The burden of development impact fees

Abstract

Abstract This paper examines the incidence of development impact fees. The analysis shows how the burden created by the fees is passed forward to consumers in competitive markets. In constrained markets, a multiplier effect increases the amount that is shifted forward. Within demand driven or, ‘hot’ markets, the type of market many large and growing cities experience, the burdens are shifted back to developers, builders and landowners. Changing impact fee levies to reflect changing market conditions will increase housing prices by increasing uncertainty.