"What price growth...?" |
Impact fees help meet growth costs
In response to Larry Allen's letter in which he suggested that all those who favor impact fees do not understand economics, I offer my own lesson.
Yes, he is correct when he says that all taxes are paid by consumers. He's also correct when he implies that builders will pass on to buyers whatever costs they can, including impact fees.
The question isn't the self-evident, "Will impact fees make homes more expensive?" It is, "Should growth pay for growth?"
That's the nugget!
If you profit from growth, you will have one view. If you are going broke subsidizing growth, you will have another.
Should we all pay higher taxes for new projects, or should we shift more burdens to the newcomers who create needs? New residents need more pavement, new bridges, larger LOTT plants, bigger libraries, additional schoolrooms and larger waterworks, all often loosely called "infrastructure" but which I'll call "community benefits."
Yes, impact fees make new homes more expensive. That is the point. The price of the new house burdened with impact fees includes not only the cost of labor, materials and profit but also the costs of extra community benefits needed by these additional residents.
So the economics lesson in two words: Growth costs.
I'll agree that impact fees are taxes. They are taxes paid by people who moved here and required additional community benefits. If they don't pay their taxes, all of us will.