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New Hampshire Supreme Court Allows Unused SDC Fees to Go to Successor Landowners

House on euros in forestK.L.W. Construction Co., Inc. v. Town of Pelham, 2014 WL 6967664 (N.H.) involved petitions for declaratory judgment by a construction company and a developer for a refund of what in Oregon are termed “systems development charges” authorized by a New Hampshire statute. Under the statutory scheme, local governments may assess fees for capital improvements; however, if the fees are not spent within six years, they must be refunded. Defendant’s ordinance authorized a refund, but only to the “current owner” of the land assessed. Plaintiff Construction Company paid the fee, which refund was also sought by the original developer. The land in question was sold to homeowners after development and the Town contended that only these successors could claim the refund.

The assessments were levied to build a new Town fire station; however, after some of the funds had been spent for feasibility studies and architectural plans, the voters of the Town declined to authorize construction. The trial court upheld the Town’s restriction of refunds to current owners and granted its motion to dismiss Plaintiffs’ claims, determining that the statutory direction for a refund of unused fees did not require that such refund be paid to the original payee.

On appeal, the court found no factual disputer and reviewed the trial court’s order of dismissal on a de novo basis, as Plaintiffs’ standing was jurisdictional and a question of law over statutory interpretation of “refund,” a term not otherwise defined by the enabling legislation. Plaintiffs contended that local governments must follow the statutory mandate and that “refund” must be given its ordinary meaning of “pay back” or “reimburse.” Plaintiffs also contended that another statute relating to exactions was more specific, providing refunds in those cases to the payer or the payer’s successor in interest. However, the SDC statute did not contain such language and the court declined to insert the same, finding the two statutes enacted at different times and dealing with different situations.

Moreover, the court cited decisions from other courts that allowed refunds to go to other than the original payers and rejected the possibility that local governments could enter into an agreement a payer to have payments specifically refunded to that payer as requiring this arrangement to be made. Moreover, the court declined to use legislative history to interpret the refund statute, finding no necessary ambiguity that would allow for such an examination. Finally, the court rejected Plaintiffs’ takings challenges, finding no adequate preservation of constitutional issues.  The court thus affirmed the trial court’s conclusion that the local ordinance authorizing SDC refunds to current landowners to be within the statutory authorization.

This is a case of statutory interpretation. Although Oregon law does not speak to the refund issue, common practice is that unspent systems development charges must be refunded. Refunding those charges to current landowners provides for better predictability in the use of those funds and for allocation of the risk of that possibility as part of the sales price for land.

K.L.W. Construction Co., Inc. v. Town of Pelham, 2014 WL 6967664 (N.H.)

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