Impact Fees and Housing Affordability

Impact fees… to advocates they are a means of “generating revenue for funding or recouping the costs of capital improvements or facility expansions necessitated by and attributable to the new development .” To detractors, they are just another way for government to reach into taxpayers’ pockets. From the Foundation’s perspective, it would be nice if an actual marketplace for roads, schools, and other services now provided by the government existed because people would actually pay for what they use, not what government bureaucrats tell them they’ve used.
Regardless of their merits, however, according to a new Harvard study outlined here, there is no doubt that impact fees have a negative impact on housing affordability.
Among the study’s findings:
Each $1,000 increase in the cost of a new median-priced home forces 217,000 prospective buyers out of the marketplace;
Every $819 rise in fees paid at the beginning of the construction process–such as an increase in the price of a construction permit, a tap fee, a proffer or an impact fee–adds an additional $1,000 to the final price of the home;
Developers pay an average of $3,114 more than it cost for basic infrastructure and services for a typical 2,077-square-foot house.
Although there was talk about a year and a half ago from Mayor Chavez that he’d consider re-aligning user fees to make Albuquerque more competitive, nothing seemed to come of it. With the national housing market in the tank and Albuquerque bound to be impacted sooner or later, perhaps now is the time to evaluate the situation?