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spaces as museums. Rationally speaking, such a fee- if it is to be imposed at all-should probably be as- sessed against residential units. After all, it is residents who generally find the time to visit museums after work or on weekends. Less subtle and unsupportable examples of illegal fees include the imposition of police and fire fees against housing, but not against nonresidential devel- opment. (Impact fees should not discriminate by type of land use.) Or how about the calculation of park impact fees based on desired levels of service rather than on lower, existing levels of service? Another ex- ample pertains to school impact fees, which have his- torically accounted for the highest fee amounts. Col- lecting impact fees for a geographic area that will not generate the need for any increase in school facilities is verboten as is the application of hypothetical future student generation rates, which are considerably higher than the actual rates experienced by the jurisdiction. Flaws in the methodology of calculating fees or inac- curate data assumptions can result in hundreds or, in some cases, thousands of dollars per house in unsub- stantiated fees. Monitor the Process Increasingly, state law requires fee-imposing ju- risdictions to include representatives of the private sector on fee review or liaison committees. This is cer- tainly an important step in making sure that private as well as public sector interests are accorded the oppor- tunity to participate in the review process. Often, how- ever, the few private sector representatives are as over- whelmed as the other committee members by pages and pages of text, reams of d:lta, and maybe even un- decipherable computer printouts. Consequently, the committee, including its private sector representatives, simply takes the path of least resistance and agrees to a consultant's methodology, data, and technical rec- ommendations. Given that the actions of ~he committee automati- cally vest the fees with a measure of credibility, it is imperative that all interested parties monitor the im- pact fee process. If local builders defer their involve- ment until fee amounts are detennined, they will be faced with an uphill struggle to amend the impact fee report and its recommendations~specially if the other members of the committee and the larger public have already "bought into" the methodology and its data assumptions. Major Caveats Even though impact fees raise several questions regarding their technical aspects, they also point to several caveats that are particularly gennane and understandable to the interested party. A few of these are discussed below. . o Recognize that impact fees pertain only to new capital facilities that directly benefit the payer. Many observers still believe that impact fees can be used for capital facilities that benefit existing residents. In'fact, impact fees are assessed and collected to fund only those capital facilities whose need is generated by new Knowledgeable and willing home builders must participate in and evaluate all of the relevant information related to the I., impact fee determination process. development. Further, expenditures based on impact fee . collections must demonstrate a direct benefit to those paying the fees. Under some statutes, an existing facil- ity is eligible for impact fee financing if it was deliber- ately oversized to accommodate new development. II Be aware that the impact fees collected must be spent within a reasonable time period. A mandated or general rule-of-thumb holds that about six years is a reasonable period in which to expend fees, although 10 years may suffice. In most cases, the jurisdiction must operate on the good faith assumption that the money will be spent for a specific facility within the mandated period. The time limitations encourage or require the preparation of capital improvement plans. D Educate the electorate on what impact fees do and do not accompli.sh. As already noted, fees fund only those capital facilities necessitated by new develop- ment. Fee collections cannot be allocated to rehabili- tation, retrofitting, or replacement of existing capital facilities. The greater cash cow of operating expenses must be explained to the electorate. Otherwise, the public will wrongly expect that impact fees can solve the full range of local fiscal problems. II Make certain that fees are assessed only to main- tain current levels of service-unless ajurisdiction has adopted a plan to address existing deficiencies and is actually implementing this plan.