Where a municipality requires, as a condition of approval of a proposed land development or subdivision project, dedication of land to the public, public improvements, payment-in-lieu of dedication or construction, or payment to mitigate the impacts of a proposed project, local regulations must require the following:
(1) All required public improvements must reflect the character defined for that neighborhood or district by the community’s comprehensive plan;
(2) The need for all dedications of land to the public and for payments-in-lieu of dedications must be clearly documented in the adopted plan of the community, i.e., the comprehensive plan and the capital improvement plan;
(3) No dedications of land to the public or payments-in-lieu of dedications may be required until the need for the dedications are identified and documented by the municipality, the land proposed for dedication is determined to be appropriate for the proposed use, and the formulas for calculating a payment-in-lieu of dedication have been established in the local regulations;
(4) All dedications, improvements, or payments-in-lieu of dedication or construction, for mitigation of identified negative impacts of proposed projects must meet the previously stated standards. Furthermore, the significant negative impacts of the proposed development on the existing conditions must be clearly documented. The mitigation required as a condition of approval must be related to the significance of the identified impact; and
(5) All payment-in-lieu of dedication or construction to mitigate the impacts of the proposed development shall be kept in restricted accounts and shall only be spent on the mitigation of the identified impacts for which it is required.