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KRUPP v. BRECKENRIDGE SANITATION DISTRICT Supreme Court of Colorado 19 P.3d 687; 2001 Colo. LEXIS 134; 2001 Colo. J. C.A.R. 930 February 26, 2001, Decided EN BANC The Breckenridge Sanitation
District (the District), a special district providing wastewater services,
assesses a plant investment fee (PIF) on all building projects within
the District. Petitioners Marshall and Renate Krupp challenged the PIF
assessment on their new residential townhouse project, arguing, inter
alia, that it amounted to an unconstitutional taking of property. n1
The court of appeals held that the PIF was not subject to a takings
analysis. Krupp v. Breckenridge Sanitation Dist., 1 P.3d 178, 181-82 (Colo. App.
1999). We affirm the judgment of the court of appeals. n1 We granted certiorari on
the following issue: Whether an impact fee levied against a development
by a special district is a development exaction subject to a constitutional
takings analysis under Nollan
v. California Coastal Commission, 483 U.S. 825, 97 L. Ed. 2d 677, 107
S. Ct. 3141 (1987) and Dolan
v. City of Tigard, 512 U.S. 374, 129 L. Ed. 2d 304, 114 S. Ct. 2309
(1994). I. The District is a single-purpose
special district that provides wastewater collection and treatment services.
In March 1996, an engineering consulting firm tendered a final report
to the District that addressed existing wastewater collection and treatment
demands and future requirements. This report, contained in the record
of this case, identifies the District's planning and service area as
comprising 23,500 acres of the Upper Blue River south from Dillon Reservoir
to Hoosier Pass on the Continental Divide. The report describes this
geographical area as being the focus of increasingly intense recreational
use and development, as the historic mining town of Breckenridge in
Summit County has been transformed into an international skiing and
year-round resort destination, along with greater Summit, Eagle, and
Grand counties. The District has the powers
necessary to implement state and federal regulations. The District's
primary wastewater treatment plant discharges in close proximity to
Dillon Reservoir, the largest water storage facility for metropolitan
Denver's drinking water. n2 Dillon Reservoir also doubles as an economic
and environmental resource of singular importance to Summit County.
The Colorado Water Quality Control Commission has classified the Blue
River waters, and the Dillon Reservoir receiving and releasing them,
for all beneficial uses made in and through this basin, including aquatic
life, recreational, water supply, and agricultural uses. 5 Colo. Code
Regs. § 1002-33 at 9 (1999).
These classifications are accompanied by water quality standards that
require pollutant dischargers, like the District, to meet strict effluent
limitations governing its discharge permits, which are issued and enforced
by the Colorado Water Quality Control Division. Id.; see also § 25-8-203, 8 C.R.S. (2000)
(authorizing classification of state waters); § 25-8-204, 8 C.R.S. (2000)
(authorizing promulgation of water quality standards); § 25-8-501, 8 C.R.S. (2000)
(authorizing discharge permits); § §
25-8-701 to 703, 8 C.R.S. (2000) (addressing domestic wastewater
treatment works). Dillon Reservoir is phosphorus-limited, which provides
the significant degree of protection required to enable development
in watersheds experiencing significant growth affecting standing water
bodies, such as lakes and reservoirs. n2 The public sector's demand
for water in the twentieth and twenty-first centuries, principally municipal
water supply, has mirrored the nineteenth century's expansive demand
for agricultural water. This demand has given rise, for example, to
Denver's acquisition of a private water company and its pursuit of high
quality mountain water, together with the water rights and storage structures
critical to maintaining a dependable water supply. See Bennett
Bear Creek Farm Water & Sanitation Dist. v. City & County of
Denver, 928 P.2d 1254, 1259 (Colo. 1996). As the report sets forth, the
impact of human activity on water quality and quantity in this geographical
area drives the District's service obligations and its revenue requirements.
The Upper Blue River drainage is the subject of complex inter-governmental/private
agreements and court decrees for the management and use of water rights,
permitting out-of-priority diversions and exchanges paired with minimum
stream flows in identified segments of the stream for protection of
the environment. n3 This combination of private and public purposes
assists Colorado and its citizens in placing to use, on both sides of
the Continental Divide, the State's share of Colorado River Compact
waters, n4 for traditional uses, such as municipal drinking water, and
newly evolving uses, such as ski-area snowmaking and minimum stream
flow water rights of the Colorado Water Conservation Board for preservation
of the environment to a reasonable degree. n5 In this context, the treatment
of wastewater for return to the Blue River is an important public purpose
and the reason for the District's existence. n3 See City of Grand Junction v. City & County of Denver, 960 P.2d 675, 677-78
(Colo. 1998). n4 See Board of County Comm'rs v. Crystal Creek Homeowners' Ass'n, 14 P.3d 325,
338 (Colo. 2000). n5 Colorado's tourist and recreational
economy, as old as the State itself, has proven to be more enduring
than the mineral discoveries that birthed the Colorado Territory. See
People v. Schafer, 946 P.2d 938, 943-44 n.7
(Colo. 1997). Accordingly, District facilities
are designed to deliver high quality effluent back to the Blue River
and to Dillon Reservoir. The engineering consultant reported to the
District in 1996 that the existing wastewater treatment works would
reach 95% capacity, 3.0 million gallons per day, within the next two
to three years. Under Colorado statutes and regulations, upon reaching
95% capacity, the District is required to undertake planning for the
expansion of its wastewater collection and treatment capability, so
that the necessary facilities and treatment technologies will be in
place to accommodate reasonably anticipated future demand for wastewater
services. See 5 Colo. Code Regs. § 1002-61.8(7)(a)(iv) at 90 (1999). The ability to develop land
in the Upper Blue River drainage is directly and inexorably tied to
the District's service function. Human uses require safe and beneficial
disposal of human-generated pollutants. Land use authorization for development
in the area therefore depends upon --and assumes --the District's financial
ability to serve its customers, thereby enabling developers to complete
their projects while reliably and dependably meeting all applicable
health, environmental, and safety standards. Consistent with sound and necessary
financial, planning, and regulatory requirements, the users of the District's
services are together answerable for the cost of bearing the present
and growing load they generate. Accordingly, in connection with its
services, the District assesses a number of fees, including "connection
fees" for physical connections to its facilities, "monthly
service fees" for use of the facilities, and "plant investment
fees" (PIFs). A PIF is a one-time charge designed to defray the
cost of expanding the District's infrastructure as development increases
demand for the District's services. The PIF must be paid to the District
before the Town of Breckenridge issues a building permit or certificate
of occupancy for a new building. n6 The District assesses the PIF for
a particular project by first calculating the project's peak effluent
flow as the multiple of the peak flow from an average single family
home in the District, measured in "single family equivalent"
(SFE) units. One SFE unit contributes a maximum of 300 gallons of wastewater
per day. The District has promulgated a schedule for the conversion
of building projects into SFE units. Once a project is converted into
SFE units, the District calculates the PIF assessment by multiplying
the project's total number of SFE units by the unit PIF rate (currently
$ 4,000 per unit). n6 While the District must
sign off on the issuance of building permits within the District, only
the Town of Breckenridge has ultimate authority to grant or deny a building
permit. The District's signoff is a representation that the District
will provide wastewater treatment services to the new development. The District's SFE conversion
scale differentiates among residential units. The District uses one
rate for single family residences, duplexes, and manufactured homes
--unit types traditionally employed for long-term, year-round use. Another
rate applies to short-term rental units such as apartments, townhouses,
and condominiums. Because short-term dwellings tend to have higher peak
occupancies and higher peak flows than comparably sized long-term dwellings,
the SFE conversion rate for apartments, townhouses, and condominiums
is significantly higher than the conversion rate for single family residences,
duplexes, and manufactured homes. n7 The District's conversion schedule
does not include a conversion category for triplexes; the District Manager
is authorized to assign SFE units to triplexes, taking into account
the legislative fee design. n7 For example, a single-family
residence with three bedrooms and two baths would receive 1.0 SFE units,
while an apartment with the same number of bedrooms and baths would
receive 1.8 SFE units. The Krupps, owners of property
in Summit County, sought to construct The Woods at Breckenridge, a residential
townhouse complex. n8 The development plans called for twenty-five units,
arranged in eight duplex and three triplex buildings. All relevant characteristics
of the units (square footage, number of bedrooms and bathrooms, etc.)
in triplex buildings are substantially identical to the units in the
duplex buildings. n8 The Krupps' development
company, CSA Real Estate Development, LLC, was an original party to
this suit. CSA did not file a timely petition for certiorari, and is
not a proper party to this appeal. In August 1995, the District
informed the Krupps that in calculating the PIF assessment for the Woods
at Breckenridge project, it was using the lower SFE conversion rate
for the duplexes and the higher conversion rate for the triplexes. The
Krupps appealed to the District's Board of Directors (Board), arguing
that since all the units --whether they were contained in the duplex
or triplex buildings --were substantially the same, the lower conversion
rate should have been used on all twenty-five units. The Krupps also
argued that the District's PIF assessment for their project was subject
to a constitutional takings analysis under Nollan v. California Coastal Commission, 483
U.S. 825, 97 L. Ed. 2d 677, 107 S. Ct. 3141 (1987) and Dolan v. City of Tigard, 512 U.S. 374, 129 L. Ed. 2d 304, 114 S. Ct. 2309
(1994). After a hearing, the Board decided to hire an expert in
utility rate-setting to independently evaluate the District's SFE conversion
schedule and unit PIF rate. The expert report, submitted
in February 1996 and contained in the record, concluded that the PIF
assessment was not excessive in relation to the projected impact of
the Krupps' project, and that there was no evidence that triplex units
should be converted at the lower rate. In fact, the expert report noted
that the use of duplexes had changed since the conversion chart was
last promulgated, and that now they were more likely to be used as short-term
rental property (subject to the higher SFE conversion rate) than as
long-term residences. Therefore, in light of the District's short-term/long-term
criteria, the District did not overcharge the Krupps for the triplexes,
but instead undercharged for the duplexes. n9 Based in part on these
findings, the Board affirmed the PIF assessment and the Krupps paid
the PIF under protest. n9 As a result of this study,
the District subsequently amended its rules to include duplexes in the
higher-rate category for apartments and condominiums. The Krupps brought suit in
Summit County District Court in April 1996, seeking review of the Board's
action under C.R.C.P. 106(a)(4). n10 The Krupps also renewed their claim,
among n10 C.R.C.P. 106(a)(4) allows
review "where any government body or officer or any lower judicial
body exercising judicial or quasi-judicial functions has exceeded its
jurisdiction or abused its discretion, and there is no plain, speedy
and adequate remedy otherwise provided by law." others, that the PIF assessment
on their project was an unconstitutional taking. The trial court bifurcated
the action between the Rule 106 claim and all other claims. On May 8,
1997, the trial court ruled that Rule 106 relief was not appropriate,
as the Board did not exceed its jurisdiction or abuse its discretion
in assessing the PIF against the Krupps. The Krupps then moved to amend
their complaint to add a claim under 42
U.S.C. § 1983. The trial court denied the motion,
holding that Rule 106 obligated the Krupps to bring all claims within
one action and within thirty days of the Board's final decision. Both parties filed for summary
judgment on the Nollan/Dolan issue. The trial court noted that implicit
in its Rule 106 ruling was the determination that the PIF assessment
was not constitutionally defective. The trial court also held that Nollan
and Dolan were inapplicable, because those cases were limited to certain
land use decisions, and the PIF addresses wastewater collection and
treatment, not land use. Finally, the trial court held that even if
Nollan and Dolan were applicable, the District satisfied the test because
the PIF is roughly proportional to the impact of the project on the
District's facilities. The court of appeals affirmed
the trial court's determination. Krupp,
1 P.3d at 180. First, the court of appeals noted that the District
has no statutory or regulatory authority to deny or condition the issuance
of building permits, and therefore, could not leverage or extort fees
under the threat of denying the permit. Krupp,
1 P.3d at 181-82. Second, the court of appeals concluded, "the
essence of a Nollan/Dolan violation is the demanding by the governmental
authority of a concession, especially a dedication of an interest in
real property, for its own benefit and not to offset the impact of the
proposed development." Krupp, 1 P.3d at 182. The District, by
contrast, was assessing a charge that was primarily of benefit to the
Krupps and directly related to their project development. Accordingly,
the court of appeals found Nollan and Dolan inapplicable. Id. II. We hold that the PIF is a valid,
legislatively established fee that is reasonably related to the District's
interest in expanding its infrastructure to account for new development,
and that the District's specific PIF assessment on the Krupps' project
was fairly calculated and rationally based. As such, the PIF does not
fall into the narrow category of charges that are subject to the Nollan/Dolan
takings analysis. A. Facilities and Services Fees We begin by discussing the
nature and characteristics of the PIF. As part of its duty to provide
wastewater collection and treatment services, the District, through
its Board, is expressly authorized to "fix and from time to time
to increase or decrease fees, ... for services, programs, or facilities
furnished by" the District. § 32-1-1001(1)(j)(I), 9 C.R.S.
(2000); see also § 32-1-1006(1)(a)(I), 9 C.R.S. (2000) (providing authority for the District
to compel owners of buildings within the District's boundaries to connect
to the water and sewer lines). The legislature grants special districts
and local governments the authority to set fees; this promotes the policy
of having development help pay its own way. See Board
of County Comm'rs v. Bainbridge, Inc., 929 P.2d 691, 698 (Colo. 1996);
Bennett Bear Creek Farm Water & Sanitation
Dist. v. City & County of Denver, 928 P.2d 1254, 1268 (Colo. 1996).
Local governments often require various forms of development fees in
order to apportion some of the capital expense burden they face to developers
and new residents. Bainbridge, 929 P.2d at 698. The District has explicitly adopted this
rationale for assessing the PIF, noting that "current customers
are not expected to subsidize or pay for growth or to benefit development
and/or developers." Breckenridge Sanitation District, Financial
Procedures and Policies 1 (Jan. 1990). In conjunction with the legislative
grant of authority to set appropriate fees, the District promulgated
a Single-Family Equivalent Unit Conversion Schedule, which set forth
a comprehensive system for determining SFE units and converting them
into PIF assessments. A PIF is assessed on every new project in the
District, from residential housing to retail stores to service stations.
In promulgating its schedule for assessing PIFs, the District acted
in a legislative capacity. See Bennett Bear Creek, 928 P.2d at 1261 (holding
that a district acts legislatively when it sets rates and charges for
its services); Cottrell v. City
& County of Denver, 636 P.2d 703, 710 (Colo. 1981) (determining
that "ratemaking is essentially a legislative function"). Municipal charges fall into
four categories: (1) ad valorem property taxes; (2) excise taxes; (3)
special assessments; and (4) service fees. n11 See Bloom
v. City of Fort Collins, 784 P.2d 304, 309 (Colo. 1989). The court
of appeals concluded that the PIF was a service fee. Krupp, 1 P.3d at 184. We agree. A service fee is "a charge imposed
on persons or property for the purpose of defraying the cost of a particular
government service." E-470 Pub. Highway Auth. v. 455 Co., 3 P.3d 18, 24 (Colo. 2000); Bloom, 784 P.2d at 308. The PIF meets this
definition: it is a one-time charge assessed on new building projects
within the District for the purpose of defraying the cost of expanding
the District's wastewater treatment system to accommodate new projects.
n11 We have used the terms
"service fee," "special fee," and "special
charge" interchangeably in our case law to denote a charge reasonably
designed to meet the overall costs of the specific service for which
the fee is imposed. See, e.g., City
of Littleton v. State, 855 P.2d 448, 452 (Colo. 1993); Bloom
v. City of Fort Collins, 784 P.2d 304, 308 (Colo. 1984); Loup-Miller Constr. Co. v. City & County
of Denver, 676 P.2d 1170, 1173 (Colo. 1984). Here, we exclusively
use the term "service fee" in speaking to the entire range
of fees the statute authorizes the District's Board to adopt. The PIF is very similar to a number of other municipal charges
that we have held to be constitutionally valid service fees. See, e.g.,
City of Littleton v. State, 855
P.2d 448, 452 (Colo. 1993) (storm drainage and flood management
system); Anema v. Transit Constr. Auth., 788 P.2d 1261,
1267 (Colo. 1990) (public transportation system); Bloom, 784 P.2d at 310 (street maintenance);
Zelinger v. City & County
of Denver, 724 P.2d 1356, 1359 (Colo. 1986) (storm drainage system);
Loup-Miller Constr. Co. v. City
& County of Denver, 676 P.2d 1170, 1174 (Colo. 1984) (sewer
system); City of Arvada v. City & County of Denver,
663 P.2d 611, 615 (Colo. 1983) (water system). Because a service fee is designed
to defray the cost of a particular governmental service, the amount
of the fee must be reasonably related to the overall cost of the service. Bloom,
784 P.2d at 308. Mathematical exactitude is not required, however,
and the particular mode adopted by the governmental entity in assessing
the fee is generally a matter of legislative discretion. Id. Absent
evidence to the contrary, we presume that the District may rationally
distinguish between different types of projects in setting its rates.
See Loup-Miller, 676 P.2d at 1174. Because the setting of rates and fees
is a legislative function that involves many questions of judgment and
discretion, we will not set aside the methodology chosen by an entity
with ratemaking authority unless it is inherently unsound. Bennett Bear Creek, 928 P.2d
at 1268. Here, the District commissioned
an independent expert report to evaluate its system for converting projects
into SFE units and assessing PIFs. The expert report concluded: (1)
multi-family units (such as apartment buildings and condominiums) are
much more likely to be used as temporary rental units than are single
family units; (2) multi-family units have, on average, higher per unit
peak day flows than single family units; (3) the variation in selected
conversion units used for residential users is therefore reasonable;
(4) based on updated demographic information, duplexes are more appropriately
treated as multi-family units; and (5) the current unit PIF rate of
$ 4,000 per SFE unit falls well within the justifiable range for unit
PIF rates, based on the District's combined historical investment and
capital cost. Based on this and other evidence, the Board concluded
that the District's rate design, and differential charges implementing
these rates, was rational. The trial court agreed. We agree with the trial court
that the record is sufficient to establish a rational basis for the
distinction between long-term and short-term residences in the District's
SFE conversion schedule. We also agree that based on the evidence suggesting
that the expected short-term, high-occupancy use of the triplex units
is typical of the multi-family unit conversion category, the District
had a rational basis for assessing triplexes in the higher, multi-family
category. Given the evidence that even duplexes are more appropriately
categorized as short-term, high-occupancy units, we reject the Krupps'
contention that in assessing the PIF on their particular project, the
District should have converted both the duplexes and triplexes using
the lower SFE rate. The District Manager calculated
the specific PIF assessment on the Krupps' project by utilizing the
publicly promulgated conversion schedule. There is no evidence that,
in performing this task, the District Manager arbitrarily ignored the
PIF's legislatively established design or miscalculated the assessment.
While the SFE conversion schedule did not provide a specific conversion
rate for triplexes, the District explicitly authorized the District
Manager to make such a determination. See Breckenridge Sanitation District,
Rules and Regulations 9-7 (Apr. 1988). Such authorization is permissible,
as long as there are sufficient statutory and administrative safeguards
to insure that administrative action will be rational and consistent,
and that subsequent judicial review of the action, if necessary, will
be available and effective. See Cottrell, 636 P.2d at 709; see also Fremont RE-1 Sch. Dist. v. Jacobs, 737 P.2d 816, 819 (Colo. 1987)
(noting that the modern trend for courts is to allow greater freedom
of discretion, within the scope of their authority, to administrative
officials). The District Manager, exercising properly authorized direction,
selected a conversion rate for the triplexes that was supported by the
evidence as being reasonable and consistent. We conclude that the PIF is
established by legislative authority, and is reasonably related to the
specific government service of providing wastewater collection and treatment
to new developments within the District. It rationally differentiates
between different classes of buildings based upon anticipated peak wastewater
flows per unit. Furthermore, the District Manager validly calculated
the Krupps' specific PIF assessment according to a publicly promulgated
conversion framework. Nevertheless, the Krupps maintain
that because payment of the PIF is a condition of development, the District's
assessment of the PIF against their development constitutes a regulatory
taking. We now turn to that question. B. Scope and Limitations of Nollan
and Dolan The Fifth Amendment to the
United States Constitution provides, "nor shall private property
be taken for public use without just compensation." U.S. Const.
amend. V. Just compensation for a taking of private property was made
applicable to the States through the Fourteenth Amendment, see Chicago,
B. & Q. R.R. Co. v. Chicago, 166 U.S. 226, 239, 41 L. Ed. 979, 985,
17 S. Ct. 581, 585-86 (1897), and is expressly provided for in the
Colorado Constitution. Colo. Const. art. II, §
15; Fowler Irrevocable
Trust 1992-1 v. City of Boulder, 17 P.3d 797, 802 (Colo. 2001).
The Takings Clause assures that the government may not force "some
people alone to bear public burdens which, in all fairness and justice,
should be borne by the public as a whole." Dolan,
512 U.S. at 384, 114 S.Ct. at 2316, 129 L. Ed. 2d at 316 (quoting
Armstrong v. United States, 364 U.S. 40, 49,
4 L. Ed. 2d 1554, 1561, 80 S. Ct. 1563 1569 (1960)). A taking unquestionably occurs
when an entity clothed with the power of eminent domain substantially
deprives a property owner of the use and enjoyment of that property.
See Fowler, No. 99SC304, slip op. at 11; City
of Northglenn v. Grynberg, 846 P.2d 175, 178 (Colo. 1993). There
is no taking, however, where the government implements a land use regulation
that "substantially advances legitimate state interests" and
does not "deny an owner economically viable use of his land."
Nollan, 483 U.S. at 834, 107 S.Ct. at 3147,
97 L. Ed. 2d at 687 (quoting Agins
v. Tiburon, 447 U.S. 255, 260, 65 L. Ed. 2d 106, 112, 100 S. Ct. 2138,
2142 (1980)). In between these scenarios
lie development exactions, in which the government requires a landowner
to forfeit part of his or her property for public use as a condition
of development. While not per se takings, development exactions will
be deemed takings requiring just compensation unless they satisfy a
two part test: (1) there must be an "essential nexus" between
the legitimate government interest and the exaction demanded, Dolan,
512 U.S. at 386, 114 S.Ct. at 2317, 129 L. Ed. 2d at 317; Nollan, 483 U.S. at 837, 107 S. Ct. at 3149,
97 L. Ed. 2d at 689; and (2) there must be "rough proportionality"
between the governmental interest and the required dedication. Dolan,
512 U.S. at 391, 114 S. Ct. at 2319, 129 L. Ed. 2d at 320. "No
precise mathematical calculation is required" for the rough proportionality
test, but the governmental entity "must make some sort of individualized
determination that the required dedication is related both in nature
and extent to the impact of the proposed development." Id. The Krupps argue that the PIF
assessment on their project is a development exaction subject to the
Nollan/Dolan analysis. They further maintain that because there was
no individualized determination of the impact of their development,
the PIF violates the "rough proportionality" prong of the
Nollan/Dolan test. We disagree. Application of the Nollan/Dolan test
has been limited to the narrow set of cases where a permitting authority,
through a specific, discretionary adjudicative determination, conditions
continued development on the exaction of private property for public
use. n12 The service fee at issue is neither the result of a discretionary
adjudicative decision of this type nor an exaction of property; it is
a payment for services necessary to enable development of the project
and to comply with responsibilities of those who generate pollutants. n12 See Greg Clifton, Recent
Developments in Regulatory Takings, 28 Colo. Law., Nov. 1999, at 83. Legislative vs. Adjudicative Determinations Both Nollan and Dolan concerned
discretionary adjudicative determinations specific to one landowner
and one parcel of land, and involved a demand for the dedication of
a portion of the land for public use. In Nollan, the California Coastal
Commission conditioned a building permit on the landowner granting an
easement for public access to the beach behind the landowner's property.
See 483 U.S. at 828, 107 S. Ct. at 3144, 97 L. Ed. 2d 683. Likewise, in
Dolan, the city made an adjudicative decision to condition the landowner's
application for a building permit on an individual parcel of land. See
512 U.S. at 391 n.8, 114 S. Ct. at 2320, 129
L. Ed. 2d at 320. The Court distinguished typical land use regulations
from the type of pointed exaction demanded in Dolan, noting that "the
sort of land use regulations [that have been sustained against constitutional
challenge] involved essentially legislative determinations classifying
entire areas of the city, whereas here the city made an adjudicative
decision to condition petitioner's application for a building permit
on an individual parcel." Id.
at 385, 114 S. Ct. at 2316, 129 L. Ed. 2d at 316. Colorado's regulatory takings
statute has codified the Nollan/Dolan test, and with it, the distinction
between legislative and adjudicative determinations. See § 29-20-203(1),
9 C.R.S. (2000). By its very language, the statute limits the Nollan/Dolan
test to charges that are "determined on an individual and discretionary
basis." Id. The statute explicitly declines to apply the test to
"any legislatively formulated assessment, fee, or charge that is
imposed on a broad class of property owners by a local government."
Id. n13 While a party may petition for review of a legislatively based
assessment that results from arbitrary or illegal administrative action
under C.R.C.P. 106(a)(4), this form of review is not an "individual
or discretionary" adjudication as contemplated in section 29-20-203(1). n13 The General Assembly has
declared that special districts are political subdivisions and local
governments of the State of Colorado. See § 32-1-1601, 9 C.R.S. (2000); see also Romer v. Fountain Sanitation Dist., 898 P.2d
37, 39 (Colo. 1995). Other jurisdictions have also distinguished between generally
applicable, legislatively formulated fees and adjudicatively imposed
development exactions. The California Supreme Court, for example, noted
that: It is not at all clear that
the rationale (and the heightened standard of scrutiny) of Nollan and
Dolan applies to cases in which the exaction takes the form of a generally
applicable development fee or assessment --cases in which the courts
have deferred to legislative and political processes to formulate "public
programs adjusting the benefits and burdens of economic life to promote
the common good." Ehrlich v. City of Culver City,
12 Cal. 4th 854, 911 P.2d 429, 446, 50 Cal. Rptr. 2d 242 (Cal. 1996)
(emphasis in original) (citations omitted); see also Parking Ass'n of Georgia, Inc. v. City of Atlanta, 264 Ga. 764, 450 S.E.2d
200, 203 (Ga. 1994). One critical difference between a legislatively
based fee and a specific, discretionary adjudicative determination is
that the risk of leveraging or extortion on the part of the government
is virtually nonexistent in a fee system. When a governmental entity
assesses a generally applicable, legislatively based development fee,
all similarly situated landowners are subject to the same fee schedule,
and a specific landowner cannot be singled out for extraordinary concessions
as a condition of development. See Home
Builders Ass'n of Cent. Arizona v. City of Scottsdale, 187 Ariz. 479,
930 P.2d 993, 1000 (Ariz. 1997); Loyola
Marymount Univ. v. Los Angeles Unified Sch. Dist., 45 Cal. App. 4th
1256, 53 Cal. Rptr. 2d 424, 434 (Cal. Ct. App. 1996). Here, the District created
a generally applicable service fee on all new development within the
District. The General Assembly authorized the fee and the District assessed
it under the terms of a publicly promulgated conversion schedule. Neither
the promulgation of the conversion schedule, nor the calculation of
the Krupps' PIF assessment by the assigned administrative official,
constituted a discretionary adjudicative activity. See Cottrell,
636 P.2d at 710 (noting that in setting out rate schedules for future
application, a governmental entity engages in the "balancing of
many questions of judgment and discretion" that is the mark of
a legislative activity). Unlike the landowners in Nollan and Dolan,
whose conditions for development were determined on an individualized
adjudicative basis, the Krupps were charged a fee that was assessed
on all new development within the District. The PIF assessment on the
Krupps' development, then, is different from the exactions subject to
Nollan and Dolan, both in its creation and in its reach. 2. Property Exactions vs. Monetary Exactions The PIF also differs from traditional
Nollan/Dolan exactions in that it is purely a monetary assessment rather
than a dedication of real property for public use. Notwithstanding this
difference, the Krupps argue that the PIF assessment is an exaction
of the kind contemplated in Nollan and Dolan. They assert that for the
purpose of a takings analysis, there is no difference between exactions
that invoke the dedication of land and those that do not. We do not
agree. Recent pronouncements by the United States Supreme Court strongly
indicate that the Nollan/Dolan test is limited to exactions involving
the dedication of property. The Supreme Court recently
clarified the narrow scope of the Nollan/Dolan test in City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687, 143
L. Ed. 2d 882, 119 S. Ct. 1624 (1999). In City of Monterey, the
city repeatedly rejected proposals to develop a property, each time
adding new requirements for the approval of the development plan. The
Supreme Court rejected the applicability of Nollan and Dolan to the
case, noting that "we have not extended the rough-proportionality
test of Dolan beyond the special context of exactions --land-use decisions
conditioning approval of development on the dedication of property to
public use." Id. at 702, 119 S.Ct. at 1635, 143 L. Ed. 2d
at 900 (emphasis added). The plain language of City of Monterey
suggests that a Nollan/Dolan analysis is appropriate in the narrow circumstance
where the government conditions development on the forfeiture of private
property for public use. The City of Monterey Court
made explicit the conclusion that other jurisdictions had been reaching
for years. In Clajon Prod. Corp.
v. Petera, 70 F.3d 1566, 1578 (10th Cir. 1995), the Tenth Circuit
Court of Appeals concluded that Nollan and Dolan "are limited to
the context of development exactions where there is a physical taking
or its equivalent." The Clajon court further explained: Nollan and Dolan essentially
view the conditioning of a permit based on the transfer of a property
interest --i.e., an easement --as tantamount to a physical occupation
of one's land .... Thus, we believe that Nollan and Dolan are best understood
as extending the analysis of complete physical occupation cases to those
situations in which the government achieves the same end (i.e., the
possession of one's physical property) through a conditional permitting
procedure. There was no physical taking
here. The PIF is not an exaction of land; rather, it is a generally
applicable service fee designed to defray the costs of expanding the
wastewater treatment system directly caused by new development. Because
Nollan, Dolan, and their progeny applied heightened scrutiny only where
the government demanded real property as a condition of development,
we find that they are not applicable to a general development fee. The Krupps urge that City of
Monterey does not close the door on application of the Nollan/Dolan
test to monetary exactions. They argue that the City of Monterey Court
was never presented with the specific question of monetary exactions,
since the actions of the city
involved complete denial of the landowner's proposed development, not
a demand for money. Furthermore, the Krupps cite cases in which purely
monetary exactions were subjected to a Nollan/Dolan analysis. See Ehrlich,
911 P.2d at 439 (applying Nollan and Dolan where the city conditioned
a permit to build tennis courts on a payment of $ 280,000, to be used
for additional public recreational facilities); Home
Builders Ass'n of Dayton v. City of Beavercreek, 89 Ohio St. 3d 121,
729 N.E.2d 349, 356 (Ohio 2000) (citing Nolan and Dolan for its
own test for a development impact fee); Clark
v. City of Albany, 137 Ore. App. 293, 904 P.2d 185, 189 (Or. Ct. App.
1995) (applying Dolan where permit conditions required the landowner
to expend money on improvements for the public benefit). We recognize that the context
of the Supreme Court's pronouncement in City of Monterey leaves open
the possibility that a very narrow class of purely monetary exactions
may be subject to heightened scrutiny under the Nollan/Dolan test. The
PIF, however, does not fall into this narrow class. In both Ehrlich
and Clark, the charges subjected to the Nollan/Dolan analysis were not
generally applicable fees, but rather exactions stemming from adjudications
particular to the landowner and parcel. The court in City of Beavercreek
discussed Nollan and Dolan in the context of service fees, but ultimately
articulated a "reasonable relationship" test. See City
of Beavercreek, 89 Ohio St. 3d at 128. We can find no indications
from the Supreme Court or in other caselaw to support the application
of heightened scrutiny to generally applicable service fees such as
the PIF. Conclusion We therefore conclude that the PIF is a legislatively
created, generally applicable service fee, and is not subject to a takings
analysis under Nollan and Dolan. Each PIF assessment is calculated by
publicly promulgated standards that are applicable to all new developments
within the District. The PIF is not imposed adjudicatively in the Nollan/Dolan
sense, and is not an assessment unique to the Krupps. Moreover, the
PIF is neither a land use regulation nor an exaction of property as
a condition of development. Consequently, it does not fall into the
relatively narrow category of development exactions addressed by Nollan
and Dolan. III. Accordingly, we affirm the judgment of the court of appeals.
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