Durham County, NC Impact Fees Ruled Illegal

In a decision that could affect several counties, the North Carolina Court of Appeals issued a decision last week that Durham County has no statutory authority to assess impact fees on new development.

The case challenges the county’s right to impose impact fees on new development to finance construction of new schools without having a direct statutory approval from the state General Assembly. After a number of failed attempts in recent years to persuade North Carolina legislators to support a bill implementing impact fees, Durham County officials in 2003 put in place an impact fee system on their own, claiming that their right to impose the fees was already covered under state law. The fees, which were either $1,155 for a multi-family residence or $2,000 for a single family home, were implemented in 2003 to help finance the construction of badly needed schools.

The County plans to ask the state Supreme Court to review the decision. Looks like some other counties are using a slightly different tack – fees imposed under local adequate public facilities ordinances – to generate revenue from new development. I wouldn’t be surprised if other counties moved in this direction given the impact fee ruling.