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Subcommittee adopts amendment to let counties allocate impact fees for resurfacing and clarifies expenditure rules
Summary
A House subcommittee adopted an amendment to House Bill 3165 that would allow impact fees to fund certain road resurfacing when supported by engineering studies and would let counties count an allocation (not full disbursement) as meeting the expenditure deadline; the panel adjourned further debate to refine details.
A House subcommittee on Feb. 26 adopted an amendment to House Bill 3165 that would let local governments use some impact-fee revenue for road resurfacing and would redefine when a fee is considered "expended." The panel approved the Sanders amendment on a roll call and then voted to adjourn debate on the bill as amended so sponsors and stakeholders can finalize implementing language.
Supporters said the change would help counties finance long-lived projects that often take more than the statute's current three-year expenditure window. "In Lexington County alone, over 22,000 residential lots currently are in the pipeline," said Theresa Alisore, a Lexington County resident, describing rapid growth and arguing the three-year deadline forces jurisdictions to return unspent fees instead of applying them to projects under construction.
The Sanders amendment is a strike-and-insert that, according to the amendment text read to the committee, adds road resurfacing as an eligible use so long as a capital-improvement plan (CIP) and an engineering study attribute the portion of resurfacing costs to new development (for example, trip generation and accelerated pavement wear). It also adds a definition of "expenditure" so that the allocation of funds within the statutory period — rather than full disbursement — counts as expended, mirroring allocation rules used for federal ARPA funds.
Not all witnesses supported the resurfacing language. One testifier warned that U.S. Supreme Court precedent and related state cases apply nexus and proportionality tests (Nolan, Dolan and Sheets) that sharply limit using impact fees for maintenance or resurfacing. "Resurfacing has the same structural problem. Roads wear out because of existing drivers, weather, and age. A new home hasn't caused any of that," the witness said, arguing that engineering studies typically attribute only a small share of resurfacing costs to new development and that higher fees would be vulnerable to legal challenge.
Committee members asked practical questions about who ultimately bears impact fees — developers or buyers — and whether permitting and regulatory costs (the sponsor cited nearly 27% of front-end builder fees) should be reduced to ease affordability pressures. Supporters said the bill tries to balance paying for growth-related infrastructure while avoiding unnecessary burden on homebuyers.
After discussion and some offers to refine the amendment language — including adding a cap or timeline for allocated-but-unspent funds and considering multifamily exemptions — the subcommittee adopted the Sanders amendment on a roll call and then voted to adjourn debate on HB3165 as amended.
The committee did not adopt final statutory language addressing caps on allocations or a deadline for when allocated funds must be spent; sponsors and stakeholders said they will continue drafting those details before the measure advances further.
What happens next: The amendment was adopted and debate was adjourned so sponsors can negotiate implementing language. The bill will return to committee or the full committee with the revised language for further consideration.
