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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Moominoid who wrote (62773)4/26/2005 4:09:49 PM
From: gpowell  Read Replies (1) of 74559
 
Let's not forget to distinguish between development fees that pay for infrastructure. Presumably these are fees that new home buyers will use - and value. To the extent this is true, some of the development fee is extracted from the home buyer - up to the extent of the perceived benefit. Further, in the absence of perfect competition, some of the fees will be absorbed by the developer, as well. It's been estimated that "only" a quarter of the development fees are absorbed by a reduction in the value of the land.

Only if new home buyers perceived no benefit in the infrastructure (or alternately - the fees were used elsewhere) and the supply market were completely competitive, would all of the burden of development fees fall on the landowner through a reduction in the value of their land.
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