What are Exactions in the context of real estate development?

Exactions refer to conditions imposed by municipalities or governmental entities as part of the approval process for real estate development projects. These conditions often require developers to dedicate a portion of land or pay fees that are used to mitigate the impact of their projects on public resources and infrastructure. For instance, when a development project is approved, the local government may require the developer to contribute land for public parks, transportation improvements, or other community amenities that support the increased density or use of the area.

This process is based on the principle that developers should bear some of the costs associated with the additional burden their projects place on public services, such as roads, schools, and utilities. By imposing such conditions, local governments seek to ensure that growth is sustainable and that public services remain adequate for the new development.

Understanding exactions is crucial for real estate developers, as they must navigate these requirements to achieve project approvals while also considering the financial implications of complying with such conditions.