Alert May 14, 2009

Municipalities Soften on Development Impact Fees

Local agencies often impose impact fees as a precondition to project approval. The fees are used to finance roads, schools, affordable housing, transit systems, and other infrastructure and services related to private development. Municipalities argue that impact fees are both a necessary and a fair method of mitigating the costs that befall them as a result of development. Developers argue that impact fees cause a disproportionate increase in construction costs. In the current economic slump, impact fees can make the difference between a project’s completion and its abandonment. Consequently, some municipalities are softening their historically hard stance regarding these fees. In Riverside County, for instance, the Western Riverside Council of Governments will lower its Transportation Uniform Mitigation Fund fee as of July 1, 2009. The City of Menifee is also considering cutting its impact fees by 20% to attract development and spur construction jobs.