Pay in-lieu of construction - time limitation to use funds?

[UrbaneSprawler]

Just stumbled upon this site, really cool! Glad to see a forum like this exists. Tried to search to see if this sort of question has been asked before but didn't see anything:

Over the years we've been collecting funds from developers to satisfy a transportation requirement that they are not meeting. Two examples are: 1) not building their street frontage required by code due to a master plan showing the road realigning and building their realigned portion of road at this time would be awkward; it would be better served realigning the overall stretch of road as a capital project when it's funded and use the developer's funds for his portion at that time. 2) a pedestrian level of service requirement requires a pedestrian crossing be made over let's say a ditch, but the ditch company will not negotiate with the developer.

In both instances, the intention would be that the municipality would receive the funds, release the developer of any further obligations specific to meeting these requirements, and the municipality would assume the responsibility in terms of making these improvements.

We've now been questioned by attorneys as to why there isn't a time limitation in place in which the municipality must either use the funds (for the exact purpose in which the finds were intended for) or return the funds back to the developer. In our view time limitations can be awkward. In the first instance above, there's no foreseeable funding source in which the agency can build a major realignment of a roadway even though it's in our transportation master plan. If it took 30 years to finally get the roadway realigned but we had to return funds for the developer's portion that was funded 10 years before, that would be unfortunate.

In the second instance above, the developer went to a public hearing in which the planning board approved a modification to the ped level of service requirement with the understanding that the developer would pay in lieu of constructing the ped crossing. There was no testimony from the developer or argument made by the developer's attorney at the hearing that this payment should be limited in time and if the agency can't complete the work within a time period that the funds should be returned. It would be awkward to explain to the board that funds intended to meet a requirement had to be returned due to the agency not being able to build the improvements within a deadline imposed.

Up to this point we've been placing language regarding payment in-lieu of construction in our development agreements without any time limitations in which we have to use the funds. A developer's attorney has our attorney agreeing that this isn't proper. Our attorney views the examples above as impact based fees and thinks case law dictates that impact based fees need to be spent addressing the impact within a reasonable time.

Just wondering if anyone else has had a similar experience on being time limited to use developer provided funds, or do you have funds collected over the years that are sitting awaiting an unknown date in which they will be used? Any insight is appreciated. Thanks!

[Bim]

I thnk your attorney is right. You charge an impact fee, you better buy the impact mitigation. It would be better to have the developer make the improvements to mitigate the direct impacts. Charging a fee for it just puts the municipality in the loop and on the hook. If the developer can't or won't do the improvements himself then his proposal shouldn't be approved.