Effective Date: May 14, 2013
This bill adopts a small but significant change to the Impact Fees Act (Chapter 11-36a of the Utah Code). To begin with, new definitions for “Level of Service” and “Private Entity” are created. “Level of Service” means the defined performance standard or unit of demand for each capital component of a public facility within a service area. The definition of “Private Entity” is expanded to include a private water company with at least 100 shareholders, which has no reasonably equivalent competition, and which is the only realistic source of water for a development. The bill clarifies that a private entity (i.e., a private water company) may establish, charge, and administer impact fees. The bill also authorizes an Advisory Opinion from the Office of the Property Rights Ombudsman “to review and comment on a proposed impact fee facilities plan or proposed impact fee analysis.”
Significantly, however, the bill includes new language concerning the level of service that is used to calculate impact fees. Section 11-36a-302 has been amended to require that an “existing level of service” be established, and it also provides that a “proposed” level of service may be adopted. The proposed level of service may exceed the existing level of service if the locality can show that it has the means to increase the existing level of service (or establish a new public facility for the service) within six years of when new development would be charged an impact fee based on the proposed level of service. The increase in service must be funded independently of impact fees. In other words, if a locality is committed to increase its service level within six years, and has established and committed the means to fund that increase (through taxes, bonding, etc), then impact fees may be based upon the increased level of service, even though that service level has not yet been raised.
This is a departure from the analysis adopted in the original impact fees act, which provided that the fees must be based on current demands. However, the language still provides that impact fees cannot be used exclusively to fund future increases in service levels; but they may evidently be used to fund the service increases, to the extent that new development will contribute to the need for the new level of service.