Impact Fee

AAA

DEFINITION of 'Impact Fee'

A fee imposed on property developers by municipalities for the new infrastructure that must be built or increased due to new property development. These fees are designed to offset the impact of additional development and residents on the municipality's infrastructure and services, which include the city's water and sewer network, police and fire protection services, schools and libraries.

These fees can also be levied against any individual or entity where its actions create an externality within a municipality.

INVESTOPEDIA EXPLAINS 'Impact Fee'

Some U.S. states attempted to institute an impact fee on individuals who owned vehicles registered in another state, who then subsequently registered that same vehicle in their homestate. This smog impact fee was eventually overturned by the U.S. courts, who stated the fee was unconstitutional on the grounds that it unfairly discriminated against persons from other states.

RELATED TERMS
  1. Social Responsibility

    The idea that companies should embrace its social responsibilities ...
  2. Externality

    A consequence of an economic activity that is experienced by ...
  3. True Cost Economics

    An economic model that seeks to include the cost of negative ...
  4. Land Rehabilitation

    A re-engineering process that attempts to restore an area of ...
  5. Property Tax

    A tax assessed on real estate by the local government. The tax ...
  6. Domini 400 Social Index

    A market cap weighted stock index of 400 publicly traded companies ...
RELATED FAQS
  1. What is the difference between a drawdown in banking and a drawdown in trading?

    The term "drawdown" appears in both the banking world and in the arena of trading, but it has completely different meanings ... Read Full Answer >>
  2. What is an adjusted cost basis and how is it calculated?

    The cost basis of an investment or asset is an important consideration in tax planning for individual investors, business ... Read Full Answer >>
  3. How can an investor determine the efficiency of a company's working capital management?

    There are a number of tools that determine how efficiently a company is managing its working capital, principally by looking ... Read Full Answer >>
  4. What are the components associated with working capital management?

    There are three main components associated with working capital management: accounts receivable, accounts payable and inventory. The ... Read Full Answer >>
  5. What does a low working capital ratio show about a company's working capital management?

    The working capital ratio is commonly used to assess a company's financial performance. Low working capital ratio values, ... Read Full Answer >>
  6. How far above the hurdle rate makes for a good investment?

    The general rule for investment when using a hurdle rate and internal rates of return is that when any internal rate of return ... Read Full Answer >>
Related Articles
  1. Home & Auto

    Simple Ways To Invest In Real Estate

    Owning property isn't always easy, but there are plenty of perks. Find out how to buy in.
  2. Home & Auto

    Uncover The Next Real Estate Hot Spot

    Real estate land speculation is a way to get in on a hot investment before a boom hits.
  3. Home & Auto

    Exploring Real Estate Investments

    Discover how owning properties can give you a roof over your head or a check in your pocket.
  4. Professionals

    Top Tips for Retirement Account Withdrawals

    Top things you need to know when it comes to managing the complex task of retirement account withdrawals.
  5. Taxes

    Tips on Charitable Contributions: Limits and Taxes

    An overview of the limits and tax deductions of charitable donations.
  6. Retirement

    Retirement: The Journey Of 1000 Miles

    Substantial time should be set aside to fully outline one's vision for retirement and the specific steps that must be taken to realize it.
  7. Taxes

    OK, So I'll Be Smarter Next Tax Time

    5 tax resolutions to start on right now for a smoother tax return next April 15.
  8. Taxes

    What To Do If You Lost Your W-2

    There's no need to panic if you don't have your Form W-2 to file taxes, there are easy ways to gain access to the missing form or file without it.
  9. Taxes

    What is the Effective Tax Rate?

    The effective tax rate is the average rate at which an individual or corporation is taxed per year.
  10. Professionals

    Vanguard Readies Muni Bond ETF

    Vanguard is set to roll out a muni bond ETF, the firm's first.

You May Also Like

Hot Definitions
  1. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
  2. Wash Trading

    The process of buying shares of a company through one broker while selling shares through a different broker. Wash trading ...
  3. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  4. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  5. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  6. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
Trading Center