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Impact fees may get new airing

Just in time for the fall political season, the contentious subject of impact fees has found its way back onto the Bainbridge City Council’s radar screen.

But with the press of other business, it’s not clear that the council will be able to devote the time that the issue consumes.

“This is an issue for discussion, but our agenda is full,” said Bill Knobloch, a member of the council’s finance committee.

Several unrelated factors have brought the issue of impact fees – levied on new homes at the time of construction, to offset some infrastructure costs associated with community growth – to the surface.

l While substituting on the finance committee for vacationing Lois Curtis, council member Deborah Vann asked the council to consider boosting the school impact fee, currently estimated to cover 32 percent of the cost of adding school capacity.

l The Bainbridge Island Park and Recreation District has informally asked the city to once again take up the question of imposing a park impact fee.

l The Planning Commission has suggested imposing a traffic impact fee.

The question was raised informally among city, school, park and fire officials, at a recent meeting of the Intergovernmental Work Group, said interim city Administrator Lee Walton.

“The school district said it might be time to take another look at that impact fee, then somebody from the park district said ‘we would like a joint meeting with you to look at that also,’” Walton said.

While impact fees may be charged for schools and parks, among other things, state law specifies that the enabling ordinance must come from the city or county, not from a school or park district directly.

The park district raised the issue two years ago, but before any final agreement was reached, the city put the $8 million open-space bond on the ballot.

The park district dropped the impact-fee request for fear that it might reduce voter support for the levy.

But park commissioner Dave Shorett said the need is still acute.

“We’ve had a tremendous amount of growth without an increase in capital funding, except for the new pool bond and the money for Gazzam Lake,” he said. “I don’t think anyone would say the capital funds have met our growth demands.”

The most pressing need, Shorett said, is not to acquire more land, but to develop some of the facilities the district already owns, and especially to add more play fields and improve some of the existing ones.

“If we could put an (artificial) turf surface on the Sands Avenue soccer field, we could get a great deal more use out of it,” he said. “And we may be able to acquire the AT&T property (east of Strawberry Hill Park), but it might not do us much good without the money to improve it.”

Shorett said impact fees for parks are common, calling them “the rule rather than the exception for districts of our size.”

Park planner Perry Barrett said the district has not proposed any specific amount for an impact fee.

“This has been in the background for many, many years,” he said, “but it’s too preliminary at this point to have a number.”

Too low?

Meanwhile, the council may re-examine the school impact fee, which is presently $4,390 for a single-family home and $1,170 for each unit in a multi-unit development.

City finance director Ralph Eells said that figure is the result of a 1991-era political compromise.

“The mayor and council at that point were opposed to any impact fees, but the school district said if you don’t enact one, we will oppose every development on the island,” Eells said. “The city blinked.”

The way the fee was determined speaks to the complexity of the issue.

“It costs $30,000 to add a new seat in the schools,” Eells said. “But not every new house has a student, so we calculated the per-household impact on the schools, and the impact fee is 32 percent of that.”

State law declares that impact fees may pay for part of growth-related improvements, but not all, Eells said, and the 32 percent ratio was the number generated by the political calculus of the time.

That is an agreement that some council members want to revisit.

“Some jurisdictions charge as much as 70 to 90 percent,” Eells said. “I think legally we could defend 90 percent, but I’m not sure I would personally be comfortable with a number that high.”

Impact fees have many detractors, who say they hurt the cause of affordable housing – adding to the price of a home without adding to its value. They also show up in the future tax assessments of other homes in the community, critics say, because overall home prices are artificially increased by the fee.

While the Bainbridge Planning Commission supports the imposition of a traffic impact fee, Eells said the constraints of state law make that only marginally useful for Bainbridge Island.

“You can only impose those fees for new development, not to correct deficiencies in your existing infrastructure,” he said. “Most of our problems are not that we want new roads or new lanes, but that our existing two-lane roads are being beat to hell by increased traffic. But you can’t charge an impact fee for that.”

The council finance committee Monday directed Walton to talk to the school and park officials about impact fees, then bring the issue back to the committee.

But committee chair Lois Curtis was skeptical.

“These are well-intentioned efforts to make new growth pay for the impacts it causes, but they can be very difficult to justify, both politically and from an accounting perspective,” said Curtis.

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What are impact fees?

Washington state law generally prevents cities and counties from levying a direct or indirect tax on new development. But recognizing that new residents create a need for new infrastructure, the state allows cities to levy impact fees, generally a per-house or per-unit charge on new construction, “for system improvements that are reasonably related to the new development.”

Park board member Dave Shorett explains the logic.

“To me, it’s more fair to make new arrivals pay for the increasing needs rather than the general taxpayer,” Shorett said.

The state agrees, but within sharply defined limits. Impact fees can only be used for capital facilities required by growth, and only for facilities that will benefit that development.

Fees must be kept in separate accounts, and must be refunded, with interest, if not spent for an approved purpose within six years.

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