Developers object to impact fee plan

Proposed traffic impact fees would cost the developer of Kendall Yards millions of dollars and jeopardize deals on the former Empire Ford building in downtown Spokane, representatives of the development community say.

Developers contend the fees, which would add costs to residential and commercial projects to pay for systemwide traffic improvements designed to accommodate growth, would drive development outside city lines, hindering economic development.

A fee advocate, however, asserts that residents would ask for a building moratorium if the fees are not imposed.

Levied on developers, the fees would raise money toward $18.1 million in projects over the first six years. Proponents argue the money is critical to comply with state law mandating cities accommodate growth without burdening existing taxpayers. But developers argue their responsibility for 95 percent of certain upgrades is unfair, and they would pass costs along to customers, making housing less affordable.

The Spokane Plan Commission will begin deliberating on the fees April 23 and will make a non-binding recommendation to the Spokane City Council. The commission’s look follows more than a year of public comment and work by city staff and a workgroup of stakeholders to draft the fees.

Kendall Yards

The fees could add at least an estimated $8.32 million to the mixed-use Kendall Yards project, in addition to millions of dollars Black Rock Development expects to pay for on-site infrastructure upgrades, said Tom Reese, project manager. Developer Marshall Chesrown paid $12.8 million for 77 acres northwest of downtown at a Metropolitan Mortgage & Securities bankruptcy auction several years ago.

“This will have a tendency to drive those commercial projects and those commercial retailers and those anchor tenants … so important on Kendall Yards out of the market, because it will simply become unfeasible to go forward on,” Reese said. “Clearly, it’s inconceivable that an impact fee can be levied on a project that you want to encourage in the downtown area for about the same value as the property was purchased in the first place.”

Reese said Kendall Yards shouldn’t be split between fee zones for downtown, which has the lowest rates, and northwest Spokane. Kendall Yards also should qualify for credits for being pedestrian-oriented and environmentally friendly, he said.

The high-profile Empire Ford building, 423 W. Third Ave., is listed for sale at $5.3 million. Chris Bell, an associate broker with NAI Black, said prospective buyers are turned off by the proposed fees. He contended more broad-based methods of funding growth are needed.

“It will kill the deal if as-drafted impact fees go into place,” Bell said.

Yet Five Mile Prairie resident Kathy Miotke said potential tenants considering a move to Spokane would be turned off by the “atrocious” state of the city’s streets, not by impact fees.

Miotke said some areas of the city aren’t meeting state requirements for keeping up with growth. “And right now we have been working with five high-growth neighborhoods that are more than willing to go and ask for a complete moratorium on building until the baseline study is done, unless we can get this passed.”

Many developers called for the city to wait for the results of a $400,000 citywide traffic study. That probably will take at least through next year to complete, said Eldon Brown, acting director of Spokane’s engineering services department. The fees could be revised after the study, Miotke said.

South Hill fee zone

A commission subcommittee already amended the proposal to lessen charges on developers in southeast Spokane in response to developers’ concerns. The new draft creates one South Hill fee zone, considerably hiking fees on most types of development in the southwest. It also reduces fees for some types of development

“Technically it was very supportable, but there was maybe some impracticality in the initial product, and some of the fees were really exorbitant,” said Ray Wright, a senior traffic planning engineer.

Using the new rate schedule, a developer in southeast Spokane would pay $2,368 for a single-family home, compared with $3,074. A southwest Spokane developer, however, would pay $1,396 more per home. Developing a bank in southeast Spokane would cost just $19.41 per square foot in fees, versus $73.79.

The commission will accept written testimony through today.