Impact Fees: Good, Bad, or Indifferent?

City Councilor Michael Cadigan has an op-ed in today’s ABQ Journal that defends the City’s practice of charging <a href="“>”impact fees” on development. The opinion piece was in response to Councilor Sanchez who recently questioned the economic impact of these fees when he said, “fees for the west end of Central Avenue are nine times higher than on the east end,” and that he’s “concerned that we are not getting commercial development … because of the way the impact fees work.”
Certainly, I understand why builders don’t like impact fees. We as citizens are paying taxes on a wide variety of items and yet, those who construct new buildings and developments must pay and then pass along these fees to those who purchase or lease that space. Whether or not there is any direct benefit to these people is unclear. Where the money goes that would have otherwise been allocated to this newly developed area is also unclear.
Ultimately, the problem with impact fees is that it is hard to tell who exactly benefits from them. What needs to happen is for builders to band together to construct their own internal infrastructure. Perhaps they could strike a deal with the government along the lines of a Business Improvement District that would handle such infrastructure needs privately? The problem is, once the government gets involved, there is no accountability or ability to separate “impact fees” from other taxes and spending and those who pay the fees wind up just paying another tax.
City Council is not going to solve this problem because they like taxes. Only the local development community can push Council to get rid of or limit these fees while also taking care of infrastructure needs.