Developer Prevails in Washington Regulatory Fee Case
A Washington appellate court ruled recently that impact fees assessed under the state's impact fee enabling statute are subject to a regulatory cap, which must satisfy nexus and proportionality requirements, and give consideration to the location of a specific project. 

In City of Olympia v. Drebick, No. 29018-9-II (Wash. 2004), the Washington Court of Appeals, Division II, rejected the city's characterization of a citywide transportation impact fee.  The fee was imposed upon John Drebick’s proposed office complex and was characterized as an excise tax that could be assessed without regard to the individualized impacts of Drebick’s specific project. 

Upon seeking land-use approval from the city of Olympia in 1998 for construction of a four-story office complex on the edge of town, Drebick was assessed a more than $160,000 fee as a condition of approval. 

Olympia calculated the fee in part by estimating the total square footage of all new commercial office space likely to be built within the city's boundaries and the costs of constructing road improvements to serve all of the new projects.  Drebick argued that the fee was excessive in relation to his project's potential impacts and that his project, located on the city's fringe, would have much less impact on the city's streets than would a typical commercial building in the center of the city.  Accounting for the individualized traffic-related effects of his project, Drebick estimated that those effects could be fully mitigated by a payment of roughly $29,000, more than $130,000 less than the costs assessed by Olympia. 

The Washington Court of Appeals interpreted the state's impact fee enabling statutes as requiring that impact fees be “reasonably related to” the individualized impacts of a particular project.  The Court of Appeals rejected the excise tax standard advanced by the City, which imposed a uniform citywide apportionment of impact fees to pay the costs of new development, independent of individual considerations. 

Citing U.S. Supreme Court precedent from the Nollan and Dolan cases, the Washington Court of Appeals emphasized the government's obligation to make an “individualized determination” that a required dedication is related both in “nature and extent” to the impact of the proposed development.  Moreover, the Court of Appeals confirmed that the fundamental purpose of the Takings Clause of the Constitution is to “bar government from forcing some people alone to bear public burdens, which in all fairness and justice, should be borne by the public as a whole.”

The Court of Appeals reversed a lower court ruling and remanded the case, requiring that the city recalculate the fees, not to exceed the individualized impacts of Drebick’s specific project.  The Court of Appeals ruling will likely affect numerous impact fee programs throughout the state of Washington.  [ return to top ]