Increasing Impact Fees for Schools

Increasing Impact Fees for Schools

New construction home framing against sky

It’s been almost 20 years since I worked with the Peninsula School District to adopt the City of Gig Harbor’s first construction impact fee for schools. Since then I’ve heard one consistent theme. Whether it’s participating with Peninsula School District’s facilities planning committee, talking to constituents, or listening to our School Board, the current calculation is insufficient to our needs.

Impact fees are charged to new development by cities and counties, to help pay for the cost to government services generated by growth. The State Legislature allowed local governments to charge them under the Growth Management Act. Here’s what the statute allows:

(a) Shall only be imposed for system improvements that are reasonably related to the new development;

(b) Shall not exceed a proportionate share of the costs of system improvements that are reasonably related to the new development; and

(c) Shall be used for system improvements that will reasonably benefit the new development.

Using a formula adopted by the County Council, school districts calculate their capital needs to serve the students generated by each new housing unit. The formula is careful to back out other sources of capital revenue like state funds or the share of payments made toward to school bonds made through property taxes. That unmet need is then reduced by half. In the Peninsula School District the final number is $8,061.

However, that rate is not what’s paid by new construction. Years ago, the County Council established a Maximum Fee Obligation (MFO) which caps rates at $3,485 for single family residence or about 22% of the capital costs created by a new single family home. Because school district boundaries usually include territory in cities and unincorporated Pierce County, the County’s MFO is typically adopted within cities as well.

A study I sponsored had four main findings:

  • The school impact fee methodology employed by Pierce County is similar to the methodologies used by King County, Snohomish County and Clark County.
  • Key differences in the methodologies are the adjustment percentage used and the use of a maximum fee obligation. King County, like Pierce County reduces the calculated unfunded need by 50%, but they do not use a maximum fee obligation. Snohomish County uses a 50% adjustment and recently imposed a maximum of $7,000 per dwelling unit. Clark County uses an adjustment of 85% and does not impose a maximum fee obligation.
  • Many incorporated jurisdictions that Pierce County school districts also serve tend to have rates similar to those imposed in Pierce County. Some of these jurisdictions adopt the Pierce County methodology by reference. Some of these jurisdictions also impose a maximum limit, but not at the same rate as Pierce County.
  • Pierce County rates are generally lower than rates in the three county jurisdictions examined for comparison. Additionally, rates in municipalities in Pierce County also tend to be lower than other regional jurisdictions. Without the maximum fee obligation rates in Pierce County would have more variance between districts, but would also be more similar to the rates seen in Clark and Snohomish Counties.

The amendment I’m proposing will increase Pierce County’s MFO by 50% to $5,228. That’s closer to the amount requested by our school districts, and to peer jurisdictions in King, Snohomish, and Clark counties.

Here’s the rest of the ordnance. You can comment directly on the legislation, write to the Council, and call your member direction, asking them to support Proposed Ordinance No. 2018-13.

It’s important to state clearly that impact fees will not solve all our schools’ capital needs. Even if I could persuade my County Council colleagues to increase fee to 100% of the need to accommodate new growth, the clear majority of the capital needs in our schools would remain.

Even still, at a time when we’re asking our constituents to support our schools, we owe them our best effort to exhaust every other available source of funds.

The bill will be heard in Community Development Committee this Monday, March 19th, at 1:30pm in Council Chambers. Final consideration before the full Council is scheduled for April 3rd at 3:00pm.