The effects of impact fees on multifamily housing construction

Development impact fees may create more housing opportunities for lower-income households within suburban areas if there is a fiscal incentive behind the adoption of exclusionary land-use regulations. Using panel data estimation techniques that allow us to control for unobservable heterogeneity and potential endogeneities, we estimate the effects of different types of impact fees on multifamily housing construction using data from Florida counties. Impact fees earmarked for public services other than for offsite water and sewer system improvements are found to expand the stock of multifamily housing construction within inner suburban areas. Water/sewer impact fees, on the other hand, are found to reduce construction throughout the entire metropolitan area.