State property-rights office, Utah League summarize impact-fee rules and limits for cities

Molly Wheeler, deputy director of the Utah League of Cities and Towns, opened a webinar with the Office of the Property Rights Ombudsman to review impact fees and answer local officials’ questions.

The webinar explained that impact fees are a one‑time charge imposed by local government on new development to mitigate additional demand on public facilities; they are intended to fund expansions needed to maintain existing levels of service, not to raise service levels or cure existing deficiencies. "Very simply put, they're a one‑time charge that's imposed by local government upon new development activity as a condition for development approval," said Rob Terry, statewide land use training director in the Office of the Property Rights Ombudsman.

Why it matters: impact fees are a common tool for municipalities to pay for growth‑driven infrastructure but can be legally challenged if not supported by clear documentation and calculation. Officials at the webinar urged jurisdictions to match fee calculations to documented needs, to maintain transparency, and to consider administrative capacity before adopting fees.

Key points covered

- Permitted and prohibited uses: Presenters listed permitted uses authorized under state law as including water supply, treatment, storage and distribution; wastewater collection and treatment; stormwater drainage and flood control; municipal power; roadway facilities; parks, recreation, open space and trails; public safety facilities (subject to limits); environmental mitigation in limited cases and municipal natural gas facilities. Prohibited uses noted included construction of jails or prisons, acquisition of fire suppression vehicles costing under $500,000 (and residential impact fees may not be used for fire suppression vehicles), funding operation and maintenance, and curing existing deficiencies or increasing the level of service for existing demand except in narrowly documented circumstances.

- Thresholds and required studies: An impact fee facilities plan (IFFP) is required for jurisdictions of 5,000 or more population (per the last census) that expect to collect $250,000 or more in impact fees in a year. Smaller jurisdictions may rely on their general plan or capital facilities plan but must include equivalent analysis and findings. Jordan Cullimore, lead attorney in the Office of the Property Rights Ombudsman, said the analysis for a general plan substitute will "look pretty much exactly like what a separate IFFP would look like."

- Administration and timelines: Agencies must keep separate interest‑bearing accounts for each type of impact fee and report annually to the state auditor. If collected fees are not expended or encumbered against an identified system improvement within six years, a refund (including earned interest) is required unless the agency makes written findings justifying a longer holding period.

- Special topics raised by participants: The presenters advised caution about using impact fees for buildings such as public works facilities (they said such uses often fall outside the statute’s enumerated facility types and should be evaluated case‑by‑case). They confirmed that internal accessory dwelling units allowed "by right" cannot be charged impact fees. Regarding schools, presenters said school facilities themselves are not a permitted impact‑fee category, but fees may be charged to a school if the school directly necessitates other enumerated public facilities; those facilities would need to be included in the IFFP or equivalent analysis.

- Redevelopment: The panel said impact fees generally apply to new net impact. If redevelopment increases intensity— for example replacing a single house with a multiunit building—fees may be charged on the increase in demand, not on the preexisting use.

Practical advice and next steps

Presenters repeatedly urged local officials to weigh whether impact fees make financial and administrative sense for their jurisdiction—asking whether growth is sufficient to justify study and ongoing administration and whether the agency has the capacity to manage accounts and annual reporting. Rob Terry noted the local onus: "the city is the one that needs to understand whether or not they have a comfort level, with something and a process that they're going to take," because a legal challenge would fall to the local agency.

The webinar pointed listeners to resources: the Office of the Property Rights Ombudsman (propertyrights.utah.gov), the Land Use Academy of Utah (luau.utah.gov), and Local Administrative Advisors coordinated by the Utah League of Cities and Towns for smaller jurisdictions.

Ending

Speakers encouraged attendees to use the ombudsman's office and the League as resources and to coordinate with school districts, consultants or other service providers early in planning so facilities that will be needed for growth are reflected in fee analyses and facility plans. "We are an independent neutral agency," Cullimore said, "and we are here as a resource for everyone and to help, educate, train, and also provide dispute resolution services."