BERK Does Impact Fees
As city and county budgets become increasingly competitive, local governments around the state are exploring or revisiting alternative revenue sources. Especially after the economy recovered coming out of the recession, many locations saw increased development but not always a corresponding growth in revenues to provide services. Impact fees are one option that help tie increased development with increased public funding.
Here we provide a short introduction to impact fees, both what they are and how they are implemented.
The Idea: What Are Impact Fees?
Often summarized as “growth paying for growth,” impact fees are intended to offset impacts from development and/or to ensure adequate public facilities. Essentially, impact fees correct for current taxing structures not capturing the full cost that new development can put on local government services.
Washington State has multiple fees that can be referred to as “impact fees.” These fees are authorized by different statutes that dictate how and when fees are levied and revenues are spent. Some of these fees are specific to particular types of taxing districts (Transportation Benefit District impact fees); others respond to impacts from specific developments (State Environmental Policy Act, or SEPA, mitigation fees).
There are some common themes among Washington’s impact fees – they fund capital improvements, not on-going maintenance and operations costs; funded improvements are for public benefit; funded improvements must be reasonably related to development and benefit future users of the development; developers cannot be charged multiple types of impact fees for the same development.
Growth Management Act (GMA) impact fees are one of the more common impact fees that local governments enact, partially because GMA impact fees can be used to fund multiple types of infrastructure and do not need to be negotiated for each project.
In Practice: How Are Impact Fees Implemented?
Given the diverse nature of impact fees, there are specifics to each type, but the following process is typical to all:
Quantify the impact from expected growth. This could be the official growth projections (GMA impact fees) or the environmental impacts from specific projects (SEPA mitigation fees).
Identify system improvements or mitigation needed to address growth. This would include published capital projects lists associated with system improvements (for GMA impact fees) or identifying mitigation measures and costs linked to development impacts (for SEPA mitigation fees).
Enact, levy, and expend. There are different mechanisms for the types of impact fees, but generally, the local government passes ordinances related to the impact fee and collect fees at the permitting counter. Some fees require that collections are held in a separate account and need to be refunded if not spent.
BERK is here to help. We have assisted local governments of all sizes with impact fees and can navigate with you the quirks of each.
Resources for Impact Fees
Impact Fee Studies and Policy Explorations (by BERK staff)
City of Anacortes Fire (2019)
City of Lakewood Planned Action Ordinance Including SEPA Mitigation Fee (2018) (see pp. 22-23)
General Impact Fee Information
Municipal Research and Services Center (MRSC)