Impact Fees Decision Mechanism: Growth Management Decisions In Local Political Market

Abstract

While scholars of growth management have focused on the influence of impact fees on housing affordability or land price, less attention has been paid to impact fees in themselves. In particular, there are few studies on the variation in impact fees across cities. From the political market perspective, the decision mechanism of impact fees is more politically complex than economic models have suggested. This study investigates which conditions account for the variation in the amount of impact fees, which are an essential financial resource of local governments. The empirical analysis supports the assumptions of city government on the supply side, and developers and existing residents on the demand side, to decide the amount of impact fees. The findings show that cities with a council-mayor form of government on the supply side are more likely to increase impact fees. On the demand side, cities where residents have a more Democratic ideology tend to increase fees, and, contrary to the initial hypotheses, those with relatively many developers are more likely to increase impact fees.