what are impact fees

Impact fees are fees imposed by local governments in the United States on new or proposed development projects to pay for all or a portion of the costs of providing public services to the new development. These fees are usually implemented to help reduce the economic burden on local jurisdictions that are trying to deal with population growth within the area. Impact fees are considered to be a charge on new development to help fund and pay for the construction or needed expansion of offsite capital improvements. They are one-time charges for the creation of new infrastructure. Impact fees can be used to help fund the construction of needed parks, schools, roads, sewer, water treatment, utilities, libraries, and public safety buildings to the newly developed area. Impact fees are determined based on the size of the new development, the cost of implementing it, and how much it will impact the surrounding area. Impact fees are not taxes, and they are paid by developers as part of the development approval process. The primary purpose of impact fees is to recover costs and not to generate revenue. Impact fees are widely used in the United States, particularly in regions with high demographic growth rates. They are most prevalent in places with resistance to using general revenue sources to pay for growth-related costs. Impact fees should only be utilized when a connection can be made between the impact of new development and the need for new infrastructure to accommodate that development.