flexiblefullpage - default
Currently Reading

A Closer Look at Impact Fees

A Closer Look at Impact Fees

By NAHB December 8, 2016
For new-home construction, there is concern regarding the accuracy, efficiency, and use of impact fees.
This article first appeared in the December 2016 issue of Pro Builder.

Just because impact fees have been around since the 1970s doesn’t mean they should be any local jurisdiction’s primary solution for financing public facilities.

This is especially true in the growing number of places where impact fees are being miscalculated and misused.

A prime example involves an ongoing dispute between the city of Bozeman, Mont., and the Southwest Montana Building Industry Association (SWMBIA), which revealed—for the second time within the last 15 years—significant misappropriation of funds from impact fees. “We started noticing that among the city’s projects using impact fee revenues, several were projects involving preexisting deficiencies in infrastructure, not new infrastructure. To us, that just didn’t make sense,” said Eugene Graf, an active SWMBIA member and owner of E.G. Construction.

Frustration grew among Graf and his fellow members of the SWMBIA. This past January they decided to commission an audit of the city. The Development Planning and Financing Group Inc. (DPFG) conducted the audit to closely examine the previous five-year span and determine where exactly the impact-fee money was going, and if it was being appropriately used.

The recently completed audit revealed an estimated misappropriation of $7.2 million. The largest components of the total amount include:

  • $4.1 million to fund a water treatment plant instead of the construction of a water distribution system
  • $2.2 million to fund a water reclamation facility instead of the construction of sewer collection lines
  • $935,000 to fund the construction of a fire station in an effort to correct an existing deficiency

City officials have reportedly denied any wrongdoing, though their correspondence with the SWMBIA to this point has been slow. 

Despite the rapid growth in the Bozeman market, affordability remains an important issue for many builders and area residents. Current city impact fees for a 2,400-square-foot home on a quarter-acre lot tack on an extra $10,000.

In response to similar concerns across the industry regarding the accuracy, efficiency, and use of impact fees, NAHB worked with DPFG on an update to the “Impact Fee Handbook.” The free guide includes new examples of common mistakes municipalities make while calculating and imposing impact fees.

The updated “Impact Fee Handbook” is available in the Infrastructure Finance and Development Fees section of NAHB’s Land Use 101 resource library.

(Click image to enlarge)


Related Stories


High Court EPA Ruling Has Wider Ramifications for Regulations' Reach

NAHB Policy Briefing: Wider ramifications of Supreme Court's EPA ruling; number of Hispanic workers in construction is on the rise

Jobsite Safety

Rise in Trench-Related Fatalities Spurs Enhanced Nationwide Safety Enforcement

Following a sharp rise in the number of trench-related fatalities in the first six months of 2022, OSHA is increasing its worksite inspections and rolling out a number of new safety initiatives


Net Zero Construction Is on the Rise, but Inconsistent Regulations Could Halt Progress

Confusing building codes and regulations have builders scratching their heads and wondering where to start when it comes to net zero construction

boombox1 -
native1 - default

More in Category

native2 - default
halfpage1 -

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.

Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.