Builders have been asking some of the same questions about impact fees for years: Why do they cost so much more in one city than another? Are the studies behind those fees current? And when a builder pays for roads, water or parks, how easy is it to see where the money actually goes?
On October 20, Utah's Office of the Legislative Auditor General released a 98-page audit looking directly at those questions. The report does not say every city is doing something wrong. In fact, it recognizes that many local governments use impact fees properly. But it does identify real problems with aging studies, weak transparency, inconsistent compliance and the way some fees are structured.
Key findings, at a glance
- 5 of 9: Entities examined in depth had an improper expenditure or another statutory compliance problem.
- 27 years: Age of the oldest impact fee studies reviewed; roughly half the study documents were over five years old.
- $10k–$39k: Approximate range of fees for a 2,000-square-foot detached home across 22 Utah fee areas.
- 12 of 22: Fee areas charged a 1,500-square-foot house the same total fee as a 3,000-square-foot house.
- ~15%: Increase in the median single-family impact fee from 2023 to 2026 in the supporting study.
- No clear link: Researchers found no statistically significant link between fees and final new-home sale prices; development feasibility was not tested.
One important distinction: The audit reviewed nine unnamed local entities in depth for compliance. Separately, it compared residential impact fees across 16 named Utah cities and 22 fee areas. The report does not tell readers that any of those 16 named cities committed the anonymous compliance violations. We have kept those two samples separate throughout this article.
What the audit recommends lawmakers and state agencies consider
The auditors made ten formal recommendations. Here they are in plain English, immediately after the key findings so members can see the possible fixes before getting into the details.
- 1.1 Revisit service areas. Weigh whether more targeted areas would better link fee payers with the facilities that serve them, without creating excessive administrative cost.
- 1.2 Update studies regularly. Consider a statutory review cycle for impact fee facilities plans and analyses.
- 1.3 Improve project-level reporting. Continue monitoring how much is collected, spent and planned for each infrastructure project.
- 1.4 Make fee data easier to see. The State Auditor should improve public access to collections and expenditures.
- 1.5 Put fee studies online. Consider requiring public entities to post their facilities plans and analyses on a public website.
- 2.1 Provide consistent training. The Property Rights Ombudsman and partners should publish a more complete impact fee guide and training resources.
- 2.2 Speed up legal guidance. Improve the Ombudsman's case management and explore appropriate technology to shorten delays.
- 2.3 Monitor every required report. The State Auditor should provide consistent compliance feedback to reporting entities.
- 2.4 Clarify oversight in statute. Consider expressly addressing public reporting, exceptions to the six-year spending rule and reporting of statutory exceptions.
- 2.5 Clear up unresolved legal questions. Consider whether additional statutory guidance is needed on calculation methods, staff costs, safety adjustments and other disputed issues.
These are proposals and agency recommendations, not laws that have already been enacted. The auditors did not recommend abolishing impact fees or imposing a statewide cap.
Who was actually reviewed?
The report involves three different kinds of work, and mixing them together can create the wrong impression.
Compliance review: Auditors closely examined nine entities: five cities, two counties and two special districts that provide services such as water or public safety. Those entities were selected to examine practices in depth. The report does not name them. Five of the nine had either improper spending or another compliance failure. The audit does not publish a city-by-city list of which anonymous entity made which mistake.
Fee comparison: The audit separately assembled fee schedules from 16 named Utah cities. Because Heber, Eagle Mountain and West Haven use multiple fee areas, this produced 22 different areas. The detailed audit table also uses anonymous labels (City A, City B and so on), but the Gardner Institute appendix identifies the actual communities in its graphs.
Home-price analysis: The Gardner Institute analyzed 9,674 comparable new-home sales from the same 16-city set to see whether differences in impact fees were associated with different final home prices.
All 16 Utah cities named in the residential comparison
Below are all 16 cities shown by name in the Gardner Institute's fee charts. The notes tell you why a city appears in the report. These are fee comparisons and examples, not a list of cities that violated the law.
- Heber City: Its North Village fee area has the highest 2026 single-family fee in the comparison (nearly $39,000). Heber's citywide area is also separately shown, at about $23,700.
- Park City: Second-highest fee area in the comparison. Its secondary-water charge is $14,382, and the supporting analysis lists a sewer fee of $14,112.
- Washington City: Among the five highest-fee areas. A $17,071 Washington County Water Conservancy District charge makes up a substantial share of the total.
- St. George: Among the five highest-fee areas; also includes the same $17,071 water conservancy district charge discussed for Washington City.
- Grantsville: Highlighted in the audit at $35,448 for a 2,000-square-foot home, compared with Kaysville's $11,539. Secondary water is a major component.
- Saratoga Springs: In the higher-fee group; the research specifically highlights an $8,339 secondary-water impact fee.
- Provo: Included in the 22-area ranking; also among the five cities where the appendix identifies municipal-power impact fees.
- Eagle Mountain: Three different service areas are shown (West, North and South) with different totals and fee mixes.
- West Haven: Four fee areas appear separately: Taylor-West Weber WID, Hooper WID, Bona Vista WID and WHSSD. Their totals differ within the same city.
- Farmington: Appears in the middle of the 2026 fee rankings, with a mix of water, park, sewer and transportation charges.
- Riverton: Included in the middle range of the fee-area comparisons; appears in the breakdown of fees by type and home size.
- Salt Lake City: Included in the ranked schedules and used elsewhere in the audit as an example of the debate over citywide police-facility fees. Its townhome fee is especially low relative to the other sampled areas.
- Lehi: Included in the residential ranking; also separately named in the three-city educational-facility example, with approximately $378,696 in fees.
- Herriman: Appears in the lower half of the ranked fee schedules; its fees are compared by service type and housing size.
- West Valley City: Among the lower-fee areas in the 2026 residential comparison, though still with multiple fee categories.
- Kaysville: Highlighted at $11,539 for a 2,000-square-foot home. The report uses it as the comparison to Grantsville's much higher total.
One more named Utah city: Payson appears in the separate educational-facility comparison, though not as one of the 16 residential-sample cities. Its facility was assessed approximately $445,911 in impact fees.
What jumps out about those fee differences?
The differences can be substantial even for the same hypothetical home. The auditors use the Kaysville–Grantsville comparison to make that point: $11,539 versus $35,448. Neither number, by itself, proves the fee is fair or unfair. Infrastructure needs, existing capacity and which utilities serve the community all matter.
Water explains much of the difference at the high end. The Gardner research found that the five highest-fee areas each charged more than $33,000, with water-related fees representing 42% to 67% of their totals. It also found that parks, culinary water and sewer were the three largest fee categories across the comparison, and that parks, culinary water and sewer accounted for about 79% of the net fee increase from 2023 to 2026.
These fees were rising: the research found a roughly 15% increase in the median single-family fee over those three years. That is a real upfront cost when a builder is trying to make a project pencil out.
The auditors also compared three similarly sized educational facilities, with a much larger spread than the residential examples: $378,696 in Lehi; $445,911 in Payson; and about $1.54 million in Heber. They do not establish that those cities acted improperly. The comparison shows how differently a project can be assessed.
The biggest problem may be the age of the studies
Utah generally requires an Impact Fee Facilities Plan and Impact Fee Analysis to show what infrastructure is needed, what capacity already exists, what new growth will demand and how the fees are calculated. That only works when the underlying assumptions are current.
Auditors reviewed 41 study documents from nine entities and found studies ranging up to 27 years old. Their chart treats combined planning documents separately, showing that roughly half of the analyzed plan and analysis components were older than five years. They also identified an unnamed county charging fees without the required studies.
The consequences can go in either direction. One unnamed service district collected fees for a pipeline that never got built, leading to a dispute and a roughly $10 million settlement. An unnamed city collected $6.2 million for park projects not included in its impact fee studies. Elsewhere, construction costs more than doubled for a planned water tank, and the city did not have enough fee revenue to pay for the project.
The recommendation is a regular update cycle, with flexibility for community size and growth. Neighboring states commonly require review within three to five years. The auditors recognize that an update can cost $35,000–$80,000, so the Legislature would need to balance the cost of review with the risk of using old data.
The compliance findings are serious, but the names are confidential in this report
Among the nine unnamed entities reviewed for practices, five had an improper expenditure or another statutory compliance problem. The report cites poor accounting, incomplete studies, unauthorized or inadequately supported spending, reporting gaps and questions about service-area restrictions.
It describes substantial settlements: approximately $8.5 million for one district following allegations about proportionality, reporting and spending outside adopted plans; nearly $10 million in another protracted district dispute; and approximately $1 million in refunds by a city that revised its fee structure after a challenge. The audit does not publicly tie these matters to a named city in its compliance sample.
Better oversight can help here. The State Auditor has improved reporting templates since 2024, but the audit recommends continued monitoring of all entities required to report and clearer authority to oversee compliance. And it urges more practical training so cities know what is required before a mistake turns into years of litigation.
Builders should be able to see where the money goes
It should not be difficult to answer basic questions: How much has a city collected in park or transportation impact fees? Which projects are those dollars intended to fund? How much has actually been spent? The audit found that project-level reporting historically was not consistent enough to answer those questions easily.
It also found that just two of nine entities followed the existing rule requiring certain fee studies to be available in a public library. The auditors suggest a far more useful approach: post plans, analyses and collections-and-expenditures information online, and make public reporting understandable. They highlight Idaho Falls, Idaho, which uses an interactive dashboard, as an example.
There is a related issue with Utah's general six-year spending requirement. Cities can justify holding some funds longer, but the auditors found that state law does not clearly say how those exceptions are to be reported or who should review them. Clarifying that process is one of the report's specific legislative options.
Should a builder pay for a project on the other side of town?
Impact fees have to be connected to the development's needs and roughly proportionate to its impacts. That is the reason the report spends time on service areas, the geographic boundaries connecting fee collections and infrastructure projects.
A citywide service area may make sense for a major water system. A small neighborhood park can raise a different question. The auditors offer several alternatives: keep the status quo, require targeted service areas for infrastructure such as parks or roads, set rules for larger cities or adopt a hybrid. They also note a real cost: three service areas with seven fee categories could require 21 separate accounting funds.
This is not an argument that every city must use the smallest possible boundary. The report asks lawmakers to consider when tighter geography makes the fee's benefit easier to demonstrate, and when it simply makes the system more complicated.
The smaller-home problem is worth attention
The Gardner Institute found that 12 of 22 fee areas charged a 1,500-square-foot single-family home the same total impact fee as a 3,000-square-foot home. At the median, that works out to $12.88 per square foot for the smaller home versus $6.44 for the larger one.
For a 1,500-square-foot townhome, the median fee was 88% of the fee for a same-size detached home. Five fee areas offered no townhome discount. Nearly every fee area charged a 750-square-foot townhome the same as a 1,000-square-foot townhome.
To be fair, smaller houses do not necessarily use half as much water or create half as many vehicle trips. The audit does not recommend fees based solely on square footage. It does raise a question worth answering: Are the current formulas measuring actual infrastructure demand for different types of homes?
What the home-price finding does, and doesn't, say
This is likely to be the most debated part of the report. Using 9,674 comparable new-home sales across the 16-city sample, Gardner researchers did not find a statistically significant relationship between impact fees and final sale prices. The preferred model estimated about 39 cents in price for each $1 in fees, but the estimate was too uncertain to conclude that the relationship differed from zero.
That is an important result, and the research should be described accurately. But it is not the same as saying a fee costs a builder nothing. A builder may not be able to raise a home's selling price just because development costs increase. The difference can show up in the price that can be paid for land, in the development margin or in whether a project can move forward at all. The study did not directly measure those outcomes, and it could not rule out modest cost pass-through to buyers.
The researchers also identify other major influences on housing affordability, including infrastructure constraints, limited developable land, growth and interest rates. It would be useful to know more about whether fee structures influence the number and kinds of homes that are financially feasible to build.
Other named places in the report, and what they illustrate
The audit mentions several jurisdictions outside the 16-city Utah fee comparison. They are examples or legal background, not additional named Utah compliance targets:
- Tucson, Arizona: Example of park and street service areas, with citywide public-safety fees; the report also mentions its $50 administrative impact fee.
- Spokane, Washington: Example of a different analytical method for defining service areas.
- Boise, Idaho: Example of using a share of collections to cover impact fee administrative costs.
- Idaho Falls, Idaho: Example of a publicly accessible impact fee dashboard.
- Washoe County, Nevada: Uses two road impact fee service areas; cited as a geographic example rather than a Utah city.
- West Jordan and South Jordan, Utah: Named in references to older Utah impact-fee court cases, not as cities accused of wrongdoing by this audit.
A few unanswered policy questions
The report also raises several smaller but useful issues that could benefit from clearer rules: whether local governments need more technical help with engineering calculations; how to spend fees collected under an earlier facilities plan when projects change; whether HOAs can impose fees described as impact fees; whether fire-suppression features should influence certain impact fee calculations; whether fee revenues may fund staff administering the program; and whether the state should offer more consistent guidance about fee methodologies and service standards.
These are questions for lawmakers to consider, not conclusions that any particular named city broke the law.
What happens next?
The Office of the State Auditor agreed with the goal of better reporting but noted that additional statutory responsibilities may require more staff and funding. The Property Rights Ombudsman outlined plans for a guidebook, expanded training and faster handling of legal requests, with work continuing into 2027. The Utah League of Cities and Towns acknowledged the value of updated studies and public access while emphasizing that cities have different needs and that any statewide rules must be practical.
For our members, the point is straightforward. Builders understand that growth requires infrastructure and that new development must pay an appropriate share. What they need in return is a system built on current numbers, clear calculations, fair allocation and an accounting of where the money goes.
Impact fees will always be part of the conversation about growth. The question now is how Utah can make the system more consistent, transparent and accountable for everyone involved.
The audit gives legislators, local governments and the homebuilding industry a strong factual starting point. We will be watching closely as those recommendations are discussed and as any proposed changes to the Impact Fees Act move forward.
Based on the October 20, 2026 performance audit Utah Impact Fees: Current Practices and Policy Considerations (Report 2026-33), including the Gardner Institute's technical appendix. Named-city fee comparisons do not establish legal noncompliance.