Court Upholds Planning Board’s Ability to Set and Adjust Impact Fees

Caparco v. Town of Danville and Drowne v. Town of Sandown
Caparco v. Town of Danville and Drowne v. Town of Sandown
No. 2004-711
Tuesday, November 15, 2005

The Towns of Danville and Sandown adopted impact fee amendments to their zoning ordinances, which imposed fees upon new development to reflect the costs that would be incurred by the towns in building or improving public facilities. Such ordinances are permitted as forms of “innovative” zoning by RSA 674:21.

The plaintiffs alleged that these ordinances were defective and unenforceable because they allowed the planning board in each municipality to periodically adjust the amount of the fee. The plaintiffs argued that such adjustments were not permitted under the enabling statute. It also argued that if the statute allowed the adjustments, the statute itself was unconstitutional because it allowed the imposition of a charge without the express consent of the people at town meeting.

The Court found that the enabling statute did permit planning boards to adjust impact fees because it empowered local planning boards to “administer” the innovative zoning tool. The adjustments could be upheld because the ordinances as adopted contained sufficient standards to guide the planning board, thus limiting their discretion to arbitrarily change the fees, and because the fees could be tested by reference to objective data.

The constitutional argument was quickly dismissed, with the Court finding that the people had indeed consented to the fees as well as their periodic adjustment, by their vote adopting the ordinance.

The case is important for municipalities considering the adoption of an impact fee ordinance, since it affirms the availability of the tool. The key to success with such an ordinance is to carefully specify a methodology and specific measurements for the planning board to consider when it either adopts or changes an impact fee. The Court spoke approvingly of variables that were “factual,” that could be “periodically updated” and that required planning boards to “compile and assess the underlying data.”

The factors to be considered must be specific enough to guide the planning board, yet prevent it from taking arbitrary or unwarranted action to prevent or restrict development.