In The Vanishing Automobile and Other Urban Myths, I suggested that impact fees might sometimes be a good way for cities to pay for the costs of growth. I have since changed my mind. Impact fees are bad under any circumstances.
I was persuaded of this when I reviewed housing affordability in urban areas across the country. I realized that the cost of existing homes closely tracks the cost of new homes. So when government regulations or fees increase the cost of new homes, the price of existing homes also rises.
![](http://ti.org/GrandRapidsnewhome400.jpg)
Will the taxes paid on this new home pay for the services its residents consume?