When popular fishing charter captain Destin “Chilly” Williams and his wife, Kim, built a new home in eastern Orange Beach, they raised their eyebrows a bit at impact fees charged by the city.
The Williamses cried foul at the more than $2,600 fee on a value for the land and home based at about $243,000. They filed suit, and are seeking others with similar complaints.
According to state law, local governments can only assess a 1 percent impact fee on new construction, which, in their case, would have been about $2,400. According to Baldwin County tax records, the Williamses built a new home at 5145 Sampson Ave.
“Based upon a review of records … defendants have routinely charged impact fees in excess of 1 percent of the completion value of developments in violation of the act,” the lawsuit states.
The lawsuit is also seeking to add others who have paid impact fees since the law’s inception and a class-action suit was filed as part of the complaint. The filing claims many of the records reviewed show people have been overcharged since the fee was initiated. Plaintiffs seek a refund on the overcharged fees as well as having Orange Beach pay for all their legal fees.
Originally filed in Baldwin County District Court last August, the lawsuit alleges the city is in violation of the Fifth Amendment of the Constitution and a 2006 state law that established ground rules for what cities could charge for impact fees and how they could be used. On Jan. 7 the city of Orange Beach requested it be moved to federal court in Mobile.
Named as plaintiffs in the lawsuit are Mayor Tony Kennon and all five councilmembers: Joni Blalock, Jeff Boyd, Jerry Johnson, Annette Mitchell and Jeff Silvers.
Cities charge impact fees on new homes and developments to pay for the extra infrastructure and services burdened by the new residents and traffic to new businesses. Those can include police and fire stations or recreational facilities. The lawsuit claims not only are the impact fees not being used as intended, but the city won’t reveal how they calculate individual impact fees.
“As a result of these failures, defendants have failed to adjust impact fees to only fund or recoup the costs of governmental infrastructure necessitated by and attributable directly to the new development,” the lawsuit states. “Defendants do not publicize the formulae they use to calculate impact fees. Moreover, they do not produce the same in response to public records requests, likely in violation of Alabama public records laws.”
Another part of the law, the complaint alleges, says cities can only charge these fees when property taxes and other city revenue is not enough to improve the infrastructure. The lawsuit says the city of Orange Beach has more than $50 million in reserves.
In property taxes, Orange Beach residents pay a total of 28 mills, which is divided between the state, county, schools and municipalities. The city’s cut of this revenue is four mills.
Additionally, the city collects a 7 percent lodging tax on all vacation rentals in its corporate limits and in 2019 this levy generated more than $21 million.
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