Seductive Fallacy of Impact Fees

April 12, 1994

Considering that Westminster Mayor W. Benjamin Brown has announced he is running for Carroll County commissioner, he comes off as courageous for condemning what he says are the county's low rates of property taxes and impact fees. Especially in an election year, most politicians consider it political suicide to even suggest the need for higher taxes and fees.

But Mayor Brown's stance is not as brave it might appear. To raise the additional revenue, he advocates increasing impact fees -- charges tacked on to new construction, ostensibly to pay for schools and roads -- because most county residents think they won't have to pay them.

There is a deceptive allure to impact fees. They supposedly target the new migrants into the county. The reasoning is that since these residents are responsible for requiring new schools and other public facilities, it is fair they should shoulder those costs. But the reality of these charges is otherwise. Impact fees are imposed on all new construction, not on the location of a family's last residence. If you happen to have grown up in Carroll County and buy a new townhouse, you pay the impact fee. If you have lived in this county for decades and decide to move to a newly built, larger house, you pay the fee. A new resident who buys an existing house doesn't pay a cent.

Impact fees also are not a reliable source of revenue. When the economy turns down, housing starts fall. However, the school-age population continues to balloon, as it did during the last recession. South Carroll had overcrowded classrooms long before the current recovery started. The recovery will only accelerate the growth, and the county will never catch up with school construction if it expects to finance it through impact fees.

Mayor Brown urged the commissioners to set the impact fee at whatever level can be justified. If the county's intent is to make housing even less affordable, only then would a substantial increase in the impact fee make sense. Since every developer passes those fees on to the homebuyers, it will price many young families out of Carroll's housing market. The county would be better off to find more equitable and reliable sources of revenue to finance Carroll's necessary public infrastructure improvements.

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