Impact Fees and Housing Affordability: a Guidebook

Impact fees are one-time charges applied to new development. Impact fees are a form of land-use regulation designed to assure that communities maintain adequate levels of public facilities in the face of growth. The resulting revenue generated for the construction or expansion of new facilities is coincidental to their land-use regulatory (i.e. police power) purpose. Were it not for growth many communities would have adequate public facilities and often if growth is at a manageable pace adequate public facilities can be provided concurrent with the impacts of growth. To assure adequate public facilities, impact fees are assessed and dedicated principally for the provision of additional water and sewer systems, schools, libraries, parks and recreation facilities, and other infrastructure made necessary by the presence of new residents in the area. The funds collected cannot be used for operation and maintenance, repair, alteration, or replacement of capital facilities. As will be noted, impact fees are not the best way in which to finance most public facilities from a variety of theoretical perspectives and instead taxes are. However, in the absence of the legal or political ability to raise taxes combined with a desire to maintain level-of-service quality in their communities, elected officials may see impact fees as a pragmatic solution