Reducing Impact Fees and Exactions: Balancing Costs for Development


In the process of developing and building communities one of the least discussed but important obstacles are the impact fee and taxes imposed on builders and developers. These fees are intended to help pay for public services and infrastructure required by new developments, like roads, parks, schools, and roads. When they're excessive, they could hinder development, impact the affordability of housing, and ultimately affect the vitality of communities. This article will delve into how reducing fees could spur growth and benefit not only developers and builders but also local government as well as advocacy groups, financial institutions and most importantly, residents.

Understanding Impact Fees and Exactions

Before we go into more detail on the subject, let's first understand what fees and exactions actually mean. They're fees that developers are imposed by local governments in order to encourage new developments to provide the necessary infrastructure, and other services that they depend on. While they play an essential function in financing infrastructure for the public, there's a delicate balance to achieve. If they're too high, developers could pass the costs on to renters or homebuyers and increase affordability or even stop projects completely. If you're interested in delving deeper into the nuances of impact fees, consider exploring our impact fee analysis services.

The Case for Reduction

Economic Development and Housing Affordability

The most convincing argument for reducing these costs is the direct impact on economic growth and affordability of housing. The high fees can dramatically increase the cost of building homes and, restricts housing availability and raises costs, making homeownership in the realm of possibility for a lot of. Through easing the burden of these fees and encouraging the development of more residential properties, thereby increasing the number of homes available and making them cheaper to purchase.

Stimulating Investment

The reduction of impact fees and exorbitants can be used as an investment stimulus. For builders and developers, cost reductions can make previously insurmountable projects financially viable, leading to an increase in development and construction. This is not just beneficial to the construction industry, but creates economic benefits for the entire community. This includes employment creation and an increase in the amount of money spent within the region.

Encouraging Smart Growth

Another thing to think about is how reducing the cost of these fees could encourage sustainable, smart growth. With lower costs, developers may be more likely to invest in mixed-use developments as well as affordable housing projects within urban areas already in place that support denser, more efficient land usage patterns. This kind of development may decrease the need for large new infrastructure, further reducing the cost for local authorities over the long run.

Real-World Examples

Let's start with some examples from the real world. In cities where impact fees have been cut or the flexibility of payment has been incorporated and the outcomes have been encouraging. Some cities have introduced tiered impact fee structures which offer lower costs for developments including affordable housing units, which are increasing the building of affordable housing. Another option has seen municipalities offering waivers or reductions for projects that satisfy certain community needs like green building certifications, or public amenities. Cities that have embraced innovative approaches like future-proofing projects with impact fee analysis have witnessed promising outcomes.

impact fee structures

impact fee structures

The Path Forward

What should we do next? Developers and builders getting involved in the discussion about impacts fees and exactions are essential. Local government officials and communities, it's all about finding the right balance between funding essential infrastructure while not hindering the development process. Strategies to consider include:

  • Reviewing and revising regularly the impact fee to reflect the current economic climate and actual cost of infrastructure costs.
  • Giving incentives or discounts in development projects that offer community benefits, for example affordable housing or sustainability amenities.
  • Flexible payment plans allow developers to postpone fees until the completion of projects which eases the financial burden.


In conclusion, it's evident that reducing impact fees and other associated costs plays a crucial role in fostering development, bolstering affordable housing options, and promoting environmentally and economically sustainable growth. At Developers Research, we understand the importance of inclusive dialogue among all stakeholders to formulate strategies aimed at mitigating these fees while still prioritizing essential infrastructural needs. By engaging in collaborative efforts, communities can pave the way for more resilient, equitable, and enduring urban landscapes that cater to the needs of future generations. Join us at Developers Research in our mission to advocate for fair and balanced fee structures that benefit not only developers but also contribute to the betterment of our cities and towns, enhancing accessibility and quality of life for all. Together, let's build stronger, more vibrant communities for a brighter tomorrow.


1. What are impact fees and exactions?

Impact fees and exactions are charges imposed by local governments on developers to fund public services and infrastructure necessitated by new developments, such as roads, parks, and schools. Learn more about impact fees and local government regulations.

2. How do excessive impact fees affect development?

Excessive impact fees can hinder development by increasing the cost of construction, potentially making projects financially unviable for developers. This could lead to decreased housing availability and affordability issues.

3. What strategies can communities and developers consider to mitigate impact fees?

Strategies may include regularly reviewing and revising impact fees, offering incentives for projects that provide community benefits, and implementing flexible payment plans to ease the financial burden on developers. Read about the essentials of development impact fees or mobility fees.

4. How does reducing impact fees benefit residents and communities?

Reducing impact fees benefits residents and communities by increasing housing affordability, stimulating economic growth, creating employment opportunities, and promoting environmentally and economically sustainable development. It helps build stronger, more vibrant communities with enhanced accessibility and quality of life for all. 

5. How can individuals and organizations get involved with Developers Research?

Individuals and organizations interested in advocating for fair fee structures and promoting sustainable development practices can join Developers Research in our mission. They can participate in collaborative efforts, engage in dialogue, and contribute ideas to help create resilient, equitable, and vibrant communities.