HOUSE BILL NO. 820 Offered January 11, 2006 Prefiled January 10, 2006 A BILL to amend and reenact §§ 15.2-2317 through 15.2-2327 of the Code of Virginia, relating to impact fees. ---------- Patron-- May ---------- Referred to Committee for Courts of Justice ----------

Be it enacted by the General Assembly of Virginia:

1.  That §§ 15.2-2317 through 15.2-2327 of the Code of Virginia are amended and reenacted as follows:

§ 15.2-2317. Applicability of article.

This article shall apply to (i) any county having a population of 500,000 or more as determined by the most recent U.S. Census, (ii) any county or city adjacent thereto, (iii) any city contiguous to such adjacent county or city, (iv) any town within such county or an adjacent county, and (v) any county having a population between 58,000 and 62,000 all localities.

The provisions of this article shall expire on July 1, 2003, if, prior to that date, no applicable locality has assessed and imposed impact fees as provided in § 15.2-2319.

§ 15.2-2318. Definitions.

As used in this article, unless the context requires a different meaning:

"Cost" includes, in addition to all labor, materials, machinery and equipment for construction, (i) acquisition of land, rights-of-way, property rights, easements and interests, including the costs of moving or relocating utilities, (ii) demolition or removal of any structure on land so acquired, including acquisition of land to which such structure may be moved, (iii) survey, engineering, and architectural expenses, (iv) legal, administrative, and other related expenses, and (v) interest charges and other financing costs if impact fees are used for the payment of principal and interest on bonds, notes or other obligations issued by the locality to finance the road improvement public facility.

"Impact fee" means a charge or assessment imposed against new development in order to generate revenue to fund or recover the costs of reasonable road improvements public facilities necessitated by and attributable to the new development. Impact fees may not be assessed and imposed for road public facility repair, operation and maintenance, nor to expand existing roads public facilities to meet demand which that existed prior to the new development.

"Impact fee service area" means land designated by ordinance within a locality, having clearly defined boundaries and clearly related traffic public facility needs and within which development is to be subject to the assessment of impact fees.

"Public facility" means a road improvement or school facility improvement.

"Road improvement" includes construction of new roads or improvement or expansion of existing roads as required by applicable construction standards of the Virginia Department of Transportation to meet increased demand attributable to new development. Road improvements do not include on-site construction of roads which that a developer may be required to provide pursuant to §§ 15.2-2241 through 15.2-2245.

"School facility improvement" includes construction of new school facilities or improvement or expansion of existing facilities to meet the increased demand attributable in substantial part to new development.

§ 15.2-2319. Authority to assess and impose impact fees.

Any applicable locality may, by ordinance pursuant to the procedures and requirements of this article, assess and impose impact fees on new development to pay all or a part of the cost of reasonable road improvements public facilities attributable in substantial part to the new development.

Prior to the adoption of the ordinance, a locality shall establish an impact fee advisory committee. The committee shall be composed of not less than five nor more than ten10 members appointed by the governing body of the locality and at least forty40 percent of the membership shall be representatives from the development, building or real estate industries. The planning commission or other existing committee that meets the membership requirements may serve as the impact fee advisory committee. The committee shall serve in an advisory capacity to assist and advise the governing body of the locality with regard to the ordinance. No action of the committee shall be considered a necessary prerequisite for any action taken by the locality in regard to the adoption of an ordinance.

§ 15.2-2320. Impact fee service areas to be established.

The locality shall delineate one or more impact fee service areas within its jurisdiction. Impact fees collected from new development within an impact fee service area shall be expended for road improvements public facilities within that impact fee service area. An impact fee service area may encompass more than one road improvement public facility project.

§ 15.2-2321. Adoption of public facility improvements program.

Prior to adopting a system of impact fees, the locality shall conduct an assessment of road public facility improvement needs within an impact fee service area and in the locality and shall adopt a road public facility improvements plan for the area showing the new roads or schools proposed to be constructed and the existing roads or schools to be improved or expanded and the schedule for undertaking such construction, improvement or expansion. The road improvements plan shall be adopted as an amendment to the required comprehensive plan and shall be incorporated into the capital improvements program or, in the case of the counties where applicable, the six-year plan for secondary road construction pursuant to § 33.1-70.01.

The locality shall adopt the road improvements plan after holding a duly advertised public hearing. The public hearing notice shall identify the impact fee service area or areas to be designated, and shall include a summary of the needs assessment and the assumptions upon which the assessment is based, the proposed amount of the impact fee, and information as to how a copy of the complete study may be examined. A copy of the complete study shall be available for public inspection and copying at reasonable times prior to the public hearing.

The locality at a minimum shall include the following items in assessing road improvement public facility needs and preparing a road an improvements plan:

1. An analysis of the existing capacity, current usage and existing commitments to future usage of existing roads public facilities, as indicated by (i) current valid building permits outstanding, (ii) approved conditional rezonings, special exceptions, and special use permits, and (iii) approved site plans and subdivision plats. If the current usage and commitments exceed the existing capacity of the roads public facilities, the locality also shall determine the costs of improving the roads public facilities to meet the demand. The analysis shall include a plan to fund the current usages and commitments that exceed the existing capacity of the roads public facilities.

2. The projected need for and costs of construction of new roads or improvement public facilities or expansion of existing roads public facilities attributable in whole or in part to projected new development. Road improvement Public facility needs shall be projected for the impact fee service area when fully developed in accord with the comprehensive plan and, if full development is projected to occur more than ten10 years in the future, at the end of a ten10-year period. The assumptions with regard to land uses, densities, intensities, and population upon which road improvement public facility projections are based shall be presented.

3. The total number of new service units projected for the impact fee service area when fully developed and, if full development is projected to occur more than ten10 years in the future, at the end of a ten10-year period. A For road improvements, a "service unit" is a standardized measure of traffic use or generation, based upon the ITE manual (published by the Institute of Transportation Engineers) or locally conducted trip generation studies. For school facilities, a "service unit" is a standardized measure of school facility use or demand. The locality shall develop a table or method for attributing service units to various types of development and land use, including but not limited to residential, commercial and industrial uses. The table shall be based upon the ITE manual (published by the Institute of Transportation Engineers) or locally conducted trip generation studies.

§ 15.2-2322. Adoption of impact fee and schedule.

After adoption of a road an improvement program, the locality may adopt an ordinance establishing a system of impact fees to fund or recapture all or any part of the cost of providing reasonable road improvements public facilities required by new development. The ordinance shall set forth the schedule of impact fees.

§ 15.2-2323. When impact fees assessed and imposed.

The amount of impact fees to be imposed on a specific development or subdivision shall be determined before or at the time the site plan or subdivision is approved. The ordinance shall specify that the fee is to be collected at the time of the issuance of a certificate of occupancy. The ordinance shall provide that fees (i) may be paid in lump sum or (ii) be paid on installment at a reasonable rate of interest for a fixed number of years. The locality by ordinance may provide for negotiated agreements with the owner of the property as to the time and method of paying the impact fees.

The maximum impact fee to be imposed shall be determined (i) by dividing projected road improvement costs in the service area when fully developed by the number of projected service units when fully developed, or (ii) for a reasonable period of time, but not less than ten10 years, by dividing the projected costs necessitated by development in the next ten10 years by the service units projected to be created in the next ten10 years.

The ordinance shall provide for appeals from administrative determinations, regarding the impact fees to be imposed, to the governing body or such other body as designated in the ordinance. The ordinance may provide for the resolution of disputes over an impact fee by arbitration or otherwise.

No impact fees shall be assessed or imposed upon a development or subdivision if the subdivider or developer has proffered conditions pursuant to §§ 15.2-2298 or 15.2-2303 for off-site road improvements and the proffered conditions have been accepted by the local government.

§ 15.2-2324. Credits against impact fee.

A.  The provisions of this subsection apply to any credits to be applied against impact fees for road improvements. The value of any dedication, contribution or construction from the developer for off-site road improvements within the impact fee service area shall be treated as a credit against the impact fees imposed on the developer's project. The locality may by ordinance provide for credits for approved on-site improvements in excess of those required by the development.

The locality also shall calculate and credit against impact fees the extent to which (i) developments have already contributed to the cost of existing roads which will serve the development, (ii) new development will contribute to the cost of existing roads, and (iii) new development will contribute to the cost of road improvements in the future other than through impact fees.

B.  The provisions of this subsection apply to any credits to be applied against impact fees for school facilities. The value of any dedication, contribution or construction from the developer for school facility improvements within the service area shall be treated as a credit against the impact fee calculated pursuant to § 15.2-2323.

The locality shall also calculate and credit against impact fees (i) the extent to which developments have already contributed to the cost of existing school facilities which will serve the development, (ii) the extent to which the new development will contribute to the cost of existing school facilities, and (iii) the extent to which new development will contribute to the cost of school facility improvements in the future other than through impact fees.

§ 15.2-2325. Updating plan and amending impact fee.

The locality shall update the needs assessment and the assumptions and projections at least once every two years. The road improvement improvements plan shall be updated at least every two years to reflect current assumptions and projections. The impact fee schedule may be amended to reflect any substantial changes in such assumptions and projections.

§ 15.2-2326. Use of proceeds.

A separate road improvement account shall be established for the impact fee service area and all funds collected through impact fees shall be deposited in the interest-bearing account. Interest earned on deposits shall become funds of the account. The expenditure of funds from the account shall be only for road improvements public facilities within the impact fee service area as set out in the road improvement improvements plan for the impact fee service area.

§ 15.2-2327. Refund of impact fees.

The locality shall refund any impact fee or portion thereof for which construction of a project is not completed within a reasonable period of time, not to exceed fifteen15 years.

Upon completion of a project, the locality shall recalculate the impact fee based on the actual cost of the improvement. It The locality shall refund the difference if the impact fee paid exceeds actual cost by more than fifteen15 percent. Refunds shall be made to the record owner of the property at the time the refund is made.