Longitudinal Effects of Impact Fees and Special Assessments on the Level of Capital Spending, Taxes, and Long-Term Debt in American Cities

Changhoon Jung, Chul-Young Roh and Younguck Kang
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Changhoon Jung: Auburn University, jungcha@auburn.edu
Chul-Young Roh: East Tennessee State University
Younguck Kang: KDI School of Public Policy and Management

Public Finance Review, 2009, vol. 37, issue 5, 613-636

Abstract: This article examines whether the use of impact fees and special assessments affect the level of capital spending and two major own source revenues of local capital spending (taxes and long-term debt) by analyzing a panel of 695 American cities with populations over 20,000 during the time period of 1980—2000. Since impact fees and special assessments are heavily used in a growing community and because it covers less than half the costs of new development, the findings demonstrate that the private financing of public infrastructure (impact fees and special assessments) increases the level of local capital spending. It also leads to an increase in the level of long-term debt use. Although it provides partial tax relief, it is not a strong substitute for taxes. Thus, impact fees and special assessments are not a substitute for local capital spending. It is rather a supplemental revenue source to fund local capital infrastructure.

Keywords: special assessments; impact fees; capital spending (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:37:y:2009:i:5:p:613-636

DOI: 10.1177/1091142109344585

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