Introduction
In our study on impact fees, we examined rates across the state and found that there are large differences, with the highest fees in the metro Atlanta and metro Savannah areas. In 2023, more jurisdictions are considering implementing impact fees across the state and many jurisdictions, like Atlanta, have large scheduled increases in fees. While impact fees are a tool to help defray the costs of infrastructure needed to support new development, they are also an additional housing cost as Georgia experiences skyrocketing housing prices. We hope this second impact fee study, which will focus on trends and financial impact on the community, will inform the economic discussion around impact fees and educate the public about why, where and how they are used.
Trends
The Metro Atlanta Arms Race: Impact Fee Rate Increases that Make Inflation Blush
Since Cherokee County implemented the first county-wide impact fees in Georgia in 2000, impact fees have become an increasingly important part of revenues for some jurisdictions. In particular, cities and counties in the metro Atlanta area have impact fees that are significantly higher than the state average. In recent years, some metro Atlanta jurisdictions increased their impact fee rates, which has caused nearby jurisdictions to increase their impact fees as well. The City of Atlanta is one example of a jurisdiction that raised its rates to more closely match surrounding jurisdictions.
The City of Atlanta is in the process of increasing its impact fees across the board. Previously, Atlanta had not raised its rates for 27 years. In 2020, its single-family home rate was $1,380 and its multifamily rate was $743. These rates are on a staggered increase plan and will rise from $3,682 in 2022 for a single-family home of 1,500-2,499 square feet to $4,908 in September 2023. Rates for the other two single-family tiers, less than 1,500 square feet and 2,500 square feet or greater, have risen similarly as well. Multifamily has three tiers: low-rise, mid-rise and high-rise, with rates of $2,961, $2,524 and $2,078 respectively in 2023. While Atlanta had not raised its rates in a long time, these rates represent a 3.55x increase in just three years – at a time when housing prices are already spiking. To assess the effect of these rate increases, the City of Atlanta commissioned an impact fee study from the consulting company Duncan Associates. The firm determined that Atlanta’s new fee would “not likely have much of an effect on the City’s ability to attract new development.” This is likely because other jurisdictions around Atlanta already have higher rates than the proposed increased rates, with some planning to increase their impact fees further. While the competitive landscape of many metro jurisdictions may not be changing as many are increasing their impact fees, the effect on homebuyers and builders is thousands of dollars in increased costs.
Cherokee County has the highest revenues from impact fees in Georgia. In March 2022, Cherokee County increased its impact fees for single-family homes to $2,008.64 from $1,465, rising again in 2023 to $2,690. That is an 83% increase over two years. Multifamily impact fees will have a similar increase to $2,638 from $1,447 for apartments and to $2,622 from $1,442 for townhomes and condos.
Fulton County does not have a county-wide impact fee, but the cities of Alpharetta, Milton, Roswell and Sandy Springs do. Three of those cities, Alpharetta, Milton and Sandy Springs, have the top three impact fees in the state for single-family homes and all types of multifamily homes. In general, the impact fees for cities in Fulton County are exceptionally higher than the statewide average of $2,439.62 for single-family and $2,010.18 for multifamily, and contribute towards high housing costs.
Fulton County: Home to the Highest Impact Fees in Georgia
Alpharetta ($6,689.53), Atlanta ($3,682), Milton ($7,757.85), Roswell (average single-family rate of $3,224.88) and Sandy Springs ($6,854.82) rank as some of the highest in the state in overall single-family home impact fees. Multifamily impact fees are similarly high compared to others across the state. Although median household income is high in some Fulton cities, the overall county median income is only $72,741. When paired with some of the states’ highest impact fees, this makes Sandy Springs, Milton, Atlanta and Alpharetta all fall into the 10 most cost-burdened areas in the state when comparing median family income to impact fees. When some Fulton County officials say their cities should be “aspirational,” and not necessarily “affordable for people today,” there is reason to question whether impact fees are being used to keep prices high and slow population growth.
The Dividing Line of I-75: Cobb County vs Henry County and Cherokee County
Three metro Atlanta counties, each located on I-75, are quite different in their implementation of impact fees. They range from relatively moderate fees used to support parks and roads in Cobb, to the highest impact fee revenue jurisdiction in the state with Cherokee County. The highest percentage increase in the state occurred when Henry County more than doubled its impact fee in 2022. Cherokee and Cobb have similar infrastructure conditions with top schools and roads, while Henry County has more of an industrial base with slightly lower incomes and average infrastructure. Contrasting Henry and Cherokee with Cobb, it’s not immediately clear that impact fees are producing a positive quality-of-life difference commensurate with the costs they impose on new homebuyers and builders.
Cobb County currently does not have a county-wide impact fee, but the cities of Acworth ($500), Powder Springs ($669.36) and Kennesaw ($699) all levy impact fees for single-family homes that are significantly less than the state average ($2,439.62) and median ($2,010.18). Multifamily impact fees in these cities also fall significantly below the statewide average and median. These relatively low impact fees contrast with neighboring Fulton and Cherokee, which both levy impact fees at the city or county level significantly above the state average. Like other northern Atlanta counties, Cobb County has a relatively high household median income of $80,830, and maintains a reputation of having good schools and infrastructure.
Cherokee County, by contrast, has a county-wide impact fee of $2,008.64 for single-family homes and includes the cities of Canton ($3,945.75) and Woodstock ($1,509.72) that levy citywide impact fees in addition to the county’s. These joint city and county impact fees mean the rates in these Cherokee County cities are significantly higher than other jurisdictions in the state. Cherokee County derives significant revenue from impact fees: $8,576,705 in fiscal year 2021, which was the highest of any jurisdiction in the state. Compared to Cobb County, it has a similar median household income of $84,817, similarly good schools and good infrastructure.
Henry County has a relatively high single-family impact fee of $3,544.46, with the cities of Hampton ($229.15), McDonough ($2,209.16) and Stockbridge ($2,420.92) charging additional citywide impact fees. Compared to Cobb and Cherokee, Henry has a lower median family income of $71,110 and average school scores, and it has infrastructure that is somewhat overwhelmed by the amount of warehouses in the area that are a major part of its economy. Henry County has more cars per household than Atlanta, and new large warehouses and limited public transportation options have created a need to increase roads and infrastructure that supports freight transportation. It would be worthwhile for the county to determine how much new infrastructure supports industry versus residential development and whether impact fee rates match that need.
Effingham County vs Bryan County
The City of Savannah has started preliminary meetings on implementing an impact fee. Its neighbors to the north and south, Effingham County and Bryan County, have existing impact fee ordinances and provide an opportunity to examine their effect on development and government revenues. Like Bryan County, Savannah is considering using an impact fee to help pay for parks and recreation, public safety facilities, and road improvements.
Effingham County has the highest county impact fee in Georgia, implemented in 2005. But according to Effingham County’s Finance Department, it stopped collecting impact fees around fiscal year 2012. This was confirmed by the county’s annual comprehensive financial reports (ACFR) for 2012-2021, which listed no revenues from impact fees. In an email to the Georgia Public Policy Foundation, Effingham County’s Finance Department said “the impact fee law was pretty nebulous, and that was part of the decision to no longer charge them. There was a fear of accidentally falling out of compliance in some way.” Effingham remains compliant with the law by listing impact fees in its ACFRs and retains the ability to levy an impact fee in its municipal code.
In contrast, Bryan County implemented its impact fee much later, in 2019, and amended it in 2021. Although Bryan County’s impact fee of $3,241 for single-family homes is lower than Effingham County’s $4,600, its revenues of $788,270 and expenditures are increasingly becoming important for funding Bryan County’s transportation and park services. Impact fees and Transportation Special Purpose Local Option Sales Tax (T-SPLOST) have been some of the primary ways Bryan County has funded new infrastructure projects in its annual Capital Improvement Elements (CIE) plans. Implementation and amending of an impact fee ordinance in Bryan County followed the proper procedures of two public hearings, and annual CIE updates and the meeting notes and CIE plans are available on the county’s website. However, Bryan County was sued by the Home Builders Association of Greater Savannah, with the argument that the fee is both unconstitutional and will adversely impact homebuyers. A hearing for the case is scheduled.
Impact on the Community
It’s no secret that housing costs have increased significantly in Georgia, with Atlanta’s average home price peaking at $420,000 in July 2022. Even with recent reversals of this trend, affordability is still a major issue. With the 30-year mortgage rate at 6.33% as of January 2023 and likely to stay high in the short-to-medium-term, many hopeful buyers will likely stay out of the market for the time being.
Burden of Impact Fees on Affordability: Impact Fee to Median Income Ratio
While impact fees generally account for less than 1% of the cost of a new home in Georgia, they vary significantly across jurisdictions. Impact fee-to-average house price percentages range from 0.069% in Hampton to 11 times higher at 0.79% in Cumming. While impact fees are beneficial for jurisdictions to support infrastructure, the difference between the lowest and highest impact fees relative to housing costs reflects that the burdens of impact fees for new homebuyers and builders are greatly unequal across the state. The risk of proposed increases could make affordability gaps worse, even in traditionally more affordable areas like Henry County. If such large impact fee rate changes are approved, average house prices and average rents will likely increase.
The range of impact-fee-to-median-income ratios is even wider, from 0.42% in Hampton to 21 times higher at 9.15% in Cumming. This difference is a better measure of long-term affordability and complicates issues like workforce housing. Even homebuyers with traditionally middle-class jobs have lost their ability to afford housing. Using the American Enterprise Institute’s “Carpenter Index,” we can see how these workers have gone from being able to afford 98.7% of entry-level homes in the Atlanta area in 2012, to only 36.9% in 2021. The housing affordability problem in Georgia increasingly affects middle-class families in addition to minimum-wage workers. Impact fees are increasingly part of the reason why owning or renting is more difficult for many Georgia families, and the affordability ratios for single-family homes, multifamily apartments, townhouses and condos are shown in the maps below.
Single-Family Home Impact Fee to Median Income Ratios
Highest 10 Impact Fee to Median Income Ratios: Single-Family Homes
| Government | County for Cities | Ratio SFH |
| Cumming | Forsyth | 9.15% |
| Sandy Springs | Fulton | 8.46% |
| Effingham | n/a | 6.86% |
| Canton | Cherokee | 6.42% |
| Milton | Fulton | 6.09% |
| Atlanta | Fulton | 5.74% |
| Rockdale | n/a | 5.71% |
| Alpharetta | Fulton | 5.59% |
| Gainesville | Hall | 5.22% |
| Fayetteville | Fayette | 5.04% |
Multifamily Apartment Impact Fee to Median Income Ratios:
Highest 10 Impact Fee to Median Income Ratios: Apartments
| Government | County for Cities | Ratio MFH Apartment |
| Sandy Springs | Fulton | 8.46% |
| Canton | Cherokee | 6.22% |
| Milton | Fulton | 6.09% |
| Cumming | Forsyth | 5.98% |
| Rockdale | n/a | 5.71% |
| Alpharetta | Fulton | 5.59% |
| Gainesville | Hall | 5.22% |
| Fayetteville | Fayette | 5.04% |
| Effingham | n/a | 4.53% |
| Pike | n/a | 4.29% |
Multifamily Townhouse and Condo Impact Fee to Median Income Ratios:
Highest 10 Impact Fee to Median Income Ratios: Townhouse & Condo:
| Government | County for Cities | Ratio MFH Condo/Townhouse |
| Sandy Springs | Fulton | 8.46% |
| Canton | Cherokee | 6.16% |
| Milton | Fulton | 6.09% |
| Cumming | Forsyth | 5.98% |
| Rockdale | n/a | 5.71% |
| Alpharetta | Fulton | 5.59% |
| Gainesville | Hall | 5.22% |
| Fayetteville | Fayette | 5.04% |
| Effingham | n/a | 4.53% |
| Pike | n/a | 4.26% |
Conclusion
Across the state more jurisdictions are considering implementing impact fees, and jurisdictions that already levy fees are increasing them by more than double in many cases. In a climate of increasingly unaffordable housing costs, it is fair to ask whether these new costs toward building new housing make sense. Certain jurisdictions, particularly in metro Atlanta, have impact fees that are cost-burdensome for their residents. The gap in burdens between locations that are relatively close to each other, for example Cobb County versus cities in Fulton County, is quite large and could make the difference in a family being able to afford their first home. It also affects workforce housing, and the ability of service workers to live in the area where they work. With the data in this study, we hope citizens, property developers and government officials can consider whether an impact fee is appropriate for their community and, if so, how much should be levied.
