Seattle’s decision to forgo development impact fees is an artifact from a different era, writes columnist Jonathan Martin.
Seattle decided a long time ago that it wouldn’t require growth to pay for growth with impact fees.
At least 80 cities in Washington think otherwise, including all the big Eastside cities, and impose impact fees. If Seattle had similar fees, the 16,000 new housing units now in the pipeline would raise an estimated $45 million — and that’s just for transportation. The lost impact fees from South Lake Union make my head hurt.
Seattle should revisit its aversion to impact fees because that initial decision is now based on outdated logic. Seattle City Councilmember Nick Licata said he asked about the lack of impact fees when he joined the council back in 1998. “The thinking was: Seattle is fully developed, so impact fees are hard to justify,” he said.
That was at least two economic booms ago. Today, as Seattle is choking on an unprecedented river of growth, the definition of “fully developed” seems antiquated. Seattlelured Expedia and Weyerhaeuser. New development is crowding roads and squeezing potential park space. In the hot neighborhoods, schools are overcrowded.
Those are exactly the problems intended to be eased with impact fees.
Seattle instead has opted to pay for transportation, parks and schools with special property-tax levies — the drip-drip-drip increases that make property taxpayers feel like a frog in a pot.
“The public has ponied up more than their fair share,” said Licata. “We’ve been quite hesitant telling developers you need to pony up.”
In the background to this issue is Mayor Ed Murray’s housing-affordability plan, which calls for squeezing commercial developers for “linkage fees” to build subsidized units. Linkage fees are identical in concept to impact fees, but they would be dedicated only for affordable housing.
The linkage-fee proposal is on greased rails, as Mayor Ed Murray and the City Council are focused on bending down housing costs.
Good goal. But the residents of the city are talking just as much about the consequences of an Amazon-fueled boom. Impact fees could help with that angst. They can’t pay for bus service, but they could build dedicated bus lanes, fill potholes and build schools and parks.
Robert Feldstein, Murray’s policy adviser, said the city recently finished a feasibility study on impact fees, but implementation is at least a year away.
Given the city’s history of acquiescing to developers, I’ll bet it’s an either-or scenario: linkage fees for affordable housing or impact fees to pay for growth.
Which would you rather see?
I can already hear at least two howls of protest. Developers will say they’re already paying for some traffic impacts as part of environmental permitting. But impact fees would generate much more. In Bellevue, commercial-development impact fees for transportation average about 3 percent of the property value. Kirkland charges new fast-food restaurants nearly 50 percent of the project cost to ease traffic impacts.
The second howl would come from the urbanist lobby concerned about fees that drive development out to the suburbs. But most of Seattle’s neighbors already charge them, and at rates larger than any likely to be approved by Seattle. In Redmond, a new midsized office pays a whopping 11 percent for traffic and park impact fees.
What’s most surprising about impact fees is that they don’t raise the cost of housing or compromise job growth, according to a research analysis by the City of Portland, the icon of growth management. In fact, some studies show that developers prefer the certainty of an impact-fee schedule and the amenities they fund.
“We have decades of experience here in Washington, and if they impacted development, we’d have seen it,” said Randy Young, a Redmond-based consultant who advises cities on impact fees. “Development has rocked right along when the economy is strong.”
Seattle took a U-turn away from impact fees in a different era. Take a look around at all those tower cranes. Shouldn’t growth be paying for growth?