IN THESE TIMES OF SCHOOL CLOSINGS and expensive, largely unfunded federal mandates such as the Bush administration's “No Child Left Behind” program, local school departments and city budget managers are grabbing any tool available to pay for school construction and repair. An easy target: impact fees levied on new-home construction. For example, Osceola County, Fla., recently raised fees from $2,828 to $9,708 per single-family residence. That hurts, and the Florida HBA has filed a class-action lawsuit to fight the hike.

But that's an extreme case. More typical is what's happening in Madison County, Ill., where impact fees have recently been “discovered” by school officials as a way to raise money for new school construction. Jerry Rombach, president of the HBA of Greater Southwest Illinois, says his organization traces the rapid spread of impact fees initiated by school superintendents to a conference that they all attended.

“In Illinois, impact fees hadn't been bad,” Rombach notes, “except around Chicago. But four years ago, [the state] expanded the impact fee concept to allow for an annexation fee of $1,000 per lot, which later became $2,500 per lot.”

He says that school impact fees in his region now average about $3,000 for a single-family home. What concerns Rombach, however, is the ease with which towns can increase that fee, up to the state cap of $7,000.

In response, he says his group may challenge the formula by which the need for new school development is determined. Otherwise, he warns of a “prairie fire” of high fees devastating the home building market. And he adds another big anxiety for builders: Impact fees may become the jugular vein from which all social services feed.