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From the Baltimore Sun

Impact fee change in offing

County seeks to broaden use of levy imposed on new development

By Susan GVOZDAS
Special to The Sun

April 15, 2007

As a lawsuit accusing Anne Arundel County of misspending and holding on too long to developers' impact fees drags into a seventh year, the Leopold administration will introduce a bill tomorrow that will effectively prevent further such conflicts.

The legislation would let the county start infrastructure improvements needed to accommodate new development by leveraging impact fees to float bonds. Currently, the county must wait to assemble all of the money for a project before proceeding.

No longer would the county be under pressure to spend the money within the required six years, or refund it to home buyers.

David Plymer, deputy county attorney, played down the bill's significance, characterizing it as "housekeeping" rather than a major policy change.

County Executive John R. Leopold also plans to introduce legislation in the next month to raise impact fees, but he would not say by how much.

New homeowners pay impact fees to lessen the effect of new developments on the local infrastructure. The fees, which started at $877 in 1988 and run as much as $4,200 for a single-family house, are collected by district. Those funds must be poured back into the designated districts to expand roads, schools and water and sewer lines.

The bill, which was introduced last month, then pulled Friday to make several technical changes, reaffirms that the county budget officer can use impact fees to pay for a project even after the budget process is closed. Current law allows that, but officials want it clearly spelled out, Plymer said.

"We felt it prudent to put it in the legislation," he said.

Though he acknowledged that the bill was prompted by the current class action against the county, Plymer said passage of this bill would not affect the lawsuit.

The suit was filed in February 2001 by property owners - individuals as well as a development company - in the Seven Oaks community on behalf of all owners of property developed between 1988 and 1996. They claimed that the county had either not spent or improperly spent their impact fees and sought an estimated $27 million in refunds.

Both the county and the plaintiffs' attorney, John R. Grieber Jr., are appealing a December ruling that requires the county to refund $4.7 million to homeowners. A Howard Circuit Court judge ruled that the county had misspent fees on classroom trailers, which are not considered a permanent school expansion. Grieber believes homeowners deserve a larger refund.

County Councilman Jamie Benoit, a Piney Orchard Democrat, said he supports using impact fees to finance projects but that the bill might not be the best method for doing so.

The refund portion would stay in the code, even though "there will never be another refund issued in this county if this bill passes," he said.

Council member C. Edward Middlebrooks, a Severn Republican, said he was not sure whether he would support Leopold's proposal to allow the county to use impact fees for borrowing.

"Clearly that wasn't the intent when they passed the bill, but maybe it is something we need to do," he said.

John Stamato, president of Ribera Development LLC in Annapolis, said using impact fees to pay off construction bonds would provide a more comprehensive approach to school construction issues.

Any increase in the impact fee should be similar to the water and sewer allocation process, Stamato said, in which a developer is told what the capacity needs are in the early stages and then begins making reservation payments to meet that goal.

"This would provide the county with the impact-fee revenue potentially years before all of the students from the project enroll in county schools, with adequate time to plan for growth," he said in an e-mail.

(Revised April 2007)