Like other municipalities near Tallinn, Tartu and Pärnu, Jõelähtme Rural Municipality has grown rapidly over the past few decades. At the beginning of the century (2000–2005), the municipality had about 5,000 residents. That figure has now grown to 8,000, with the population increasing by an average of 300 people per year in recent years.

As the population has become younger and more families have moved in, a critical shortage of kindergarten and school places has emerged, particularly in the Tallinn-area small borough of Loo and the village of Liivamäe.

With the municipality's debt burden already high, Jõelähtme has for the past couple of years required developers submitting new detailed plans to pay a social infrastructure development fee of €6,300 per residential unit, whether an apartment, townhouse unit or single-family home. According to Umboja, the amount is marginal in the final price of a property and does not discourage people from moving in. He added that professional developers also support the system because it provides equal and predictable rules for everyone.

Justice chancellor and court demanding end to the practice

The practice, however, is now under threat because there is no legal basis in legislation for collecting the fee. The chancellor of justice has formally called on Jõelähtme Rural Municipality to bring the municipal council's regulations into compliance with the Constitution. If the municipality does not change its current practice, the justice chancellor plans to ask the Supreme Court to review the matter for its constitutionality. The Supreme Court has previously ruled against municipalities in similar cases.

In a letter sent to the government on June 25, Andrus Umboja wrote that no one stands to benefit from such a legal dispute and that the only solution is for the Riigikogu to pass new legislation establishing the fee.

Government rejects bill

The Ministry of Regional Affairs and Agriculture sought to resolve the issue as early as January 8 this year by submitting a proposal to the cabinet to amend the Local Taxes Act and add the development fee to the list of local taxes.

Sigrid Soomlais, the ministry's deputy secretary general responsible for regional development, said the draft bill was largely based on municipalities' current practices, their own requests and the chancellor of justice's assessment that the area requires legal clarity.

The government, however, rejected the ministry's proposal in January.

"The government did not support the proposal in January and as a result we did not proceed with the draft bill," Soomlais said. Asked what would happen next, she replied plainly: "We do not currently have an alternative draft bill in the works."

According to Soomlais, local governments now have no choice but to follow the law as it stands and existing court rulings — which in practice means municipalities can no longer require developers to pay a social infrastructure development fee.

Developments shelved for an undetermined period

In his appeal to the ministry, Jõelähtme Rural Municipality Mayor Andrus Umboja proposed that the draft bill rejected in January be resubmitted to the cabinet.

Umboja stressed that while the state requires local governments to provide kindergarten and school places, municipalities do not have the resources to cope with the additional burden created by suburbanization.

With no solution in sight at either the ministry or government level and the law providing no basis for charging the fee, residential development now faces the prospect of coming to a halt. Umboja said that although the law obliges local governments to provide kindergarten and school places, the state also has a responsibility to equip municipalities with practical tools to fulfill those obligations, since the trends driving suburbanization cannot be stopped or reversed.

The situation is most critical in the small borough of Loo. Although there are parts of the municipality, such as Kostivere, where school places are still available, requiring children to travel 13 kilometers in the opposite direction from their usual commute is not a long-term solution for families. Moreover, new development proposals have also been submitted for the Kostivere area.

According to Umboja, the municipality is currently processing several major detailed plans in which the development fee is essential to financing new school places. If municipalities are barred from collecting the fee, approval of new detailed plans will have to be suspended.

"If we cannot provide school and kindergarten places, then we cannot approve new detailed plans and that means new housing will not be built," Umboja warned.

He said that failing to resolve the issue would significantly hinder development across Estonia's fastest-growing regions, including Harju, Tartu and Pärnu counties.

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