IMPACT FEES: SOME FUNDAMENTAL ISSUES

Impact fees are an increasingly popular way for local governments to raise money for new capital facilities. The legal basis for the imposition of these fees, however, is unsettled. This paper considers some of the fundamental questions that must be resolved concerning the legality of impact fees. The paper concludes that in many instances such fees are unauthorized taxes, not fees incident to the regulatory power local governments possess under the police power. The paper suggests that impact fees should play only a limited role in meeting the fiscal obligations of local governments.