The Puget Sound region is booming with new development, more residents and jobs, and demand for increasingly stretched public services, whether they be roads, transit, schools, or parks. Many jurisdictions require new development to pay impact fees to partially supplement capital funding to construct new facilities for these services. Seattle, however, is one of the few cities that does not impose impact fees for transportation or schools. Seattle does have Mandatory Housing Affordability (MHA) and will expand that today, which is essentially an impact fee for affordable housing. Seattle also has a fee for sewer and electrical hookups, which are technically a form of impact fee but not in name. Under state law, impact fees can be used to pay for road improvements, school expansions, park and open space acquisition, and new firehouses.
Opinions on impact fees vary widely. Some boosters suggest that “new growth should pay for growth”–or put another way: that growth should pay for the new impacts to services that growth can create. Some hope that impact fees will curb new development. Detractors think they are designed to punish developers and that the costs are passed on in the form of higher housing prices. And some simply think that general taxation (e.g., property tax) is a fairer way to pay for growth.
However, the professional planning opinion locally, nationally, and globally sit squarely in favor of impact fees. Additionally, the economic research suggests that impact fees are a form of land value capture, causing lower land prices rather than higher housing costs. While there is evidence that impact fees can increase housing prices, research suggests that may actually be due to the additional services they provide. After all, well-funded schools often correlate to higher housing prices. Overall, planners and community members often see the policy is a fair way to fund the additional services needed due to growth.
Washington Statute on Impact Fees
In Washington state, impact fees are authorized under Chapter 82.02 RCW. The purpose of impact fees is to provide a financing tool for developing system improvements that will serve new development. The statute, however, is clear that impact fees must not be solely relied upon for financing new improvements. Instead, there must be a “balance between impact fees and other sources of public funds.” The statute is also clear that impact fees cannot be imposed arbitrarily or in a duplicative manner for existing impacts. They must be designed so that the impact fee cost is proportionate to the benefit that new growth and development will receive from improved and expanded public services.