Guest Column in the Greater Spokane Inc. Policy Newsletter on Impact Fees

This column by SHBA Government Affairs Director (originally published in the monthly Greater Spokane Inc. policy newsletter) is the second in their series of guest columns to written by local, state and national partners. 

How Will Impact Fees Impact Your Business?
By Steve Taylor, Government Affairs Director
Spokane Home Builders Association & Spokane REALTORS®

The Greater Spokane business community is beginning to ask questions about the City of Spokane 's proposed transportation impact fee, the first of its kind in eastern Washington. 

What is the fee? Transportation impact fees are authorized by state law (RCW 82.02) to be levied on new development to pay for a proportionate share of the cost of new roadway infrastructure needed to support growth.

Why are impact fees being proposed?  Tax receipts for roads have been declining and the pace of growth has outstripped Spokane's ability to pay for new infrastructure.  The city's existing roadways are crumbling and voters recently approved a street bond to rebuild and resurface the worst areas.  The city wants impact fees to supplement existing funds and provide matching dollars for state and federal grants.

Why should the business community care?  Growth cannot occur without the infrastructure to support it, and the pot of money used to finance new roads is getting smaller and smaller.  The Growth Management Act says that if development causes a portion of the road system to fall below established levels of service, then new capacity must be in place within six years of the development's approval.  Otherwise, the municipality should deny the development.  Lack of infrastructure (or levels of service set beyond reason) inhibits economic growth, construction, and job creation which negatively impacts consumer spending, capital formation, and public revenue.

What does Spokane's fee do?  The City hopes to raise about $17.1 million with impact fees over the next six years as part of its $106 million dollar transportation improvement plan.  The fee would be assessed on most new development based upon the number of new peak hour road trips generated by the projects.  The most recent version of the fee proposes four service areas: Northwest, Northeast, Downtown, and South.  Fees collected in these areas will pay for road projects within the same areas.  The peak hour trip rate varies between service areas from $655 to $2,151 per new trip.  Each land use is assessed its fee on a per unit or square footage basis.  Fee revenue can only be used for new roadway capacity and is prohibited from being spent on remedying existing service deficiencies.

What is the impact on business?  The Spokane Home Builders and Spokane REALTORS® have been working to educate all Spokane business groups about the impact this fee may have on residential and commercial construction.  Commercial land uses have been hit particularly hard by the proposal and many developers have expressed concerns that the fee may delay or make it unfeasible to move forward with their projects. 

Another issue is one of fairness.  As expressed above, fees may only be used to fund a proportionate share of new capacity.  Proportionate share under the current fee structure is set at 95%.  This means that the public will only benefit by the capacity improvements (located primarily on arterials) by 5%.  In other words, the development community, a major driver of business and economic growth in Spokane, is being required to shoulder the burden of infrastructure improvements that will be enjoyed by the entire community.  The Home Builders and REALTORS® have stated their commitment to finding solutions to Spokane 's infrastructure challenges.  However, saddling new development with this responsibility without including the entire community is inequitable, counterproductive, and will result in reducing housing affordability while driving commercial services into the County or the Valley.

What can you do?  Please take time to learn more about Spokane 's proposed impact fee by visiting www.spokaneengineering.org or contact the Spokane Home Builders and REALTORS® Government Affairs Department at (509) 532-4990.  The Spokane Plan Commission will be holding a public hearing on their recommendations on April 9th at 5:00pm at Spokane City Hall .  Please attend and make your voice heard on this important public issue.