Florida’s governor recently signed a new bill into law, House Bill 337, limiting a local government’s ability to impose impact fees on builders and developers embarking on new residential and commercial construction projects. The law, which took effect immediately and whose limits will be applied retroactively for increases in impact fees made since January 1, 2021, aims to prevent counties from hiking up costs associated with new builds.
An impact fee is a one-time fee assessed by local governments to developers and builders to offset a new development’s impact on existing infrastructure. The rationale behind the assessment is to essentially charge a tax on new construction to defray its costs on existing vital services such as schools, parks, roads and emergency services. Think: An increase in residents and users equals more of a burden on existing infrastructure.
Unfortunately, for years developers have complained that the impact fees collected by local governments are not actually used by the municipalities for remediating the impact the new growth has on the infrastructure at all. Oftentimes, developers argue that instead of investing the impact fee funds on improvements to the existing infrastructure affected by a new project, the impact fee funds are diverted to areas not remotely impacted by the new construction and are actually squandered away on other pet projects of local governments.