Over the last 30 years, the topic of increasing or lowering impact fees has been much debated among Florida counties.
In partnership with researchers from the DeVoe L. Moore Center, The James Madison Institute (JMI) released a timely new report, “Assessing Florida Local Government Impact Fees: 2024-2025,” which details regulatory challenges facing Floridians who need to construct more homes and have more types of housing.
The study includes an analysis of impact fees, which are payments collected by local governments to offset the costs of new growth, within five counties in Florida: Collier, Lee, Manatee, Sarasota and Sumter.
Common uses for impact fees include funding roads, emergency medical services, law enforcement, public parks, and other amenities. These five counties represent very different approaches to designing and implementing impact fees.
The JMI study also offers local governments guidance on how to better approach and refine fees in order to ease the burden on builders and homeowners.
Impact Fees
New development places additional demands on public facilities. Residential development in Florida is subject to a range of government-imposed charges. While these fees are necessary to fund public services and infrastructure, careful fee schedule design is critical.
Poorly-structured fees can create inequities, discourage development, and exacerbate housing affordability challenges. Impact fees are payments collected by local governments to offset the cost of new growth. Common uses for impact fees include funding roads, emergency medical services, law enforcement, public parks, and other amenities.
Many localities have also introduced mobility fees to support projects aimed at accommodating or expanding transportation options like walking, bicycling, and public transit. Impact fees ensure that the cost of expanding these facilities is borne by the new developments that create the need, rather than by existing residents.
Impact Fees vs. Taxes
Impact fees offer local governments a practical alternative to taxation by providing a targeted way to fund infrastructure without increasing taxes on existing residents. As tax resentment increased following high inflation in the 1970s, local governments sought creative ways to shift the cost of improving public facilities directly onto those generating the demand.
Impact fees emerged as a promising solution. By 2019, local governments charging impact fees for single family detached homes collected roughly $13,500 per home on average. By requiring developers to “pay their own way,” it became possible to fund infrastructure sustainably while minimizing the financial burden on current taxpayers.
Despite their utility, impact fees have some major limitations.
“Residential development in Florida is subject to a range of government-imposed charges. While these fees are necessary to fund public services and infrastructure, careful fee schedule design is critical. This study shows the various approaches counties are taking in collecting impact fees and suggests areas for policy improvement. Housing policy is not a one-size fits all approach and impact fees should not be either.” — Doug Wheeler, Director of the George Gibbs Center for Economic Prosperity, The James Madison Institute
“Florida has a significant gap between housing unit supply and demand, and the state needs more housing for homeowners and renters. This report also offers Florida cities and counties guidance on how to better approach and refine fees in order to right-size the burdens on builders and homeowners.” — Dr. Samuel Staley, Director, DeVoe Moore Center
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