Friday, May 23, 2008

Impact Fees on New Construction

In 1991, the Georgia legislature passed a law allowing for the imposition of impact fees on new development. Of course the home builders challenged the law all the way to the supreme court where the high court decreed that impact fees were legal, appropriate and not a new form of tax.

The basic purpose of an impact fee is based on the undisputed fact that newly constructed residential and commercial projects create a larger demand for county/municipal services than is covered by their tax base. The new property taxes cover enough for maintenance and operations but not enough revenue to capitalize new projects.

This imbalance results in a strain on existing infrastructure unless local government can find a way to fund the new needs created by the new projects. 

Simply said, without putting a small one time impact fee on all new residential and commercial projects all the people who reside in the county are paying for the impact created by the new people who have moved or will move into the county. It is interesting to note that Bryan County, Effingham County and Jasper County all have chosen to go with impact fees. So have 20 other Georgia counties all of which are experiencing rapid growth.

The bottom line is this: Who should pay for the results of growth (new libraries, police precincts, roads, recreation, jails, and courts)? Those who already live here, or the people who have chosen to move here? It's an easy answer in my opinion.

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