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Title Impacts of Impact Fees: Report to the City of Albuquerque, New Mexico
Highlights
                     
Administrative Processes & Streamlining X There is implicit recognition that lengthy permitting processes may discourage development of affordable housing.
  Check This report recommends expedited permitting processes to encourage affordable housing development.
                     
Fees and Dedications X There is implicit recognition that impact fees may discourage development of affordable housing.
  Check This report finds that fees have no apparent negative effect, enhances local economies, and recommends basing fee calculations on costs of providing services or waiving impact fees for affordable housing development.
Description This report by Arthur C. Nelson reviews literature regarding the effects of impact fees on local economic development and housing prices, and discusses the controversy of enacting impact fees. Nelson states that local governments must often pay for the cost of new growth and that taxes do not generate enough revenue to cover these costs. As a result, cities impose impact fees to account for the cost of new development. However, opponents argue that impact fees discourage development, have negative economic consequences, raise housing prices, and cause a decline in the production of affordable housing.

This report finds that impact fees can discourage development in the short term, but the level of development eventually returns to what it was originally. The report also finds that impact fees do not have an apparent negative effect on local economies, but can actually enhance local economies. Furthermore, the report finds that although housing prices may be increased by impact fees they can ultimately reduce property taxes and increase the value of infrastructure to an amount greater than the cost of the fees. In addition, if the fees result in an increase of housing prices, the report recommends that affordable housing be allowed special development incentives. These incentives include calculating fees to be based on the cost of providing services in different service areas, expedited permitting, and impact fee waivers.

Publication Date 2004
Organization Metropolitan Institute and Virginia Tech-Alexandria Center
Web Locationhttp://www.cabq.gov/council/documents/ImpactsofImpactFees.pdf

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Notice: The contents of this record reflect the views of the author and/or promulgating municipality, and should not be construed as representing the views or policies of the U.S. Department of Housing and Urban Development or U.S. HUD's Office of Policy Development and Research. No attempt has been made by U.S. HUD or its contractors to verify the accuracy, currency, or validity of the record contents presented herein.

          

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