Tuesday, April 17, 2007

Impact fees – doing them right …

  Impact fees –- Are they a subtle and effective way for governments to shape and discourage harmful or costly development?  Or are they a license for governments to abuse their power over private property owners?  Or perhaps a little of both?

   Two impact stories are in the news.  First, the Arizona Daily Star reports on the growth of impact fees on new development in Tucson, one of America’s fastest growing cities.  The city argues, with considerable force, that such fees are justified to help pay for additional city services that are generated by new development.  But some property owners, including some commercial property owners, argue that Tucson’s high fees are helping push new development out of the city and into rural areas that don’t have such fees.  But of course one of the theoretical arguments for impact fees is to encourage developers to “infill” in areas in which there is already infrastructure, and to avoid “sprawl.”  But the Tucson practice seems to be encouraging the opposite!  Once again, the ideas of land use law work best if done at a regional level, not locality by locality.

   Meanwhile, the Los Angeles Times reports that Caltrans, the state’s road-construction agency, is increasingly seeking impact fees, and even suing to gather them, from developers whose projects would generate higher demand for highways.  Some developers use a special word to refer to the state’s use of such fee … yes, “extortion,” the term famously quoted by Justice Scalia, writing for the Supreme Court in the 1994 Dolan case, about land use exactions.

Freeway    A problem with the use of impact fees for California roads is that almost any new development would generate the need for more road construction and maintenance, whether it is a new project in Orange County that would overburden the jammed freeway system, or a new town in the Sierra foothills that would require building new roads fro scratch.  But then again, the principle behind incentive-based rules is that law encourages parties, such as developers, to look for development that would generate the LEAST in new traffic.  I suppose a downtown L.A. new urbanist project of dense housing, stores, and offices might support a successful argument that it would have the effect of REMOVING some cars from the highways, thus justifying the imposition of zero impact fees.  But maybe an “impact award” from the government? …


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