## Facts

- Hamilton Township, a limited-home-rule township in Warren County, Ohio, experienced rapid population growth from 1990 to 2010.
- To fund growth-related needs, the township adopted Amended Resolution No. 2007-0418 imposing “impact fees” on applicants seeking zoning certificates for new construction or redevelopment in unincorporated areas.
- The resolution imposed four categories of charges: road, fire, police, and parks.
- The stated purpose was to raise funds to provide new or redeveloped property the same level of governmental services currently provided to existing development and to offset increased services and improvements caused by development.
- Fees varied by land use and were commonly assessed on a per-unit basis (e.g., per dwelling unit or hotel/motel room).
- Collected funds were segregated by category but could be used for township-wide capital improvements and services rather than improvements specifically benefiting the fee-paying parcel.
- Developers and landowners challenged the charges as taxes imposed without statutory authority.

## Issues

1. Whether the township’s “impact fees,” based on their operation, were taxes rather than regulatory fees or special assessments.
2. If the charges were taxes, whether a limited-home-rule township may impose them under R.C. 504.04(A)(1) absent authorization by general law.

## Decision

- The Ohio Supreme Court reversed the court of appeals and the trial court.
- The Court held the “impact fees” operated as taxes because they primarily raised revenue for general public services and capital infrastructure rather than defraying regulatory costs or funding parcel-specific benefits.
- Because R.C. 504.04(A)(1) permits limited-home-rule townships to impose taxes only as authorized by general law, and no general law authorized these charges, the township lacked authority to impose them.

## Legal Principles

- The characterization of a governmental exaction turns on its substance and function, not the label attached to it.
- A charge that primarily raises revenue to fund general governmental services or broad capital improvements is a tax, not a regulatory fee.
- A special assessment requires a closer connection to a specific improvement that specially benefits the assessed property; segregating funds does not alone establish that connection.
- Under R.C. 504.04(A)(1), a limited-home-rule township may impose a tax only when the General Assembly has authorized it by general law; absent such authorization, the tax is invalid.

## Conclusion

The court invalidated Hamilton Township’s development “impact fees” because, in operation, they were taxes used to fund general services and system-wide improvements, and limited-home-rule townships may not impose new taxes without clear authorization by general law.


Drees Co. v. Hamilton Twp., 970 N.E.2d 916 (Ohio 2012)