Olympia's Community Plan and Development (CPD) officials proposed increases to several development fee rates as part of its proposed budget for next year.
CPD Director Leonard Bauer and CDP Deputy Director Tim Smith presented the proposed development services and impact fee changes at the Finance Committee meeting on Wednesday, October 18.
Bauer proposed a 4.14% increase in the development permit fees, which he said considered fees for services. It covers government services, such as planning review for land use, building and engineering, and inspection services.
"Under the state law, we can recover those costs," Bauer told the committee members.
Bauer recalled that in 2008, the city council set a goal to recover 85% of those costs from building permit fees, with the remaining amount covered by the general fund.
However, a consultant's study in 2021 revealed that the actual recovery rate in Olympia was only about 76%.
"They found it to be an average of about 76% rather than 85%. We have not quite achieved that with the fees that we had. One of their recommendations was to increase our fees based on that labor annually cost assumption in the budget each year," Bauer said.
According to Bauer, the stormwater utility plan fee was implemented in the Public Works Department to review proposed projects for their stormwater plans.
"However, it was just a single fee," Bauer said. "What we've discovered, as we've implemented that over this year, is that for some very small projects that fee was probably too high. And for very large projects that maybe wasn't high enough in terms of our actual costs."
The new proposal establishes a tiered fee structure for this fee based on the size of the impervious surface added or replaced by a project. It aims to make the fee more commensurate with actual review costs for different-sized projects.
These permits allow private parties, like utilities, to work in the public right-of-way.
Bauer said the city had previously used a single flat fee structure for these permits, but they found that some permits were out of scale with actual review costs depending on the size and complexity of the project.
He said they are proposing a tiered fee structure for right-of-way obstruction permits, similar to the change proposed for stormwater fees. It aims to align the permit fees with actual review costs based on factors like the size and scope of work within the public right-of-way.
For electrical permits and inspections, Bauer proposed adopting the Washington State Labor & Industries fee schedule by reference rather than adjusting the city's fees annually to match.
Bauer said the city has followed the Labor and Industries fee schedule for many years by adjusting the city's fees every year to match. However, the new proposal is to simply adopt the Labor and Industries fee schedule by reference to the city's ordinance rather than listing out all the individual fees.
It simplifies the process and ensures the city's electrical permit fees remain aligned with the state's schedule over time without needing an annual adjustment to match any changes made by Labor and Industries.
For the MFTE application fees, Bauer proposed increasing the fee from its current $100 to a significant $1,000.
He said the city's current fee has been in place since 1995 and has never changed.
They surveyed other cities with the same MFTE program and found that Olympia's current $100 fee is "remarkably lower than all other cities" surveyed.
The proposed increase would raise the fee to $1,000, which Bauer noted is still on the lower end compared to other cities.
He added that this increase aims to bring Olympia closer to covering its costs for administering the multifamily tax exemption program.
Smith presented proposed increases to the city's impact fees. He said impact fees help pay for growth-related infrastructure like transportation, parks, and schools.
He explained that the city adopted its first Transportation Master Plan two years ago. The plan included changes to the city's transportation impact fee programs, which support multimodal infrastructure like streets, bike/pedestrian improvements, and transit, not just vehicle capacity.
The CPD, according to Smith, proposed a 10% increase in transportation impact fees to keep pace with the increased costs of building the list of transportation projects identified in the master plan.
Smith also outlined increases for parks, North Thurston District, and Olympia School District impact fees.
He said the city adopted a new Parks Master Plan and impact fee rate study in 2022. That included a phasing plan to increase fee rates over multiple years.
For school districts, Smith informed that the city began collecting fees for North Thurston School District in 2023 after updating their interlocal agreement.
He stated that increases were proposed for 2024 North Thurston School District impact fees and Olympia School District.
5 comments on this item Please log in to comment by clicking here
Yeti1981
Government: We need more "Affordable Housing!"
Also Government: Let's make housing less affordable!.
Wednesday, October 25, 2023 Report this
BobJacobs
Development fees should cover the full cost of the city activities that serve development. After all , these costs exist only because of development. Any exceptions need to be justified, e.g. the cost of processing appeals. Why must the general public cover 15% of these costs?
Growth cost charges like impact fees and utility connection fees should likewise cover the full costs of growth, i.e. facilities needed to serve the increased population represented by the new developments. Unfortunately, state law does not allow full cost recovery in at least two ways: (1) only new school buildings, new parks, new streets, new fire facilities, and new utility facilities are allowed to be funded this way. Increased populations also need the full range of public facilities, like libraries, jails, police stations, city halls, etc. (2) fees are not allowed to recover the full cost of new facilities even where allowed.
Bob Jacobs, public policy analyst
Wednesday, October 25, 2023 Report this
DalePutnam
Many years ago, when city planning as a course of study was new, one was taught that needed infrastructure for new growth would normally be covered by bond issues, paid off by the new, additional, taxes paid by the new growth. Growth was paying for itself, but not in advance as is now the case with impact fees. Interesting concept, as it kept the cost of new development down. How things have changed.
Wednesday, October 25, 2023 Report this
Yeti1981
The mantra "growth pays for growth" is a myth. The new people who are tax payers like you and me pay for it, not the developer. All development costs are passed on to the homebuyer/consumer.
Thursday, October 26, 2023 Report this
Yeti1981
Why should working people who happen to move to your community later than you did be charged an entry fee? Shouldn't the cost of new growth, which benefits the old residents too, be spread evenly amongst everyone?
Thursday, October 26, 2023 Report this