Should Owners and Developers of Low-Performance Buildings Pay Impact or Mitigation Fees to Finance Green Building Incentive Programs and Other Sustainable Development Initiatives?
44 Pages Posted: 10 Aug 2009 Last revised: 4 Dec 2013
Date Written: August 10, 2009
As more states and local governments decide to offer green building incentives and other programs to offset the impact of land uses that do not meet sustainable development standards, they must decide how to fund or offset the costs of their programs. This Article argues that developer fees should be used more ambitiously to help finance the most progressive sustainability objectives, and it examines the legal limits that apply to developer funding devices for sustainability, such as sustainability impact and mitigation fees. The U.S. Supreme Court’s land use exactions opinions do not provide meaningful guidance concerning the constitutionality of monetary development exactions. Moreover, through its trilogy of takings cases in its 2005 term, the Court reinforced the principle that federal courts must accede to legislative initiatives in a wide array of state and local land use policies. As a result, the key limitations on the use of developer fees to finance green building incentives and other sustainable development programs must come from the highly developed body of state land use law governing exactions, impact fees, and mitigation fees. While the prevailing view favors using a rigorous rational nexus test to determine the validity of developer fees in most context, state courts should apply a more deferential standard to sustainability fees, which should require only that the fee program must bear a reasonable relationship to the public health, safety, and general welfare.
Keywords: green buildings, sustainable construction, sustainable development, sustainability fees, impact fees, mitigation fees
JEL Classification: K11, K21
Suggested Citation: Suggested Citation
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By Troy A. Rule