When designing an impact fee schedule, many localities apply the same fee rates throughout the entire jurisdiction. However, denser parts of a city or county often have better-developed infrastructure than areas on the fringe. When infrastructure availability is uneven across a jurisdiction, some local governments choose to sub-divide the jurisdiction into smaller "service areas" with fees within each service area varying depending on existing infrastructure capacity. These jurisdictions charge lower impact fees in sub-areas requiring fewer infrastructure improvements to accommodate new growth. This tiered fee schedule not only facilitates the development of more affordable homes but also helps to discourage development in fringe areas that leads to increased sprawl. [1] Officials in Phoenix, Arizona, for example, have divided the city into eight "feeless" areas and six areas where impact fees are charged. "Feeless" areas are those in which existing public facilities

Photo courtesy of Arizona Department of Housing

currently have the capacity to accommodate projected growth. The six impact fee areas are not as well-developed, and will require varying levels of infrastructure improvements as the city continues to grow. Across each of these fee areas, charges associated with new development vary depending on the need for new facilities spurred by new development. Net fees charged on a new single-family home in one of the impact fee areas range from a low of $6,631 to a high of $17,765 in areas requiring considerable new investment. By more precisely defining service areas for impact fees, communities can ensure that rates remain low for homes in well-served neighborhoods. Click here to learn more about Phoenix's impact fees.

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You are currently reading: Adjust fees based on existing infrastructure and service area In some areas the existing infrastructure already has adequate capacity to accommodate new homes. Lowering or eliminating impact fees in such neighborhoods helps preserve affordability and may create an extra incentive for affordable infill development. Other pages in this section: Adopt a proportionate impact fee schedule In contrast to a flat, per-unit fee structure, proportionate impact fees reflect variations in unit size, location and other features that have been shown to influence demand for services. Allow fee reductions or waivers Full or partial impact fee waivers help preserve the affordability of new homes. Some communities find alternative funding sources to offset these losses and ensure that public services infrastructure keeps pace with new development. Allow impact fees to be paid on a deferred basis By allowing payment of impact fees to be deferred until the end stages of the development process or paid over a period of years following occupancy, communities can help to reduce housing and development costs without affecting the level of services provided. Click here to view other resources on impact fees.

[1] Note that some critics of impact fees argue that these fees can actually lead to sprawl when unevenly adopted across regions. To the extent that developers seek out jurisdictions that do not impose impact fees, and "leapfrog" over those that do, development may not proceed in an orderly, well-planned fashion.