Are the development impact fees that the Ada County Highway District charges new builders actually fees, or are they really taxes? And can ACHD make the State of Idaho pay them when the state builds something in Ada County?
Plain-English summary
The Division of Public Works asked two related questions about ACHD's Ordinance 184, which since April 1992 has charged "impact fees" to new developments in Ada County to fund road expansion.
Question one: are these really fees, or are they taxes in disguise? If they are taxes, the ordinance (and possibly the enabling statute) would violate Idaho Constitution art. 7, § 4 (which exempts public property from taxation) and § 5 (which requires uniform taxation).
The AG worked through the Idaho Supreme Court's three-part test for distinguishing a fee from a tax. (1) Does the charge confer a benefit not shared by the general public? Ordinance 184 charges every new development without first determining whether the development actually generates a need for road improvements, and lets the fee administrator decide that countywide impacts allow fees to be spent outside the designated benefit zone. That is closer to a general benefit than a particular one. (2) Is the fee voluntary, in the sense that someone can avoid it? Yes, the developer can choose not to build. So this prong is met. (3) Is the fee tied to the cost of providing the service? Ordinance 184 lacks clarity on accounting and segregation of revenues, so it is unclear whether expenditures stay within the benefit zone or are reasonably tied to the cost of road improvements caused by the development.
The bottom line: ACHD's ordinance has indicia that look more like a tax than a fee. The AG recommended ACHD revise the ordinance to comport with the enabling Development Impact Fee Act (chapter 82, title 67, Idaho Code, enacted in 1992), particularly on the rational-nexus standard and on accounting.
Question two: can ACHD assess impact fees against the state? No. Idaho follows the rule that statutes do not bind the sovereign absent clear legislative intent. Idaho Code chapter 82, title 67, doesn't name the state as a payer. The fiscal note attached to H.B. 805 said there would be no general-fund impact, which makes sense only if the state was excluded. Local Union 283 v. Robison (1967) is the leading Idaho case: broad statutory language is not read to govern the state unless that construction is "clear and indisputable." Assessing impact fees on state construction would, in effect, tax the state's general fund to subsidize a county's road program; the legislature did not direct that result.
Currency note
This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Idaho Development Impact Fee Act has likely been amended in the decades since this opinion was issued.
Background and statutory framework
Impact fees emerged in the 1980s as a tool for fast-growing local governments to fund the off-site infrastructure that new development demanded. They are charged at the building-permit or plat-approval stage, are tied to the type of development being built, and are supposed to fund capital improvements (not maintenance, not operating costs) that are necessary because of the new development. Bloom v. City of Fort Collins (Colo. 1989), Holmdel Builders Ass'n (N.J. 1990), and Homebuilders v. Palm Beach Comm. (Fla. App. 1983) are the cases most often cited for upholding well-designed impact fees.
ACHD adopted Ordinance 184 in September 1991 (effective April 15, 1992). The ordinance divides Ada County into eight benefit zones, sets a per-category fee schedule, and limits expenditures to capital improvements within or immediately adjacent to the zone in which the fee was raised, with discretion to the fee administrator to apply fees countywide for development with countywide impact.
Roughly two-and-a-half months after Ordinance 184 took effect, the legislature enacted the Idaho Development Impact Fee Act (H.B. 805, codified as chapter 82, title 67, Idaho Code, effective July 1, 1992). The Act provides general statutory authority for governmental entities to adopt impact-fee ordinances. The key constraints are: fees must be limited to the proportionate share of system improvement costs serving the new development (§ 67-8202(9), § 67-8207); fees must benefit the service area in which the project is located (§ 67-8204(11)); fees must be segregated and accounted for separately (§ 67-8210).
The fee-versus-tax distinction draws on Idaho's three-part test from Brewster v. City of Pocatello, 115 Idaho 502 (1988) (where a Pocatello "street restoration and maintenance fee" was struck down as a disguised tax), Loomis v. City of Hailey, 119 Idaho 434 (1991), Foster's Inc. v. Boise City, 63 Idaho 201 (1941) (parking-meter fee upheld as regulatory), and Kootenai County Property Association v. Kootenai County, 115 Idaho 676 (1989). The U.S. Supreme Court's framing in National Cable Television Ass'n v. United States, 415 U.S. 336 (1974), informs the "particular benefit" prong.
Intergovernmental immunity in Idaho rests on Local Union 283, Intn'l Brotherhood of Electrical Workers v. Robison, 91 Idaho 445 (1967), and Wilcox v. City of Idaho Falls, 23 F. Supp. 626 (D.C. Idaho 1938). Sutherland's treatise on statutory construction (§ 62.01 et seq.) sets out the underlying rule: government is not bound by general statutory language unless the legislature clearly directs it.
Common questions
Why does the AG say Ordinance 184 looks like a tax?
Three reasons. First, ACHD charges every new development without an individualized determination that the development actually generates road impact requiring new construction. Second, the fee administrator can spend fees outside the designated benefit zone if a development has "countywide impact" (which dilutes the particular-benefit requirement). Third, the ordinance lacks clear accounting rules to show that fee revenue is being spent only for system improvements caused by new development, as opposed to general roadway needs.
What is the "rational nexus" test?
It is the substantive due process test that most states (and the Idaho Development Impact Fee Act) use to evaluate impact fees. The test has two parts: (1) a rational nexus between the new development project and the need for additional capital improvements, and (2) a rational nexus between the expenditure for capital facilities and the benefits accruing to the property on which the charge is imposed. The opinion contrasts this standard with the stricter "specifically and uniquely attributable" test (Illinois) and the more lenient "reasonable relationship" test (California).
Why can't ACHD make the state pay?
Two reasons. (1) The Development Impact Fee Act doesn't say the state is included; H.B. 805's fiscal note expressly anticipated no general-fund impact. (2) Idaho follows the canonical rule that broad statutory language doesn't reach the state unless the legislature is clear about it.
Does this mean state agencies can build whatever they want, anywhere, without paying for road impacts?
The opinion is narrower. It addresses only the impact-fee question. Other coordination tools (the Local Planning Act's requirement that local governments take state needs into account, the AG's separate guidance in Opinion 92-5 on state agencies' general compliance with local zoning) still apply. The state can be a cooperative partner without being a fee-paying developer.
What should ACHD do to make Ordinance 184 hold up?
The AG recommended ACHD review and amend the ordinance to align with the Development Impact Fee Act's requirements: tighter restrictions on the fee administrator's discretion, an individualized needs determination tied to each development, a clear accounting system that segregates fees by benefit zone, and documentation that expenditures stay within the zones unless statutory exceptions apply.
Citations
Idaho Constitution: art. 7, § 4 (public property exempt from taxation); art. 7, § 5 (uniform taxation); art. 12, § 2 (police-power grant to municipalities and counties).
Idaho Code: title 67, chapter 82 (Idaho Development Impact Fee Act); § 67-8202(9) (definition of "development impact fee"); § 67-8204(1), (2), (8), (11) (ordinance content requirements); § 67-8207 (proportionate-share limit); § 67-8210 (segregation and earmarking).
U.S. Supreme Court: National Cable Television Ass'n v. United States, 415 U.S. 336 (1974) (regulatory-fee benefit analysis).
Idaho cases: Brewster v. City of Pocatello, 115 Idaho 502, 768 P.2d 765 (1988) (Idaho Supreme Court; Pocatello street fee struck down as disguised tax); Foster's Inc. v. Boise City, 63 Idaho 201, 118 P.2d 721 (1941); Kootenai County Property Association v. Kootenai County, 115 Idaho 676, 769 P.2d 553 (1989); Local Union 283, Intn'l Brotherhood of Electrical Workers v. Robison, 91 Idaho 445, 423 P.2d 999 (1967) (Idaho Supreme Court; intergovernmental immunity); Loomis v. City of Hailey, 119 Idaho 434, 807 P.2d 1272 (1991); Olson v. J.A. Freeman Co., 117 Idaho 706, 791 P.2d 1285 (1990); State v. Nelson, 36 Idaho 713, 213 P. 358 (1923).
Other cases: Associated Homebuilders v. City of Walnut Creek, 94 Cal. Rptr. 630, 484 P.2d 606 (1971) (California "reasonable relationship" test); Bloom v. City of Fort Collins, 784 P.2d 304 (Colo. 1989); City of Casa Grande v. Tucker, 169 Ariz. 143, 817 P.2d 947 (Ct. App. 1991); Contractors and Builders Ass'n v. City of Dunedine, 329 So. 2d 314 (Fla. 1976) (rational-nexus origin case); Eastern Diversified Properties, Inc. v. Montgomery County, 570 A.2d 850 (Md. 1990); Holmdel Builders Ass'n v. Township of Holmdel, 583 A.2d 277 (N.J. 1990); Homebuilders v. Board of Palm Beach Comm., 446 So. 2d 140 (Fla. App. 4th Dist. 1983); Lee County v. New Testament Baptist Church of Ft. Meyers, Fla., 507 So. 2d 626 (Fla. App. 2d Dist. 1987); New Jersey Builders Ass'n v. Bernard Township, 108 N.J. 223, 528 A.2d 555 (1987); Pioneer Trust and Savings v. Village of Mount Prospect, 22 Ill. 2d 375, 176 N.E.2d 799 (1961) (Illinois "specifically and uniquely attributable" test); Wilcox v. City of Idaho Falls, 23 F. Supp. 626 (D.C. Idaho 1938).
Other authorities: Ada County Highway District Ordinance No. 184; Bryan Blaesser and Christine Kentopp, Impact Fees: the Second Generation, 38 Wash. U.J. Urb. & Contemp. L. 55 (1990); McQuillan, Municipal Corporations, § 213 Quasi Municipal Corporations (3rd ed. 1987); Sutherland, Statutory Construction, Statutes in Derogation of Sovereignty, § 62.01 et seq. (1992); Juergensmeyer and Blake, Impact Fees: An Answer to Loc'l Gov'ts' Capital Funding Dilemma, 9 Fla. St. U. L. Rev. 415 (1981).
Source
- Landing page: https://www.ag.idaho.gov/office-resources/opinions/
- Original PDF: https://ag.idaho.gov/content/uploads/2018/04/OP93-05.pdf
Original opinion text
ATTORNEY GENERAL OPINION NO. 93-5
To:
G. Anne Barker, Administrator
Division of Public Works
STATEHOUSE MAIL
Boise, ID 83720-1000
Per Request for Attorney General's Opinion
QUESTIONS PRESENTED
1.
Impact Fees Assessed by Ada County Highway District.
a.
Are impact fees assessed by Ada County Highway District true fees, or
unauthorized taxes in violation of article 7, sections 4 and 5, of the Idaho
Constitution?
b.
Do the impact fees assessed by Ada County Highway District pursuant to
Ordinance 184 meet substantive due process requirements of the
constitution?
2.
May Ada County Highway District, as a legislatively created taxing district, assess
impact fees against the state without express authority from the state to do so?
CONCLUSION
1.
Impact Fees Assessed by Ada County Highway District.
a.
The provisions of ACHD's Ordinance 184 allow for discretionary
application of impact fees outside of designated benefit zones, require
payment of fees with what appears to be no determination of need for
services as a result of the new development, and lack clarity on accounting
for revenues. Although it is difficult to determine with certainty whether
ACHD's impact fee ordinance allows for an assessment of a regulatory fee,
or is a disguised tax in violation of article 7, sections 4 and 5 of the Idaho
Constitution, the above stated provisions are indicia of a tax rather than a
fee. It is recommended that the sweeping powers provided to the fee
administrator in the ordinance and the failure to define within the ordinance
procedures for collection and accounting of fees be reviewed and amended
by ACHD to clearly comport with the requirements in the enabling statute,
chapter 82, title 67, Idaho Code.
b.
To meet the requirements of substantive due process, the ordinance must
provide a rational nexus between the impact fees assessed to a new
development and the need for additional capital improvements. Further,
there must be a rational nexus between the expenditure for capital facilities
and the benefits accruing to the property in which the impact fees are
assessed. The enabling statute requires that an ordinance establish a
rational nexus between the expenditures for capital facilities and the
benefits accruing to the property on which the charge is imposed. It is not
clear that Ordinance 184 establishes a need resulting from the new
development prior to assessing impact fees. In addition, it is not clear that
Ordinance 184 complies with the earmarking and expenditure requirements
of the "Idaho Development Impact Fee Act." As a result, it is not clear that
Ordinance 184 meets the requirements of the enabling act or the rational
nexus standard required by the constitution.
2.
Statutes are subject to the rule of construction exempting government from their
operation in the absence of a clear expression of intent on the part of the
legislature to the contrary. The language contained in the "Idaho Development
Impact Fee Act" does not indicate that the state was to be included for the purpose
of payment of development impact fees. In fact, the fiscal note attached to H.B.
805 indicates that the legislative intent was not to include the state within the
purview of the act. As such, the state is excluded from compliance with impact
fee ordinances enacted pursuant to the "Idaho Development Impact Fee Act."
[Full analysis follows in the original PDF, with detailed treatment of: (a) the
background of impact fees and the elements distinguishing them from other
exactions; (b) the three-part fee-vs-tax analysis applied to Ordinance 184 (benefit
not shared by general public, fee not forced contribution, compensation for
expenses in providing services); (c) the substantive due process / rational nexus
analysis under chapter 82, title 67; and (d) the intergovernmental immunity
analysis applying Local Union 283 and the Sutherland canon to conclude the state
is not a payer. The full text is available at the linked PDF above.]
DATED this 7th day of April, 1993.
LARRY ECHOHAWK
Attorney General
Analysis by:
TERRY B. ANDERSON
Deputy Attorney General
Chief, Business Regulation
and State Finance Division