Impact Fees. We hear about them from time to time, but what are they? The invention of the Growth Management Act of 1990 authorized cities and counties in Washington State to impose fees on property developers to mitigate the impact of new development on public infrastructure. Most often, impact fees are used for such facilities as roads, schools and parks.

The mothers of this invention may have been well intentioned, but who ultimately bears the cost? The intent of impact fees was to shift the burden of financing new infrastructure from the community at large to the developers. Fine in theory, but missing something in reality. The ultimate burden of impact fees falls on homebuyers in the form of higher housing prices.

Most builder/developers readily recognize that an impact fee is a cost of house production and thereby include it in the selling price. Which begs the question: Is this equitable to the consumer? Let’s examine a few examples.

The burden of a $2,000 impact fee is three times greater for the buyer of a $100,000 home than it is for the buyer of a $300,000 home. Whereas the impact fee may be a minor annoyance to the $300,000 homebuyer, it can make the difference between qualifying or not qualifying on a mortgage for the $100,000 homebuyer. Another example of the inherent inequity of impact fees is when “empty-nesters” purchase a new home subject to school impact fees, notwithstanding the fact that they do not have children. Contrast that with the case of a family with school-age children who purchase an existing home and, consequently, are not subject to school impact fees.

In Kitsap County, the current impact fee imposed upon construction of single family residences is $1974. Based upon the deliberations and projections of county officials, it is now expected that the new ordinance will increase this impact fee to $4200 in less than four years. Justification for such a significant increase and direct impact to the consumer is simply not tenable. Alternative funding sources need to be explored. In particular, the Real Estate Excise Tax (REET) is substantially more equitable than impact fees because REET is assessed on all real estate transactions and not just new construction.

It is laudable that Kitsap County Commissioner Patty Lent has undertaken the initiative to spearhead efforts to increase the REET at the state legislative level. Unfortunately, there is no assurance that this will occur in 2004. At this point, the only assurance Kitsap County citizens have is that they will bear an even heavier burden of impact fees in 2004.

Impact fees represent one of the safest political options for paying for new infrastructure, because, in general, they tax people who are not already local voters — new residents. Policymakers must weigh the consequences of impact fees while working to establish a more equitable, effective and efficient means of financing necessary public facilities.

Kitsap County’s process of reviewing its impact fee ordinance and adopting a new one will culminate with its final public hearing on Thursday, June 17th at 7 p.m. at the Eagle’s Nest located at the Fairgrounds. This likely will be the last opportunity for our concerned citizens to weigh-in on one of the most inequitable taxes ever invented, impact fees.