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How impact fees would ‘impact’ Shelbyville legally

Posted on Wednesday, May 29, 2024 at 8:00 am


What can legally be done to control growth in Shelbyville is a question City Attorney Ginger Shofner is often asked.

As with most legal questions the answers aren’t all that simple.

“There are several things the city can do,” Shofner said. “And it takes a very wide lens looking at various aspects.”

One of those possibilities is the implementation of an impact fee. An impact fee is usually a one-time payment imposed by a local government on a property developer.

“With the development and growth in Shelbyville, we have to be aware of increased costs in providing services,” Shelbyville Mayor Randy Carroll said. “Public streets and roads, police and fire protection, school facilities, public parks and recreation, are just a few of the needs of a growing community. “

Impact fees serve a dual purpose. A fee may prompt a developer to look at a location in another city. And if a developer does decide to pay an impact fee, the cost of increased services and infrastructure would be offset by the fee.

“There are already costs that builders and developers pay to start a project,” Carroll said. “The City is constantly evaluating the impact new construction and expansion has on our citizens. One of those impacts is the financial burden on the budget numbers.”

Alternative to tax hikes

These fees are an alternative to raising property taxes in order to pay for additional capital infrastructure.

“Most of the cities and counties with impact fees in the State of Tennessee have had them for a long time,” Shofner said. “We are a private charter city. Right now, we don’t have the authority of the state to charge an impact fee.

“If we had an impact fee it would be earmarked and set aside for specific services. It cannot be earmarked for general expenditures.”

In order for the city to legally implement an impact fee it would have to begin a lengthy process which would ultimately require approval from the State of Tennessee.

“We would have to have the authority and the mechanism to do it,” Shofner said. “We simply can’t just say as a city we are going to throw a fee on a developer.

“Impact fees are very controversial with developers. None of the developers want it. People moving in, or building a new home in Shelbyville, aren’t going to want it because it will increase the price of their home.”

The legal process

The process of adding an impact fee would start with the Shelbyville City Council members wanting to approve an impact fee as Carroll suggested. Generally, in most places that have one, the fee is based on the size of the development.

Part of the process is that city officials would have to meet with State Representative Pat Marsh and State Senator Shane Reeves as part of the process.

“We do not have the authority from the state,” Shofner said. “There is no explicit or implicit authority for the city to charge an impact fee. We do not have the authority to place a tax or any type of a of use fee on them right now.

“I would have to work with the Tennessee legislative attorneys to see what we would want from an impact fee,” Shofner said. “We would have to talk with Pat and Shane and say this is what the city wants.”

The request would have to be voted on by the state as part of the process of adding the impact fee to the city charter.

“We would have to have some number crunchers to support what we are doing,” Shofner said. “It would require a substantial finance survey of what we actually need. You can’t just willy-nilly pick a number. It will be a process.”

Whether or not to impose an impact fee would be “a hot button” issue for the City Council with supporters and detractors on either side of the issue.

“It is not easy making these types of decisions,” Shofner said. “We would need guidance from some folks who have done it before and how to do the study. You just don’t come up with a number. All the costs have to be justified.”

Carroll agrees with Shofner a decision on whether to implement impact fees will require a great deal of study.

“Because of the growth, the Mayor and City Council will look at impact fees as an adjustment if needed,” Carroll said. “We are aware that fees are passed along by the builder and developer to the business or home buyer. Shelbyville officials will gather information and do research before making any decisions on impact fees for the future.”