American Dream

NORTH CAROLINA — The Raleigh City Council wants to raise impact fees on construction by 72 percent. Cities charge “impact fees” on residential construction to pay for the increased costs of growth on city services. But the rationale behind impact fees focuses only on the negative impact of growth and ignores the obvious other half of the equation: growth’s benefits.“New homes lead to higher property-tax revenues,” Sanera, JLF research director and local government analyst, said. “Converting old farmland with low property values to a subdivision with lots of new homes raises property values exponentially. Land that used to produce low property-tax revenues for the city now yields relatively high property-tax revenues.”The impact-fee report commissioned by the city ignores those benefits, Sanera argues. The report prepared by Duncan & Associates neglects to consider Raleigh’s increased tax revenues from home construction and ownership.“What Raleigh needed was a comprehensive economic analysis of growth,” Sanera said. “What Raleigh paid for was an unbalanced, one-sided look at the impact of growth. How can you gauge something’s real impact if you don’t examine its benefits along with its cost?”