25.11.2021

Indefinite demand for contributions to development costs is unconstitutional

In its decision of 24 November 2021 (Case No. 1 BvL 1/19), the Federal Constitutional Court (Bundesverfassungsgericht) declared unconstitutional a provision of the Rhineland-Palatinate Municipal Fees Act (Kommunalabgabengesetz Rheinland-Pfalz), according to which development cost contributions can be levied retroactively on residents for an unlimited period of time.

According to the court, property owners must not be left in the dark for years or even decades as to whether they are still being charged development fees. The unlimited possibility for the municipality to pass on the costs to the owners violates the requirement of clarity and predictability of the burden.

The legislature must now create an appropriate time limit that takes into account both the legal certainty of the individual and the interest of the general public in equalising benefits.

Consequently, Hesse and North Rhine-Westphalia will also have to amend their municipal levy laws, as neither contains a time limit.

Background:

Building areas are usually first connected to the public infrastructure (for example roads, sewers, electricity and gas) at the expense of the municipality; the costs incurred for this are then later passed on to the owners of the properties who benefit from the development.

According to the Rhineland-Palatinate Municipal Charges Act, there are no deadlines for apportioning the costs to the property owners. So far, it was possible that even decades after the actual connection of the respective property to the public network, development costs could be demanded from the owner, if – as in this case – the road was only fully completed and dedicated years later.

It remains to be seen how the state legislatures will implement the requirements.

If you have any questions, please do not hesitate to contact us.

Yvonne Spatz, Lawyer, Graduate in Administrative Law

Marlena Purwin, Lawyer