Both municipalities and developers would benefit from widespread use of impact fees.  An impact fee is a calculated and consistent charge on new development that is used by municipalities and other public entities to offset the cost of creating or expanding infrastructure to cope with the impacts and needs of the development.  Municipalities benefit because they receive funds necessary to make capital improvements; and developers benefit because impact fee programs are more predictable and expeditious than the current system of informal mitigation payments.  

Currently, impact fees are not expressly permitted in state law.  Massachusetts municipalities have the right to impose impact fees through their “home rule attributed police power,” but historically local attempts to codify fee programs have been overturned when challenged in court.  To be legally defensible a fee must be reasonably related to the infrastructure needs created by the development to which it is applied, the fee payer must receive some benefit from the additional facility, and the fee must be proportional to the impact of the development.

In the absence of clear state authorization and guidelines for impact fees, many municipalities negotiate exactions that can be unpredictable and costly to developers, while often failing to mitigate the full impact of developments.  The current “closed door” process has little rhyme or reason.  Sophisticated municipalities might squeeze more out of developers, while larger developers have the resources and experience necessary to navigate the overly long and complex process.  Cities and towns may lack the technical capacity to evaluate impacts or to effectively negotiate with developers.  For municipalities, the benefits dwindle when boards are working at cross purposes and resources are consumed by long negotiations.  

Impact fees are becoming the mitigation tool of choice across the country.  A recent study conducted by Duncan Associates found that 27 states have enabling legislation to define and allow fees, 19 of which have passed laws since 1990.  Other states, such as Ohio, do not have formal impact feel legislation but allow municipalities and counties to implement fees through the use of their police power.

A few states have formalized regional impact fee systems.  New Jersey uses special Transportation Development Districts to ensure that traffic impacts across municipal borders are fully addressed.  California allows its transit authorities to implement impact fees and links regional fees to the state’s environmental review process.  Other states allow county governments or regional authorities to implement impact fees.

It is important to note that impact fees will only be possible and effective in the context of proactive municipal planning.  In order to effectively use impact fees, cities and towns must have comprehensive and consistent plans for land use and the necessary capital infrastructure.  Only when those preconditions have been established can a municipality assess fees according to a fair and legally defensible formula.

19.a    MAPC should collaborate with public and private stakeholders to conduct outreach and technical assistance regarding impact fees

19.b    MAPC should collaborate with public and private stakeholders to develop legislation explicitly authorizing impact fees in Massachusetts

19.c    The Legislature should adopt impact fee authorizing legislation and should provide funding to support training and education regarding best practices

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