Legal Considerations of Development Impact Fees

Abstract Although development fees are relative newcomers to the legal scene, precedents for them exist in subdivision dedication requirements and utility charges. Courts— especially state courts—require that such fees meet a "rational nexus" test. This article describes the basis for that test, its more sophisticated forms, and some applications to particular types of fees. The 1987 U.S. Supreme Court decision in Nollan v. California Coastal Commission adds a federal constitutional requirement for a close fit between the fee and the purpose it serves. The implication of that decision for planning practice is that planners need to conduct more complete background studies than they have done in the past to support a legally defensible development fee program.