An impact fee is a charge a community makes to a developer to pay for improvements that are needed because of a new development. Examples are roads, sewer, water mains, water storage, parks and fire stations. Impact fees are not universal. Some communities require that the developers pay for roads, water and sewer that the development requires.
To the extent that smaller water mains, narrower roads and longer distances form fire stations are given as incentives, it is possible to deduct the proportional cost of these items from the impact fee. When considering the lower cost of water, include the lower storage costs as well as water mains and hydrants.