Impact Fees

Impact fees are taxes imposed by a city or municipality in order to pay for the infrastructure improvements that are necessary when a new development is constructed. The amount can vary; larger cities in the western part of the United States feature higher fees. Impact fees are generally assessed like property taxes: They are designed to cover the costs of supplying water lines, power infrastructure and new roads to developments in which these amenities were absent. These fees are ultimately designed to offset the costs of expansion for towns and cities where population growth is a threat to an already weak or overburdened infrastructure. Impact fees are imposed against developers in some parts of the country, but the costs are generally just passed on to property owners in the form of higher costs. In many cases, they are assessed in order to pay for improvements to things like local parks and beautification projects around the development.