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This paper describes national methodological and fee level trends for development fees (also referred to as impact fees, connection fees, and system development charges). A case study for Tucson Water is also provided to illustrate how broad constitutional standards and guidelines may be applied to address local concerns and objectives. Specific development fee trends described in this paper include:

Legal environment

Methodological approaches (e.g., fee structure, schedule, and offsets)

Economic development issues

Fee levels

More and more water and wastewater (including stormwater) utilities are including development fees as an integral component of their capital funding plans, in part because state and federal assistance for system construction has become more limited. As much of the utility capital cost burden has shifted to the local level, concerns about equity between current and future system users have become heightened as communities are faced with significant costs for system rehabilitation and replacement, as well as additional capacity needs. Development fees are often assessed either to avoid charging existing users for extra capacity costs or to compensate (via reduced future utility bill increases) the existing users for the costs they have previously incurred to provide this capacity.

State enabling acts and case law provide broad guidelines related to development fee calculation and implementation. It is then up to the local community to select specific approaches that are consistent with both the constitutional standards and local circumstances and objectives.
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Document Type: Research Article

Publication date: 2004-01-01

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