City leaders understandably are wringing their hands. It’s been only six months since the council approved a $903 million budget. To make ends meet, nearly 200 hours of library service were eliminated, staff levels for most departments were cut, employees were furloughed, the rainy day fund was drained, and parking fines were raised. Despite all that and only five months into the new year, the city has discovered revenues will fall at least $10 million short of budget.
And next year the deficit is expected to be another $56 million. The year after that the projected shortfall is $53 million. Still more programs must be slashed and taxes, fees, or other new revenue sources must be found immediately.
Since the library system absorbed a huge share of the cuts in the fall, and public safety (police and fire) are always sacrosanct, it seems inevitable that this time around more will be taken from parks, transportation, and quite possibly human services. The prospect of such deep cuts has prompted an outpouring of citizens at council hearings, especially advocates representing parks and human services. Several interest groups also are forming to call for new sources of revenue.
A group of what could be characterized as upper-echelon activists with longstanding corporate ties are lobbying for creation of a Metropolitan Parks District. State legislation allows cities to create quasi-independent Metropolitan Park Districts with unique powers to use eminent domain, buy and sell parks property, and most importantly, to sell bonds and levy property taxes.
This is not a good idea, in my view, and below I outline a better approach. Also, there likely would be considerable opposition to a Metropolitan Park District, just as there was a decade ago in Seattle when the idea was first floated and then rejected by elected leaders. Grassroots parks advocates fear loss of resident control and participation if parks management is ceded to a quasi-independent body.
Another reason for opposing the idea: In bad economic times, when property values fall and the tax base shrinks, these special taxing districts lose their revenue base. And how willing will the city be to fill this financial void once authority has been handed over to another entity?
There also is talk among library supporters of creating a similar independent entity to manage and raise revenues for our libraries. City Council President Richard Conlin says he's exploring this idea.
Earlier this week, a number of light rail, bike, and sustainability groups operating under the banner of “Streets for All” also launched a new lobbying effort. They’re asking the city council and mayor, despite the budget crunch, to come up with another $30 million on top of existing commitments to guarantee increased spending for pedestrian, bike, and mass transit improvements city-wide.
The effort for the walk-bike-ride initiative has drawn support from some council members and Mayor Mike McGinn, but so far no new sources of funding have been identified. McGinn says he's considering such options as raising vehicle license fees and the possible creation of a “Transportation Benefit District” — another state-authorized tool— giving broad powers to an entity with the power to raise taxes.
These ideas for parks and transportation funding may have to wait in line since it is likely the city council will soon float another Families and Education Levy, with Conlin pushing the idea of a library-district ballot measure in 2011.
With the exception of a possible revival of the employee head tax that businesses would pay, a measure rescinded last year by the council, most efforts now being considered by both city officials and advocates take the form of ever-more-inventive ways of raising property taxes and fees that generally hit small businesses and working people disproportionately hard.
And yet there is one source of revenue going completely overlooked by most Seattle politicians — developer impact fees. Why haven't our city leaders long ago tapped this source that has a potential to raise millions not only for parks but a host of other city infrastructure needs? Many other cities do, and for many good reasons.
The Growth Management Act (GMA) explicitly allows cities, counties, and towns the option of requiring new development to cover the cost of providing infrastructure and services that their projects demand, so long as that fee "is reasonably related to the new development that creates additional demand and need for public facilities, that is a proportionate share of the cost of the public facilities, and that is used for facilities that reasonably benefit the new development." (See RCW 82.02.090 (3).)
Further, these impact fees may be imposed to cover costs related to "(a) public streets and roads; (b) publicly owned parks, open space, and recreation facilities; (c) school facilities; and (d) fire protection facilities in jurisdictions that are not part of a fire district." (See RCW 82.02.090 (7).)
In fact, the majority of jurisdictions in the three-county area including King County, Bellevue, and Burien, and such "backwater" places as Carnation, Covington, Des Moines, Federal Way, Hunts Point, Issaquah, Kenmore, Kent, Kirkland, Maple Valley, North Bend, Redmond, Sammamish, SeaTac, Tukwila, and Woodinville long ago implemented impact fee systems.
Thurston County just put out an RFP asking for consultants to help create an impact fee system there. A 2008 survey by the Association of Washington City’s shows that 34 percent of the 158 cities that responded have implemented some form of impact fee system to cover at least a portion of their city’s infrastructure costs.
Most towns and cities in the area use these fees to help cover the costs associated with schools and transportation systems. Seattle has chosen, and it's a good use, to focus developer bonus-offset funds to low-income housing. But several jurisdictions, including Redmond, Woodinville, Covington, Des Moines, Kenmore, Kirkland, North Bend, and Sammamish, also use them to raise significant amounts of revenues for parks.
Let's take a closer look at Redmond's formula for calculating impact fees to help cover costs of their park system. (See page 13 of 27 especially). In Redmond, an impact fee of about $2,500 is charged per unit of new residential development (slightly lower for rental and slightly higher for single family), and $957 per 1000 gross square feet of new office space. About $400 is charged per 1000 gross square feet of new manufacture, industrial, and retail space. In addition, Redmond charges additional fees to help them cover fire and transportation expenses caused by new growth. In total about 6 percent of their budget in these areas is paid for from impact fees. Only low income housing developments are exempted from these fees in Redmond.
The methodology for coming up with specific amounts charged in each city per type of new use seems to vary depending on the infrastructure needs of each city and impacts of new growth on that infrastructure. But the methodology to calculate these fees now is pretty standard given the two decades it has taken to perfect those calculations since GMA was first enacted.
Despite the economic downturn, there were conservatively over 10,000 new residential units added to Seattle's stock, either in issued permits or built units in 2009, according to Department of Planning (DPD) sources. Using Redmond’s rate of $2,500 on average charged per new residential unit created, those 10,000 new units built here in Seattle could have raised $25 million last year for Seattle Parks. Real estate publications indicate that Seattle added about 2.6 million square feet of office space in 2009. (See page 2.) At $957 per 1000 square feet (Redmond’s formula for new office space), that would have raised another $2.5 million for Seattle parks.
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