Impact Fees

We've had relatively little litigation over impact fees here in Tennessee. But the Ohio Supreme Court recently took a look at impact fees in Hamilton Township, and concluded that the fees were in reality an unauthorized tax levied by the local government. Drees Co. v. Hamilton Twp., 132 Ohio St.3d 186, 2012-Ohio-2370. the Ohio Supreme Court relied upon a multifactorial analysis which I will not discuss in any detail here. However, a significant portion of that analysis had to do with the goals of the impact fee structure, and how the benefits would be distributed within the township. The Ohio Supreme Court indicated that, under Ohio law, in order to qualify as a fee, the increased assessment must benefit the targeted properties. But in this case, it was clear that the goal was to benefit all properties across the entire township, not just the ones who paid the fee. Under those circumstances, the Ohio Supreme Court concluded that the so-called impact fee was in reality attacks, unauthorized by the legislature, and as such, void.

While there are certainly statutory provisions for impact fees here in Tennessee, as far as I recall, there's not in any litigation concerning those fees. Well, at least, nothing that reached the appellate courts of our state. Frankly, it is usually easier just to impose tax rather than bother with the fairly complicated ramifications of an impact the ordinance. Nevertheless, the Ohio Supreme Court decision is interesting reading. There are a number of other cases across the nation cited in the Ohio decision, and there are plenty more than that which I usually talk about in my law school course. This is an intriguing area of the law.