Developers in Spokane likely will have to pay a one-time tax to upgrade streets that serve their new buildings.
A majority of the Spokane City Council on Tuesday indicated support to remove language in the city’s impact fee law that delayed implementation of the law since it was enacted in 2008. But the council was forced to delay a decision for at least a week to recalculate the final fee rates.
If approved, Spokane would join about 60 other Washington cities, including Liberty Lake, in having impact fees.
The council also appears likely to remove exemptions that were in the original law. That means governments, universities, hospitals, schools, low-income housing groups and other social service agencies planning to expand will have to pay the same taxes as all other builders.
Money raised won’t be used for maintenance like filling potholes. Instead, the fee will be spent on construction and upgrades needed to deal with increased traffic caused by the new development. Projects include street widening, creation of turn lanes and addition of stoplights.
“We need to start accumulation of funds to address the current backlog of projects,” Community Assembly member Jim Bakke told the council. The assembly is a committee of Spokane neighborhood leaders. “For some people the time will never be right.”
Bakke added that if developers don’t pay for upgrades to serve their developments, the costs shift to taxpayers and that “will put the burden on those with the least ability to pay.”
Other supporters said that if the city doesn’t have the money to improve capacity of streets affected by new development, building moratoriums might be necessary.
But Joel White, executive officer of Spokane Home Builders Association, warned that some home builders and businesses will build outside the city to avoid paying the new tax. He told the council that it would be better to phase in the fees to lessen the burden on builders as they struggle to deal with the economic downturn.
“The big problem is there is an adjustment period that needs to happen,” he said.
The delay in implementing the tax was proposed right before the original impact fee ordinance was approved in 2008 by then-Councilman Al French, an architect and developer. The rule said the city wouldn’t collect the taxes until the city had a new sustainable source of street maintenance dollars.
Supporters of the delay said it wasn’t fair to make developers pay to upgrade streets when the city didn’t have the money to maintain them. Opponents said the change was a ploy to prevent the fees from becoming reality.
During Tuesday’s debate, the council voted 5-2 to remove some projects from the list of road upgrades. Councilman Richard Rush argued that some of the projects would cause sprawl.
The decision will lower the proposed rates. As proposed, the new impact fees would have ranged significantly based on project size and location. The builder of a single-family home in northwest Spokane would have had 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 have had to pay $216,000 in northwest Spokane, $264,500 in northeast Spokane, $185,000 on the South Hill and $68,500 downtown.
Last week, Mayor Mary Verner said she supported the change in the law to allow the tax to be collected.
Officials from Providence Sacred Heart Medical Center and Providence Holy Family Hospital asked the council not to remove exemptions for the hospitals. They noted that the hospital provides millions of dollars in charity care and cost reductions to people who can’t afford health care.
“We are nonprofit and one of the last health safety nets in the city of Spokane,” said Kerry Olson, manager of construction management for Holy Family. “It will have a negative impact on the sick and the poor.”
But Councilwoman Amber Waldref said if some groups are exempted others would have to pick up the cost.
“I do think that once you put in one exemption, it really does become a slippery slope,” she said.
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