CALCULATING DEVELOPER CHARGES FOR URBAN INFRASTRUCTURE: A FEASIBLE METHOD FOR APPLYING MARGINAL COST PRICING

摘要

This paper considers the application of marginal cost pricing to the calculation of developer charges, also termed exactions or impact fees, in the contemporary urban environment. We derive an "ideal" measure of long-run marginal capacity cost (MCC) of urban infrastructure expansion. Given practical difficulties in estimating MCC, we develop an alternative Adjusted Amortization Method (AAM) with less onerous data requirements. Using a simulation model we compare the magnitudes of developer charges derived from the ideal MCC measure, our AAM method and three other common approaches to the measurement of MCC. Our results show that an adjusted version of the AAM formula performs very well.