Financing Transport Infrastructure in Developing Country Cities: Evaluation of and Lessons from Nascent Use of Impact Fees in Santiago de Chile

Abstract

The potential for and limitations to the use of impact fees to finance urban transport infrastructure in developing country cities are assessed, drawing from the specific case of Santiago de Chile. The current state of urban transport infrastructure financing and its inherent complications are first presented. Principles of appropriate impact fee use are then derived from the U.S. experience. These principles are then applied to the recent use of transportation impact fees in Santiago, leading to preliminary recommendations for improvement, including the following: establishing proper overarching legal guidance for their use; taking a uniform approach to their application; clarifying the relationship of impact fees to other user fees and other forms of development exactions; answering the question of who bears the ultimate burden of impact fee costs; and improving the understanding of the effects of transportation impact fees on other public policy goals. From this assessment of the Santiago experience, lessons for other developing country cities are presented.