Bills could restructure housing impact fees

Bills could restructure housing impact fees
Sen. Hans Zeiger (R-25) is sponsoring two bills regarding local impact fees for new housing construction. Photo: freepik.com

Two bills that could affect the structure of local impact fees imposed by cities on new housing construction with the goal of improving  housing supply and affordability have been introduced by Sen. Hans Zeiger (R-25) this week. SB 6364 would restructure those fee rates based on house size, while SB 6387 would shorten the allotted time cities and counties have to spend those fees.

The bills received mixed reviews from building community stakeholders during a Jan. 27 public hearing of the Senate Housing Stability & Affordability Committee.

Impact fees are used to cover the costs of new infrastructure to accommodate additional residents’ use of public roads, parks, schools and fire protection services. However, builders have underscored the effects of these fees on housing prices. SB 6364 would create a tiered fee structure based on the square footage per bedroom of the house, with the intent of lowering the cost for smaller single-family homes.

Zeiger told the committee these costs “are real barriers to being able to undertake particular affordable housing. If we’re going to make some progress in that arena, I think we really need to take a close look at impact fees. We leave it up to the jurisdiction to decide what the tiered structure would look like, but the idea here is that the smaller the house…the lower the builder has to pay in impact fees, and the more affordable it’s going to be for the homeowner.”

Testifying in the support of the bill was Pierce County builder Bill Riley, who told the committee that the current housing supply suffers from a “missing middle” in terms of price and size. “If I build a $1 million home or I build a $300,000 home, the fee is the same no matter what.”

However, Building Industry Association Government Affairs Director Jan Himebaugh said the number of bedrooms, not their size, determines the true impact on local infrastructure. “What we get concerned about is incentivizing of one particular type of development and putting pressure on the other stuff.”

Under current state law, city and county governments have 10 years to spend local impact fees. If not, the developer gets refunded that money. SB 6387 would shorten that time period to six years, which Zeiger said was the policy prior to 2011. “I think that that prior arrangement was probably tied more closely to the goal within the Growth Management Act of making sure that we are tying development to a corresponding growth in public service (and) that we’re spending that money.”

Speaking in support, Riley said: “it’s necessary that we start building infrastructure today as those folks move in and as we’re so far behind on infrastructure.”

Himebaugh was also in favor of SB 6387. “The jurisdiction should have a smaller, shorter timeframe to spend that money. We actually think it might reform some impact fees, make them (cities and counties) take a look at how they are calculating the fees, so that they’re actually a little fairer and more equitable across the board.”

However, Association of Washington Cities Government Relations Advocate Carl Schroeder argued that most cities don’t have enough development to build up sufficient fees necessary to invest in new infrastructure within six years. ‘I don’t think there’s many cities that are interested in holding on to these when they may have an investment that they could make with those dollars. Perhaps there is some middle ground that we can work through in terms of that issue.”

In agreement was Washington State Association of Counties Policy Director Paul Jewell. “One home pays a certain fee, but it’s not what’s necessary for the entire infrastructure improvements that might be required because of the impacts related to a new development. These things build up over time, which is why we need the time for that to happen in addition.”

No further action is yet scheduled for either bill.

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