WILLIAM DABBS, ET AL.
ANNE ARUNDEL COUNTY, MD.
Wright, Graeff, Bair, Gary E. (Specially Assigned), JJ.
appeal arises from the Circuit Court for Anne Arundel
County's entry of a declaratory judgment in favor of
appellee, Anne Arundel County (the "County"), as to
all counts and claims stated in a class action complaint
filed against it on November 4, 2011, by appellants, William
Dabbs, Sally Trapp, Samuel Craycraft, and Roberta Craycraft,
"individually and on behalf of all others similarly
situated." Appellants had sought refunds of impact fees
that, following the fiscal year ("FY") of
collection, were not expended or encumbered within six FYs.
Following a hearing on November 20, 2014, and after receiving
memoranda from the parties, the circuit court entered
judgment in the County's favor on January 27, 2016,
ordering that appellants "take nothing in this
action." The court also denied appellants' motion to
revise class definition, as well as their motion for an
accounting of County impact fee collections, expenditures,
and encumbrances. On February 11, 2016, appellants noted this
clarity, we have combined, renumbered, and rephrased the
questions presented by appellants, as follows:
1. Did the circuit court err in concluding that the
"rough proportionality" or "rational
nexus" test established by the Supreme Court of the
United States has no application to development impact fees?
2. Did the circuit court err in finding that the enactment of
Bill No. 27-07 did not interfere with the vested rights of
appellants to recover impact fee refunds?
3. Did the circuit court err in concluding that appellants
could not recover as damages $9.9 million that the County
transferred from the General Fund to the Impact Fee Special
Fund in 2008?
4. In determining the appropriate use of impact fees under
its Impact Fee Ordinance, is the County required to use the
definition of "State Rated School Capacity" that
the State applies for school construction funding purposes?
5. Did the circuit court err in denying appellants'
motion for an accounting of County impact fee collections,
expenditures, and encumbrances?
6. Did the circuit court err in finding that the prospective
repeal in Bill No. 71-08 of the County's impact fee
refund provision, codified in § 17-11-210(b), had no
effect on appellants' vested rights to refunds?
reasons that follow, we affirm the circuit court's
The County's Impact Fee Ordinance
to the authority set forth in Chapter 350, Acts of 1986, and
codified in Subtitle 2 of Title 11 of Article 17 (the
"Impact Fee Ordinance") of the Anne Arundel County
Code ("County Code"), the County may impose impact
fees for the purpose of requiring new development to pay its
proportionate share of the costs for land and capital
facilities necessary to accommodate development impacts on
public facilities. § 17-11-202(1). Impact fees must be paid by any person who
improves real property causing an impact on public facilities
before a building permit for the improvement may be issued.
§§ 17-11-203, 17-11-206.
§ 17-11-209(a), all funds collected from impact fees
must be used for eligible capital projects, that is, capital
projects for the "expansion of the capacity" of
roads and schools, and not for replacement, maintenance, or
operations. The County has been divided into impact fee
districts and impact fees generally must be used for capital
improvements within the "district from which they are
collected." § 17-11-209(d). The County Planning and
Zoning Officer ("PZO") determines the extent to
which capital projects are eligible for impact fee use.
See generally Impact Fee Ordinance.
17-11-210(b) provides that, if the impact fees collected in a
district are not expended or encumbered within six FYs
following the FY of collection, the County Office of Finance
must give notice to current property owners that impact fees
are available for refund. Section 17-11-210(e), however,
allows the PZO to "extend for up to three years the date
at which the funds must be expended or encumbered." Such
an extension may be made "only on a written finding that
within a three-year period certain capital improvements are
planned to be constructed that will be of direct benefit to
the property against which the fees were charged."
County began imposing impact fees in FY 1988. On December 20,
2001, the County Council enacted Bill No. 96-01, which,
effective February 3, 2002, authorized the County to use
impact fees for temporary structures (classrooms) provided
they expanded the capacity of the schools to serve new
development. Then, on May 22, 2007, the County Council
enacted Bill No. 27-07, which codified the procedures which
the County had utilized to count impact fee expenditures and
encumbrances for purposes of determining impact fee refunds
under § 17-11-210(b). Because Bill No. 27-07 did not
effect a substantive change in policy, the County Council
made Bill No. 27-07 retroactive to fees collected in FYs
November 6, 2008, the County Council enacted Bill No. 71-08
and repealed, prospectively, the impact fee refund provisions
previously set forth in § 17-11-210. The repeal was
effective on January 1, 2009, and barred claims that were not
ripe as of the effective date of the repeal, that is, the
repeal barred claims for refunds of fees collected after FY
action is the second lawsuit in which class plaintiffs have
sought refunds of impact fees pursuant to § 17-11-210.
In the first action, the circuit court ruled that it would
only resolve claims for refunds of impact fees collected in
FYs 1988-1996, namely the FYs that were ripe for review at
that time. Halle Dev., Inc. v. Anne Arundel Cty.,
Case No. 02-C-01-069418. Thus, in 2011, appellants filed the
present claim ("Dabbs"), seeking refunds
of fees collected in and after FY 1997.
2008, this Court, in Halle, explained the manner in
which § 17-11-210 should be applied to calculate whether
impact fees are available for refund. Anne Arundel Cty.
v. Halle Dev., Inc., No. 2552, Sept. Term, 2006 (Feb. 7,
2008, on reconsideration, May 7, 2008). We ruled
that the County was entitled to count impact fee encumbrances
in calculating refunds after the close of six FY periods and
remanded the case to the circuit court for the purpose of
recalculating refunds accordingly. Specifically, we rejected
the County's argument that the case should be remanded to
the PZO for new extension decisions, and we ruled that the
County Code required any decision by the PZO to extend the
period for using impact fees be validly made before the end
of the six FY period. However, we agreed with the County that
(1) in applying its procedure to count impact fees encumbered
for the purpose of determining refunds, the County was not
attempting to encumber impact fees "retroactively,
" and (2) the County Code did not require the County to
count impact fee encumbrances as part of the annual budget
process and within the six FY period. We stated:
Owners contend that the circuit court's ruling is
supported by the refund provisions in Code § 17-11-210.
They argue that the County is attempting retroactively to
encumber funds. They assert that the circuit court correctly
ruled that for refund purposes a PZO determination that
impact fee funds had been encumbered, must have been made
within the six years following collection of the funds. This
analysis confuses encumbrance with extension. As we have seen
in Part I, supra, there was a time limit prior to
which the fact-finding of extension must be made, and made in
the required format, in order to effect an extension. Section
17-11-210 does not mandate any format for effecting an
Halle, Feb. 7, 2008 opinion at 19-20.
rejected the circuit court's reliance on §
4-11-102(c)(11) for the proposition that impact fee
encumbrances had to be counted as a part of the annual budget
Code § 4-11-102(c)(11), also cited by the court and
requiring the capital budget and capital program to include
"any amounts encumbered and expended by April 1 of the
current and prior year, " is satisfied by the current
format of that budget and program, as described above. That
information advises the County Council of matters of historic
fact. The section does not require that encumbrances be
recorded in the accounts of a particular impact fee special
fund when those encumbrances are made in the future, during
the fiscal year that is the subject of a particular capital
Id. at 19. In short, we ruled:
Accordingly, we shall remand on the encumbrance issue for a
determination of the amount of impact fees that had been
encumbered, but unexpended, within six years following their
Id. at 20.
the County filed a motion for reconsideration requesting that
this Court rule that the County was also entitled to count
impact fees encumbered in connection with plaintiffs'
claims for refunds of school impact fees. We granted the
motion in a May 7, 2008 opinion, stating:
[In our February 7, 2008 opinion, ] we held that the circuit
court erred in failing to include in the six-year test
encumbrances made within a six-year period after the year of
receipt in computing the debit against fee receipts.
* * *
This Court's rationale in its February 7, 2008 opinion
with respect to transportation project encumbrances, argues
the County, is equally applicable to the accounting record
for encumbrances for school projects. Because we held in our
February 7, 2008 opinion that the ground on which the circuit
court relied in rejecting encumbrances as a setoff under the
six-year test was erroneous, the court, on remand, should
consider not only encumbrances for transportation projects,
but for school projects as well when applying the six-year
Halle, May 7, 2008 opinion at 7-8.
Bill No. 27-07, which codified the County's procedure for
counting impact fee encumbrances, had been enacted prior to
this Court's 2008 opinion and was retroactive, we ruled
that the amended ordinance did not modify the concept of
encumbrance which had been in the County Code from the
enactment of Bill 58-87 in 1988, and thus, it was unnecessary
to address the retroactivity of the legislation because it
did not change law or policy.
this Court's 2008 decision in Halle, both the
County and the class plaintiffs filed petitions for a writ of
certiorari in the Court of Appeals. The County
requested that the Court review the Court of Special
Appeals' ruling that the case could not be remanded to
the PZO to make new extension decisions. The class
plaintiffs, on the other hand, requested that the Court of
Appeals review the Court's ruling that the County was not
"retroactively encumbering" impact fees by
utilizing the procedure (subsequently codified in Bill No.
27-07) to count them after the case had been filed.
Plaintiffs argued that they had vested rights to an accrued
cause of action to recover refunds after they filed suit on
February 21, 2001, and thus, the case could not be remanded
to permit the County to either grant new extensions, or count
Court of Appeals granted the County's petition. Anne
Arundel v. Halle, 405 Md. 350 (2008). However, it denied
plaintiffs' cross-petition, thus declining to review the
encumbrances issue. The Court of Appeals then affirmed this
Court on all issues for which it granted certiorari
and explained that the class plaintiffs did not have vested
rights which would preclude the County from counting
encumbrances after the close of the six FY periods. Anne
Arundel Cty. v. Halle Dev., Inc., 408 Md. 539 (2009). It
This case is not about vesting. It is about the PZO's
lack of authority under the impact fee ordinance to go back
and make administrative decisions that it failed to
effectively execute when permitted. Indeed, the Owners may
not be vested in their right to a refund. Whether they are
entitled to a refund and in what amount it will be determined
by the Circuit Court on remand. The full refund amount
determined by the Circuit Court may be reduced if the County
is able to prove that it, in fact, encumbered the impact fee
funds within six years.
Id. at 559. In an accompanying footnote, the Court
of Appeals explained:
The Court of Special Appeals held in its May 7, 2008
unreported opinion that the Circuit Court, on remand, should
re-determine the amount that the County had timely encumbered
for eligible capital improvements, and in doing so,
"should consider not only encumbrances for
transportation projects, but for school projects as well when
applying the six-year test." We did not grant
certiorari as to this issue, and thus the decision
of the intermediate appellate court is law in this case.
Accordingly, the determination by the Circuit Court as to ...