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owners, builders, and/or the final property owner. Impact fees apply to both residential and non-residential development, and may cover a wide range of service improvements, such as roads, parks, and public safety.8 More specifically, the Minnesota Supreme Court, in Country Joe, Inc. v. City of Eagan, 560 N.W.2d 681, 685 (Minn. 1997), stated that an impact fee is a form of development exaction possessing the following characteristics: · In the form of a predetermined money payment. · Assessed as a condition to the issuance of a building permit, an occupancy permit or plat approval. · Pursuant to local government powers to regulate new growth and development and provide for adequate public facilities and services. · Levied to fund large-scale, off-site public facilities and services necessary to serve new development. · In an amount which is proportionate to the need for the public facilities generated by new development.9 Country Joe further noted the difference between an impact fee and a special assessment: ‘The primary difference is that special assessments represent a measure of the benefit of public improvements on new or existing development, whereas impact fees typically measure the cost of the demand or need for public facilities as a result of new development only.’10 Just as special assessments are constitutionally constrained to be no greater than the special benefit conferred on the properties that are assessed, so, too, are impact fees, as a form of exaction, constitutionally limited. The U.S. Supreme Court in Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 319 (1994), established that an unconstitutional taking occurs unless it can be shown that (a) there is an essential nexus between the exaction required and the state interest being advanced (Nollan), and (b) there is a rough proportionality between the exaction and the impact of the proposed development project (Dolan).11 As of June 2005, 25 states had adopted impact fee enabling legislation allowing local governments to establish and collect such fees.12 Minnesota is not one of these states. In the absence of enabling legislation, what authority then, if any, does a Minnesota city have to adopt impact fees? The Minnesota Supreme Court avoided answering this question in Country Joe, but the Court’s reasoning suggests that there is no such authority under current Minnesota law. In Country Joe, building contractors challenged the legality of a road unit connection charge adopted by the City of Eagan. The charge grew out of a study by the city’s consulting engineers projecting that the city would suffer a shortfall of over one million dollars to finance major street construction. The city council adopted the road unit connection charge payable as a condition to issuance of all building permits in the city. The city made a threefold argument in defending against the contractors’ challenge to the road unit connection charge: (a) the charge was a lawful exercise of its implied powers under Minnesota law, (b) the charge was a lawful impact fee, and (c) the charge was a lawful exercise of the city’s police powers. The Supreme Court first rejected the city’s argument that the road unit connection charge was a lawful exercise of the city’s implied municipal planning authority under the Municipal Planning Act, Minn. Stat. Ch. 462.13 The Court stated that because Eagan was a statutory city, it had no inherent powers beyond those expressly conferred. Furthermore, “[t]hat the Municipal Planning Act expressly confers broad municipal planning powers on cities does not necessarily imply that the legislature similarly intended to confer broad financing powers under the act.” The Court pointed out that the Legislature had expressly provided for sewer and water charges (after which the city had modeled its road unit connection charges), but had not expressly provided for road charges.14 Significantly, for purposes of discussion further below, the Court also observed [t]hat this lack of express statutory authorization was not the result of legislative oversight is evidenced by statutory provisions expressly establishing special assessments as the mechanism by which cities are empowered to finance road improvements. See Minn. Stat. §§ 429.021, subd. 1(1), 412.221, subd. 6.15 For these reasons, the Court concluded that “the authority to impose a road unit connection charge cannot be implied from the city’s municipal planning authority.”