Which statement best describes the typical use of impact fees?

• A. To offset capital facility costs attributable to new growth.
• B. To fund ongoing operational expenses.
• C. To subsidize private businesses.
• D. To finance debt service on existing facilities.

Answer: (A)

Impact fees are charges imposed on new development to cover the capital facility costs created by that growth. They are intended to fund the capital improvements needed to serve new residents and businesses—things like roads, schools, water and sewer lines, parks, and other infrastructure. Because they are paid at approval or permit time, they help ensure that new growth pays for the facilities it necessitates, rather than imposing ongoing operating costs on the existing tax base. They are not used to fund ongoing operations, subsidize private businesses, or cover debt service on existing facilities. So the best description is that impact fees offset capital facility costs attributable to new growth.