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Report · June 1997

Who Pays for Development Fees and Exactions?

Steven M. Sheffrin and Marla Dresch

Exactions are payments made by a developer to local governments for the right to proceed with a project. Exactions can include development fees, the dedication of public land, the construction or maintenance of public infrastructure, or the provision of public services. Developers complain that exactions have become excessive, stifling economic growth. Local government officials argue that these levies are essential to growth: Without them, local government could not provide the infrastructure necessary for new development. Although California leads the nation in imposing fees on new residential development, surprisingly little is known about the nature and effects of these fees-for example, the extent to which they are passed on to consumers in the form of higher home prices. This volume presents the results of an econometric analysis of development fees in Contra Costa County-a county in the San Francisco Bay area that has experienced rapid growth in recent decades.


Economic Growth Economy