Here's the Wikipedia definition of Impact Fee:
An impact fee is a fee that is implemented by a local government on a new or proposed development to help assist or pay for a portion of the costs that the new development may cause with public services to the new development within the United States. They are considered to be a charge on new development to help fund and pay for the construction or needed expansion of offsite capital improvements. These fees are usually implemented to help reduce the economic burden on local jurisdictions that are trying to deal with population growth within the area.I've read that the majority of localities use impact fees, yet look at what's happening to them. It seems like local governments are really pouncing on them as a way to generate revenue.
Between 2004 and 2008, the amount of money charged as an impact fee (generally ranging from thousands to tens of thousands of dollars per new housing unit) grew an average of 76%, with some jurisdictions increasing fees up to 225% in that four-year period.So, although this might work in theory, like just about everything, the government is trying to tax the living daylights out of it.
In some areas of California, for example, impact fees are estimated to have grown to approximately $80,000 to $90,000 per new home in 2008.
Impact fees are so pervasive that they affect nearly every aspect of housing, and have a serious detrimental impact on housing affordability (estimated cost of regulation and impact fees constitute nearly half the value of Seattle area homes).