Impact Fee Amendments

18
11-36a-102
11-36a-301
11-36a-601
11-36a-602
0
Impact Fee Amendments
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Calvin R. Musselman
House Sponsor:
LONG TITLE
General Description:
This bill modifies requirements for implementing and expending an impact fee.
Highlighted Provisions:
This bill:
modifies the requirements for impact fee service areas;
restricts where a local political subdivision may expend the revenue generated by impact
fees; and
makes technical and conforming changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
11-36a-102
, as last amended by Laws of Utah 2025, First Special Session, Chapter 16
11-36a-301
, as last amended by Laws of Utah 2025, First Special Session, Chapter 15
11-36a-601
, as last amended by Laws of Utah 2017, Chapter 394
11-36a-602
, as last amended by Laws of Utah 2017, Chapter 190
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
11-36a-102
is amended to read:
11-36a-102
. Definitions.
As used in this chapter:
(1)
(a)
"Affected entity" means each county, municipality, special district under
Title
17B, Limited Purpose Local Government Entities - Special Districts
, special service
district under
Title 17D, Chapter 1, Special Service District Act
, school district,
interlocal cooperation entity established under
Chapter 13, Interlocal Cooperation Act
,
and specified public utility:
(i)
whose services or facilities are likely to require expansion or significant
modification because of the facilities proposed in the proposed impact fee
facilities plan; or
(ii)
that has filed with the local political subdivision or private entity a copy of the
general or long-range plan of the county, municipality, special district, special
service district, school district, interlocal cooperation entity, or specified public
utility.
(b)
"Affected entity" does not include the local political subdivision or private entity that
is required under Section
11-36a-501
to provide notice.
(2)
"Charter school" includes:
(a)
an operating charter school;
(b)
an applicant for a charter school whose application has been approved by a charter
school authorizer as provided in
Title 53G, Chapter 5, Part 6, Charter School Credit
Enhancement Program
; and
(c)
an entity that is working on behalf of a charter school or approved charter applicant
to develop or construct a charter school building.
(3)
"Development activity" means any construction or expansion of a building, structure, or
use, any change in use of a building or structure, or any changes in the use of land that
creates additional demand and need for public facilities.
(4)
"Development approval" means:
(a)
except as provided in Subsection
(4)(b)
, any written authorization from a local
political subdivision that authorizes the commencement of development activity;
(b)
development activity, for a public entity that may develop without written
authorization from a local political subdivision;
(c)
a written authorization from a public water supplier, as defined in Section
73-1-4
, or
a private water company:
(i)
to reserve or provide:
(A)
a water right;
(B)
a system capacity; or
(C)
a distribution facility; or
(ii)
to deliver for a development activity:
(A)
culinary water; or
(B)
irrigation water; or
(d)
a written authorization from a sanitary sewer authority, as defined in Section
10-20-102
:
(i)
to reserve or provide:
(A)
sewer collection capacity; or
(B)
treatment capacity; or
(ii)
to provide sewer service for a development activity.
(5)
"Enactment" means:
(a)
a municipal ordinance, for a municipality;
(b)
a county ordinance, for a county; and
(c)
a governing board resolution, for a special district, special service district, or private
entity.
(6)
"Encumber" means:
(a)
a pledge to retire a debt; or
(b)
an allocation to a current purchase order or contract.
(7)
"Expense for overhead" means a cost that a local political subdivision or private entity:
(a)
incurs in connection with:
(i)
developing an impact fee facilities plan;
(ii)
developing an impact fee analysis; or
(iii)
imposing an impact fee, including any related overhead expenses; and
(b)
calculates in accordance with a methodology that is consistent with generally
accepted cost accounting practices.
(8)
"Hookup fee" means a fee for the installation and inspection of any pipe, line, meter, or
appurtenance to connect to a gas, water, sewer, storm water, power, or other utility
system of a municipality, county, special district, special service district, or private
entity.
(9)
(a)
"Impact fee" means a payment of money imposed upon new development activity
as a condition of development approval to mitigate the impact of the new
development on public infrastructure.
(b)
"Impact fee" does not mean a tax, a special assessment, a building permit fee, a
hookup fee, a fee for project improvements, or other reasonable permit or application
fee.
(10)
"Impact fee analysis" means the written analysis of each impact fee required by
Section
11-36a-303
.
(11)
"Impact fee facilities plan" means the plan required by Section
11-36a-301
.
(12)
"Level of service" means the defined performance standard or unit of demand for each
capital component of a public facility within a service area.
(13)
(a)
"Local political subdivision" means a county, a municipality, a special district
under
Title 17B, Limited Purpose Local Government Entities - Special Districts
, a
special service district under
Title 17D, Chapter 1, Special Service District Act
, or
the Point of the Mountain State Land Authority, created in Section
11-59-201
.
(b)
"Local political subdivision" does not mean a school district, whose impact fee
activity is governed by Section
11-36a-206
.
(14)
"Private entity" means an entity in private ownership with at least 100 individual
shareholders, customers, or connections, that is located in a first, second, third, or fourth
class county and provides water to an applicant for development approval who is
required to obtain water from the private entity either as a:
(a)
specific condition of development approval by a local political subdivision acting
pursuant to a prior agreement, whether written or unwritten, with the private entity; or
(b)
functional condition of development approval because the private entity:
(i)
has no reasonably equivalent competition in the immediate market; and
(ii)
is the only realistic source of water for the applicant's development.
(15)
(a)
"Project improvements" means site improvements and facilities that are:
(i)
planned and designed to provide service for development resulting from a
development activity;
(ii)
necessary for the use and convenience of the occupants or users of development
resulting from a development activity; and
(iii)
not identified or reimbursed as a system improvement.
(b)
"Project improvements" does not mean system improvements.
(16)
"Proportionate share" means the cost of public facility improvements that are
:
roughly
proportionate and reasonably related to the service demands and needs of any
development activity.
(17)
"Public facilities" means only the following impact fee facilities that have a life
expectancy of 10 or more years and are owned or operated by or on behalf of a local
political subdivision or private entity:
(a)
water rights and water supply, treatment, storage, and distribution facilities;
(b)
wastewater collection and treatment facilities;
(c)
storm water, drainage, and flood control facilities;
(d)
municipal power facilities;
(e)
roadway facilities;
(f)
parks, recreation facilities, open space, and trails;
(g)
public safety facilities;
(h)
environmental mitigation as provided in Section
11-36a-205
; or
(i)
municipal natural gas facilities.
(18)
(a)
"Public safety facility" means:
(i)
a building constructed or leased to house police, fire, or other public safety
entities; or
(ii)
a fire suppression vehicle costing in excess of $500,000.
(b)
"Public safety facility" does not mean a jail, prison, or other place of involuntary
incarceration.
(19)
(a)
"Roadway facilities" means a street or road that has been designated on an
officially adopted subdivision plat, roadway plan, or general plan of a political
subdivision, together with all necessary appurtenances.
(b)
"Roadway facilities" includes associated improvements to a federal or state roadway
only when the associated improvements:
(i)
are necessitated by the new development; and
(ii)
are not funded by the state or federal government.
(c)
"Roadway facilities" does not mean federal or state roadways.
(20)
(a)
"Service area" means a geographic area designated by an entity that imposes an
impact fee on the basis of sound planning or engineering principles in which a public
facility, or a defined set of public facilities, provides service within the area.
(b)
"Service area" may
not
include the entire local political subdivision or an entire area
served by a private entity
.
(21)
"Specified public agency" means:
(a)
the state;
(b)
a school district; or
(c)
a charter school.
(22)
(a)
"System improvements" means:
(i)
existing public facilities that are:
(A)
identified in the impact fee analysis under Section
11-36a-304
; and
(B)
designed to provide services to service areas within the community at large;
and
(ii)
future public facilities identified in the impact fee analysis under Section
11-36a-304
that are intended to provide services to service areas within the
community at large.
(b)
"System improvements" does not mean project improvements.
Section 2. Section
11-36a-301
is amended to read:
11-36a-301
. Impact fee facilities plan.
(1)
Before imposing an impact fee,
each
a
local political subdivision or private entity shall,
except as provided in Subsection
(3)
, prepare an impact fee facilities plan
:

(a)
to determine the public facilities required to serve development resulting from new
development activity
.
;
(b)
that designates a service area for each impact fee the local political subdivision or
private entity imposes; and
(c)
that demonstrates that the geographic area included in each service area is necessary
to include in the service area based on specific planning or engineering principles.
(2)
A municipality or county need not prepare a separate impact fee facilities plan if the
general plan required by Section
10-20-401
or
17-79-401
, respectively, contains the
elements required by Section
11-36a-302
.
(3)
A local political subdivision or a private entity with a population, or serving a
population, of less than 5,000 as of the last federal census that charges impact fees of
less than $250,000 annually need not comply with the impact fee facilities plan
requirements of this part, but shall ensure that:
(a)
the impact fees that the local political subdivision or private entity imposes are based
upon a reasonable plan that otherwise complies with the common law and this
chapter; and
(b)
each applicable notice required by this chapter is given.
Section 3. Section
11-36a-601
is amended to read:
11-36a-601
. Accounting of impact fees.
A local political subdivision that collects an impact fee shall:
(1)
establish a separate interest bearing ledger account
for each service area and
for each
type of public facility for which an impact fee is collected;
(2)
deposit a receipt for an impact fee in the appropriate ledger account established under
Subsection
(1)
;
(3)
retain the interest earned on each fund or ledger account in the fund or ledger account;
(4)
at the end of each fiscal year, prepare a report that:
(a)
for each fund or ledger account, shows:
(i)
the source and amount of all money collected, earned, and received by the fund or
ledger account during the fiscal year; and
(ii)
each expenditure from the fund or ledger account;
(b)
accounts for all impact fee funds that the local political subdivision has on hand at
the end of the fiscal year;
(c)
identifies the impact fee funds described in Subsection
(4)(b)
by:
(i)
the year in which the impact fee funds were received;
(ii)
the project from which the impact fee funds were collected;
(iii)
the project for which the impact fee funds are budgeted; and
(iv)
the projected schedule for expenditure; and
(d)
is:
(i)
in a format developed by the state auditor;
(ii)
certified by the local political subdivision's chief financial officer; and
(iii)
transmitted to the state auditor within 180 days after the day on which the fiscal
year ends.
Section 4. Section
11-36a-602
is amended to read:
11-36a-602
. Expenditure of impact fees.
(1)
A local political subdivision may expend
an
impact
fees
fee
only for a system
improvement:
(a)
identified in the
adopted
impact fee facilities plan
when the local political
subdivision collected the impact fee
;
and
(b)
for the
specific
public facility type for which the
fee was collected.
local political
subdivision collects the impact fee; and
(c)
within the service area for which the local political subdivision collects the impact
fee.
(2)
(a)
Except as provided in Subsection
(2)(b)
, a local political subdivision shall expend
or encumber an impact fee collected with respect to a lot:
(i)
for a permissible use; and
(ii)
within six years after the impact fee with respect to that lot is collected.
(b)
A local political subdivision may hold the fees for longer than six years if it
identifies, in writing:
(i)
an extraordinary and compelling reason why the fees should be held longer than
six years; and
(ii)
an absolute date by which the fees will be expended.
Section 5.
Effective Date.
This bill takes effect on
May 6, 2026
.
2-3-26 4:22 PM