Property Rights & Impact Fee Issues Around the Nation

Property rights and impact fees remain issues around the country. In late 2004, a property rights measure passed in Oregon and designed to address uncompensated regulatory takings.  In addition, there have been four decisions regarding the ability of municipalities and local governments to implement impact fees tied to a variety of topics including schools, telecommunications and a ballot measure.

Property Rights Measure Passes in Oregon

School Impact Fee Victory in North Carolina

Impact Fee Referendum Defeated in South Carolina

Telecommunications Impact Fee Defeated in Ohio

Property Rights Initiative Passes in Oregon

The Wall Street Journal reported recently (November 9, 2004) on a statewide property rights ballot initiative that passed November 2, 2004 in Oregon. The initiative, Measure 37, which passed with 60% of the vote, was drafted by Oregonians in Action, a property rights advocacy group concerned with the growing abuse of uncompensated regulatory takings in the state. Measure 37 does not forbid local and state authorities from regulating land use. However, the measure does excuse property owners from compliance with onerous rules enacted after they have purchased their land, or requires the government to compensate the owners who have complied with the restrictive rules. As the article reports, the immediate effect of Measure 37 will be to stop the most frivolous land use regulations, since state and local governments cannot afford to pay millions of dollars for “takings” of this nature. A provision of the ballot initiative provides that compensation is due if the regulation remains in force 180 days after the property owner makes written demand for compensation. After that time, the owner may file an action in circuit court in the county in which the property is located.The measure also specifies that the owner is entitled to reasonable attorney fees, expenses, and costs reasonably incurred to collect compensation.

North Carolina Builders Win School Impact Fee Case

In a clear victory for the building industry, a Durham County trial court recently ruled in favor of several North Carolina Builders, invalidating a school impact fee ordinance imposed upon new residential construction.

Granting the builders’ motion for summary judgment in their class action lawsuit, the court ruled on January 25 that the Durham County ordinance was “unlawful, void and without legal effect” and that the county was permanently enjoined from enforcing and collecting fees under it. However, on March 1, the North Carolina Court of Appeals ruled that the county can continue to collect the fees on residential construction until the legal wrangling has been resolved. The recent appeals court decision, nevertheless, hasn't lessened the sense that builders have won a key victory at a time when cash-strapped local jurisdictions are increasingly turning to new or higher impact fees as an extra source of municipal funding.

The trial court ordered Durham County to refund to the builders all of the fees that had been collected, plus 8% interest, and to provide an accounting of all persons who paid or might have paid the school impact fees. This victory amounts to a potential annual savings of more than $5 million for Durham County home builders and home buyers.

This case follows on the heels of a similar victory in Ocean Springs, Mississippi, last year, as builders continue to score growing success in defeating these measures.

Impact Fee Referendum Defeated in South Carolina

Voters defeated an impact fee ballot question in November in Horry County, South Carolina (Myrtle Beach area). Thanks in large part to the efforts of the building industry,  voters in Horry County shot down an advisory referendum ballot question that inquired as to whether citizens favored the imposition of impact fees in the county.  South Carolina law enables counties to impose impact fees without voter approval. However, the Horry County Council had hoped that a favorable vote on the ballot question would pave the way for impact fees in that county, thereby softening the impact of potential opposition. 

A coalition styled as “Citizens for Horry County’s Future,” which included state and local builders’ organizations, led the effort to defeat the referendum through mass mailings, radio and print advertisements, and phone banking. Emphasizing that impact fees could adversely affect the local housing market, the Coalition mobilized more than 500 supporters in its grassroots advocacy campaign. The referendum was defeated, with 58 percent of the electorate voting against impact fees.

Greater Cincinnati HBA Prevails in Telecommunications Impact Fee Case

The Greater Cincinnati HBA has prevailed on summary judgment in its lawsuit against the City of Lebanon, Ohio, related to mandatory telecommunication system connection fees imposed by Lebanon. The City was ordered by the Warren County Court of Common Pleas to return all fees charged to residential builders since 2002. In 2002, Lebanon’s City Council passed a resolution imposing a mandatory fee of $1,250 for each new residential unit in order to connect new units to the City-owned broadband telecommunication network, regardless of whether the homeowner subscribed to the services offered. The network carries cable television and high-speed internet service. The court found that the fee amounted to a taking of property without the payment of just compensation, in violation of the 5th and 14th Amendments to the U.S. Constitution. NAHB assisted with funding in this case through its Legal Action Fund.
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