Impact Fees

The problem: Local jurisdictions can charge different impact fee rates for single-family residences than they do for multi-family residences. In many jurisdictions, multi-family units pay more! This is extremely disproportionate as often individuals purchasing multi-family units earn a lower income than those buying single-family homes. 

The solution: The same impact fee rate should be applied to both single and multi-family residences. This will significantly reduce the burden on lower-income households. 

The problem: Not all jurisdictions collect impact fees or collect impact fees in all four categories. It is not clear which jurisdictions collect which fees, if any. This also means it is not easy to track where the money is being spent. 

The solution: Clearer reporting from jurisdictions on whether they collect impact fees, which impact fees they collect, and impact fee rates needs to be collected. The Department of Commerce should be required to track this information and report account balances, collections, encumbrances and how they relate to specific fee collected, expenditures, and refunds for all local jurisdictions collecting impact fees. 

The problem: Impact fees cannot pay for existing deficiencies, ongoing costs (example: maintenance, operations, salaries, etc….), or for growth outside the jurisdiction where the fees are collected. Unfortunately, it isn’t clear where the money is being spent as not all jurisdictions report this information. 

The solution: Separate accounts must be established for each type of impact fee collected and project purpose (example: traffic impact fees must go in a traffic account and can only be used for traffic projects). The Department of Commerce should be required to track and report on these accounts to ensure transparency and that the funds are being used properly. 

The problem: Impact fees cannot be the sole source of funding for any capital improvement. Unfortunately, it’s unclear how much or little that actual percentage of the project is made up by impact fees. 

The solution: Establish a threshold for impact fees to fund no more than 50% of a project. 

The problem: Currently, local jurisdictions have 10 years to spend or dedicate impact fees to projects. That is more time than a substantial amount of mortgage lengths, meaning those who paid the impact fee will have likely sold their home before projects are completed.  

The solution: Shorten the timeframe to spend impact fees. By reducing the amount of time to six years, more homeowners will be able to enjoy the benefits of the projects they helped fund.  

The problem: The deferral program provides a financial benefit to builders, allowing them to pay the fee at the end of their project when they have likely generated revenue, rather than paying upfront. Unfortunately, it is not always clear how to qualify for a deferral program. 

The solution: We must streamline the deferral program, including CLEAR instructions on how to defer publicly available.