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History[ edit ] Impact fees were first implemented in Hinsdale, Illinois in 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.
Impact fees became more widely accepted in the United States in the s and s. First used to help fund capital recovery fees for water and sewer facilities, then in the s, 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.
Finally, Impact of the legal and regulatory the s 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.
In some cases, the use of the impact fee has developed its own phrase of "growth should pay its own way". In Lieu fees are different from impact fees and are not as flexible because they relate only to required dedications where they can be appropriately used.
Because the use of the in lieu fee may not always be efficient, planners and cities are now turning to impact fees as a more appropriate way to collect money for facilities and services. Impact fees can be more easily applied to needed infrastructure or facilities while in lieu fees cannot.
Impact fees can be applied before new development is started or completed, which may allow costs to be transferred to future residents in the area. Another advantage of using an impact fee compared to the in lieu fee is that it can be applied to any new construction from single family homes, apartments, and even commercial development.
In lieu fees may not always be as easily applied to any specific zone. Finally, impact fees can be implemented earlier than in lieu fees so that the capital need matches the need for services.
The first focuses on recognizing that the fees are positive exactions of funds for a community and should be used in that manner. Second, impact fees should be used for any need in the community.
At the time when impact fee usage first started people argued whether they should just focus on utility types or include other types of special services of facilities.
Some argued for just utility types because only the people paying the actual fee would receive the service. This is known as a closed ended use. An open ended use, such as parks or libraries, allows anyone to use the service, even if they have not directly paid for the service.
Still people argue and believe that development can affect all services and should help contribute to them.
They must follow the rational nexus and roughly proportional rules or guidelines. There must be a connection between the new development and the need for the new facilities in the region.
Also, the impact fee must be able to benefit the person paying the fee along with calculating the fee on a fair proportionate formula for all residents. It focuses on determining who should pay for what in the case of impact fees.
Some may have to pay for the fee, but may not get to use the service which can be seen as a tax, but by using impact fees on people that cause the need for the new service it helps to not cause a tax on everyone and allows those that are not using the service to be excluded from paying the fee.
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. 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. 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. 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.
Two main cases that dealt with impact fees development have been Pioneer Trust and Savings Bank v. Mount Prospect and Gulest Associate Incorporated v.
Constitution's Takings Clause was found to apply to an impact fee by the U.The Regulatory Oversight Committee (ROC) is a group of 71 public authorities with full membership and 19 observers from more than 50 countries established in January to coordinate and oversee a worldwide framework of legal entity identification, the Global LEI System.
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