K.L.N. Construction Co., Inc., et als. v. Town of Pelham

Town Impact Fee Ordinance May Dictate Fee Refunds be Paid to Current Property Owner
NH Supreme Court, No,. 2013-374
Wednesday, December 10, 2014

The NH Supreme Court concluded that it was within the authority of the Town of Pelham to direct that impact fee refunds would be paid to the current owner of the property for which the fee was paid, not the original fee payor.

Pelham adopted an impact fee ordinance pursuant to RSA 674:21 (V). The ordinance provided that the current owners of property on which impact fees were paid may apply for a full or partial refund of the paid impact fee if the collected fees were not spent or encumbered within six years.  From 2002 to 2010, the Town collected impact fees from residential properties for the proposed construction of a new fire station, and those impact fees were paid by the developers of those residential properties.  After the Town Meeting failed to appropriate the Town’s share for the cost of the new fire station, the developers sought a refund of the collected impact fees, arguing that only the fee payors should be paid impact fee refunds.

The developers brought suit against the Town seeking the impact fee refunds, and the Town moved to dismiss their claims, arguing the developers were no longer owners of the subject properties and therefore did not have the legal right to seek the impact fee refunds.  In reply, the developers argued the Town’s impact fee ordinance directing impact fee refunds be paid to the current property owners was contrary to the impact fee statute, and was therefore  beyond the scope of the authority delegated by the Legislature.

The NH Supreme Court concluded the term “refund” as found in RSA 674:21 (V) (e) was to be given its plain and ordinary meaning: “to pay back or reimburse.”  The Court further concluded that an amendment to the impact fee statute in 2004 that restored the ability of planning boards to assess off-site exactions contained language that directed exaction fee refunds be made only to the fee payor.  Since that language was not added to the remainder of the statute governing impact fees assessed by ordinance the Court concluded that the Legislature intended that only refunds arising from planning board imposed exactions had to be paid to the original fee payer or its successor in interest.  Because this language was not inserted into the impact fee portion of the statute, this permitted Pelham to direct that impact fee refunds would made to the current property owner not the original fee payor.