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WV Law on Impact Fees
Full Text of law follows this Brief List of Key Provisions:
The legislature says fairness requires future
residents to contribute to investments (7-20-2b3), thus minimizing county borrowing (7-20-2b6). Capital
improvements are defined by governmental accounting principles, with useful
life at least three years (7-20-3a).
Impact fees can be levied at subdivision or building permit stage (7-20-3g). The proportionate
share charged is the cost attributed to new development less
past or future taxes that pay for capital improvement costs (7-20-3h). Of the 7 criteria required for impact
fees (7-20-6),
Jefferson County has 6: annual growth over 1%; comprehensive plan; plan updated
at no less than 5-year intervals; zoning; subdivision ordinance, and
enforcement of building codes on "construction or structural
modification."
The 7th criterion is a capital improvement program which lists: sites with development potential, standards of service, and proposed capital improvements. The program and fees can be changed annually (7-20-6e). Along with the "program" is a capital improvements "plan" that shows deficiencies as well as new demands for capital improvements and public services created by new development (7-20-7b1). Impact fees may only be spent on items in the "plan" (7-20-8b). Jefferson County has a list of proposed capital spending, but it is focused on projects that are needed already, not projects that will be required by future growth, such as future elementary schools, new fire stations, etc. The county has not prepared a list of projects that will be needed by the next 1,000 homes, 3,000 homes, or 9,000 homes, even though that many homes already have at least initial approval.
Besides impact fees for new capital improvements (7-20-8a), the county gets authority to impose new taxes or fees which municipalities can charge, but counties otherwise can't: taxes on gross receipts of businesses and utilities (7-20-7a). These can be spent on existing capital improvements that were built in anticipation of needs (7-20-7a). 15% of voters can force a referendum before they go into effect (7-20-7a).
The County Commission defines geographic areas within which impact fees must be spent (7-20-8a), and they must normally be spent within 6 years (7-20-8e) or refunded (7-20-9a).
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Full Text of Local Powers Act:
ARTICLE 20. FEES AND EXPENDITURES FOR COUNTY DEVELOPMENT.
SECTION 7-20-1. Short title.
This article shall be known as the "Local Powers Act."
SECTION 7-20-2. Purpose and findings.
(a) It is the purpose of this article to provide for the fair distribution of costs for county development by authorizing the assessment and collection of fees to offset the cost of commercial and residential development within affected counties.
(b) The Legislature hereby makes the following findings:
(1) The residents, taxpayers and users of county facilities and services, in affected counties, have contributed significant funds in the form of taxes and user charges toward the cost of existing county facilities and services, which represent a substantial and incalculable investment;
(2) Affected counties in West Virginia are experiencing an increased demand for development which is causing strain on tax revenues and user charges at existing levels and impairing the ability of taxpayers, residents and users to bear the cost of increased demand for county facilities and services. In some instances, county borrowing has been required to meet the demand;
(3) Equitable considerations require that future residents and users of existing county facilities and services contribute toward the investment already made in those facilities and services;
(4) Sound fiscal policy in the efficient administration of county government requires that the imposition of taxes and user charges be commensurate to the actual yearly cost of county facilities and services;
(5) Accumulations of large financial reserves for future capital expenditures unjustly exact unneeded current funds from taxpayers and users; and
(6) County borrowing unnecessarily increases the cost of government by the amount of debt service and should be avoided unless considered absolutely necessary to meet an existing public need.
SECTION 7-20-3. Definitions.
(a) "Capital improvements" means the following public facilities or assets that are owned, supported or established by county government:
(1) Water treatment and distribution facilities;
(2) Wastewater treatment and disposal facilities;
(3) Sanitary sewers;
(4) Storm water, drainage, and flood control facilities;
(5) Public primary and secondary school facilities;
(6) Public road systems and rights-of-way;
(7) Parks and recreational facilities; and
(8) Police, emergency medical, rescue, and fire protection facilities.
"Capital improvements" as defined herein is limited to those improvements that are treated as capitalized expenses according to generally accepted governmental accounting principles and that have an expected useful life of no less than three years. "Capital improvement" does not include costs associated with the operation, repair, maintenance, or full replacement of capital improvements. "Capital improvement" does include reasonable costs for planning, design, engineering, land acquisition, and other costs directly associated with the capital improvements described herein.
(b) "County services" means the following: (1) Services provided by administration and administrative personnel, law enforcement and its support personnel; (2) street light service; (3) fire-fighting service; (4) ambulance service; (5) fire hydrant service; (6) roadway maintenance and other services provided by roadway maintenance personnel; (7) public utility systems and services provided by public utility systems personnel, water; and (8) all other direct and indirect county services authorized by this code.
(c) "Direct county services" means those public services authorized and provided by various county agencies or departments.
(d) "Indirect county services" means those public services authorized and provided by commissioned agents, agencies or departments of the county.
(e) "Growth county" means any county within the state with an averaged population growth rate in excess of one percent per year as determined from the most recent decennial census counts and forecasted, within decennial census count years, by official records of government or generally approved standard statistical estimate procedures: Provided, That once "growth county" status is achieved it is permanent in nature and the powers derived hereby are continued.
(f) "User" means any member of the public who uses or may have occasion to use county facilities and services as defined herein.
(h) "Proportionate share" means the cost of capital improvements that are reasonably attributed to new development less any credits or offsets for construction or dedication of land or capital improvements, past or future payments made or reasonably anticipated to be made by new development in the form of user fees, debt service payments, taxes or other payments toward capital improvement costs.
(i) "Reasonable benefit" means a benefit received from the provision of a capital improvement greater than that received by the general public located within the county wherein an impact fee is being imposed.
(j) "Plan" means a county, comprehensive, general, master or other land use plan as described herein.
(k) "Program" means the capital improvements program described herein.
(l) "Unincorporated area" and "total unincorporated area" means all lands and resident estates of a county that are not included within the corporate, annexed areas or legal service areas of an incorporated or chartered municipality, city, town or village located in the state of West Virginia.
SECTION 7-20-4. Counties authorized to collect fees.
County governments affected by the construction of new development projects are hereby authorized to require the payment of fees for any new development projects constructed therein in the event any costs associated with capital improvements or the provision of other services are attributable to such project. Such fees shall not exceed a proportionate share of such costs required to accommodate any such new development. Before requiring payment of any fee authorized hereunder, it must be evident that some reasonable benefit from any such capital improvements will be realized by any such development project.
SECTION 7-20-5. Credits or offsets to be adjusted; incidental benefit by one development not construed as denying reasonable benefit to new development.
Credits or offsets for past or future payments toward capital improvement costs shall be adjusted for time-price differentials inherent in fair comparisons of monetary amounts paid or received at different times.
The receipt of an incidental benefit by any development shall not be construed as denying a reasonable benefit to any other new development.
SECTION 7-20-6. Criteria and requirements necessary to implement collection of fees.
(a) As a prerequisite to authorizing counties to levy impact fees related to population growth and public service needs, counties shall meet the following requirements:
(1) A demonstration that population growth rate history as determined from the most recent base decennial census counts of a county, utilizing generally approved standard statistical estimate procedures, in excess of one percent annually averaged over a five-year period since the last decennial census count; or a demonstration that a total population growth rate projection of one percent per annum for an ensuing five-year period, based on standard statistical estimate procedures, from the current official population estimate of the county;
(2) Adopting a countywide comprehensive plan;
(3) Reviewing and updating any comprehensive plan at no less than five-year intervals;
(4) Drafting and adopting a comprehensive zoning ordinance;
(5) Drafting and adopting a subdivision control ordinance;
(6) Keeping in place a
formal building permit and review system which
provides a process to regulate the authorization of applications relating to
construction or structural modification and which further provides for the
systematic and ongoing inspection of existing structures.[1] The
county shall adopt, pursuant to section three-n, article one of this chapter,
the state building code into any such building permit and review system; and
(7) Providing an improvement program which shall include:
(A) Developing and maintaining a list within the county of particular sites with development potential;
(B) Developing and maintaining standards of service for capital improvements which are fully or partially funded with revenues collected from impact fees; and
(C) Lists of proposed capital improvements from all areas, containing descriptions of any such proposed capital improvements, cost estimates, projected time frames for constructing such improvements and proposed or anticipated funding sources.
(b) Capital improvement programs may include provisions to provide for the expenditure of impact fees for any legitimate county purpose. This may include the expenditure of fees for partial funding of any particular capital improvement where other funding exists from any source other than the county, or exists in combination with other funds available to the county: Provided, That for such expenditures to be considered legitimate no county or other local authority may deny or withhold any reasonable benefit that may be derived therefrom from any development project for which such impact fee or fees have been paid.
(c) Capital improvement programs for public elementary and secondary school facilities may include provisions to spend impact fees based on a computation related to the following: (1) The existing local tax base; and (2) the adjusted value of accumulated infrastructure investment, based on net depreciation, and any remaining debt owed thereon. Any such computation must establish the value of any equity shares in the net worth of an impacted school system facility, regardless of the existence of any need to expand such facility. Impact fee revenues may only be used for capital replacement or expansion.
(d) Additional development areas may be added to any plan or capital improvements program provided for hereunder if a county government so desires. The standards governing the construction or structural modification for any such additional area shall not deviate from those adopted and maintained at the time such addition is made.
(e) The county may modify annually any capital improvements plan in addition to any impact fee rates based thereon, pursuant to the following:
(1) The number and extent of development projects begun in the past year;
(2) The number and extent of public facilities existing or under construction;
(3) The changing needs of the general population;
(4) The availability of any other funding sources; and
(5) Any other relevant and significant factor applicable to a legitimate goal or goals of any such capital improvement plan.
SECTION 7-20-7. Establishment of impact fees; levies may be used to fund existing capital improvements.
(a) Impact fees assessed against a development project to fund capital improvements and public services may not exceed the actual proportionate share of any benefit realized by such project relative to the benefit to the resident taxpayers.
Notwithstanding any other provision of this code to the contrary, those counties that meet the requirements of section six of this article are hereby authorized to assess, levy, collect and administer any tax or fee as has been or may be specifically authorized by the Legislature by general law to the municipalities of this state: Provided, That any assessment, levy or collection shall be delayed sixty days from its regular effective date: Provided, however, That in the event fifteen percent of the qualified voters of the county by petition duly signed by them in their own handwriting and filed with the county commission within forty-five days after any impact fee or levy is imposed by the county commission, pursuant to this article, the fee or levy protested may not become effective until it is ratified by a majority of the legal votes cast thereon by the qualified voters of such county at any primary, general or special election as the county commission directs. Voting thereon may not take place until after notice of the subcommission of the fee a levy on the ballot has been given by publication of class II legal advertisement and publication area shall be the county where such fee or levy is imposed: Provided further, That counties may not "double tax" by applying a given tax within any corporate boundary in which that municipality has implemented such tax. Any such taxes or fees collected under this law may be used to fund a proportionate share of the cost of existing capital improvements and public services where it is shown that all or a portion of existing capital improvements and public services were provided in anticipation of the needs of new development.
(b) In determining a proportionate share of capital improvements and public services costs, the following factors shall be considered:
(1) The need for new capital improvements and public services to serve new development based on an existing capital improvements plan that shows (A) any current deficiencies in existing capital improvements and services that serve existing development and the means by which any such deficiencies may be eliminated within a reasonable period of time by means other than impact fees or additional levies; and (B) any additional demands reasonably anticipated as the result of capital improvements and public services created by new development;
(2) The availability of other sources of revenue to fund capital improvements and public services, including user charges, existing taxes, intergovernmental transfers, in addition to any special tax or assessment alternatives that may exist;
(3) The cost of existing capital improvements and public services;
(4) The method by which the existing capital improvements and public services are financed;
(5) The extent to which any new development, required to pay impact fees, has contributed to the cost of existing capital improvements and public services in order to determine if any credit or offset may be due such development as a result thereof;
(6) The extent to which any new development, required to pay impact fees, is reasonably projected to contribute to the cost of the existing capital improvements and public services in the future through user fees, debt service payments, or other necessary payments related to funding the cost of existing capital improvements and public services;
(7) The extent to which any new development is required, as a condition of approval, to construct and dedicate capital improvements and public services which may give rise to the future accrual of any credit or offsetting contribution; and
(8) The time-price differentials inherent in reasonably determining amounts paid and benefits received at various times that may give rise to the accrual of credits or offsets due new development as a result of past payments.
(c) Each county shall assess impact fees pursuant to a standard formula so as to ensure fair and similar treatment to all affected persons or projects. A county commission may provide partial or total funding from general or other nonimpact fee funding sources for capital improvements and public services directly related to new development, when such development benefits some public purpose, such as providing affordable housing and creating or retaining employment in the community.
SECTION 7-20-8. Use and administration of impact fees.
(a) Revenues collected from the payment of impact fees shall be restricted to funding new and additional capital improvements or expanded or extended public services which benefit the particular developments from which they were paid. Except as provided herein, to ensure that developments for which impact fees have been paid receive reasonable benefits relative to such payments, the use of such funds shall be restricted to areas wherein development projects are located. County commissions shall have discretion in determining geographical configurations related to the expenditure of impact fee collections.
(b) Impact fees may only be spent on those projects specified in the capital improvement plan described in this article.
(c) When impact fees are collected, the county commission shall enter into agreements with any affected party providing new development in order to ensure compliance with the provisions of this article.
(d) Impact fee receipts shall be specifically earmarked and retained in a special account. All receipts shall be placed in interest-bearing accounts wherein the interest gained thereon shall accrue. All accumulated interest shall be published at least once each fiscal period. The county commission shall provide an annual accounting for each account containing impact fee receipts showing the particular source and amount of all such receipts collected, earned, or received, and the capital improvements and public services that were funded, in whole or in part, thereby.
(e) Impact fees shall be expended only in compliance with the plan. Impact fee receipts shall be expended within six years of receipt thereof unless extraordinary and compelling reasons exist to retain them beyond this period. Such extraordinary or compelling reasons shall be identified and published by the county commission in a local newspaper of general circulation for at least two consecutive weeks.
SECTION 7-20-9. Refund of unexpended impact fees.
(a) The owner or purchaser of property for which impact fees have been paid may apply for a refund of any such paid fees. Such refund shall be made when a county commission fails to expend such funds within six years from the date such fees were originally collected. The county commission shall notify potential claimants by first class mail deposited in the United States mail and directed to the last known address of any such claimant. Only the owner or purchaser may apply for such refund. Application for any refund must be submitted to the county commission within one year of the date the right to claim the refund arises. All refunds due and unclaimed shall be retained in the special account and expended as required herein, except as provided in this section. The right to claim any refund may be limited by the provisions of section five in this article.
(b) When a county commission seeks to terminate any impact fee requirement, all unexpended funds shall be refunded to the owner or purchaser of the property from whom such fund was initially collected. Upon the finding that any or all fee requirements are to be terminated, the county commission shall place notice of such termination and the availability of refunds in a newspaper of general circulation one time a week for two consecutive weeks and shall also notify all known potential claimants by first class mail deposited with the United States postal service at their last known address. All funds available for refund shall be retained for a period of one year. At the end of one year, any remaining funds may be transferred to the general fund and used for any public purpose. A county commission is released from this notice requirement if there are no unexpended balances within an account or funds being terminated.
SECTION 7-20-10. Impact fees required to be consistent with other development regulations.
County commissions that require the payment of impact fees in providing capital improvements and public services shall incorporate such financial requirements within a master land use plan in order that any new development or developments are not required to contribute more than their proportionate share of the cost of providing such capital improvements and public services.