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Note: In connection with developing a residential subdivision of new homes in Effingham County, Georgia, Park West Effingham, L.P. (Developer) agreed with the Effingham County Board of Commissioners (Board) to pay water and sewer impact fees (Impact Fees), and that payment would be "secured by an irrevocable [standby] Letter of Credit in favor of [Board]" in the amount of US $1,245,360, which represented one half of the total estimated Impact Fees. The agreement also provided that Developer would pay a minimum of $297,152 in Impact Fees per year, but if the actual fees for a given year were greater than the estimate, Developer would pay the difference. In the event that Developer failed to pay, Board could draw the entire standby.

After Board sought payment for an additional $700,000 in Impact Fees that did not correspond to areas where building permits had been issued, Developer sued Board, seeking a declaration that it did not have to pay Impact Fees before building permits were issued. Developer also obtained a temporary injunction preventing Board from drawing on the standby.

The Effingham County Superior Court's ruled that the agreement was void because it violated a Georgia law prohibiting the payment of impact fees before the issuance of a building permit. The Court of Appeals of Georgia, Fourth Division, Smith, J., affirmed. The appellate court found that requirements that Developer provide a standby for one half of the total estimated Impact Fees and make minimum annual payments constituted "the entire method of calculating, collecting and enforcing payment", and therefore violated Georgia law against paying impact fees before building permits were issued.

[JEB/pbl]

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