Can Development Impact Fees Help Mitigate Urban Sprawl?

Many local governments have reacted to sprawl by adopting urban containment policies to limit fringe growth and encourage core development. An alternative is to design impact fee programs that account for the higher costs of providing services to remote locations. Zone-based impact fee programs carry this potential, but there is no empirical work investigating their effects on residential development. We explored the effects of a zone-based impact fee program on residential permits issued across the Albuquerque MSA using 21 years of data, identifying countervailing influences on density. We found the program mitigated sprawl by reducing the share of construction occurring near the urban fringe and increasing the share in more centrally located areas. However, we found no evidence the program increased core development. During a brief period when Albuquerque had impact fees but an adjacent community did not, spill-over effects that exacerbated sprawl were observed