Development Impact Fees
[Rappa, John G.
How Development Fees Affect Residential Development
OLR Research Report 2002-R-
December 9, 2002]
Florida Task Force Studies Need for State Regulation of Impact Fees
Washington, DC 200026.
. Volume 5, Issue 1.
“Impact Fees” or “Development Impact Fees” (DIFs) are one-time fees imposed by local
governments on proposed development projects to defray some of the costs of constructing
or improving off-site infrastructure (e.g., sewers, roads, parks, schools) needed to service
The concept of an impact fee or DIF originated in the 1970s in Florida and
was further developed in California.
The Florida legislature recently (i.e., 2005) enacted SB 360 making a number of significant
changes to Florida's Growth Management laws and providing major funding for public
infrastructure. The new law also creates the Florida Impact Fee Review Task Force whose
responsibility it is to examine the administration of impact fees and recommend whether Florida
needs to adopt specific enabling legislation. An impact fee is a charge levied on new homes to
pay for the construction of off-site capital improvements that benefit that development.
In contrast to other states, local government authority to assess impact fees in Florida derives
from home rule authority and case law, rather than a state enabling statute. The Florida
Constitution gives local government broad authority to provide fire protection, parks and
recreation facilities, transportation facilities, schools, libraries, and water and sewer services.
Courts Allow Fees but Set Limits
As early as 1976, Florida courts have considered the legality of impact fees.
The courts have
consistently held that an impact fee is legal as long as the local ordinance contained certain
characteristics. An impact fee is legal, for instance, if it is:
Only applied to new development that requires an expansion of public facilities
Proportionally related to the need
Earmarked for capital facilities and not operating costs
Used for facilities that benefit those who pay the fee
Is a one-time charge, though collection may be spread over time.
Theoretical and empirical studies show that impact fees increase housing production costs and
that builders pass the increase along to their customers.
These same studies cautiously suggest
that the fees also increase the sale prices of existing homes, cause builders to concentrate on
building higher priced homes, and reinforce racial and economic segregation.
The caution stems
from the lack of data needed to test the impact fee’s potential effects and the difficulty in
identifying, isolating, and controlling the other factors that influence the way developers and