Effect of Fees

In the short-term, impact fees may cause a slight increase in housing costs if the local real estate market allows the builder to shift the cost forward to the buyer. However, in the long-term it is more than likely that the cost will be shifted backwards to landowners in the form of lower prices that may be bid for undeveloped land.

No, if the price of new housing actually rises because of impact fees, then the value of existing housing will follow suit because it is an integral part of the local real estate market. Current move-up homebuyers who move up will be able to use their “windfall profits” to pay for the increased costs of the new home. As they say, “a rising tide lifts all boats”.

Adoption of impact fees reduces pressure on local residents to raise taxes and fees. And with new development paying for its own capacity-enhancing infrastructure needs, any current funds that have been designated to pay for those projects can be shifted to the more immediate needs of existing residents, such as for facility maintenance and rehabilitation.