Impact fees have been on the radar in Seattle for many years now. The city is the largest jurisdiction in the state to forego collection of transportation impact fees on new development, despite authority to do so. To right this wrong, the Seattle City Council issued a Statement of Legislative Intent in November 2017 to begin the process of looking at the issue anew. In doing so, Council Central Staff took over the reins from the executive branch, which let the issue languish for several years after completing a white paper.

How Transportation Impact Fees Could Be Imposed

Last March, the Seattle City Council was briefed on transportation impact fee options. Kendra Breiland of Fehr and Peers laid out the framework and possible policy choices before the city council. “First and foremost, the program should be structured to fund projects that align with Seattle’s values,” she said. “A piece of that is really funding innovative projects. So, thinking about projects that really address Seattle’s values, thinking about Greenway projects, thinking about off-board fare payment.”

Breiland pointed to many of the transportation projects to be funded through the Move Seattle Levy as good candidates for impact fees funding. Broadly speaking, she said that impact fees could directly facilitate a host of progressive transportation improvement priorities in the city, including:

  • Sidewalk expansions and gaps in the pedestrian network within right-of-ways. That means that impact fees could be focused on efforts to improve pedestrian access to transit facilities, advance many Safe Routes to School projects, and provide equity to areas that have long-missed out on sidewalks in the north and south ends of the city.
  • New bicycle infrastructure which could realize many aspects of the Bicycle Master Plan, such as the Basic Bike Network, Neighborhood Greenways, and general bike facility capacity improvements.
  • Transit improvements in the right-of-way, such as transit signal priority, off-board fare payment, bus lanes, bus stops, and other transit improvements within streets. Operational and added equipment to fleets, however, would not be eligible for impact fee funding.
  • Strategic freight improvements throughout the city.
  • Lastly, rails-to-trails corridors like the Burke-Gilman Trail which are considered a right-of-way under state law and therefore are possible transportation facilities eligible for strictly pedestrian and bicycle investments.

In terms of how a program could be structured, Breiland suggested that past discussions focused on a citywide program instead of by subareas. A wider structure could allow investments to be made flexibility throughout the city if predicated on a large project list. Such a project list could still be equitably designed to ensure that projects funded by the impact fee program are targeting areas in need with high priority improvements.

There are clear differences in transportation demand across the city, Breiland noted. Trips in Downtown Seattle in and urban centers and urban villages tend to have much higher rates of walking, bicycle, and transit trips in contrast to less dense areas of the city than have higher rates of private vehicle trips. Structuring an impact fee program in response to this could mean imposing varying impact fee rates by geographic area, with lower rates where private vehicle trips are lowest and access to transit is higher, for instance.

Any impact fee program will need to involve a proper rate study to determine the kind of transportation demands that specific land use types generate. Typically, transportation impact fees are imposed on the basis of the number of afternoon and evening peak-hour trips assumed to be generated by a development. Once the rate study is completed, the city could go through the process of compiling an actual fee schedule based upon several considerations: use type and transportation demand, cost of capital improvement on project list, geographic location, and other relevant policy issues.

Transportation impact fees are just one part of overall system improvements (e.g., parks, emergency service facilities, child care, affordable housing, and water and sewer connection contributions) that developers are often responsible. Looking at the wider range of obligations, Breiland highlighted how Seattle compares to peer and regional cities when it comes to a range of system improvement types. She illustrated this through three hypothetical development scenarios (e.g., medium single-family home, large multifamily development, and large office development) and their system improvement responsibilities. Seattle stacks up toward the lower-middle of the pack and at the very bottom for single-family homes when excluding sewer connections.

On average, peer cities are imposing transportation impact fees under $5 per square foot for residential development. Meanwhile, commercial development typically is subject to much higher impact fees, ranging from about $10 to $25 per square foot where they are imposed.

Lastly, an important caveat that Breiland covered in her discussion is how impact fees could be collected for completed improvement projects. This may be desirable for the city to help free up revenues for other programmatic work that would not otherwise be available if impact fees were not still being collected to fund completed projects. There is a limitation here, however, in that it must be demonstrated that completed projects are continuing to provide capacity for future growth. Most jurisdictions, however, do not use this method instead opting to only impose impact fees on developments for projects yet to be completed.

How Seattle Is Considering Adoption of Transportation Impact Fees

Will Seattle finally move toward implementing impact fees? It appears a real possibility, judging by draft legislation under consideration by the city council. It would make several critical changes to enable imposition of transportation impact fees, including:

  • Adoption of amendments to the comprehensive plan. A new goal would be added to the Transportation Element. “Base transportation impact fees on the difference between the value of the existing transportation system and the cost of identified capacity-related improvements needed to address the impacts of growth,” the draft goal reads. An amendment would also clarify the city’s intent to use transportation impact fees, rather than just consider them.
  • Modify the transportation appendix. The comprehensive plan contains an appendix related to transportation. This would be updated to specify eligible projects for which impact fees could pay for and the methodology by which impact fees could be imposed. The draft indicates that the city would use the “existing system value methodology” to impose impact fees.

The “existing system value methodology” looks at existing deficiencies in the transportation system by calculating both the value of existing infrastructure and the value of land within city right-of-way. Once this value is derived, the number of current afternoon and evening peak-hour trips per person is determined and divided into the existing system value. This provides the existing system value per person per trip. Using this as a baseline, the city can determine the needed system improvements above this based upon a project list that will serve future development over a 12-year period and apportion the appropriate impact fee costs to be paid per trip that new development will create.

In keeping with the city’s desire to prioritize sustainable transportation, the project list to be funded by impact fees is narrowly tailored to transit, walking, biking, and freight programs. A draft map has been created, depicting where corridor projects could be implemented.

Identified corridor projects that would be eligible for transportation impact fee revenue. (City of Seattle)
Identified corridor projects that would be eligible for transportation impact fee revenue. (City of Seattle)

Transit improvements identified on the draft project list, include:

  • The Graham Street Station, an infill station project on the Central Link light rail line;
  • The Roosevelt RapidRide corridor between Northgate, Ballard, and Downtown Seattle;
  • The Madison Street RapidRide G Line corridor between Downton Seattle and Madison Valley;
  • The Route 44 corridor between Ballard and Montlake Triangle; and
  • Fauntleroy Way SW and California Ave SW where the RapidRide C Line operates.

The draft project list also highlights implementation of the Bike Master Plan and Pedestrian Master Plan, in addition to several complete streets projects to benefit transit, waling, and biking. This includes a variety of key corridors like Aurora Avenue, Delridge Way SW, Rainier Avenue, N Greenwood Ave/N Phinney Ave, and Lake City Way. Projects from the Freight Master Plan would generally be eligible on the project list, though specific corridors are identified in the Duwamish Industrial District.

A public hearing on the proposal is scheduled today and could be adopted late this year. In tandem with the comprehensive plan amendments, a formal impact fee schedule should be forthcoming in the months ahead, which would be adopted with the comprehensive plan policy changes. That could include a variety of policy choices on how the fees are designed and whether credits could be applied by geography.

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15 COMMENTS

  1. Yes to Impact Fees in Seattle Now! But along with them, property taxes should be reduced! And they should be used to pay for replacing aging water and sewer infrastructure and for upgrading police stations. Also for Sound Transit 3 projects but only if the ST3 tax to citizens can be reduced by the amount earned from Impact fees. If there’s funding left over after that put it toward the bike paths.

    • You should read the first article on this topic that outlines what is legal and not legal with impact fees. They can only be used to expand capacity of systems that would become deficient by new growth. They cannot be used to repair or replace ageing systems. https://www.theurbanist.org/2019/03/18/impact-fees-in-washington-state-an-introduction/

      I’d also point out that the city already charges for water and sewer hookups, so what you’re asking for is already in place. Impact fees cannot be used for police stations or police equipment.

      We need to maintain what have and improve what we need. Impact fees can only be a very small portion of the latter, meaning the property taxes must be maintained unless we’re suddenly going to get to implement a widely used income tax. (Even that seems unlikely to shift the taxation burden since the sales tax would be the first to see cuts.)

  2. I really don’t grasp the logic of using impact fees to pay for sidewalk expansion. Because we who’ve been here for decades have failed to invest in building sidewalks, we should charge someone building new homes (or, most likely, those occupying new homes) money to build the sidewalks we’ve failed to pay for ourselves?

    • New development creates new demands and deficiencies in the entire system beyond just the frontage of the development property. Impact fees can help provide a means to create more connected facilities and ensure that those residents or employees can walk between their home and place of work instead of creating other higher impacts to the transportation system. This is a good and logical policy.

      I’d also point out that most sidewalks have always been created by developers, not the city. Rather, the city pays for maintenance and replacement.

      • I agree sidewalks have often been built by the builder fronting a property – but honestly the nexus here seems pretty strained: what’s the “new” demand? Did people nearby *not* want to walk on a sidewalk before? “We didn’t pony up to pay but now you have to” doesn’t strike me as good and only logical in a nakedly self-serving sense.

        • I mean, five lots (with five SFRs) on a block with 15 residents making only about two walking roundtrips or ferwer per capita per day is small versus those same lots suddenly accommodating 20 times the number of residents making several times that per capita per day. The demand changes dramatically in terms of the corresponding need and capacity. Was it a bad call for King County to not have required sidewalks prior to incorporation to Seattle? Yes. But there is a real deficiency in the network that grows by not investing and complimenting growth.

          I’d also point out this isn’t just about implementing the priority pedestrian network. The impact fees would go to a multitude of critical transit, bike, and freight projects. And the fees don’t just apply to residential development. I would encourage you to read the research on value capture. It does not, if implemented properly, increase housing costs. It extracts wealth from sellers of property to developers. https://www.theurbanist.org/2019/03/18/impact-fees-in-washington-state-an-introduction/

          • I don’t see the demand for a sidewalk as a function of “number of walkers.” I mean, I think the residents of those 5 original lots probably want to “not be killed by cars” and have a reasonable claim to public investment to make less likely. Based on your example, arguably increasing the number of people demanding sidewalks changes the political calculus to make doing what I would call the right thing (building them) more likely so we should encourage it, not charge fees!

  3. Tom, I’d disagree that impact fees are the main reason behind differences in infrastructure quality between Seattle and Kirkland. I’d posit that infrastructure age is a bigger factor. Simply put, most of Kirkland was originally developed more recently than the amount of time it takes for new roads and schools and pipes to wear out. The same cannot be said for Seattle.

    Impact fees get your city a one-time infusion of cash that can be used to pay the initial capital costs for infrastructure related to a new development. The problem I see with this is that if you rely on it too much, your city leaders will be reluctant to set ongoing taxes to a high enough rate to support the eventual replacement of that infrastructure. You’ve got a newly developed city with a bunch of shiny new infrastructure, so there’s no perceived need to charge much in taxes. Then a few decades down the line when your housing stock has depreciated, perhaps being inhabited by people with less wealth than when the homes were shiny and new, roads and other things start to deteriorate and there’s no political will to raise taxes enough to fix it all. Instead you look for the next wave of developers bringing in impact fees to help kick the can down the road a bit.

    For this reason I think there’s something to be said for issuing debt to pay for a good portion of initial infrastructure costs. That gives impetus to impose a more sustainable rate of taxation from the start, because it will be needed to pay off the debt. Once the initial bonds are paid off, the taxes that were being used for debt service can be diverted into maintenance activities that will become increasingly necessary at that point.

    • That’s an interesting argument about infrastructure investment and commitment. This has been a constant challenge in even Seattle to keep up with ongoing maintenance and replacement outside of very key areas with deeply vested interests. For instance, there’s a lot of handwriging over what to do about the Magnolia Bridge and Ballard Bridge, which are big ticket items with no serious plans of midterm replacement. But even basic sidewalk maintenance in the city has been a longstanding issue regardless of neighbourhood. In the past few years, there have been huge lifts through new levies and tax programmes that have sought to right the ship on some infrastructure replacement, but it is still lags significantly. Personally, I think there is a big cultural issue over disinterest in projects that aren’t shiny, bold, and new. It’s hard for people to get excited about fixing their neighbour’s pipes and broken curb. It’s only when other new capacity or landmark projects are bundled into a programme that maintenance and replacement gets the attention it deserves.

      Issuing debt obviously creates a commitment, but I don’t know if that really is the means to jump-start the kind of investment necessary. Debt is carried with interest leading to a lot of public finance waste. Selling people on the need to pay as you go and creating a sustainable financing plan would obviously be ideal, but maybe your point on debt to force the equitable, ongoing investment has some serious merit.

      • It’s true that impact fees come out of land values, but that is the exact mechanism by which they prevent change.

        That’s because they only affect the value of land *that someone redevelops*. They do nothing to the value of the land when it passes from one car-wash proprietor to another. They only depress the sum that a potential apartment project can afford to pay for that same car wash. So the new car-wash proprietor makes a higher bid, and the lot remains a car wash instead of 40 much-needed apartments on a bus line.

        • Hey Michael,

          You seem to be implying that impact fees will favor existing uses over new construction, reducing the likelihood land will convert to new uses. This suggests impact fees will affect the supply of new housing negatively.

          However, the research appears to find the opposite conclusion. Impact fees have been found to increase housing production.

          This is a good study that also links to other studies so you can read the whole literature and see how the academic debate has evolved.

          https://www.researchgate.net/publication/321166895_Developers_pay_developer_charges

  4. Because Seattle does not have impact fees, then it’s infrastructure is in inferior shape compared to Bellevue and Kirkland who do.
    I would suggest Seattle adopt impact fee structures similar to the Eastside suburbs.

    Your maps of proposed improvements are blurry. Can you provide them again as PDF documents?

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