The "growth should pay for growth" mantra is total crap. From Sightline Institute:
1. Buildings don't ****, picnic in parks, ride buses, or spawn school age kids. Homebuilders are not sorcerers that spawn humans to fill their buildings. They build because existing humans need housing and will pay for it.
2. Yes, adding costs to development raises the cost of housing. Things like impact fees put most of the burden on first-time buyers and renters.
3. Creating exclusionary zones through policy isn't a good look. When a city imposes rules, fees, and zoning that inflate housing prices, incumbent homeowners win, while renters, and newcomers hoping to buy, lose.
4. You don’t get a free pass just for being early and hanging around. Operations, maintenance, and repair comprise the lion’s share of the public outlays for many services. large capital investments—a new sewage treatment plant, for example—are usually funded by 30 to 40 year bonds. Spreading out the payback over decades minimizes the rate hikes, which shrink as more customers arrive and start using the service. Payback periods for different capital improvements often overlap. All told, when the costs of ongoing expansion are so smeared out over time, the length of residency becomes irrelevant. On average the cost for the service usually ends up roughly proportional to the number of people it serves.
5. Adding housing to cities is the world’s biggest urban planning no-brainer. Perhaps the most agreed upon idea in the contemporary field of urban planning is the importance of concentrating new growth in urban areas. On the environmental side, compact development cuts climate pollution and preserves our forests and farms by curtailing sprawl. On the economic side, clustering jobs turbocharges innovation and productivity. On the equity side, abundant housing in prosperous neighborhoods is an escalator for upward mobility. Imposing impact fees on new homes in urban centers flies in the face of these immensely valuable, large-scale, long-term benefits.
6. Impact fees are ossified relics of stale, suburb-centric thinking.
For expansion into undeveloped “greenfield” areas, policymakers have a legitimate case for impact fees. In that scenario, land may be worth next to nothing until a municipality extends basic infrastructure—roads, power, water, sewer—so that functioning homes can be built. If the public foots the bill, it’s a direct subsidy to the owners of the property served—and worse, a subsidy that encourages unsustainable sprawling growth. Impact fees justifiably recapture some of that subsidy from the property owners, while at the same time chilling the incentive to sprawl. In built-out urban places, however, the situation is different. There, new homes rarely need targeted new public investment to be viable. And besides, governments from the local through federal levels widely agree that housing should be directed to urbanized areas. Washington State’s Growth Management Act authorized impact fees over two decades ago but made no distinction between built-out urban centers and exurban greenfields. It’s past due for an update.
7. It’s fun to believe that someone else will pay… until it backfires.
Utility bills are regressive. Rising property taxes can put homeowners on fixed incomes in the red. Meanwhile, many municipal budgets are cash-strapped. Together, these factors make impact fees politically tempting: someone else pays (or so it seems). It’s akin to the rising popularity of forcing homebuilders to pay for affordable housing through inclusionary zoning (IZ), but just like IZ, impact fees precipitate adverse unintended consequences. To avoid doing more harm than good with impact fees, cities can instead fund infrastructure through taxes and utility charges that spread the burden equitably across all residents, businesses, and property owners. And to protect those who can least afford it, they can provide breaks or exemptions to low-income people, as local governments currently offer to Seattleites on property taxes and electricity and water bills.
8. If you’re trying to mitigate an affordable housing crisis caused by a shortage of homes, talking about new housing as if it’s toxic waste may not be the best messaging strategy.
Impact fees hinder equity and sustainability not only in concrete ways. Hitting homebuilders with impact fees also reinforces the public perception that the job of adding homes in city neighborhoods is a noxious activity, and that those who do it are trying to get away with something. Today, kneejerk cultural enmity for developers may be the most chronically powerful obstacle to rule changes that would help cities achieve the housing abundance necessary for equitable growth. Grandstanding about impact fees feeds the toxic narrative that homebuilding is the problem, rather than a critical part of the solution for affordability. The inimical words perpetuate flawed policy. You don’t have to love developers (or capitalism) to recognize that they are a necessary means to a shared goal: more homes for people who need them, lower prices, greener cities, more equity.
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