In a ruling that could carry special importance for the town of Aquinnah — as well as for other Vineyard towns that want to adopt impact fees — the Massachusetts Appeals Court this week struck down a school impact fee in the town of Franklin.
The court found that the impact fee, charged to developers, is an improper tax.
“This is so totally contrary to tax philosophy as to require it to be stricken down,” declared Mel Greenberg, an associate justice of the Massachusetts Appeals Court, who wrote the decision.
The appeals court decision upheld a ruling by a Norfolk superior court judge that struck down the impact fee.
The Franklin case is one of two now under close watch by the people of Aquinnah and their town counsel. Last month Aquinnah voters approved a sweeping set of regulations for a townwide district of critical planning concern (DCPC).
The regulations include a set of graduated building impact fees aimed at fostering an affordable housing program for town residents.
Voters adopted the impact fees, but on the advice of town counsel Ronald H. Rappaport, town officials agreed not to enforce the impact fees until the outcome of the two court cases is decided.
The other pending court case is with the town of Barnstable, and it also involves a building impact fee for affordable housing.
The Franklin case centered on an impact fee aimed at paying for school costs associated with development. A bedroom community located southwest of Boston, Franklin has long been known as one of the fastest growing communities in the state. Between 1980 and 1995, the town population increased by 41 per cent, from 17,500 to 25,000.
The town built a new school in 1995, but a research group hired by the town projected that growth would cause town schools to be filled beyond capacity by the year 2000.
In December 1995 the town adopted a bylaw that required developers to pay a fee aimed at relieving the burden on the schools. The fee schedule in the bylaw is proportionate to the size of the project. The money went into two special funds earmarked for school use in the northern and southern sections of town. Any money in the fund not spent after eight years would be returned to the payer.
Attorneys for developers and homebuilder associations hailed the appeals court ruling that struck down the impact fee. The ruling was decried by municipal planners, who say impact fees are necessary for communities under siege from the effects of runaway growth.
Impact fees have been upheld in the state of Florida, but not in Massachusetts.
On the Vineyard, the decision cast a small shadow of doubt on the decision of the town of Aquinnah last month to adopt a building impact fee.
Mr. Rappaport said this week that the Franklin ruling did not come as a surprise. “At the Aquinnah town meeting I said it was my opinion that the impact fees would not pass legal muster given the current state of the law, and the Franklin case came out the way I expected,” he said.
The case centered on the distinction between a fee and a tax. Using a test case decided some time ago with Emerson College, the appeals court decided that the Franklin impact fee is in fact a tax.
“Towns do not have the power to tax,” the court wrote.
The decision found that fees “share common traits that distinguish them from taxes.” Fees are charged in connection with a particular service and may not be used to collect general revenues, the court found.
It is not known whether the town will appeal the decision to the Massachusetts Supreme Judicial Court.
The court also concluded: “We are not without sympathy for the town’s position.”
“Fees are supposed to defray reasonable expenses, and a tax benefits a community as a whole, not a particular project,” Mr. Rappaport said.
Mr. Rappaport said a key difference with the Aquinnah impact fee lies in the fact that it was adopted under the umbrella of a DCPC, using the broad authority vested in the Martha’s Vineyard Commission by the state legislature.
“This is what makes the Aquinnah impact fee arguably different. If a town has any ability to enact an impact fee, it gets the broadest protection because of the Martha’s Vineyard Commission legislation,” Mr. Rappaport said.
The Barnstable impact fee was not done under a DCPC, but it was enacted using guidelines from the Cape Cod Commission. The Barnstable impact fee is currently the subject of a challenge in superior court.