Press release from Mayor and Councilmembers proposing alternative GFC fees

MAYOR'S PRESS CONFERENCE

"Mayor Nadine Woodward joined Councilmember Jonathan Bingle today in announcing an alternative approach to updating development fees that help pay for growth-related transportation and utility infrastructure improvements.

Bingle’s approach, which Woodward and Councilmember Michael Cathcart support, would begin collecting fees at an increased rate to address infrastructure costs, lessen the immediate impact on home prices in the middle of a housing emergency, allow badly needed development to continue, and engages the public in robust, meaningful participation on the development of an updated fee schedules.

“This is the kind of creative, collaborative thinking we need to return our housing supply to levels that will meet demand for years to come,” Woodward said. “This solution provides some immediate infrastructure relief, sets us on a path to encourage more housing in our city, and gets the community involved in solving our housing needs.”

The General Facilities Charges (GFCs) were established in 2002. Bingle’s approach to updating them has three elements:

• Implement an interim fee increase of 66 percent, which is the equivalent of consumer price index increases since 2002, the year the fees were established, where fees are currently collected
• Let the moratorium expire in order to begin collecting the impact fees in the Latah Valley that are needed to pay for infrastructure improvements
• Define a public engagement process of no longer than 2 years to update the fee schedule and establish a corresponding infrastructure plan to match

“The community has to be part of the solution,” Bingle said. “This is an extremely complicated challenge and we need to give the community time to digest all of the factors and engage.”

An ordinance the City Council established on September 12 by emergency action is driving the timing of the development fee conversation. The emergency ordinance established a six-month moratorium on building new housing in the Latah Valley and required City staff to develop a plan for raising fees to pay for the transportation and sewer and water service impacts. The fees have not been adjusted and have often been waived over the past two decades.

The ordinance the Council is currently planning to consider by emergency action would immediately add about $21,000 to the cost of a new home. When financing costs over the life of a typical 30-year mortgage are factored, the total cost increases to about $50,000 over the life of the loan. The median household income in Spokane is $55,000, about 50 percent below the state average.

“These are difficult balances to strike,” Cathcart said. “We need the additional housing and at the same time we must find a way to afford the infrastructure that comes with it in a community where the median household income is much lower than other parts of the state. We are proposing a reasonable approach to meeting both needs for the long-term benefit of our community.”

Developers are assessed fees, known as GFCs, to pay a fair share of the cost of extending water and sewer services into an area. Those costs are covered by the new utility customer rather than assigned to existing customers in the form of monthly rate increases.

A similar fee, known as a Transportation Impact Fee, is assessed on developers to cover additional transportation system needs and use. Provision of adequate services are required as a prerequisite for approval of any new development.

Housing cost have rapidly increased over the past two years. Interest rates, which dipped to generational lows, have since steadily increased, adding to the housing affordability challenge."

*This post was copied from the official press release by the Mayor's Office*