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Sewer Impact Fees: "Flushing Money Away," Says Builder and Developer



In March, we discussed the anticipated U.S. Supreme Court opinion in Sheetz v. County of El Dorado.  In Sheetz, a California county levied a $23,420 "traffic mitigation fee" against a property owner that sought a permit to construct a mobile home on his residential lot.  In April, the U.S.  Supreme Court ruled unanimously in favor of the property owner that the conditions on building permits should be subject to heightened scrutiny.  The Court’s ruling did not address or prohibit the imposition of impact fees on new developments through reasonable formulas or schedules that assess the impact of classes of development rather than the impact of specific parcels of property.  It held that “whether a permit condition imposed on a class of properties must be tailored with the same degree of specificity as a permit condition that targets a particular development is an issue for the state courts to consider.”  A recent case filed in the Northern District of Alabama, Ridge Crest Homes, LLC v. Jefferson County, Alabama, No. 2:24-cv-00696 has asked the Court to decide just that question for Alabama.


Birmingham-based builder and developer, Ridge Crest, claims that by not assessing impact fees based on the specific impact of each particular development, but instead arbitrarily imposing uniform rates on all developments, Jefferson County’s impact fees are an unlawful taking. Specifically, Ridge Crest alleges that the sewer impact fees imposed for connecting to the sewer system are not being used for infrastructure. Ridge Crest claims that the fees imposed are solely intended to raise revenue for the County and are not proportionate to any burden caused by the issuance of building permits. As evidence, Ridge Crest points, in part, to the fact that the County 1) does not use the impact fees for the construction of capital improvements, and 2) the sewer impact fees are merged with the general funds of Jefferson County and are not specifically allocated for to address the impact to the sewer system.


Ridge Crest seeks the implementation of a new system that reasonably assesses impact fees based on the specific impact of construction or development on the County’s sewer system, rather than issuing blanket impact fees. They are also requesting that all monies collected by Jefferson County as sewer impact fees over the past six years be returned, with interest, to all affected parties. 


The Court’s opinion in Ridge Crest could have far-reaching effects on the legality of the impact fees charged to builders and developers across Alabama.  We will continue to follow the case and post updates.

 

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