Clint Bolick

Making an Impact

Posted on June 07, 2007 | Author: Clint Bolick
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Prospective Arizona homebuyers face a double-whammy: escalating prices compounded by skyrocketing fees imposed by voracious local governments.

Chandler recently raised its development impact fees nearly 50 percent, adding nearly $6,000 to the price of a home. Avondale's fees nearly doubled with an $8,000 increase, bringing the total burden to a whopping $18,000 per home.

Impact fees are a politically attractive way for cities to raise taxes, because those who bear the burden---future homebuyers---are not yet voters. But the net effect is to make the American Dream unaffordable for people of modest means.

Arizona law limits impact fees to the costs imposed upon the community by a development---necessary roads, etc. But local governments increasingly use impact fees for all sorts of goodies. Mesa, for instance, imposes a cultural impact fee on new residential development, even though the extra costs occasioned by new homes is marginal at best.

Likewise, state law requires local governments to offset impact fees with future anticipated tax revenues that the developments will generate. Some cities--like Goodyear, which just massively raised its impact fees over the advice of their own economic consultants--ignore the state mandate.

Development should pay its own way. But revenue-greedy municipalities should not impose on new homebuyers costs that should be shared across the community as a whole. As is so often the case, local governments are incapable of self-restraint, and need to be reined in. Until they are, the chance of buying a home will remain out of reach for many.

Clint Bolick is the director of the Goldwater Institute Center for Constitutional Litigation.

Key Links:
-Arizona Republic: City impact fees to increase new-home costs by $6,000
-City of Chandler: Development Fee Schedule
-Reason Foundation: Regulation for Revenue

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