Impact Fees: One-time fees charged by local governments at the time of building permit issuance to fund the cost of new or expanded public infrastructure — such as roads, schools, water systems, and parks — made necessary by new development.
What Impact Fees Fund
Impact fees are earmarked for specific infrastructure categories. Common types include: school impact fees (funding new school capacity), transportation/road impact fees, water and sewer connection fees, park and recreation impact fees, fire and public safety fees, and library fees. The fees collected must be used for the specific purpose for which they were charged — they cannot be redirected to general fund spending.
When Impact Fees Are Charged
Impact fees are typically charged at the time of building permit issuance for new construction, additions that increase square footage, and changes of use. They are generally not charged for like-for-like renovations that don't add new units or significantly increase building size. ADU construction often triggers reduced impact fees or, in California, is specifically exempted from certain fees under state law.
How Much Are Impact Fees?
Impact fees vary enormously by location. In high-growth California cities, total impact fees on a new single-family home can exceed $50,000 — including school fees of $10,000–$25,000, transportation fees of $5,000–$15,000, and utility connection fees. In lower-cost markets, total impact fees might be $3,000–$8,000. Impact fees are one of the most significant variables in the total cost of development, especially in California.
Impact Fees vs. Permit Fees
Impact fees and permit fees are different charges. Permit fees fund the cost of processing your application and conducting inspections — they're essentially a cost-recovery mechanism. Impact fees fund new infrastructure necessitated by your project. Both are typically paid at permit issuance, which is why the "permit fee" line on a development cost estimate sometimes looks much larger than expected.