Kitsap Peninsula Business Journal
6-13-2003
SPECIAL REPORT - REAL ESTATE ON THE PENINSULA
Reconsideration of impact fees comes
at June 17 public hearing
By Temple A. Stark

A vote on possible changes to impact fees comes before the Kitsap County Board of Commissioners later this month.

The public hearing on impact fees is June 23. Under consideration at that time is the range of fees and thoughts on other sources of revenue for the county.

Arguments on both the pros and cons of the fees are familiar, but people’s mood about them change. Public Works, parks and the school districts have already offered their recommendations, which call for a five-year phase-in plan of increased fees.

The county now has two impact fee laws. One is for parks and transportation and the second for schools. One of the main reorganization changes is to merge the two fees as one.

That’s not an increase itself, but county departments are recommending one. According to an informational summary written for commissioners, departmental heads and the public, a fee increase is needed “to achieve the level of capital investment necessary to accommodate the projected growth and land use identified in the County’s adopted Comprehensive Plan.”

“I will not support any increase in impact fees, as I have stated prior,” County Commission Chair Jan Angel said, via e-mail. “They are not mandated, they are not an equitable tax and I feel we can find a much better way to fund roads, parks and schools.”

Meanwhile, Commissioner Patty Lent, who steadfastly promised to oppose any proposed impact fee increase during her campaign, spent the better part of an hour and a half on May 29 attempting to justify to a clearly unhappy Homebuilders Association (HBA) board of directors why she has blatantly broken her campaign promise.

With County Administrator Malcolm Fleming at her side, she attempted to explain a proposal which she seemed confused about herself, outlining a sliding scale of increases.

Commissioner Chris Endresen has long been on record as favoring steep increases in impact fees.

Kamuron Gurol is the newly hired director of the Department of Community Development, which issues the permits and the impact fee bills. Although new to Kitsap County, he’s not new to the discussion surrounding Impact fees. His previous position was in Snohomish County

Authorized through the Growth Management Act (GMA), money from impact fees goes toward improving or maintaining roads, parks, schools and fire departments. In most cases throughout the state, though, it is roads under the Public Works Department that receive the greatest percentage of its budget from impact fees, Gurol said.

Impact fees help a county develop long-range plans, with a relatively reliable source of income.

“Ultimately the cost of housing is what somebody will pay for it,” Gurol said. “My job here is to issue the permits. The reason I do it and don’t lose sleep over it is because it’s going to a needed infrastructure. Until we figure out somebody else to pay for it I think this is a reasonable amount.”

“The proposed impact fee represents about 3 percent to 5 percent of the current median home price in Kitsap County ($162,900),” the flier states.

Art Castle, executive vice president of the HBA said for new homes the amount is closer to 10 percent of the cost. He said the median average figures for new houses is actually nearer to $250,000 in most of the county, and might be expected to hit $275,000 soon.

“Almost nothing new is built below $200,000,” Castle added.

He points to close to $50,000 in all permit fees and development taxes combined as one reason the price is so high.

“If you raise it all too much you reach a point where you get diminishing returns,” he said. “Nobody’s going to want to build.”

It may be just coincidence that Poulsbo, which has the lowest impact fees ($963), has seen a boom in growth over recent years. But a cause-and-effect relationship is hard to pin down, and is denied by some.

One argument being made against impact fees is that school enrollment in Kitsap has been on the decline for several years — a trend forecasted by the school districts themselves to continue unabated for the foreseeable future. Therefore, the money being fed to the schools should be proportionately reallocated instead of raising the fees. However, already squeezed for funding, the school districts aren’t buying into that.

One alternative to impact fees, which Angel strongly considers is higher “excise tax” funds, which come from the sale of both new and re-sold homes.

“[They] are far more equitable and will not raise the cost of housing to cover the imposed impact fee a builder has had to cover,” Angel said.

Gurol said the board of commissioners as a whole is looking for more flexibility on how the now existing Real Estate Excise Tax can be used.