West Case Update

Development Impact Fee Not a Taking If It Meets "Rational Nexus Test"

Description Ohio high court upheld an impact fee a city imposed on real estate developers to help cover the cost of expanded roads. The fee met the rational nexus test by showing that the fee was related to the costs of serving the expanded population in new developments.

Topic Constitutional Law

Key Words Takings; Impact Fee; Rational Nexus

C A S E S U M M A R Y

Facts The City of Beavercreek decided to impose an impact fee on real estate developers. The fee was based on a city estimate of the cost of expanding city services for new development. The home builders association and other developers challenged the constitutionality of the impact fee. The trial court upheld the fee; the appeals court struck it down as unconstitutional. The city appealed to the Ohio high court.

Decision Reversed. Municipalities have the power, under the state constitution, to impose assorted taxes and fees. A dual rational nexus test is used by the courts to determine if there is a taking. 1) Is there a reasonable connection between the need for additional capital facilities and the growth of the population generated by new development. 2) If a reasonable connection exists, is there a reasonable connection between the expenditure of funds collected through the impact fee and the benefits accruing to the development. The city met that test, showing that developers and the city were paying proportionate shares necessary to provide new public facilities, such as roads, to accommodate an expanding population.

Citation Home Builders Association of Dayton and the Miami Valley v. City of Beavercreek, 729 N.E.2d 349 (Sup. Ct., Ohio, 2000)

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Development Impact Fee Not a Taking If It Meets "Rational Nexus Test"
Description	Ohio high court upheld an impact fee a city imposed on real estate developers to help cover the cost of expanded roads. The fee met the rational nexus test by showing that the fee was related to the costs of serving the expanded population in new developments.
Topic	Constitutional Law
Key Words	Takings; Impact Fee; Rational Nexus
C A S E S U M M A R Y
Facts	The City of Beavercreek decided to impose an impact fee on real estate developers. The fee was based on a city estimate of the cost of expanding city services for new development. The home builders association and other developers challenged the constitutionality of the impact fee. The trial court upheld the fee; the appeals court struck it down as unconstitutional. The city appealed to the Ohio high court.
Decision	Reversed. Municipalities have the power, under the state constitution, to impose assorted taxes and fees. A dual rational nexus test is used by the courts to determine if there is a taking. 1) Is there a reasonable connection between the need for additional capital facilities and the growth of the population generated by new development. 2) If a reasonable connection exists, is there a reasonable connection between the expenditure of funds collected through the impact fee and the benefits accruing to the development. The city met that test, showing that developers and the city were paying proportionate shares necessary to provide new public facilities, such as roads, to accommodate an expanding population.
Citation	Home Builders Association of Dayton and the Miami Valley v. City of Beavercreek, 729 N.E.2d 349 (Sup. Ct., Ohio, 2000)