By Christie Malchow
Mayor, City of Sammamish
We often hear this term, 𝐠𝐫𝐨𝐰𝐭𝐡 𝐩𝐚𝐲𝐬 𝐟𝐨𝐫 𝐠𝐫𝐨𝐰𝐭𝐡. But does it?
It doesn’t in the absolute sense. Actually, state law prevents it from paying its full impact, leaving the balance of the burden to existing taxpayers to fill the void.
The term “growth pays for growth” is one I wish politicians and others would stop using, because it implies somehow that incoming development will somehow make everything fine and there won’t be a burden on existing property owners.
New development (residential) pays impact fees in the form of park impact fees, traffic impact fees, and school impact fees. These impact fees have strict regulations on their use by the agency that collects them. Impact fees are governed by the Growth Management Act and are only charged to new r͟e͟s͟i͟d͟e͟n͟t͟i͟a͟l͟ development.
𝑰𝒎𝒑𝒂𝒄𝒕 𝒇𝒆𝒆𝒔, 𝒃𝒚 𝒍𝒂𝒘, 𝒄𝒂𝒏𝒏𝒐𝒕 𝒃𝒆 𝒖𝒔𝒆𝒅 𝒂𝒔 𝒕𝒉𝒆 𝒔𝒐𝒍𝒆 𝒔𝒐𝒖𝒓𝒄𝒆 𝒐𝒇 𝒇𝒖𝒏𝒅𝒊𝒏𝒈 𝒐𝒇 𝒕𝒉𝒆 𝒔𝒚𝒔𝒕𝒆𝒎 𝒊𝒎𝒑𝒓𝒐𝒗𝒆𝒎𝒆𝒏𝒕𝒔 𝒏𝒆𝒆𝒅𝒆𝒅 𝒕𝒐 𝒔𝒆𝒓𝒗𝒆 𝒕𝒉𝒆 𝒏𝒆𝒘 𝒅𝒆𝒗𝒆𝒍𝒐𝒑𝒎𝒆𝒏𝒕.
So let’s dive into some numbers.
On December 31, 2018, #Sammamish had exactly $9,798,129 in traffic impact fees. In terms of an infrastructure project, those impact fees don’t go very far and not every project is eligible to use impact fees. By law, a project cannot use 100% impact fees either.
In 2018, construction of SE 4th used $2,436,234 in impact fees, but the project’s total cost (adopted on our 2020 Transportation Improvement Plan) is slated to be $20,930,000. The City did get a $5M TIB [state] grant, leaving the taxpayer contribution to be $13,493,766. That equates to 𝟔𝟒% 𝒐𝒇 𝒕𝒉𝒆 𝒑𝒓𝒐𝒋𝒆𝒄𝒕 𝒇𝒖𝒏𝒅𝒊𝒏𝒈 𝒄𝒐𝒎𝒊𝒏𝒈 𝒇𝒓𝒐𝒎 𝒕𝒂𝒙𝒑𝒂𝒚𝒆𝒓𝒔. The City will likely be able to recollect some of the $13M as development comes in (for frontage improvements – ie. sidewalk, curb, gutter, bike lanes), but this demonstrates growth doesn’t cover the cost of growth, and not even most of the cost.
If we look at schools, the districts use a complex formula to determine what dollar figure is used as an “impact fee.” This is long, but keep reading…
The Lake Washington School District calculated the cost per seat for a new 690 student elementary school to be $45,376/seat. They multiply the cost per seat by the student generation rate (# of students from a new development) to find the proportionate impact of a single family house (SFR).
$45,376 x 0.426 (K-5 generation rate) = $19,784/SFR
Then calculate the impact for growth projects at each grade level:
Total Cost per SFR for all grades = $36,300/house
The LWSD got a credit for state matching of $4,835 & estimated taxes that new homeowner will pay toward school construction bond ($7,878)
𝐅𝐢𝐧𝐚𝐥 𝐜𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐞𝐝 𝐢𝐦𝐩𝐚𝐜𝐭 𝐟𝐞𝐞:
$𝟑𝟕,𝟑𝟎𝟎 – $𝟒,𝟖𝟑𝟓 (𝐬𝐭𝐚𝐭𝐞 𝐦𝐚𝐭𝐜𝐡) – $𝟕,𝟖𝟕𝟖 (𝐭𝐚𝐱𝐞𝐬) – $𝟐𝟒,𝟓𝟖𝟕
But there’s more, because King County requires a 50% reduction of that impact fee, so 𝚝𝚑𝚎 𝚗𝚎𝚠 𝚜𝚒𝚗𝚐𝚕𝚎 𝚏𝚊𝚖𝚒𝚕𝚢 𝚑𝚘𝚖𝚎 𝚠𝚒𝚕𝚕 𝚙𝚊𝚢 $𝟷𝟸,𝟸𝟿𝟺 𝚕𝚎𝚊𝚟𝚒𝚗𝚐 𝚝𝚑𝚎 𝚘𝚝𝚑𝚎𝚛 𝟻0% 𝚘𝚏 𝚝𝚑𝚎 𝚒𝚖𝚙𝚊𝚌𝚝 𝚝𝚘 𝚎𝚡𝚒𝚜𝚝𝚒𝚗𝚐 𝚝𝚊𝚡𝚙𝚊𝚢𝚎𝚛𝚜 𝚝𝚘 𝚏𝚞𝚗𝚍.
So growth pays for some of the growth, but it certainly doesn’t pay the full ride and thus, the old adage “growth pays for growth” is really a misleading phrase that shouldn’t be used, or at the very least more accurately stated as:
G𝑟𝑜𝑤𝑡ℎ 𝑝𝑎𝑦𝑠 𝑓𝑜𝑟 𝑎 𝑝𝑜𝑟𝑡𝑖𝑜𝑛 𝑜𝑓 𝑖𝑡𝑠 𝑓𝑢𝑙𝑙 𝑖𝑚𝑝𝑎𝑐𝑡.