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1. Overview

Overview: What is a development impact fee (DIF)?

DIF is a legal one-time, upfront cash payment made by a developer for local government’s approval of his/her development project.

• DIF offsets some/all of public facility costs
• Focused on improvements outside project boundary
• Examples include parks, roads, water/sewage, schools, and police/emergency
• Intended for capital costs but sometimes used for O&M and administration expenses

Overview: How is it different from other funding?

Transportation enhances property values

• New or improvedinfrastructure providesspecial benefits tonearby properties.
• Access to transportationinfrastructure createshigher land values.
• Special assessmentsreturn a portion of thisspecial benefit to thepublic sector thatcreated it.

Compared to...	DIF provides
Negotiated exactions	Add speed and predictability Generate more revenues
Special/benefits assessments	Fund wider variety of services, focus on off-site improvements Less secure source of revenues; limited financing options
User fees	Allow reserve capacity regardless of usage Tied directly to local planning process

DIFs can buy into existing excess capacity and allow recouping of prior investments; best-suited for urban infill developments

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