New NAHB Report Details Alternatives to Impact Fees

Filed in Housing Finance, Land Development by on January 12, 2015 0 Comments

Special Purpose Tax Districts book cover-smallWith development once again under way, the age-old pressure points in the development approval process also have returned. As communities look at ways to finance new infrastructure, it is all too easy for them to bump the impact fees on new residential developments back up to pre-recession levels for roads, schools, water, sewer and so on.

But impact fees are an imperfect tool for financing infrastructure. Because you can’t spend them until they accumulate, they rise and fall with the pace of construction, and they unfairly burden new development to address a broader community need.

They are often based on flawed assumptions about costs of growth and improperly spent. It’s worth noting that relying on them during the sustained construction boom that preceded the recession did not help build a way out of the overall infrastructure challenge.

There are alternative municipal finance solutions that better meet the needs of both private development and the public sector, so NAHB’s Land Development Committee recently hired a CPA to write a report on one of the best alternative approaches to impact fees: special district financing. This new report, An Overview of Special Purpose Taxing Districts, is now available online, as well as in hard copy by request.

Quite simply, special districts are revenue sources that are both more reliable and more equitable. There is a clearer connection between the assessed fee and the benefits that the fee is paying for. They can be used more easily with other financing tools, and they are much more of a positive collaboration between the public and private sectors.

NAHB’s land use staff also continues to update the extensive, free online toolkit, Land Use 101, which offers issue backgrounders, credentialed reports and presentations for members and EOs to use locally in the face of an expanding array of development challenges.

For more information, email Claire Worshtil, or call her at 800-368-5242 x8309.

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