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Utah Homeowners Vow Suit Over 'Impact' Fees

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School officials in a fast-growing Utah district are bracing for a class action amid complaints that they owe $2.5 million to local homeowners.

The dispute in the popular ski-resort town of Park City stems from school "impact" fees levied on new homes built in the area. Enrollment in the Park City schools has doubled to more than 3,000 students in the past seven years, and district officials in 1994 worked with city and county authorities to impose the fees to help pay for more classrooms. Park City is in Summit County, southeast of Salt Lake City.

State lawmakers quashed those fees effective next month, however, and some residents and developers in Park City are demanding refunds on the $2.5 million collected and put in escrow over the past two years.

"I find it hard to believe that they want to soak the newcomer," said Edward F. Brophy, who paid about $7,000 in impact fees when he moved to Park City in 1994 and built a duplex a year later. "If this were a consistent, ongoing, until-the-end-of-time tax, I'd say 'have at it.' But I can't for the life of me see how this is fair."

Nikki Lowry, the president of the Park City school board, said fees were collected before the legislative moratorium. The district may keep the money, newas it would help defer the debt service on a $31.5 million bond passed last year to pay for building over the next 15 years.

But such a move likely would land the district in court, she said.

"If we choose not to give it back, we have every legal right," Ms. Lowry said. "But it will likely mean a class-action suit. There's talk already that there are people who will try to sue us."

An Unfair Tax?

School impact fees usually are assessed on new homes as a way to make growth help pay for itself. But developers, who pay the fees and often pass the costs on to people who buy the homes, often fight the fees and their rationale.

As plaintiffs, these developers argue that it's unfair to tax people who buy newly built homes to pay to accommodate enrollment growth because people who have no children or who already live in the district often buy such homes.

The Colorado Supreme Court is considering appeals of lower-court rulings that impact fees violate state school-funding laws. (See Education Week, April 19, 1995.)

Although school enrollment is booming in Utah, Park City's school impact fee of $3,393 per home is the only one in the state.

"None of the other districts picked it up," said Darrell White, the executive director of the Utah School Superintendents Association. "They wanted to see what happened in Park City."

Last year, several months after the fees were set in Park City, state lawmakers passed a bill that specified about eight fees that could be imposed on new homeowners. But the legislation prohibited school impact fees after May 1 of this year.

Some lawmakers were concerned that the impact fee in Park City, one of the state's more affluent districts, bypassed the state's equity formulas for school spending, according to officials of the state home builders' association.

"Schools have definite mechanisms of funding," said L. Tasman Biesinger, the executive vice president of the group, which helped draft the law. "They receive the largest portion of the state budget."

Park City's Ms. Lowry said the district will try to reverse the legislature's action, and the school board will hold hearings to gauge public sentiment about what to do with the $2.5 million.

A public survey taken by the district before the fees were imposed reported that nearly 90 percent of residents liked the idea.

"Clearly, we're hearing from people who want refunds from the impact fees," Ms Lowry said. "But there's a vast majority of people out there who wanted impact fees in the first place who haven't been heard yet."

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