Impact fees are typically used to compensate for what type of costs?

Impact fees are typically utilized to cover infrastructure costs that arise from new development. These fees are generally assessed on new construction or development projects to help local governments recoup the expenses associated with the increased demand for public services and facilities that result from that growth. Infrastructure costs can include expenses for roads, parks, public safety facilities, and utilities—all of which are necessary to support the additional population that new development brings. By collecting impact fees, municipalities aim to ensure that growth pays for itself and that existing taxpayers are not burdened with the costs of accommodating new development.

The other options, while related to overall budgeting and finance, do not align with the specific purpose of impact fees. Administrative costs are generally related to the expenses of managing and running government operations, debt repayment pertains to financing already incurred obligations, and operating expenses refer to the day-to-day costs of running municipal programs and services—none of which are directly compensated by impact fees.