The Coming War on Impact Fees

An image of a sanitary sewer manhole cover.
Photo by Eliobed Suarez / Unsplash
The Supreme Court ruled Friday that developers and home builders in California may challenge the fees commonly imposed by cities and counties to pay for new roads, schools, sewers and other public improvements.
The justices said these “impact fees” may be unconstitutional if builders and developers are forced to pay an unfair share of the cost of public projects.

LA Times

In a landmark decision on Friday, the Supreme Court of the United States ruled that developers and home builders in California have the right to challenge fees imposed by cities and counties to fund essential public infrastructure such as roads, schools, and sewers. The justices expressed concerns that these "impact fees" could be deemed unconstitutional if they unfairly burden developers with the lion's share of public project costs.

This ruling marks a crescendo in what proponents describe as "market urbanism", a trend where public entities increasingly turn to market-based approaches to address urban challenges. Elected officials, including Michigan's Governor Gretchen Whitmer, have recently gone to great lengths to accommodate developers in a bid to boost housing production, often at any cost despite no evidence of an actual housing shortage.

This is a train wreck in slow motion. Who, for example, defines what constitutes an "unfair share" of infrastructure expenses? Moreover, in their efforts to sidestep protracted legal battles, it will be communities that end up bearing the brunt of compromises as they find themselves in this no-win situation.

For more information, check out this article from the National Association of Counties.