The Truth About Impact Fees - Taxation Without Representation in the New Millennium!
By Mary Loucas, AHA
Home prices in Northern Illinois have skyrocketed over the past 10 years. Increasing land costs and municipal and county impact fees are driving the price of a new home well beyond the reach of many middle and low income families. For over 15 years, the home-building industry has been fighting to keep these fees at reasonable levels and within legal limits so that housing in the region remains affordable. Nevertheless, in some communities impact fees are now adding $10,000 to 20,000 to the cost of a new home.
Impact fees are charges assessed by counties and municipalities to commercial and individual builders of homes ostensibly to recover some of the infrastructure improvement costs a community will incur in accommodating new development. Units of local government argue that impact fees cover costs that future tax revenue streams do not. If school impact fees are being assessed where you live, they are probably being collected by either the local school district, the county or the town in which you live. Impact fee amounts can range from a few hundreds of dollars per home to many thousands of dollars per home. They are assessed against and paid by commercial builders and individuals who build their own homes alike, including retirees and those with no children in the school system. Rarely are these parties given any opportunity to participate in the process that gives rise to this new tax upon them. Unlike the general property tax system in this state, there are few rules, few state statutes and few local ordinances that set ground rules to protect the interests of the parties who ultimately pay these fees. In short, the assessment of these fees is taxation without representation in a new form; in a new millenium!
School impact fees are frequently regressive in nature. In other words, an $8,000 fee maybe assessed against a $100,000 home and no fee may be assessed against a $500,000 home since over time it will generate more property tax revenue to the local school district. Thus, those least able to pay the fee are frequently asked to pay the greatest fee.
Illinois law does not explicitly allow counties, municipalities or school districts to collect impact fees for school buildings. The law does allow counties and municipalities to require subdividers of residential land to donate land for school purposes or to pay cashin- lieu fees for the purchase of school lands. The Illinois Supreme Court ruled in O.L. Krughoff et al. v. City of Naperville that the city had the power to require of builders the dedication of land or the payment of cash-in-lieu fees to purchase school land. The Court held that the donation requirements must reflect the impact on the community that is "uniquely attributable to and fairly proportioned to the need for new school and park facilities created by the proposed developments." Although this case opened the door for Illinois municipalities to adopt impact fee ordinances for a whole host of purposes, too often those municipalities have forgotten or overlooked this essential constitutional limitation in their assessment and collection of impact fees.