Issue: IMPACT FEES

Understanding Impact Fees in Wisconsin

Wisconsin law allows municipalities to charge impact fees on new development. However, the law also establishes rules that municipalities must follow when creating, collecting, using, and managing those fees. Simply put, municipalities are allowed to charge impact fees—but they must follow the law when they do it.

Unfortunately, there are times when municipalities may not be following all of the requirements established under Wisconsin law. When that happens, builders, developers, property owners, and taxpayers should understand the law and be willing to ask questions. Municipalities should be held accountable for following the same laws they are responsible for administering.

What Is an Impact Fee?

An impact fee is money that a municipality charges because a new development is expected to create a need for certain additional public facilities.

Think of it this way: when new homes or businesses are built, more people may use things like roads, parks, water systems, sewer systems, or other public facilities. Wisconsin law allows a municipality, under certain circumstances, to charge new development for an appropriate share of the cost of providing or expanding certain public facilities needed because of that development.

But an impact fee is not simply extra money a municipality can collect and spend however it chooses. Wisconsin law places requirements and limitations on how impact fees are established, calculated, collected, and used. The fees must be connected to eligible public facilities and the needs created by new development, and municipalities must comply with the requirements established by state law.

Standing Up for the Law and the Local Homeowner

(Court case: MBA vs. City of Delafield)

Occasionally, the Metro Builders Association (MBA) steps in on behalf of local homeowners and our members when we believe a municipality is not following the laws governing the home building and development process. Impact fees are one of those areas. These fees ultimately become part of the cost of creating a new home, which means improperly collected or managed impact fees can ultimately affect the price paid by the homeowner.

In December 2023, the MBA filed an appeal with the City of Delafield, following the appeal process established in the City’s ordinances. The MBA’s position was that the City had not been following Wisconsin law in the way it administered its impact fees. At the time, the City was operating under a needs assessment that was approximately 23 years old and, in the MBA’s view, did not identify the current projects for which impact fees were being collected. The MBA also raised concerns that collected impact fees were not being properly maintained in segregated accounts, that funds had been moved into the City’s general fund, and that required information and documentation were not being provided to those paying the fees.

The MBA’s position was straightforward: if impact fees are collected, the law must be followed. When fees are collected or held contrary to the requirements of state law, the MBA believes those funds should be returned, with applicable interest, to those who paid them.

After approximately a year and a half, the City denied the MBA’s appeal. Believing that decision was incorrect, the MBA filed a case in Waukesha County Circuit Court in May 2025.

In July 2026, the Court issued its decision, concluding that the City of Delafield’s impact fee ordinance did not comply with Wisconsin state statutes and that the MBA’s appeal should not have been dismissed. The Court remanded the matter back to the City for reconsideration.

The MBA looks forward to the City reconsidering the appeal in accordance with the Court’s decision and Wisconsin law. This has never been about whether municipalities should be allowed to collect lawful impact fees. It is about making sure that when they do, they follow the law, properly account for the money they collect, and remember that ultimately those costs are being paid by homeowners.

Read the Law for Yourself

Below you will find Wisconsin Statute § 66.0617, the state law governing impact fees. We encourage you to read it for yourself. The law establishes what municipalities may do, what they must do, and the limitations placed on impact fees.

Impact fees are permitted in Wisconsin—but so are the protections and requirements contained in the law. The entire statute matters, and it needs to be followed as written.