Introduced by Representatives Adams of Hartland and Komline of Dorset

BILL AS INTRODUCEDH.698

2008Page 1

H.698

Introduced by Representatives Adams of Hartland and Komline of Dorset

Referred to Committee on

Date:

Subject: Executive fees; Act 250; planning and zoning; agency of natural resources development review

Statement of purpose: This bill proposes to establish a uniform procedure for the setting of fees for development review, which is intended to assure that fees are set at a level commensurate with the government’s cost of development approval. As part of this procedure, the adopting authority would have to relate the fee level to the costs of administration, list a schedule of fees particular to each category of development subject to a fee, allow for the payment of fees under protest, follow a specified process in the case of unscheduled fees, comply with a public notice process, account for the use of fees, refund unused portions of fees, and annually audit fees collected and the expenses related to each fee. The bill proposes to allow fees to be appealed, it puts the burden upon the government in establishing that the fees are justified, and allows resort to binding or nonbinding arbitration. The bill proposes to apply generally to development review under Title 24, including specifically review under chapters 117 and 59 of that title. With regard to fees assessed by statute for development review by the agency of natural resources or by the natural resources board, if the secretary of the agency or the chair of the natural resources board recommends to the general assembly the revision of the respective fees, the secretary or the chair must provide the analysis established in the bill with regard to the reasonableness of the fees in question. The commissioner of public safety is subject to the same requirements when recommending revision of fire prevention and building code fees.

AN ACT RELATING TO ESTABLISHING A UNIFORM FEE-SETTING PROCEDURE FOR DEVELOPMENT REVIEW

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. 3 V.S.A. § 2829 is added to read:

§ 2829. UNIFORM FEE-SETTING PROCEDURE FOR DEVELOPMENT

REVIEW

(a) Legislative findings. The general assembly of the state of Vermontfinds and declares that it is necessary and desirable, as a matter of public policy, to provide for the establishment of standards regarding fees imposed by a governmental entity in conjunction with regulatory review and approval of development applications. Applicants for development approval should not be required, under the guise of police power regulation of property, to provide revenue for general public purposes, which, in fairness, should be provided by the public as a whole. In addition to refunds of fees improperly imposed upon applications for development approval or rebates improperly withheld, the remedy of damages may be provided to applicants for such approvals in egregious cases. The establishment of standards for the imposition of regulatory fees in conjunction with development review and approval will promote the goals specified in this subsection in a manner consistent with Chapter I, Articles 1 and 4 of the Constitution of the State of Vermont, which guarantees to each person the inalienable right to due process and to acquire, possess and protect property.

(b) Definitions. As used in this section, the following words and phrases have the meanings indicated:

(1) “Aggrieved person” means any person who claims to have been injured as a result of a decision by a governmental entity regarding a fee, which injury is over and above the expected impact of that fee upon the public generally.

(2) “Applicant” means any person or entity, whether private or public, with a legal or equitable interest in real property, that applies for development approval, and includes the heirs, successors, agents, and assigns of those ownership interests.

(3) “Category” or “categories” of development means the classification of development by type, including but not limited to, single-family detached residential, single-family attached residential, multiple-family residential, institutional, retail, office, and industrial.

(4) “Consultant” means a member of a recognized profession whose members are subject to a code of ethics, and is licensed by and in good standing with the state, including accountants, architects, attorneys, and engineers.

(5) “Development” means any proposed land use, structure or site improvement for which a development approval is required under Title 10, 20, or 24.

(6) “Development application” means an application for a development approval, filed in accordance with the laws, ordinances, and regulations of a governmental entity under Title 10 or 24.

(7) “Development approval” means any written approval or decision by a governmental entity under its development review and permit authority located in Title 10 or 24 that gives authorization to undertake a development or land use, including a zoning map amendment, planned unit development, administrative appeal, variance, conditional use, site plan, subdivision plan, record plat, building permit, demolition permit, stormwater management permit, grading permit, environmental permit, other pre-building permits, or a use and occupancy permit.

(8) “Development review” means the process of reviewing a development application and issuing a decision on that application, as well as inspection and enforcement activity directly related to that application.

(9) “Fee” or “regulatory fee” means a charge, or other, monetary requirement, including costs related to acquiring and maintaining an escrow account, a letter of credit, or a surety bond, imposed in conjunction with an application for issuance of a development approval or similar governmental service that benefits an applicant in a manner not shared by other members of the public, is paid by choice of the applicant, and is not collected to raise revenue but to cover reasonably anticipated costs directly related to issuing, inspecting, and enforcing a development approval.

(10) “Governmental entity” means any state, regional or local government jurisdiction, including any municipality exercising planning or zoning authority under Title 10 or 24 or otherwise exercising development approval authority under applicable state law, acting through its governing body, or any board, commission, or agency of that government jurisdiction having final approval authority over a development application.

(11) “Property” or “real property” means all real property subject to development regulation by a governmental entity.

(12) “Revenue” or “general revenue” means an amount of money or other consideration, raised for general public purposes, which is not commensurate with a governmental entity’s direct costs of issuing, inspecting, and enforcing a development approval.

(c) Requirements for fees imposed for development review and approval.

(1) Reasonableness. Before any fee may be imposed in connection with a development review or approval, there must be both of the following:

(A) A demonstrable connection, association, or relationship between the fee and the substantial advancement of the state’s legitimate interest in equitably financing the cost of development review.

(B) Adetermination, based upon reliable factual studies or statistics, that the fee is commensurate with the governmental entity’s reasonably anticipated direct costs of issuing, inspecting, and enforcing a development approval.

(2) Fee schedules. The governmental entity must prepare and publish fee schedules, subject to approval by its governing body and enactment of a law, ordinance, or regulation as provided in subdivision(6) of this subsection, containing an individualized determination for each category of development subject to a fee that the fee is related both in nature and extent to the cost of development review for that development. If appropriate, those portions of a fee related to inspection and enforcement may be listed separately for each category of development. If the governmental entity lacks the expertise or knowledge to prepare a fee schedule, it must retain one or more qualified consultants to assist it in doing so.

(3) Payment of a schedule fee under protest. Upon request by an applicant, the governmental entity must provide a written explanation of a schedule fee in relation to the development application being filed. If dissatisfied with the explanation, the applicant may at the time of filing the application pay the fee under protest, and final action on the application shall not be delayed or withheld. Failure to file a written disputation of the fee within 30 days of the date of filing the application shall be deemed a waiver of the applicant’s right to contest the fee upon appeal or in arbitration.

(4) Unscheduled fees. In exceptional circumstances involving a development not covered in a fee schedule, or of a complexity not reasonably foreseeable, including a natural disaster, an emergency, or a previously unanticipated need for an inspection that is essential to protect the public health and safety, a governmental entity may make a separate unscheduled fee determination for that development. If a government entity lacks the expertise or knowledge to do so, it shall retain one or more qualified consultants to assist it in reviewing an off-schedule development application and determining an appropriate fee for that application.

(A) The governmental entity shall make a final determination of the fee, by appropriate ordinance or regulation, after consultation with the applicant to compute the amount needed to cover the costs of the development review, including consultant services. A written itemized bill for these costs shall be submitted to the applicant, identifying the work performed or to be performed, persons performing the work, including consultant work, with approximate times spent by each, and describing how the fee is commensurate with the direct costs of the development review.

(B) In the event the applicant disputes the amount of the fee, the applicant shall within 30 days of the date of transmittal of the itemized bill, notify the governing body of the governmental entity in writing of the dispute, and the basis of the dispute. In this event, if the applicant pays the disputed fee under protest, pending final determination of any appeal or arbitration, final action on the development application must not be delayed or withheld. Failure of the applicant to dispute the fee in atimely mannershall be deemed a waiver of the applicant’s right to contest the fee upon appeal or in arbitration.

(C) In the alternative to the procedure described in subdivision(4)(B) of this subdivision (4), an applicant who disputes the amount of the fee as provided in this subsection, may pay the fee under protest, and request an independent audit of the fee. The audit shall be completed and a written report provided to the governmental entity and applicant within 30 days of the applicant’s written notice of dispute and payment of the fee under protest. In these cases, final action on the application shall not be delayed or withheld. Election by the applicant not to pursue the audit process in a timely manner shall be deemed a waiver of the applicant’s right to seek an audit in any appeal or arbitration. If the audit confirms the fee, costs of the audit shall be assessed against the applicant. If the audit reduces or increases the fee in whole or in part, costs shall be apportioned in accordance with the decrease or increase provided in the audit. If the applicant or governmental entity disagrees with the audit and so indicates in writing within 30 days of the date of the audit, issues related to the audit may be raised upon appeal of the fee or in arbitration as provided in subsection (d) of this section.

(5) Waiver of right to appeal. Approval of a development application shall not be conditioned upon waiver by the applicant of the right to appeal a fee.

(6) Legal authority required. All fees shall be authorized by law, and unless established by statute, shall be prescribed by ordinance or regulation enacted by the governmental entity, following a public hearing to be conducted in at least two sessions, 10 days apart for fees shown on fee schedules. Notice of the hearing shall be published for three consecutive weeks in a newspaper of general circulation in the community served by the governmental entity, commencing no less than 30 days prior to the initial public hearing. The following provisions apply when enacting an ordinance or regulation creating or amending a fee schedule. No less than 30 days prior to the initialpublic hearing, a study conducted by the governmental entity, or if it lacks the expertise or knowledge to conduct such a study, by one or more qualified consultants, shall be on file with the governmental entity and available for review by the public. The study shall conclusively demonstrate that an increase in regulatory fees is required to offset reasonably anticipated costs directly related to issuing, inspecting, and enforcing each category of development approval shown on the fee schedule. In determining the amount of any fee increase, the study shall discount any unused fees collected for inspections or enforcement of prior development approvals.

(7) Vested rights. A complete development application, filed prior to the effective date of a law, ordinance, or regulation providing for a new fee or amending a previously enacted fee, shall be vested and shall be processed under the previously existing fee schedule. A pending development application that is amended or modified after the effective date of a newly enacted ordinance is similarly vested, unless the amendment or modification results in a more intense category of development or substantially increases the density or intensity of the proposed development.

(8) Accounting procedures. The governmental entity shall adopt management and accounting procedures to ensure that fees for each category of development are maintained in a separate account and used only in accordance with the requirements of this section.

(A) Within 30 days of final inspection or issuance of a certificate of occupancy, whichever is later, any unused portion of the fee shall be refunded to the applicant.

(B) Prior to the end of each fiscal year, a budget shall be adopted for each category of development, containing a list of expenses, including consultant costs, for which these fees are used and a list of estimated revenues derived from each.

(C) Prior to the end of each fiscal year, an audit shall be conducted of the actual fees collected for development review and the expense, including consultant costs, related to each fee. A report of the audit and any written statements of management related to the auditshall be made at a duly noticed meeting of the governing body. Copies of the report shall be made available to the governing body, the state auditor, and the general public not less than 30 days prior to that meeting. Any surplus or deficit shall be identified and reflected in the next fiscal or calendar year budget.

(d) Appeal.

(1) Standing. An applicant or aggrieved person shall have standing to file an appeal of a fee.

(2) Filing requirements. An appeal of a fee shall be taken to the environmental court andshall be made in accordance with the provisions of this section and the requirements of applicable state law regarding appeals from decisions of administrative agencies and appeals from decisions of local regulatory bodies.

(A) An appeal of the fee may be filed whether or not the final decision on a development application is challenged.

(B) A petition of appeal may be joined or consolidated with a suit for declaratory or injunctive relief, filed in accordance with applicable provisions of state law.

(3) Remedies. If, upon review of the evidence of record or the evidence adduced at trial, the court finds that imposition of the fee is not in accordance with law, it shall invalidate the fee and direct that all or a portion of the fee be refunded with interest. Further, if the appeal or related cause of action for declaratory or injunctive relief contains a request for damages, the court may award damages upon a finding that the fee is not authorized under state law, or that it is grossly out of balance with the amount reasonably necessary to cover the cost of the development approval.

(4) Burden of proof. In the event of an appealor the filing of a related cause of action challenging a fee, the governmental entity shall bear the initial burden of proving that the fee complies with the requirements of subsection (c) of this section.

(5) Time for appeal. An appeal shall be filed within 30 days after formal entry of the governmental entity’s final decision on the underlying development application.

(6) Alternative binding or nonbinding arbitration. In lieu of filing an appeal or related cause of action as set forth in subdivision(2) of this subsection, the governmental entity and applicant may agree to enter into binding arbitration pursuant to state law and procedures. A qualified arbitrator may be selected by mutual agreement. If the governmental entity and applicant are unable to agree on an arbitrator, an arbitrator shall be appointed by the environmental court.

Sec. 2. 3 V.S.A. § 2822(o) is added to read:

(o) Any recommendations by the secretary of natural resources regarding any revision of fees established in this section shall be accompanied by a report containing the results of an analysis as required under subsection 2829(c) of this title with regard to the reasonableness of the proposed fee amendment and with regard to fee schedules. This analysis shall be presented to the legislative committees on appropriations, the house committee on ways and means, and the senate committee on finance.

Sec. 3. 10 V.S.A. § 6083a(i) is added to read:

(i) Any recommendations by the natural resources panel regarding any revision of fees established in this section shall be accompanied by a report containing the results of an analysis as required under 3 V.S.A. § 2829(c) with regard to the reasonableness of the proposed fee amendment and with regard to fee schedules. This analysis shall be presented to the legislative committees on appropriations, the house committee on ways and means, and the senate committee on finance.

Sec. 4. 20 V.S.A. § 2731(j) is added to read:

(j) Any recommendations by the commissioner of public safety regarding any revision of fire prevention and building code fees established in this section shall be accompanied by a report containing the results of an analysis as required under 3 V.S.A. § 2829(c) with regard to the reasonableness of the proposed fee amendment and with regard to fee schedules. This analysis shall be presented to the legislative committees on appropriations, the house committee on ways and means, and the senate committee on finance.

Sec. 5. 24 V.S.A. § 1985 is added to read:

§ 1985. FEES FOR DEVELOPMENT REVIEW

(a) For purposes of this section, the term “development” means any proposed land use, structure,or site improvement for which approval is required under this title.

(b) In order to assess fees for the review under this title of any proposed development, the municipality shall comply with the provisions of 3 V.S.A. §2829, establishing a uniform fee setting procedure for development review.

Sec. 6. 24 V.S.A. § 4440(b) is amended to read:

(b) TheIn accordance with the provisions of 3 V.S.A. § 2829, establishing a uniform fee setting procedure for development review, thelegislative body may prescribe reasonable fees to be charged with respect to the administration of bylaws and for the administration of development review, and shall administer the imposition of those fees. These fees may include the cost of posting and publishing notices and holding public hearings and the cost of conducting periodic inspections during the installation of public improvements. These fees may be required to be payable by the applicant upon submission of the application or prior to issuance of permits or certificates of occupancy.