Impact Fees

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Impact fees are fees a city charges your new development for the additional burden (or impact) the development places on a public service system.  For example, when your new development uses city provided water, you get a monthly water bill.  But that bill only pays for the water that comes out of the tap.  To get that water to your new development, additional infrastructure had to be put into place, or existing infrastructure was incrementally burdened.  Additional capacity for pipes, pumps, filtration plants, water towers, labor, etc. had to be put into place for your specific development.  Since your additional development has burdened that infrastructure system, you pay an impact fee to help support and expand that infrastructure.  Instead of all water users simply paying a higher monthly water bill for the water supply infrastructure expansion to accommodate your specific new development, you as the developer pay it more directly through an impact fee.  Impact fees can apply to city provided services of: water, sewer, roadways, and sometimes fire department, EMS, police, and public parks.

 

In my experience, larger and growing cities have a tendency to charge impact fees to help pay for their growth.  Smaller and slower growing cities do not because the incremental demand your new development puts on the system is minor.  And they don't want to disincentivize development with impact fees. 

 

Call the city and find out what impact fees they will charge for your development and get an estimate of the dollar amount of those fees and put that in your development budget.  Some impact fees are nominal, but some can go into the six figures.  This is also a task you can assign to your civil engineer, who will probably have experience investigating impact fees with the city. 

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