December 14, 2007

County Powers Relief Act does not prevent cities from requiring residential developers to build or pay for sidewalks

Effect of County Powers Relief Act on City's Authority to Require Developers of Certain Real Property to Construct Sidewalks or Pay a Fee in Lieu of Construction (TN Attorney General Opinion 07-161, December 13, 2007).

Opinion may be found at:

"The Act restricts the enactment of impact fees and adequate facilities taxes after its June 20, 2006, effective date by providing that:
no county shall be authorized to enact an impact fee on development or a local real estate transfer tax by private or public act. In addition, this part shall be the exclusive authority for local governments to adopt any new or additional adequate facilities taxes on development. Tenn. Code Ann. § 67-4-2913 (2007)." Id.

"The Proposed Ordinance is not an adequate facilities tax. First, and most importantly, it is not a privilege tax on development. The Proposed Ordinance does not declare the development of property to be a taxable privilege. Also, unlike the taxes described above, it is not the intent of the Proposed Ordinance to ensure that developers pay their fair share of new or expanded public facilities caused by a substantial increase in property development. The City wants to create a network of sidewalks as part of its desire to promote the health, safety and welfare of the public. This desire exists outside of any residential development boom that might create the need for new or expanded sanitary sewers, roads, waterworks, and other facilities. Furthermore, the fee in lieu of construction is based on the actual cost of constructing the required sidewalk, not a calculation of the gross square footage or number of lots or units being developed. Finally, it must be noted that the default position of the Proposed Ordinance is for the developer to build the sidewalk, not for the City to impose a tax and collect revenue. Under the Proposed Ordinance, the City collects funds from the developer only when the developer requests a waiver of the construction requirement and the waiver is approved by the City’s Director of Engineering." Id.

"The General Assembly’s use of these particular terms demonstrates its desire to limit counties from enacting impact fees while allowing cities to do so. If the General Assembly had intended to limit cities, it could have used the term “local governments” as it did in the second sentence with regard to the restriction on adequate facilities taxes or the term “municipality” as it did in the third sentence." Id.