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BOOK 95 PA;E 131 of the more expensive unit's cost. The second disadvantage is that impact fees must be paid in full prior to receiving development approval. This need for upfront payment may create financing difficulties for developers. In the case of housing, the need to pay impact fees upfront may significantly increase the amount of money which must be obtained or financed in order to complete a housing unit. The disadvantages noted, especially the second disadvantage concerning upfront payment, create much of the controversy concerning impact fees, as those fees relate to the provision of affordable housing. It is argued that impact fee costs imposed on housing are added to the price of housing which makes it difficult for persons with very low-, low- or moderate -incomes to obtain housing. With this claim in mind, it is often recommended that local governments provide impact fee alternatives for affordable housing. These alternatives generally take one of two forms: the elimination/reduction of impact fees or the subsidization of impact fees. O Impact Fee Elimination/Reduction The elimination or reduction of impact fees for affordable housing would have an immediate effect, as the amount eliminated or reduced would be eliminated from the housing cost. However, the facility demand created by the housing unit will not be eliminated or reduced. Therefore, the government is faced with obtaining funds for the necessary facility expansion through some other means. In many cases, funds may be obtained through increased tax levies (e.g. property, sales) or through increases in utility rates. The government may also seek alternative methods to fund the necessary expansions. In some cases, the financial impact of an alternative may be just as great as, if not greater than, the financial impact of'the impact fee which would have been charged. As examples of impact fee elimination or reductions for affordable housing, the City of Orlando provides an impact fee exemption for affordable housing, while Orange County provides an -impact fee reduction for affordable housing. The exemption and reduction are provided for in each government's respective impact fee regulations; however, each government must compensate the respective impact fee funds through its other revenue sources. The compensating action of the government is classified as having the government paying the impact fee on behalf of the affordable housing unit, rather than actually eliminating or reducing the impact fee. Another suggested variation on eliminating or reducing impact fees for affordable housing is shifting the impact fee liability to other uses. This would involve recalculating impact fee rates with the amount of the waived affordable housing impac* fee revenue charged to other uses. This concept is inappropriatef as provisions to shift costs may invalidate an impact fee ordinance. Developers would be paying both their own proportionate share of capital costs as well as the share for another project. Legally, this would not conform to the proportionate share concept upon which impact fees are based. 0 Impact Fee Subsidization The subsidization of impact .fees on behalf of affordable housing, in which the government specifically identifies monies which may be used to pay all or a part of the impact fees for affordable housing, is the second impact fee alternative for affordable housing. This alternative is similar to the concept of eliminating or reducing impact fees for affordable housing. The subsidization alternative serves as a_method of formally recognizing that, while the affordable housing unit developer is not paying all or a part of an impact fee, the funds must still be provided to compensate for the demand that the affordable housing unit will create. The decisions to be made when the subsidization alternative is used are 22 MAY 18, 1995