Sunday, May 21, 2006

Impact fees

There is a debate going on in the Triangle regarding impact fees and their effect on curbing growth. The argument posed by many, including former Cary mayor Glen Lang, is that newcomers should be footing the bill for the new schools, roads, and infrastructure. Lang even argues that it is a case of basic economics where those who benefit should bear the costs. While I am all for people paying for the services they consume, taxing developers seems like a very poor way to accomplish this goal.

Impact fees don't directly raise the cost of a house like many people like to think. If Glen Lang wants to talk about basic economics he should understand that supply and demand determines prices, and that imposing taxes only raises the cost of production. Some developers will be able to absorb this new cost but others won't. Supply of housing will shrink and prices will rise. Yes, this may curb growth, but it will also raise prices for existing residents who may be looking to move into a larger home.

If the argument is that we want people to bear the costs of the services they consume then why don't we make parents bear the full costs of schooling their children? Why not let roads and infrastructure be built by the same developers who build the surrounding communities? Why must the city and county governments be the middleman?

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