Impact Fees (Oppose – Preemption) 

Impact Fees (Oppose – Preemption) 

SB 144 (Bean) and HB 207 (Donalds) prohibit local governments from collecting impact fees prior to the issuance a building permit for the property that is subject to the fee. In addition, the dual rational nexus test is codified in the bills. The dual rational nexus test is the legal standard used by courts to require the expenditures of funds collected by an impact fee, and the benefits that are accrued to the new construction (both residential and commercial) should be reasonably connected to the need for additional capital used for a major facility and should be connected to the increased impact caused by the new construction. The legislation requires that impact fees be connected to (have a rational nexus with) the money spent from the funds collected and be connected to the benefits of the new residential or commercial construction. The bills require local governments to specifically earmark funds collected by the impact fees for use in acquiring, constructing or improving capital facilities to benefit the “new users.” The legislation prohibits the use of impact fee revenues to pay existing debt or for prior approved projects, unless the expenditure is reasonably connected to, or has a rational nexus with, the increased impact generated by the new residential or commercial construction.  Lastly, the bills exempt water and sewer connection fees from the provisions of the legislation. (Cruz)