This chapter focuses on traffic impact fees and illustrates a series of difficulties with their use. Contemporary US law suggests that fees be based on a rational nexus of costs and benefits and on rough proportionality of a fee with the external cost imposed by new development. It begins by providing a history of fees and exactions in the United States and California and reviews the important legal issues surrounding fees and exactions. Next, the chapter describes the economics of impact fees, and provides evidence of the level of fees in various California cities. Impact fees, exactions, in-lieu fees, and compulsory dedications are often treated as synonymous since they all are established as conditions precedent to obtaining final development approvals. It also suggests that the large variation of fees between jurisdictions indicates that at least some cities are miscalculating or misusing traffic impact fees. The chapter concludes some alternative methods of infrastructure provision that could avoid these problems.