In Toronto we have something known as Development Charges. In the US, they are more commonly referred to as Development Impact Fees, which in my view, lends a certain precision to their intent.
The idea behind these fees is that they account for some or all of the off-site public costs required to serve a new development. Initially this meant utilities, but today these fees usually include everything from transit and parks to child care and pedestrian infrastructure.
According to Wikipedia, the first impact fees were implemented in Hinsdale, Illinois in 1947. By the 1980s, impact fees had become a universally accepted mechanism for funding the costs associated with growth.
Not surprisingly, there’s substantial case law around impact fees. One of the concepts that comes up a lot is this idea of essential or rational nexus. That is, can the fee(s) be rationally linked to the impacts of a particular development?
One well known example is Nollan v. California Coastal Commission (1987).
The Nollans proposed to build a 2-storey house within the exact same footprint of their current 1-storey house. As an approval condition, the Coastal Commission wanted a public easement across the beach in front of their house.
The U.S. Supreme Court sided with the Nollans and held that the development exaction (public easement) was not adequately related to their new development (additional storey). A “rational nexus” did not exist.
If you’re interested in this topic, the American Planning Association has a policy guide on impact fees available on their website.
