] challenges the reasonableness of its subdivision or hookup fees. 631 P.2d at 904. The burden then falls upon the challenger to show[] failure to comply with the constitutional standard of reasonableness. Id. ¶ 9 Substantively, Banberry began its analysis by acknowledging that a presumption of constitutionality attaches to the legislative decisions of municipalities when they establish impact fees. See 631 P.2d at 904. That presumption, however, may be overcome if fees require newly developed properties to bear more than their equitable share of the capital costs in relation to benefits conferred. Id. at 903. Thus, where the fee charged a new subdivision or a new property hookup exceeds the direct costs incident thereto (as a means of sharing the costs of common facilities), the excess must survive measure against the standard that the total costs fall equitably upon those who are similarly situated and in just proportion to benefits conferred. Stated otherwise, to comply with the standard of reasonableness, a municipal fee related to services like water and sewer must not require newly developed properties to bear more than their equitable share of the capital costs in relation to benefits conferred. Id. ¶ 10 Banberry also established a list of factors for determining the reasonableness of impact fees. Id. at 903-04. This list was couched in illustrative terms and was designed to guarantee that fees were reasonable and equitable and not in violation of other statutory limits. Among the most important factors the municipality should consider in determining the relative burden already borne and yet to be borne by newly developed properties and other properties are the following, suggested by the well-reasoned authorities cited below: (1) the cost of existing capital facilities; (2) the manner of financing existing capital facilities (such as user charges, special assessments, bonded indebtedness, general taxes, or federal grants); (3) the relative extent to which the newly developed properties and the other properties in the municipality have already contributed to the cost of existing capital facilities (by such means as user charges, special assessments, or payment from the proceeds of general taxes); (4) the relative extent to which the newly developed properties and the other properties in the municipality will contribute to the cost of existing capital facilities in the future; (5) the extent to which the newly developed properties are entitled to a credit because the municipality is requiring their developers or owners (by contractual arrangement or otherwise) to provide common facilities (inside or outside the proposed development) that have been provided by the municipality and financed through general taxation or other means (apart from user charges) in other parts of the municipality; (6) extraordinary costs, if any, in servicing the newly developed properties; and (7) the time-price differential inherent in fair comparisons of amounts paid at different times. Id. ¶ 11 As we noted in American Fork, these factors cannot be applied in a rigid and formalistic fashion: Given the inherent and unavoidable imprecision that accompanies the quantification of such costs and the apportionment of such costs, the Court made clear that municipalities must have sufficient flexibility to deal realistically with issues that do not admit of any kind of precise mathematical equality. Indeed, the Court stated that such equality is neither feasible nor constitutionally vital. American Fork, 973 P.2d at 427 (quoting Banberry, 631 P.2d at 904) (citation and further quotation omitted). ¶ 12 Given our holding in American Fork, the district court in this case was correct in ruling that Banberry established a standard of reasonableness against which impact fees were to be measured, but did not require a rigid, formalistic approach to the decision-making process employed to calculate the fees. Moreover, the district court was correct in holding that city council members were entitled to rely upon the expertise of others in formulating the fees. ¶ 13 Consequently, once North Logan had disclose[d] the basis for its calculations and properly presented that evidence in support of its motion for summary judgment, the burden fell on Home Builders, under Utah Rule of Civil Procedure 56(e) and Banberry, to demonstrate a disputed issue of material fact respecting the reasonableness of the City's fees. In its brief on appeal, Home Builders contests the means by which the City arrived at its fee calculations, but Home Builders fails to articulate why North Logan's fees are unreasonable or how proper application of Banberry would have resulted in a different fee.