"Development Exactions, Impact Fees, and Twin Cities Regional Dynamics" was the topic presented at the April research workshop by Professor John Adams from the Department of Geography and his graduate assistant Laura Hansen. According to Adams, impact fees stem from two responsibilities of local government: land use regulation and the provision of public facilities. As local governments face increased demands for public facilities and services because of new development, their ability to collect the revenues necessary to finance these demands cannot keep up. Impact fees are an option being implemented by municipalities around the country to help bridge the gap between demand and available resources.

Politically, impact fees may be an easier sell within a community than an increase in property taxes. Serving as a tool to slow or direct growth within a community and requiring communities to develop an assessment of existing facilities and predict future needs were also cited by Adams as advantages to impact fees. A common argument against impact fees is their effect on the provision of affordable housing and the potential for pricing some individuals out of the housing market.

In her presentation, Hansen addressed the legal issues surrounding impact fees as well as the status of impact fees in Minnesota and around the country. Examples of issues raised in the courts regarding impact fees include whether there is a proper relationship between the amount of the fee and the purpose of the fee; the proportionality and geographic relationship of the fee to the location of the development; and whether there is legislative authority to impose them.

While more than 20 states have given local governments express statutory authority to impose impact fees, Minnesota has not. Hansen reported that a road connection charge implemented by the city of Eagan to help pay for added road construction costs was invalidated by the Minnesota Supreme Court in 1997. The Court ruled that the charge was a tax, not a regulatory fee, and that the city of Eagan's statutory power to tax did not include this type of road access charge. On the other hand, Wisconsin authorizes the imposition of impact fees for the capital costs of building or expanding specific public facilities and services. Their statute also allows for exemptions and fee reductions for the development of affordable housing.

Hansen also highlighted a number of cities around the country that have implemented impact fees including San Jose and San Diego, California; Keller, Texas; and Hudson, Wisconsin. She noted that it is difficult to generalize characteristics of these fees because they vary widely in their amount and the range of facilities on which they can be imposed.

Professor Adams' work on impact fees is related to his project on "Twin Cities Regional Dynamics" which is part of the Transportation and Regional Growth Study. Additional information on this topic will be available in a report later this year.