Impact Fees: New Jersey

New Jersey’s Municipal Development Impact Fee Authorization Act, if enacted, could broaden municipalities’ ability to collect from developers. To offset costs municipalities incur because a project is approved.

The way impact fees are levied tilts too far in favor of developers. At the expense of municipalities.

For example, the hiring of additional teachers accompanies more kids in schools. Which is one byproduct of the building of more homes – more kids in schools.

A) Homes are built.
B) Families move in.
C) Families have kids.
D) Kids go to school.

Yet, in New Jersey, increases in education funding are not able to be passed through to developers by way of impact fees. Though they should be.

Because increases in education funding to accommodate larger classroom sizes – and the hiring of more teachers – is as much of a development-related cost as one can think of. It’s attributed to the building of new homes.

Education funds for a New Jersey municipality collected through impact fees imposed upon developers should be permissible.

Larger classrooms. More teachers. Potentially, the construction of a brand new school. These are costs a municipality will incur when student counts increase.
One proposed solution? Broadening the scope for the collection of impact fees by municipalities.

Whereas critics view additional impact fees as impediments to growth, that argument is easily overcome.

Impact fees can be collected in lieu of property tax hikes.

Furthermore, impact fees are specific to the development at-hand. And to the area being developed. As such, using impact fees enables existing homeowners to not be unduly burdened by increases in property taxes which go towards funding development which really does not directly affect them.