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.The result of this step is a fairly clearpicture of where development will go, how it will be served, and how muchfacilities will cost.The fourth step is determining the phasing and funding of needed capitalfacilities over time a capital improvements program.Specific facility costsand revenue sources are identified.The gap between costs and revenues canbe filled, at least in part, by impact fees.This step, in other words, defines themagnitude of fee revenues required to meet future infrastructure needs.Finally, along with zoning, design review, and other implementation mea-sures for growth management, impact fee programs are determined.There aremany technical details in calculating and administering impact fees, for whicha number of publications supply guidance.The point is that impact fees basi-cally serve a regulatory function in ensuring provision of adequate public fa-cilities when and where needed.As such, they are one component of a growthmanagement program the tail on the dog, so to speak (although in somecontroversial cases it seems to be the tail that wags the dog). 138 5.MANAGING DEVELOPMENT OF INFRASTRUCTUREfice space, and $6990 per 1000 square feet of retail space.(Many com-munities, however, impose fees only on one or two types of infrastruc-ture, which significantly reduces the above averages.) Not surprisingly,fees have increased substantially since a previous survey in 1988 up 39percent for single-family houses, for example.8A few communities have adopted special types of fees, often called linkage fees, intended to assist in financing housing programs and spe-cial amenities.The best known and most stringent is San Francisco s Of-fice Housing Production Program, which requires developers of down-town office buildings of over 50,000 square feet of floor space to pay feesfor improvements to transit, housing, public art, child care, and publicopen space.Boston levies fees on nonresidential development, includinginstitutions, to provide funds for housing improvements.Issues in Imposing Exactions and FeesExactions and fees raise four major concerns that must be considered inestablishing local policies for financing facilities: legal constraints, equityconsiderations, and administrative concerns.Legal Constraints.The extent to which local governments can demandcontributions from developers, and for what purposes, has generated aconsiderable amount of litigation in state and federal courts.(See thesummary of major court cases in Chapter 2 for some details.) Three con-stitutional guarantees awarding property owners compensation forpublic taking of property, equal protection, and due process limit localgovernments powers to require exactions.Exactions must be clearly re-lated to a public purpose, applied equally to all types of development toavoid an exclusionary effect, and not be arbitrary and capricious.The general test, applicable in virtually all states, is that exactionsshould bear a rational nexus to a development s impacts on local pub-lic facilities.A local government may, for example, require a developerto improve a certain road intersection if the developer s project will gen-erate enough traffic to warrant the improvement.The local governmentcannot, however, legitimately require developers to pay for improve-ments to intersections many miles away that traffic from their projectswill seldom use.9The legal foundation for impact fees is more complicated than forother forms of exactions.First, it must be established that fees are al-lowable under the police powers granted by the state to the local gov-ernment, rather than defined as a form of tax for which specific state au-thorization is usually required.In some states, local governments haveproceeded to adopt impact fees under liberal home rule provisions.Inother states, local governments have secured special state legislation al- USING EXACTIONS AND IMPACT FEES TO FINANCE INFRASTRUCTURE 139lowing them to adopt fees.A number of states have adopted state en-abling legislation allowing communities to adopt impact fees under cer-tain conditions and restrictions.Assuming that impact fees are allowable local acts, their calculationand administration must meet stiffer criteria than those used for othertypes of tax revenues.To avoid double taxation, the amounts of feesshould take into account regular taxes that property owners will pay forpublic improvements and must not include funds needed to correct ex-isting deficiencies (for which current residents are responsible).In ad-ministering impact fee programs, fees collected from specific develop-ments must be expended within a reasonable time for facilities in areasthat will benefit those developments.Equity Considerations.Exactions and fees also raise some issues aboutwho should pay for infrastructure improvements.At one time, it was as-sumed that the general community should be responsible for fundingmajor infrastructure systems, the theory being that long-lasting facilitiesare enjoyed by generations of beneficiaries who gradually contribute tofacility expansion through taxes.Then, in response to rapid postwargrowth, local governments began shifting responsibilities to developersfor funding facilities on their development sites.But that simple divisionof financial responsibility appears to be breaking down
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