§ 5203. Procedure

(a) A municipality may levy an impact fee on any new development within its borders provided that it has:

(1) been confirmed under section 4350 of this title and, after July 1, 1992, adopted a capital budget and program pursuant to chapter 117 of this title. The plan or capital budget and program may include:

(A) indication of locations proposed for development with a potential to create the need for new capital projects;

(B) standards for level of service for the capital projects to be fully or partially funded with impact fees;

(C) proposed locations and project lists, cost estimates, and funding sources;

(D) timing or sequence of development in the identified locations; and

(2) developed a reasonable formula that will be used to assess a developer’s impact fee. The formula shall reflect the level of service for the capital project to be funded and a means of assessing the impact associated with the development such as square footage or number of bedrooms. The level of service shall be either:

(A) an existing level of service;

(B) a State or federal standard; or

(C) a standard adopted as part of a town plan or capital budget.

(b) The amount of an impact fee used to fund a capital project shall be determined according to a formula developed under subsection (a) of this section. The fee shall be equal to or less than the portion of the capital cost of a capital project that will benefit or is attributable to the development and shall not include costs attributable to the operation, administration, or maintenance of a capital project. The municipality may require a fee for the entire cost of a capital project that will initially be used only by the beneficiaries of the development so assessed. In this case, if the project will be used by beneficiaries of future development the municipality shall establish a formula consistent with the formula developed under subsection (a) of this section to require that beneficiaries of future development pay an impact fee to the owners of the development on which the impact fee has already been levied.

(c) In determining the amount of a fee that will be used to fund a capital project, the municipality may account for:

(1) the cost of the existing or proposed facility;

(2) the means, including State or federal grants and fees paid by other developers, by which the facility has been or will be financed;

(3) the extent, if any, to which impact fees should be offset to account for other taxes or fees paid by the developer that will cover the cost of the capital project;

(4) extraordinary costs incurred by the municipality in serving the new development;

(5) the time-price differential inherent in fair comparisons of amounts paid at different times.

(d) In determining the amount of the impact fee to compensate the municipality for expenses incurred as a result of construction, the municipality shall project the expenses that will be incurred. If the actual expense incurred is less than the fee collected from the developer, the municipality shall refund the unexpended portion of the fee within one year of the termination of construction of the project.

(e) The municipality shall provide an annual accounting for each impact fee showing the source, amount of each fee collected, and project that was funded with the fee. The municipality must spend the fee on the capital project, for which the fee was intended, within six years of when the fee was paid. If it fails to do this, the owner of the property at the expiration of the six-year period may apply for and receive a refund of his or her proportionate share of that fee during the year following the date on which the right to claim the refund began.

(f) The municipality shall establish the formula and procedure for levying an impact fee by an ordinance or bylaw adopted under chapter 59 or 117 of this title. Such ordinance or bylaw shall include a provision for administrative appeal of the impact fee assessed. (Added 1987, No. 200 (Adj. Sess.), § 37, eff. July 1, 1989; amended 1989, No. 106; 1989, No. 280 (Adj. Sess.), § 11c.)