Part 1: Small News, Big Impact: Roseville’s Controversial Ordinance 1417

[Note: Have you ever started researching something and quickly realize that you've got in over your head? Ordinance 1417 is exactly that ... If I missed anything here, please fill me in. I'd love to get to the bottom of this issue. This is part 1 of 2.]

[Above: Four scenarios for Twin Lakes redevelopment laid out by Roseville planners in 2001]

“A Ramsey County district judge this past week declared “invalid and unenforceable” a Roseville city ordinance that would impose an “impact fee”  on various Twin Lakes property owners who seek to develop their property in the future.” [Roseville Patch, April 1, 2012]

A court ruling that flew under the radar last week may change the way cities and towns levy impact fees in Minnesota. The topic is admittedly dry – certainly not as exciting as a new football stadium or light rail projects. It takes a small education to get up to speed, but certainly worthwhile. [Note: To those advanced Streets.MN readers, you can read the entire 20-page judgement in PDF form: Link]

The Location:

There is a large formerly industrial parcel in the first-ring suburb of Roseville slated for redevelopment named “Twin Lakes” [Google Maps]. To get caught up to speed, here’s the Comprehensive Plan [PDF] and official  Twin Lakes Redevelopment Project page. The question however, is not over urban planning or design.

Last fall, the City of Roseville Council adopted Ordinance 1417; an ordinance that imposed a direct impact fee on various Twin Lakes property owners who seek to develop their property. While it is unclear specifically what these impacts fees were to fund, but suffice it to say, it was likely infrastructure improvements.

The ordinance was challenged, and the ruling goes something like this: “… since the roads Roseville plans to fund in the TLRA are available for use by the general public. Thus, in the context of a public road, Roseville’s impact fee is more like the tax than a regulatory or license fee.” [Star Tribune, March 29, 2012]

The ruling is interesting for a number of reasons.

1. Nexus

Impact fess aren’t as commonplace in the United States as they are in other parts of the developed world, but they aren’t without a legal backbone. Notably, legislative restrictions prevent impact fees from operating outside of a stricter “nexus” (e.g.: must be close to, or effect the paying property owner). The US Supreme Court holding in Nollan v. California Coastal Commission (1987) established that the power to impose impact fees (or, exactions) on a development is not without particular limits. Nollan states that a impact fee must advance a legitimate state interest and mitigate the adverse impact of the development. This doesn’t appear to apply in the Roseville case as there are likely to be few negative impacts, at least when compared to the existing land use. Most on-lookers would consider anything short of nuclear power plant an improvement.

2. Rough Proportionality

The most influential facet of the Nollan ruling was the institution of nexus in levying exactions, of which, the Court ruled a nexus must explicitly exist. The more recent case of Dolan v City of Tigard (1994) expands on this, stating that an additional standard of “rough proportionality” between proposed exactions and the project impacts that the exactions are intended to alleviate [see: Rough Proportionality: Who Pays for Infrastructure? - PDF]. No precise mathematical or financial equations are required, but the city must make an individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development. The City of Roseville does this, but they go about doing it in a backwards way.

3. Backwards Thinking

Chapter 1022 of the Roseville city code details the process for the zoning overlay district. The requirements are to first conduct a traffic study and then determine the amount of network trips that will occur from the development (as determined by the Institute of Transportation Engineer’s (ITE) Trip Generation Handbook, 8th Edition).

Most of the Infrastructure Improvements for the Twin Lakes plan (or, TLIIR) outlines that there isn’t adequate infrastructure, so property owners can pay the City if they’d like to redevelop their property. Furthermore, it outlines how it will charge per trip generation:

If development on a Block will generate Network Trips in excess of the number allocated to that Block in Section E below, the property owner(s) of such Block may, as provided in Section C1 above, enter into a voluntary development agreement which includes the payment of the Twin Lakes Roadway Improvement Cost Allocation Amount allocated to such Block in the TLIIR, as adjusted for the development to be constructed on such Block using the methodology set forth in the TLIIR.

It’s city-code-speak, but hard to read it your not familiar with. So, I’ll only quote it one more.

If development on a Block will not generate Network Trips in excess of the number allocated to the Block in this Section E, the property owner(s) of such Block shall not be obligated to pay the Twin Lakes Roadway Improvement Cost Allocation Amount set forth in the TLIIR for such development.

In non-city code speak: “if you create traffic, you pay more. If you create less traffic, you might not have to pay at all.” There are a handful of problems with this, and other developments that are proposed in the small area. I’ll discuss those in part 2.

 

To be continued … This ruling could have a big impact on how cities levy fees. I’d love to hear your thoughts on opinions. Please leave comments.


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2 Responses to Part 1: Small News, Big Impact: Roseville’s Controversial Ordinance 1417

  1. Brendon Slotterback
    Brendon April 4, 2012 at 1:02 am #

    I was under the impression that impact fees were expressly illegal in Minnesota. Is that why the ordinance says "may" enter into a "voluntary development agreement", rather than saying must?

  2. Nathaniel M Hood
    Nathaniel April 4, 2012 at 2:14 am #

    It is an impact fee that goes by another name. I believe Minnesota uses the term "service availability charges" sometimes too, but I'm under the impression that usually is for water and/or sewer connections. The "voluntary development agreement" isn't voluntary if you're looking to redevelopment, only voluntary if you're looking to keep things the way they are.

    Yet, my biggest issues is with how Roseville wanted to go about levying fees, based off Trip Generation. I don't necessarily think this promotes the kind of development they want. It seems like they would be punishing developers for creating density. And, who is to say traffic is bad? Maybe the additional trip generation could boost commercial property tax rates, which in turn could help pay for infrastructure? [Honestly, I'm sort of figuring this thing out as I go ...]

    I think there are a handful of issues here, and I am going to cover them in part 2. I got in a little over my head on this one, so – if you've got any advice send it in my direction! -Nate