ABSTRACT
System development charges (SDCs) should meet rational nexus criteria to assure maximum reasonable acceptance by the development community, local government elected and administrative officials, and courts. The use of service areas as benefit districts is consistent with the rational nexus requirement that the SDCs be spent within the service area from which they are collected. The relationship between the adopted level of service that is used to calculate impact SDCs for new development and the actual level of service existing at the time of impact fee adoption has important implications in the context of any SDC system. Such a situation is inconsistent with the rational nexus criteria because it charges new development SDCs that are higher than a proportionate share of the benefits received. Rational nexus principles involved when new development is buying into existing excess capacity requires consideration of depreciation because new development cannot be held responsible for more than a proportionate share of system costs or obligations.
