Impact Fees and Sprawl

March 21st, 2003 by Tim Evans

Governor McGreevey last week stepped up his smart-growth campaign with a call for expanding the use of impact fees.
Today, impact fees are paid by developers to help offset the costs of new water, sewer and road work necessitated by new development. The new impact fees would be paid by developers toward the costs of additional off-site improvements required by the new development, including costs for new roads, sewers and schools.
Municipalities in 18 other states have authority to levy impact fees in varying ways. Amendments to New Jersey’s land use law permitting the expanded use of impact fees are now being drafted.
Without a strong link to planning, impact fees have a mixed record in managing growth. One study found that an Illinois town which imposed impact fees of about $5,000 per unit still experienced a 102 percent growth in population between 1980 and 1990; while another Illinois town with impact fees of about $3,000 saw a population growth in the same period of only 20 percent.

FOR SMARTER GROWTH, LINK IMPACT FEES TO BETTER PLANNING

Simply charging developers more to build is not a smart-growth solution. Indeed, without a solid connection to better planning, impact fees could bring a community nothing more than well-financed sprawl.

To promote smarter growth, impact fees should be used to impede growth where it is not desired, consistent with the state’s blueprint for smart growth, the State Development and Redevelopment Plan. Towns with rural and environmentally sensitive lands needing protection must be allowed to charge the highest impact fees.

Likewise, impact fees can be used to encourage growth and redevelopment in more appropriate places. Impact fees in existing urban, suburban and rural centers must be the lowest, or waived completely, to help spur the growth and revitalization of these places.

Ideally, smart growth could be achieved even faster if the new law allowed for the pooling of fees by region to specifically offset the higher costs of development in and near existing communities. With such a regional arrangement, there would be no need to charge impact fees at all in areas targeted for growth and redevelopment, as these places would benefit from the higher fees collected where growth is discouraged: a “reverse impact fee” with benefit to all communities in the region.

Impact fees could also be used to achieve one of the Governor’s oft-stated aims of bringing local plans into compliance with the State Plan, if impact fees were extended only to communities that agree to achieve conformance. Impact fees should be waived for construction of affordable housing.

Without links to better planning, impact fees will simply subsidize sprawl. When linked to better planning, impact fees can be a useful tool in bringing smarter growth to New Jersey communities.