An Alternative Financing Solution

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With impact fees as high as $60,000 in some parts of the country, moderately priced homes with fees passed on by builders are increasingly out of reach for targeted buyers.

June 01, 2003

With impact fees as high as $60,000 in some parts of the country, moderately priced homes with fees passed on by builders are increasingly out of reach for targeted buyers. That is why the development industry is closely watching an impact fee financing structure recently put in place in Pasco County, Fla.

Officials there have created a Capacity Unit Assessment (CUA) program, where the municipality finances the pro rata share of the infrastructure impact fee for each new home and then recoups the finance charges and its share of the infrastructure cost through annual surcharges.

While this does not resolve the issue of whether impact fees are an equitable way to pay for new infrastructure, it does remove the upfront cost of these sometimes-large fees, which are then passed directly to the buyer through the price of a new home.

A potential benefit of CUAs is the low overhead involved because local officials administer CUAs without big startup costs. This would make the CUA process viable for relatively small new-home communities.

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