Developers Promise To Fight Impact Fees City Overestimates Future Growth, Industry Charges

The city of Spokane is pushing to collect fees on new homes in the fastest-growing neighborhoods to pay for needed parks, fire protection and road work.

The impact fees being studied would be the city’s first for parks and fire protection. Some payments already are collected for transportation improvements.

But the proposed impact fee ordinance would go further, using developer money to build new arterials and improve existing roads.

The ordinance also would collect transportation fees for property that already is subdivided but still vacant - some 2,300 plats in the seven areas under study: Seven Mile, Indian Trail, Five Mile, Calkins, Latah, Qualchan and Moran Prairie.

Builders and developers have put the city on notice that they believe the proposed ordinance is illegal and would face a court challenge.

“They’ve basically told me, we’ll see you in jail,” joked Irv Reed, planning and engineering services director for the city.

Reed is leading the effort to enact the impact-fee policy. A draft ordinance has been written and mailed to some developers for review.

A series of workshops are planned in January and February to finish the proposal before it’s sent to the City Council.

The draft calls for the fees in the fast-growing fringe areas. The city estimates those neighborhoods could be home to 70,000 new residents in the next 20 years.

The proposed fees range from a low of $1,237 per home in Seven Mile to a high of $2,909 per home on Five Mile Prairie. Fees also would be charged in the other areas under study.

Construction estimates for those seven areas cited by the city are staggering - 38,846 new homes and apartments over the next two decades.

The city estimates capital needs for the seven neighborhoods at almost $100 million. Of that, $79 million is needed for roads and transportation, $10.8 million for parks, and $9.5 million for fire protection.

Developers say the numbers are too high.

There’s no way the city can or should grow as quickly as estimated, said Cathy Ramm, a land-use consultant and developer. The inflated numbers lead to excessive capital needs estimates, which in turn lead to bloated impact fees, she said.

Ramm said the city estimates Moran Prairie growth at four units per acre, resulting in 14,000 more housing units in the next 20 years. Yet much of the land is in the county’s unincorporated area and zoned for one home per five acres.

“There’s no place to put that many units,” she said. “What’s left has drainage problems. They’ve just over estimated the future population.”

City officials concede there is much work to do on the ordinance. Some of the city’s numbers, for instance, don’t coincide with those of a countywide committee looking at population estimates for growth management laws.

The city also is using land in the unincorporated area for its analysis, even though the county, not the city, has control over the zoning and development policies there.

Homebuilders and Realtors are preparing to take their case against impact fees to the public.

They contend the fees would increase the price of all housing and property taxes, push more first-time buyers out of the market, and stifle Spokane’s economy.

“It wouldn’t kill the housing market, it sure would dampen it,” said Rob Higgins of the Spokane Association of Realtors. “And where Spokane is headed now we don’t need it dampened.”

At the same time, both Higgins and Al Haslebacher, government affairs coordinator for the Spokane Home Builders Association, acknowledge that without road and sewer improvements, growth will grind to a halt.

Gerry Shrope, capital engineer at City Hall, said impact fees are only one source of money for infrastructure.

What developers get in return for the fees is a disciplined program to expand roads and public services, Shrope said. Under state law, fees have to be spent on the project for which they were collected. Any money not spent in six years must be returned.

Shrope expects the real estate excise tax to cover some of the city’s capital costs. The 1.78 percent excise tax is paid by the seller of a home, but only a portion - $500 on a $100,000 home - stays with the city. The majority is spent by the state for education.

A new study by the Spokane Home Builders indicates taxes on a new Spokane County home costing $143,750 run $14,396.

The biggest share, $7,849, goes to the state.

“If growth doesn’t pay for itself it’s because it’s paying for so many other government activities instead,” concludes Thomas Heller, a Seattle consultant who did the analysis.

Haslebacher said he is asking lawmakers to support a bill that would allow the city and county to keep a larger share of real estate excise taxes and devote it specifically to roads, sewers and capital needs.

Residents who live in the areas are already frustrated.

Sandy Smith, a leader in the Nevada-Lidgerwood neighborhood, attended a meeting Thursday night to look at a traffic study for the Calkins area that incorporated three projects. Together they would add 2,156 apartments, 284 mobile homes, 415 single-family homes, and 1 million square feet of commercial and industrial space between Lincoln and Magnesium Roads east of Nevada.

New street lights and wider intersections would be needed, but she was unsure who would pay. She said developers have been unwilling to foot the bill voluntarily for improvements and it was time for the city to step in.

“They’re taking too long to do this,” Smith said. “If everyone gets their developments going then look at all the money we’re losing.”

, DataTimes ILLUSTRATION: Photo; Graphic: Proposed impact fees