HOUSE BILL No. 6571 December 6, 2002, Introduced by Rep. Kolb and referred to the Committee on Land Use and Environment. A bill to authorize governing bodies located within certain counties to levy and collect impact fees on developers to defray the cost of certain improvements required by land development; to provide for certain credits and exemptions; to allow the govern- ing bodies to enter into agreements relating to impact fees; to prescribe powers and duties of the governing bodies; to prescribe the powers and duties of certain state agencies and officers; to create certain funds; and to prescribe remedies. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 1. This act shall be known and may be cited as the 2 "impact fee enabling act". 3 Sec. 3. As used in this act: 4 (a) "County road agency" means a board of county road 5 commissioners or an individual or entity exercising the powers 6 and duties of a board of county road commissioners pursuant to 04914'01 TMV 2 1 county charter in a county that does not have a board of county 2 road commissioners. 3 (b) "Developer" means a person proposing new land develop- 4 ment and any successor in interest to that new land development. 5 (c) "Governing body" means any of the following: 6 (i) The legislative body of a city. 7 (ii) The legislative body of a village. 8 (iii) The township board of a township. 9 (iv) With respect to a roadway improvement, a county road 10 agency that acts only with the concurrence of the county board of 11 commissioners. 12 (d) "Impact fee" means an amount to defray a portion of the 13 cost of an off-site improvement. 14 (e) "Impact fund" means a fund created by a governing body 15 under section 15. 16 (f) "Infrastructure improvement" means the construction, 17 reconstruction, replacement, extension, or enlargement of a road- 18 way, a component of a public sewer system, a component of a 19 public water supply system, or another capital facility. 20 Infrastructure improvement includes, but is not limited to, the 21 cost of design and construction, plan preparation, and property 22 acquisition. 23 (g) "Infrastructure improvement plan" means a plan estab- 24 lished under section 7. 25 (h) "Infrastructure improvement zone" means a designated 26 area with distinct boundaries in which new land development is 27 expected to occur and in which a particular type of off-site 04914'01 3 1 improvement will be required to serve that new land development. 2 An infrastructure improvement zone may cross jurisdictional 3 boundaries. 4 (i) "New land development" means the construction, recon- 5 struction, or expansion of a building or a complex of buildings, 6 or the improvement of a recreational area, that will result in 7 the increase of traffic on a highway, street, or road near the 8 building, complex of buildings, or recreational area. However, 9 new land development does not include the construction, recon- 10 struction, or expansion of residential property or a residential 11 development if the property or development has a value of less 12 than $2,000,000.00. 13 (j) "Off-site improvement" means an infrastructure improve- 14 ment necessitated by new land development and located off the 15 premises of that new land development. 16 (k) "Person" means an individual, partnership, corporation, 17 association, governmental entity, including but not limited to a 18 governing body, or other legal entity. 19 (l) "Public sewer system" means a sewerage system as defined 20 in section 4101 of the natural resources and environmental pro- 21 tection act, 1994 PA 451, MCL 324.4101. 22 (m) "Public water supply system" means a system of pipes and 23 structures through which water is obtained and distributed to the 24 public, including wells and well structures, intakes, and cribs, 25 pumping stations, treatment plants, reservoirs, storage tanks and 26 appurtenances, collectively or severally, actually used or 04914'01 4 1 intended for use for the purpose of furnishing water to the 2 public for household or drinking purposes. 3 (n) "Roadway" means a city or village street, county road, 4 or state highway. 5 (o) "Roadway improvement" means an infrastructure improve- 6 ment involving a roadway. 7 Sec. 5. A governing body, by ordinance or resolution, may 8 levy and collect an impact fee from a developer subject to the 9 requirements of this act. 10 Sec. 7. (1) A governing body shall not adopt an impact fee 11 ordinance or resolution unless the governing body has established 12 a separate infrastructure improvement plan for each type of 13 infrastructure for which an impact fee will be collected. 14 (2) Each infrastructure improvement plan shall do all of the 15 following: 16 (a) Identify 1 or more infrastructure improvement zones for 17 the particular type of infrastructure covered by the infrastruc- 18 ture improvement plan. A governing body may enter into an agree- 19 ment with another governing body to identify 1 or more infra- 20 structure improvement zones. 21 (b) Identify those parts of the city or village street 22 system, county road system, state highway system, public sewer 23 system, or public water supply system, or other capital facility 24 that need improvement, or may need improvement within 5 years 25 after the date of the plan, due to present or future levels of 26 use. 04914'01 5 1 (c) Identify off-site improvements within infrastructure 2 improvement zones. 3 (d) Set forth anticipated methods of financing the off-site 4 improvements, including but not limited to the following: 5 (i) The portion of the off-site improvements expected to be 6 paid for by impact fees, which shall not exceed a pro rata share 7 of reasonably anticipated costs of the off-site improvements nec- 8 essary to serve the increased use generated by the new land 9 development. 10 (ii) The portion of the off-site improvements expected to be 11 paid from special assessments or other fees, if any, against 12 property benefited by the off-site improvements. 13 (iii) The portion of the off-site improvements expected to 14 be paid from other sources. 15 (3) To establish an infrastructure improvement plan, the 16 governing body shall hold a public hearing on, adopt, and obtain 17 approval of a proposed infrastructure improvement plan as pro- 18 vided in this section. 19 (4) Before establishing an infrastructure improvement plan, 20 a governing body shall publish notice of a public hearing on the 21 proposed infrastructure improvement plan in the same manner pro- 22 vided by law or charter for a public hearing on an ordinance. If 23 the governing body is a county road agency, the county road 24 agency shall publish notice of the proposed infrastructure 25 improvement plan not less than 2 weeks before the date of the 26 hearing. 04914'01 6 1 (5) An infrastructure improvement plan for roadway 2 improvements adopted by a county road agency shall be reviewed 3 and approved by resolutions of the governing bodies of not less 4 than 2/3 of the cities and villages within the county in which 5 infrastructure improvement zones are wholly or partially 6 located. The review by the governing body of a city or village 7 shall be limited to infrastructure improvement zones contained in 8 the infrastructure improvement plan that are located wholly or 9 partially within that particular city or village. 10 (6) An infrastructure improvement plan of a county road 11 agency for roadway improvements shall be reviewed and approved by 12 resolution of each township board with regard to those provi- 13 sions, if any, in the plan that require a portion of the cost of 14 a road improvement to be borne by that township or from impact 15 fees, special assessments, or other charges to be imposed by that 16 township. 17 (7) An infrastructure improvement plan of a township for 18 roadway improvements shall be reviewed and approved by the county 19 road agency of the county in which the township is located. 20 (8) An infrastructure improvement plan of a city, village, 21 or county road agency that identifies road improvements needed on 22 a segment of a state highway and methods of financing those road 23 improvements shall be reviewed and approved by the state trans- 24 portation commission. 25 Sec. 9. (1) Before adopting an impact fee ordinance or res- 26 olution, the governing body shall hold a public hearing on the 27 impact fee ordinance or resolution. The governing body shall 04914'01 7 1 publish a notice of the public hearing as provided by law or 2 charter for public hearings on ordinances. If the governing body 3 is a county road agency, the county road agency shall publish 4 notice of the proposed impact fee resolution not less than 2 5 weeks before the date of the public hearing. 6 (2) A resolution of a county road agency imposing an impact 7 fee shall be concurred in by a majority of the county board of 8 commissioners before the impact fee may be imposed. 9 (3) A governing body may enter into an agreement with 10 another governing body to levy, collect, and regulate the dispo- 11 sition of impact fees in a manner consistent with this act. 12 Sec. 11. (1) An impact fee ordinance or resolution shall 13 set forth a schedule of impact fees. The schedule of impact fees 14 shall be uniform within each infrastructure improvement zone with 15 regard to each type or class of new land development. The sched- 16 ule of impact fees shall bear a reasonable relationship to the 17 increased infrastructure use attributable to the new land devel- 18 opment and the cost of the infrastructure improvements attribut- 19 able to that increased use. The schedule of impact fees shall 20 vary with regard to different types of infrastructure and with 21 regard to the proportionate impact of new land development on the 22 level of use of that type of infrastructure. An impact fee shall 23 be assessed only once during the period of the new land develop- 24 ment, but may be paid in installments based on a schedule estab- 25 lished pursuant to this subsection. 04914'01 8 1 (2) The impact fee ordinance or resolution shall set forth 2 when the impact fee is to be paid and the information required to 3 accompany the impact fee. 4 (3) The impact fee ordinance or resolution shall provide a 5 procedure for determining an alternative impact fee if the devel- 6 oper believes that the cost of an off-site improvement is less 7 than the impact fee established in the impact fee ordinance or 8 resolution. 9 (4) The impact fee ordinance or resolution may provide that 10 the governing body and a developer may enter into an impact fee 11 agreement designed to establish a just and equitable impact fee, 12 or its equivalent in the form of contributed right-of-way or 13 other real property, or other appropriate equivalent, instead of 14 the impact fee set forth in the impact fee ordinance or 15 resolution. The impact fee agreement may provide that the devel- 16 oper shall be reimbursed from impact fees subsequently paid by 17 another developer. The governing body shall approve an impact 18 fee agreement only if the governing body finds that the impact 19 fee agreement will apportion the burden of expenditures for 20 off-site improvements in a just and equitable manner. 21 (5) The impact fee ordinance or resolution shall provide 22 that a developer is entitled to a credit against an impact fee in 23 an amount equal to the cost of the off-site improvement, or con- 24 tributions of right-of-way or other real property, money, or 25 services for the off-site improvement contributed or previously 26 contributed, paid, or legally committed to by the developer or by 04914'01 9 1 his or her predecessor in interest as a condition of any new land 2 development permit issued by the governing body. 3 Sec. 13. (1) A developer that received a new land develop- 4 ment permit before adoption of an impact fee ordinance or resolu- 5 tion may petition the governing body for an exemption from the 6 impact fees assessed under an impact fee ordinance or 7 resolution. A petition shall be evaluated by the governing body 8 based on the following criteria: 9 (a) Whether a legally enforceable act of the governing body 10 authorizes the specific new land development for which a determi- 11 nation is sought. 12 (b) Whether the petitioner has made or incurred expenditures 13 or obligations in reliance upon the authorizing act described in 14 subdivision (a) that are reasonably equivalent to the impact fee 15 required by the impact fee ordinance or resolution. 16 (c) Whether it is inequitable to deny the petitioner the 17 opportunity to complete the new land development in a manner con- 18 sistent with the conditions of the permit by requiring the devel- 19 oper to comply with the requirements of the impact fee ordinance 20 or resolution. For the purposes of this subdivision, considera- 21 tion of whether the injury suffered by the petitioner outweighs 22 the public cost of allowing the new land development to proceed 23 without payment of the impact fee shall be considered as a factor 24 in determining whether it would be inequitable to deny the peti- 25 tioner the opportunity to complete the new land development. 26 (2) If the permit contains conditions with respect to 27 off-site improvements, the developer may request a modification 04914'01 10 1 of the permit in order to bring the previously approved 2 conditions into compliance with the impact fee ordinance or reso- 3 lution adopted pursuant to this act. A modification of the 4 permit is not a substantial change under a city or village 5 planned development ordinance or a substantial deviation under 6 state law. 7 Sec. 15. (1) A governing body that levies and collects 8 impact fees under this act shall create an impact fund for each 9 infrastructure improvement zone identified under section 7. A 10 governing body shall deposit all impact fees in the impact fund 11 for the appropriate type of infrastructure created for the infra- 12 structure improvement zone in which the land development is 13 located. The revenue in an impact fund shall be kept separate 14 from other revenue of the city, village, township, or county road 15 agency. 16 (2) The governing body shall use impact fund revenue solely 17 for the purpose of off-site improvements of the type for which 18 the impact fee was collected needed to serve infrastructure 19 demand generated within the infrastructure improvement zone. 20 (3) Impact fee revenue shall not be expended on a particular 21 off-site improvement unless the governing body has identified 22 sources of funding for property acquisition and construction of 23 improvements needed to overcome existing or future service defi- 24 ciencies for the particular off-site improvement not attributable 25 to the proposed new land development. 26 (4) The governing body shall use 90% or more of the impact 27 fund revenue exclusively for off-site improvements of the type 04914'01 11 1 for which the impact fees were collected and within the 2 infrastructure improvement zone from which the impact fees were 3 collected. 4 (5) The governing body may use not more than 10% of the 5 impact fund revenue for off-site improvements of the type for 6 which the impact fees were collected and that provide access to 7 or otherwise serve the infrastructure improvement zone from which 8 the impact fees were collected. 9 (6) The governing body shall use amounts withdrawn from an 10 impact fund solely as provided by this section. The disbursement 11 of revenue from an impact fund shall occur only upon the approval 12 of a majority of the members of the governing body. 13 (7) The governing body shall invest in interest-bearing 14 accounts the money on deposit in the impact fund that is not 15 immediately necessary for expenditure as provided in this act. 16 All income derived from the accounts shall be credited to the 17 impact fund. 18 Sec. 17. The impact fee ordinance or resolution shall pro- 19 vide that the impact fees collected shall be returned to the 20 present owner of the new land development if actual physical work 21 has not commenced on an off-site improvement described in 22 section 15(4) by the last day of the calendar quarter that ends 23 immediately following the expiration of 5 years from the date the 24 impact fees were collected by the governing body, subject to the 25 following procedure: 26 (a) The present owner shall file a petition with the 27 governing body for the refund within 1 year following the last 04914'01 12 1 day of the calendar quarter that ends immediately following the 2 expiration of 5 years from the date on which the fee was 3 collected. 4 (b) The petition shall contain the following: 5 (i) A notarized sworn statement that the petitioner is the 6 present owner of the property. 7 (ii) A certified copy of the latest recorded deed. 8 (iii) A copy of the most recent ad valorem property tax bill 9 for the property. 10 (c) Upon approval of the governing body, the money shall be 11 returned to the petitioner with interest paid at the average rate 12 of 1-year United States treasury bills for the 12-month period 13 immediately preceding the month in which the money is returned. 14 Sec. 19. A governing body shall annually review an impact 15 fee ordinance or resolution adopted by that governing body. The 16 review shall consider levels of infrastructure use and actual 17 costs of construction and of acquisition of right-of-way and 18 other property for work contracted for off-site improvements by 19 the governing body. In the review, the governing body shall do 20 all of the following: 21 (a) Analyze the effects of inflation on the actual costs of 22 infrastructure improvements and the impact fees charged to sup- 23 port these infrastructure improvements. 24 (b) Review and revise, if necessary, the off-site improve- 25 ments encompassed by the impact fee ordinance or resolution. 04914'01 13 1 (c) Review and revise, if necessary, the size, shape, and 2 location of the infrastructure improvement zones identified in 3 the infrastructure improvement plans of the governing body. 4 (d) Ensure that the impact fees charged against new land 5 development for a particular type of off-site improvement do not 6 exceed the new land development's pro rata share of the reason- 7 ably anticipated costs of off-site improvements of that type 8 necessitated solely by that new land development. 9 Sec. 21. A person may bring a civil action against any 10 person that violates an impact fee ordinance or resolution 11 adopted under this act. 04914'01 Final page. TMV