Impact fee

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An impact fee is a fee most commonly assessed on the construction of new buildings within a jurisdiction. The purpose is to pay for expansion of new government buildings such as fire stations, police stations, sewer and water supply systems, parks, libraries, and other government agencies and services.

It is generally implemented by local governments, so that existing residents and businesses will not be forced to pay for needs caused and used by only new ones. In places without an impact fee, the municipality (or county, etc.) must either charge the existing tax base for something which was not their fault, or borrow through bonds and pay them off (plus interest) with part of the property tax revenue the newly-developed land generates.

The fee may also be assessed because of the environmental impact it causes, such as additional runoff from stormwater caused by pavement and other impervious surfaces, and the destruction of trees. The fees collected then go to mitigation of the damage caused, so it is less serious of a problem.

Impact fees may also be applied to vehicles, especially automobiles, because each new one introduces new pollution and traffic. The U.S. states of Georgia, Florida, and California tried to do this, but the practice (called a "smog impact fee" in California) was declared unconstitutional in state and federal courts because it discriminated against persons from other states, in violation of the U.S. Constitution's Commerce Clause.