November 23, 2010 in City

City of Spokane weighs development taxes

Latest proposal would impose fees on more types of projects
By The Spokesman-Review
 

Potential taxes on new development approved two years ago would finally be collected under a proposal being considered by the Spokane City Council.

The taxes are one-time “impact fees” paid by developers of homes, businesses and other projects that are expected to generate additional traffic demands on city services. The fees would have to be paid before building permits could be issued.

Unlike an earlier version approved by the council, schools, low-income housing projects, homeless shelters, hospitals and governments would be required to pay the fees. The new proposal also lowers the proposed fees.

Money raised would be set aside to pay for projects city officials say are needed because of increasing traffic.

“There has to be an acknowledgment that development does place a burden on infrastructure,” said City Councilman Richard Rush. “It seems like this is an appropriate way to do it.”

The fee ranges significantly based on project size and location. The builder of a single-family home in northwest Spokane would have to pay $994, $1,216 in northeast Spokane, $850 on the South Hill and $314 downtown.

The builder of a 50,000-square-foot supermarket would pay $216,000 in northwest Spokane, $264,500 in northeast Spokane, $185,000 on the South Hill and $68,500 downtown.

Some officials, however, question the implementation of new taxes during a sluggish economy.

City Councilwoman Nancy McLaughlin said the city should work with county, Spokane Valley and other leaders to implement impact fees throughout the region. Otherwise, she said, business may flow outside Spokane city limits.

“If we can’t get a regional buy-in, I think it’s best that we don’t implement them, especially in this economic downturn,” she said.

The council adopted the fees in late 2008, but added an amendment that prevented them going into effect until the city created a second tax source aimed at street maintenance. That amendment was sponsored by then-City Councilman Al French, an architect and developer who recently won a seat on the county commission.

Supporters of French’s amendment questioned why the city should create fees to build new road infrastructure when it doesn’t have the revenue to properly maintain what it builds. When he served on the council, French was a strong supporter of creating utility fees for street maintenance that would be charged on city utility bills, much like sewer and trash fees. But that concept needs approval of the state Legislature, which has not acted to allow cities to enact those fees. Those who opposed French’s amendment, including Mayor Mary Verner, argued that it was simply a way to prevent impact fees from going into effect.

On Monday, the Spokane City Council voted 4-3 to delay a vote on impact fees until Jan. 18.

Some council members said they didn’t want to confuse the debate on impact fees with the shortfall in the city budget. Impact fees must be used on specific transportation projects and couldn’t be used to prevent layoffs or service cuts.

But council President Joe Shogan reacted angrily to the delay.

“We’re deferring this because we just can’t make a decision,” Shogan said. “Let’s call a spade a spade.”

Rush said he hopes the fees will be amended so that some of the fees can be spent to upgrade pedestrian and bike infrastructure.

“It’s completely vehicular oriented,” Rush said. “We need a more holistic, all-inclusive view.”


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