School impact fees on new residential development are touted as an innovative way to fund new school facilities. In reality, they are a makeshift funding solution that hides the real problems and fails to tackle school construction needs in a fair and fiscally responsible manner.
School impact fees are an inefficient tool for financing and planning new school services and facilities. The revenues generated from a one-time fee on new homes will naturally rise and fall with the real estate market, creating an unpredictable revenue stream that is completely unsuited to addressing long-term capital needs.
Further, the fees are assessed on new housesï¿½ not new families—making it impossible to predict how many children will be sent to a local school district from any one subdivision. In any new subdivision one might find childless households, empty-nesters, home schoolers, families relocating within the same school district and families with children in private schools.
And that prompts serious questions about the fairness of the fees. It is unfair to ask residents who won't use these school facilities, such as empty-nesters and retirees, to pay for them when they are already paying property taxes that contribute to public education. Additionally, under the fee system, the costs of financing new schools are disproportionately borne by new residents, even though established residents will also benefit from the schools.
School impact fees lack transparency because the funds come from targeted populations that may not actually benefit from future schools and educational services. Unlike roads or water and sewer systems, it is difficult to target educational facilities to the families who will benefit the most.
Financing needed new schools in growing communities is a legitimate challenge, but school impact fees are a Band-aid, not an answer.
Asking new residents to bear the costs of new facilities and services—even though the benefits will be shared by the community at large—is fundamentally unfair.
Leonard Gilroy is a certified planner and policy analyst at the Reason Foundation. An archive of Gilroy's research and commentary is here, and Reason Foundation's growth and land use policy research is available here.