Definition of Impact fee

Definition of Impact fee

Impact fee is a fee imposed on property designers by regions for the new framework that must be assembled or expanded because of new property advancement. These charges intend to balance the effect of extra improvement and residents on the district’s foundation and administrations, which incorporate the city’s water and sewer system, police and fire assurance administrations, schools, and libraries.

Collecting these fees against individuals or entities whose activities create externalities in a municipality is also possible.

Brief Explanation

Impact fee is an instrument for moving a piece of the cost of giving new infrastructure to a group. There is sometimes an alternative to paying with money, such as pledging land or other resources. Sometimes, and depending on the law, impact fees are refundable if foundation costs are less than the fee.

Impact fees can be disagreeable, especially if the district requires the land proprietor to give up part of its territory for public use (this can be an infringement of the Fifth Amendment of the U.S. Constitution). Moreover, if they are too high, organizations may move elsewhere, taking employment and their expense base with them.

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