Published: January 30, 2024 | Updated: January 25, 2024

What are impact fees and how do they benefit the community?

Levi Snyder

Levi Snyder

Impact fees are a crucial tool used by local governments to finance necessary infrastructure and services resulting from growth. These fees are imposed on new developments, including commercial, industrial, and residential properties. 

The funds collected from impact fees play a vital role in expanding and enhancing public services like roads, schools, fire departments, parks, and other community amenities. By charging these fees, local governments ensure that the cost of new development is borne by those who benefit from it the most. This prevents existing taxpayers from shouldering the burden of infrastructure costs to accommodate growth. The result is smart and sustainable growth while providing essential public services. 

However, it's important to consider the potential negative impact of excessive impact fees on homeownership. While these fees aim to offset the costs involved in new developments, they directly increase the overall cost of a new home. This can affect a homebuyer's ability to afford a new home and have a notable impact on their purchasing power. 

As an example, a study by the NAHB found that for every $1,000 a home price increases, 48 homebuyers in Coeur d'Alene, Idaho, are priced out of the market. This highlights the importance of understanding the true cost of impact fees on the community. 

If you're interested in getting involved and learning more about the costs of impact fees, we encourage you to explore and engage in discussions on the subject. Education and awareness are key in ensuring that decisions regarding impact fees are made with the best interests of the community in mind. 

Study referenced: -studies/2023/special-study-nahb-priced-out-estimates-for-2023-march-2023.pdf

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Levi Snyder is the 2023 president for the North Idaho Building Contractors Association.