What are impact fees in the context of construction?

Impact fees are charges imposed by local governments on developers to help cover the costs associated with the increased demand for public services that results from new construction projects. When a new development is built, it typically leads to a need for expanded or enhanced services such as roads, schools, parks, and utilities. These fees are designed to ensure that the developers contribute to the public infrastructure that will support the new residents or businesses associated with their projects.

The rationale behind impact fees is to ensure that existing taxpayers are not solely burdened with the costs of infrastructure expansion necessitated by new developments. By collecting these fees at the time permits are issued, local governments can fund necessary improvements without immediately taxing current residents or diverting funds from other areas of need.

Understanding impact fees is essential for contractors and developers as they can significantly influence the overall cost and feasibility of a construction project. Properly factoring in these fees during project planning helps ensure that the financial aspects of development are manageable and compliant with local regulations.