History
Impact fees were first implemented in Hinsdale, Illinois in 1947. To finance a water treatment plant expansion, Hinsdale Sanitary District president John A. McElwain implemented a "tap-in" fee of $50 per new residential sewer line. The sanitary district was sued by the Illinois Home Building Association, but the district prevailed. The case was appealed to the Illinois Supreme Court and that court ruled that impact fees are legal if used for capital expenditures, but not legal if used for operating expenses. [3]
Impact fees became more widely accepted in the United States in the 1950s and 1960s. First used to help fund capital recovery fees for water and sewer facilities, then in the 1970s, with the decline of available Federal and State grants for local governments, their use increased and expanded to non-utility uses including roads, parks, schools, and other public services. [2] Golden v. Planning Board of Ramapo and Construction Industry Association of Sonoma County v. The City of Petaluma, California are the legal basis for the use of impact fees to finance public infrastructure throughout the United States. [4] Finally, in the 1980s the impact fee became a universally used funding approach for services and started to include municipal facilities such as fire, police, and libraries. After court cases in states such as Florida and California approved their legal use, many other states enacted laws which approved the use of impact fees by local jurisdictions. [2]
Impact fees have developed as an offspring of in lieu fees but have had a more significant effect on funding infrastructure. In some cases, the use of the impact fee has developed its own phrase of "growth should pay its own way". [2]
How they are used
Impact fees have become the most important method in infrastructure financing and an essential part of local governments to fund infrastructure or public services. Impact fees may help to assist in the development of needed parks, schools, roads, sewer, water treatment, utilities, libraries, and public safety buildings to the newly developed area. In most cases impact fees are used in new development. An example of this would be when a new neighborhood or commercial development is constructed the developer may be forced to pay the fee for new infrastructure or a new fire station in the area due to the demand the new development causes. In some cases the developer may pass on the fee to the future property owners through housing costs or charges. It can be seen as a growth management tool that collects development funding payment as a way to exercise police power. Impact Fees are seen as a regulation tool, but at the same time their revenue raising purpose can be seen as a tax to some. Still most states recognize and allow the use of impact fees as a way to regulate land use. [1]
The cost of an impact fee can vary from state to state. Generally, areas in the Western United States charge higher fees than other places in the country. They can also vary depending on the type of need by a community with school facilities causing the greatest cost of an impact fee. [2]
Depending on the region or stated impact fees can be classified under different types of names. Early on they were known as Capital Recovery or Expansion fees. In some states such as Oregon they are known as system development charges while in North Carolina they are known as facility fees. No matter the title of the fee within a state they all function on the same premise. [2]
Today, impact fees have become a popularly used method. About 60% of all cities with over 25,000 residents along with 40% of metropolitan counties use impact fees on new developments for public services or infrastructure. In some cities or states such as Florida, 90% of communities use Impact Fees. Twenty six states have implemented the use of impact fees in the western portion of the country, along the Atlantic coast, and within the Great Lakes region. [2]
Linkage and mitigation fees
Since impact fees have been so widely accepted with cities, counties, and states they have helped to lead to the development/encroachment of other types of regulation fees. Two main examples are linkage fees and mitigation fees.
Linkage fees are levied in some states (such as Massachusetts, New Jersey, and California) on nonresidential and market-rate multifamily residential projects, normally upon receipt of the building permit or prior to construction. Linkage fees are a derivative of development impact fees and are exacted on developers by some cities and countries to pay for a number of facilities and services. [6] The proceeds are used to fund the construction of affordable housing residential developments. Arguments against linkage fees are similar to impact fees, including the question of whether local governments have the right to enact these types of programs. [1] Linkage fees and inclusionary zoning regulations are two examples of local government methods to boost the supply of affordable housing.
Mitigation fees are similar to impact and linkage fees but they differ in that their focus is on the environment. These fees are charged to reimburse or compensate the community for the negative impact that development may have on the community. In some cases these fees are used to help preserve a component of the local environment and regulate pollution. There is debate about whether these types of fees are a legally acceptable form of government funding as impact and linkage fees are.
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The Internet in the United States grew out of the ARPANET, a network sponsored by the Advanced Research Projects Agency of the U.S. Department of Defense during the 1960s. The Internet in the United States in turn provided the foundation for the worldwide Internet of today.
The 2007 Texas constitutional amendment election took place 6 November 2007.
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Golden v. Planning Board of Ramapo was a landmark 1971 land-use planning case in New York that established growth management planning as a valid exercise of the police power in the United States.
