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Thursday, July 27, 2023

Court Rules in Favor of School District in Impact Fee Dispute with Builder

Like many other municipalities, the City of Sycamore has enacted an impact fee ordinance that requires subdividers and developers to pay a fee in lieu of school sites to be transmitted to the school districts. The school impact fee is imposed on new residential dwelling units and the amount of the fee is based on the number of bedrooms of the proposed dwelling unit. The school impact fees imposed by the City for single family dwelling units were $817 for a two-bedroom home; $3,269 for a three-bedroom home; $5,560 for a four-bedroom home; and $4,310 for a five-bedroom home.

A school district filed suit against a home builder alleging that the builder had misrepresented in its building permit applications the number of bedrooms for some of the residential dwellings in order to pay a lesser school impact fee, depriving the district of at least $66,649 in impact fees. The school district presented testimony that the builder had submitted building plans for a certain number of bedrooms but later added closets to rooms described as dens or offices to create additional bedrooms without paying the additional impact fee attributable to the modified home. 

The builder argued that some of the homes had been modified after permits had been issued but that the City (as collector of the impact fees) did not have a process in place to require the builder to supplement the impact fees. The builder also argued that the school district was applying the wrong definition of "bedroom," which the builder argued required an egress window, smoke detector, and a carbon monoxide detector to qualify as a bedroom, as required by the City's building codes.

The trial court ruled in favor of the school district on its argument that the developer was required to pay impact fees for bedrooms that were "designed and ultimately used principally or primarily for sleeping purposes," applying the definition of bedroom contained in the City's Unified Development Ordinance. The court also rejected the builder's argument that the school improperly deposited the school impact fees. Board of Ed. of Sycamore v. Silverthorne Dev't

The builder appealed and the Appellate Court upheld the ruling in favor of the school district. First, the Court held that the proper definition of bedroom is the one contained in the City's UDO, which is where the impact fee regulations were contained. The UDO focuses on the residential uses and the need for adequate school facilities rather than the building code which focuses on building safety. Applying the UDO definition of bedroom, the Court held that the testimony and evidence supported the school district's argument that the rooms at issue (described in the building permit application as a den/office with a closet added later) were designed to be used principally or primarily for sleeping purposes. The Court also upheld the trial court's ruling that the school district did not improperly deposit impact fees into the wrong fund, determining that the state statute authorizing impact fees does not require school impact fees to be deposited into a special fund, just that the fees only be used for proper purposes as set out in the statute. In sum, the Court upheld the ruling in favor of the school district.


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