It’s been a valley headline for nearly a year now – impact fees and the City of Snoqualmie not collecting the full 2011 amount assessed by the Snoqualmie Valley School District. District officials and school board members contend Snoqualmie is not paying its fair share.
It seems a simple process. The school district writes a yearly Capital Facilities Plan, identifying possible construction projects, predicted enrollment growth rates and current school building capacity . A complex formula then generates an impact fee which is approved by King County and assessed on newly constructed homes within the Snoqualmie Valley School District. Cities in the district then collect the fee from builders and turn those funds over to the county/district. The King County Growth Management Act allows for the collection of impact fees to help offset the costs of new school facilities. The fees were NOT created to completely fund new school construction. School districts can only spend impact fees on projects contained in their Capital Facilities Plan. Historically, SVSD impact fees have ranged from $1700 – $4,000. In 2009, no fee was assessed, even at the urging of Snoqualmie and North Bend administrators.
In 2011 the fee increased 300% to $8140, shocking builders. They questioned the dramatic increase during an economic recession. SVSD stood by its fee and the formula that generated it; reminding builders and the public that an $8140 impact fee is only roughly 35% of what new homes actually cost the school district. Builders questioned the district’s projected enrollment growth rates, saying the projected rates used to formulate the fee were higher than what was actually occurring. They talked of lawsuits if SVSD’s 2010 school bonds didn’t pass, saying in previous years (2007-08) they paid the fees to help fund a new high school and elementary school, yet the district never passed bonds to secure the remaining construction financing. Builders say that since impact fees only pay for Capital Facility Plan projects, without the key component -bond approval – they are essentially paying for projects that never materialize.
In March, while a $56 million bond was on the ballot, the district offered to decrease the fee using a new calculation based on the costs of annexing Snoqualmie Middle School to the high school and adding portables and additional common space at the two remaining middle schools. That fee that was closer to $5,000. According to councilwoman Maria Henriksen, this summer city officials offered to accept and collect this lower fee for the remainder of 2011. The district said no, that the lowered fee was only meant as a stop-gap measure while bonds were on the ballot, not a permanent solution. They would, though, continue negotiating the 2012 fee.
Snoqualmie’s role in impact fees is only that of collector. City officials contend that since they do not create the formula that generates the fee, they should not be held liable in any potential lawsuit. Hence, Snoqualmie requested a strong “hold harmless” (idemnity) clause to negate their potential risk from a statutory challenge to the fee and/or a constitutional challenge to the city ordinance allowing Snoqualmie to collect impact fees without bond approval. SVSD contends that an existing inter-local agreement between the two entities already protects the city with a broad idemnity clause and declined the request. According to Snoqualmie Mayor, Matt Larson, even though a potential lawsuit could challenge a city ordinance, the lawsuit still targets the impact fee that Snoqualmie does not set, only collects. Without full indemnification, the city will only collect the 2010 impact fee, roughly $5400 less than SVSD’s assessed amount. Sammamish, North Bend and Fall City all collect the higher fee.
The city of Kirkland faced similar challenges earlier this year when it annexed the unincorporated areas of Finn Hill and Juanita into its city limits, but creatively solved the problem. A program for collecting the impact fee was developed cooperatively between Kirkland, Lake Washington School District, Master Builders Association of King and Snohomish Counties, Seattle-King County Realtors, the Greater Kirkland Chamber of Commerce and local builders. According to Kirkland City Manager, Kurt Triplett, the collaboration “was an outstanding example of Kirkland stakeholders coming together and working hard to find common ground. Everyone was equally committed to the success of our schools while being sensitive to the impacts on the development industry that bears the cost of the new fee.”
It appears progress was made at a meeting yesterday between district officials, school board members, Snoqualmie and North Bend administrators and council members. Tentative terms discussed: district accepts extra indemnity language proposed by Snoqualmie and North Bend as well as language protecting the district from city errors; Snoqualmie (with expressed reservations) collects the full $8500 2012 impact fee; no further adjustments to the current 2011 fee; city’s ability to collect the fee when a new home sale closes vs. at the time of construction permitting, giving builders relief from carrying additional costs during home construction. All terms still have to go through board and council channels before it is a binding solution.