Impact fees are passed through to new home buyers in the form of higher prices or reduced choice of size, location, and amenities. Due to the incentives facing policymakers and the lack of accurate information on the true cost of new development, impact fees are unlikely to reflect the true cost of public services or infrastructure. High impact fees are regressive, reduce the supply of moderately priced housing and may negatively affect a community's ability to attract and retain good-paying jobs. Impact fees are charges collected by counties and municipalities from developers to recover the cost of infrastructure improvements attributable to new development. Impact fees are an increasingly common tool that municipalities around the country use to pay for new schools, sewers, roads, parks, and other public amenities.
Municipalities impose other costs on developers that add significantly to the price of new homes.
As large as they sometimes are, official impact fee schedules dramatically understate the true costs imposed on developers by municipalities. Other costs include annexation fees, permit and application fees, connection fees, time spent in public hearings, interest paid on loans or capital investments pending approval of applications, and the cost of complying with many other kinds of regulations. Many expenses are unique to each project and therefore cannot be averaged. Regulatory delays of three and four years are documented by the case studies. Impact fees do not reflect the true cost of infrastructure and services caused by construction of new homes.