Impact Fees

Impact fees are usually implemented by local governments to help cover the costs of infrastructure or other needed projects. These fees are very similar to linkage fees or proffers, and may vary depending on the state.

The
Issue

Some states allow local governments to utilize impact fees as a onetime cost for residential and commercial developers to initially compensate and offset the cost of local government to provide infrastructure needs and basic services, such as emergency services, public safety, water and waste water treatment, traffic signals, and public schools. Local governments will assess different variables based on the impact of a project on the community in determining appropriate levels for impact fees. In addition to property taxes, local governments are increasingly under pressure to raise impact fees because of declining federal and state resources.

Position

NAIOP members are an invaluable resource to local leaders in establishing fair and equitable impact fees. Local governments should seek input from all interested and affected parties in determining fiscally sound and responsible solutions to the challenges within their communities and avoid a fee structure that discourages and hinders commercial development.

Status

Several states are considering impact fee legislation. To view current legislative activity within your state, visit NAIOP's state legislative monitoring service (Members Only). You will need to log in using your member number and password to obtain the password for this service.

Talking
Points

  • Prior to establishing or altering impact fees, it is important for local governments to seek input from all stakeholders.
  • Impact fees must be fair and just and should not unnecessarily burden or favor a particular sector.
  • High impact fees may detrimentally affect economic growth and cause cities and counties to become less competitive with neighboring communities.
  • Impact fees are unreliable sources of funding because they do not take into consideration economic downturns or cycles.

Resources

Impactfees.com is a web site provided as a public service by Duncan Associates, one of the nation’s leading impact fee consulting firms.

Contact

Toby Burke
Associate Vice President for State and Local Affairs
703-904-7100, ext. 116