NOTE: This summary is very simplified, and is provided for informational purposes. Any questions on this topic should be directed to The Office of the Property Rights Ombudsman.
What are Impact Fees?
An impact fee is a one-time charge imposed by local governments to mitigate the impact on local infrastructure caused by new development. Growth in the form of new homes and businesses requires expansion or enlargement of public facilities to maintain the same level and quality of public services for all residents of a community. Impact fees help fund expansion of public facilities necessary to accommodate new growth.
What Statute Governs Impact Fees?
Impact fees are governed by the Impact Fees Act, found in Chapter 11-36a of the Utah Code. Local governments may charge impact fees, if they follow the terms of the Impact Fees Act.
What Types of Impact Fees May be Charged?
Impact fees may be used for permanent buildings and other physical facilities owned by the local government which have a life expectancy of more than 10 years. A local government may charge impact fees to fund the following public facilities:
water systems and water rights,
stormwater control systems,
- municipal power facilities, and
public safety facilities (i.e., police and fire facilities).
May Impact Fees be Used to Maintain Existing Facilities?
Impact fees are intended to help fund expansion of public facilities, including acquisition of property or water rights, materials, and construction. Impact fees may not be used for routine maintenance of existing facilities, or for employee salaries.
May Impact Fees be Used for Any Public Facilities?
The funds collected by impact fees may only be used on the facilities associated with that fee. For example, a road impact fee must be spent on road construction, and a park impact fee must be spent on parks, etc.
May Impact Fees be Used to Raise or Improve Service Levels?
Existing levels of service are used to determine the amount of the fees. In 2013, the Utah Legislature amended the Impact Fees Act to allow local governments to base impact fees on proposed levels of service, if funding from other sources is in place to raise the service level. See H.B. 224, 2013 Utah Legislature. The bill is included in the 2013 Legsilative Summary, available under the “Recent News” section of this website.
Who Determines the Amount of Impact Fees?
Impact fees may be assessed by cities, counties, and special districts. The governing body approves an impact fee ordinance imposing the fees, following the requirements of the Impact Fees Act.
How are Impact Fees Calculated?
Impact fees are determined through a complex analysis of a local government’s existing level of public services, future needs due to growth, and the anticipated cost to maintain the existing level of service. Please contact the Office of the Property Rights Ombudsman for a more detailed explanation of how impact fees are calculated.
What is a Capital Facilities Plan?
A capital facilities plan is an analysis of the existing facilities and levels of service, along with anticipated growth and demands created by new development. A capital facilities plan is required if a locality wishes to adopt an impact fee ordinance.
How Can the Ombudsman Office Help?
The Office of the Property Rights Ombudsman can inform and educate property owners, developers, and local governments on impact fees, and the impact fee process. The Office may issue Advisory Opinions on specific impact fees. Please contact the Ombudsman Office if you have any questions.