Regional Transportation Impact Fees: Adoption Factors, Institutional Mechanisms, Equity Impacts, and Revenue Yield

State and federal transportation infrastructure funding has steadily declined in recent decades, highlighting the rising importance of sub-state (local and regional) funding sources such as transportation impact fees. A transportation impact fee levied by a single city/municipality is now a critical funding source for developing local transportation infrastructure throughout California and the United States. However, regional transportation infrastructure—such as transit systems or roads serving multiple local jurisdictions—is usually not funded by these fees; instead, it primarily relies on scarce state and federal funds. Hence, there is an urgent need for revenue sources, such as regional transportation impact fees (RTIFs), to fund regional transportation infrastructure.

California is a national leader in the use of impact fees, primarily because various statewide propositions limit local jurisdictions' ability to generate revenues from property taxes (Proposition 13), regulatory fees (Proposition 26), and special assessments (Proposition 216). A handful of its regions also levy RTIFs. However, the extant academic and professional literature on impact fees has primarily focused on fees levied by a single jurisdiction. The focus has also been either on examining the fees' housing affordability impacts or how they can be designed and implemented to meet the rational nexus principle and reduce vertical and horizontal inequities. Furthermore, the more complicated impact fees—regional impact fees, such as RTIFs, levied by and expended across several jurisdictions—are little studied. Very little is known about the factors that lead to the adoption of such fees; the institutional mechanisms used to conceptualize, design, and implement them; their revenue yield and the proportion of the regional transportation needs funded through them; and the strategies adopted to mitigate the fees' equity impacts. Other challenges associated with RTIFs that academic research and policy discussions have not yet tackled include those related to inter-jurisdictional coordination, transparency, and project selection. 

This paper begins to fill these research gaps through an in-depth examination of several RTIF programs across California. It specifically answers the following research questions.

RQ1. What factors led to the adoption of the case study RTIF programs?

RQ2. What institutional mechanisms were used to conceptualize and design the case study RTIF programs and secure cooperation of participant jurisdictions?

RQ3. What mechanisms are being used to implement the case study RTIF programs equitably and transparently, that are agreeable to all participant jurisdictions?

RQ4. What strategies are being implemented in the case study RTIF programs to reduce vertical and horizontal inequities?

RQ5. What is the case study RTIF programs’ revenue yield, and how much regional transportation needs are being met by these revenues?

USDOT Priorities:

The proposed project aligns with both the MCEEST's goal/objectives listed below because it studies a transportation finance mechanism that potentially plays a critical, albeit little studied, role in meeting local and regional transportation needs and spurring economic development in peri-urban and rural regions that are predominantly populated by disadvantaged/underserved, low- income, minority communities. Moreover, by increasing transportation accessibility, RTIFs could help attract jobs and reduce work-related travel from these regions to far-away major employment centers, such as those in the San Francisco Bay Area and Southern California regions, thereby reducing vehicle miles traveled, and, in turn, transportation's impact on climate change.

MCEEST’s objectives are as follows:

Objective 1: Create a safer, more reliable, and more resilient transportation system that improves equity through increased access to jobs, housing, services, and other opportunities for historically underserved communities.

Objective 2: Reduce transportation’s impact on climate change by identifying feasible alternative modes and effective ways to reduce vehicle miles traveled.