§ 45-22.4-5. Collection and expenditure of impact fees. (a) The collection and expenditure of impact fees must be reasonably related to the benefits accruing to the development paying the fees. The ordinance shall consider the following requirements:

(1) Upon collection, impact fees must be deposited in a special proprietary fund, which shall be invested with all interest accruing to the trust fund;

(2) Within eight (8) years of the date of collection, impact fees shall be expended or encumbered for the construction of public facilities' capital improvements of reasonable benefit to the development paying the fees and that are consistent with the capital improvement program;

(3) Where the expenditure or encumbrance of fees is not feasible within eight (8) years, the governmental entity may retain impact fees for a longer period of time if there are compelling reasons for the longer period. The governing body shall identify, in writing, the compelling reasons for retaining impact fees for a longer period of time over eight (8) years. In no case shall impact fees be retained longer than ten (10) years.

(b) All impact fees imposed pursuant to the authority granted in this chapter shall be assessed upon the issuance of a building permit or other appropriate permission to proceed with development and shall be collected only upon the issuance of the certificate of occupancy or other final action authorizing the intended use of a structure.

(c) A governmental entity may recoup costs of excess capacity in existing capital facilities, where the excess capacity has been provided in anticipation of the needs of new development, by requiring impact fees for that portion of the facilities constructed for future users. The need to recoup costs for excess capacity must have been documented by a preconstruction assessment that demonstrated the need for the excess capacity. Nothing contained in this chapter shall prevent a municipality from continuing to assess an impact fee that recoups costs for excess capacity in an existing facility without the preconstruction assessment so long as the impact fee was enacted at least ninety (90) days prior to July 22, 2000, and is in compliance with this chapter in all other respects pursuant to § 45-22.4-7. The fees imposed to recoup the costs to provide the excess capacity must be based on the governmental entity's actual cost of acquiring, constructing, or upgrading the facility and must be no more than a proportionate share of the costs to provide the excess capacity. That portion of an impact fee deemed recoupment is exempted from provisions of subsection (a)(2) of this section.

(d) Governmental entities may accept the dedication of land or the construction of public facilities in lieu of payment of impact fees provided that:

(1) The need for the dedication or construction is clearly documented in the community's capital improvement program or comprehensive plan;

(2) The land proposed for dedication or the facilities to be constructed are determined to be appropriate for the proposed use by the local governmental entity;

(3) Formulas and/or procedures for determining the worth of proposed dedications or constructions are established.

(e) Exemptions:

(1) Impact fees shall not be imposed for remodeling, rehabilitation, or other improvements to an existing structure, or rebuilding a damaged structure, unless there is an increase in the number of dwelling units or any other measurable unit for which an impact fee is collected. Impact fees may be imposed when property that is owned or controlled by federal or state government is converted to private ownership or control.

(2) Nothing in this chapter shall prevent a municipality from granting any exemption(s) that it deems appropriate.

History of Section. (P.L. 2000, ch. 508, § 1; P.L. 2007, ch. 305, § 1; P.L. 2007, ch. 447, § 1; P.L. 2009, ch. 310, § 53; P.L. 2017, ch. 49, § 1; P.L. 2017, ch. 57, § 1; P.L. 2018, ch. 346, § 32.)