What Are Impact Fees

Impact fees are one of the primary ways that local governments fund public infrastructure needs. Impact fees are usually charged to new development, but some jurisdictions also charge them for residential remodels or other improvements.

Impact fees are often levied in response to demand for services such as roads, water and sewer lines, parks and school facilities. The fees are collected from developers who apply for building permits in order to mitigate the costs of providing additional municipal services.

Impact fees are typically paid at time of permit issuance, which can take months after application is made. Some municipalities offer an escrow account option so that they can collect the funds while they process applications and issue permits

How Are Impact Fees Calculated?

Impact fees are typically based on square footage or floor area of the proposed development project or a per unit cost. They can also be calculated by other factors including estimated vehicle trips generated by a development, or number of students entering a school district.