"NEW SECTION.  Sec. 1   The legislature finds that impact fees are an important source of funding for public facilities, facilities that include school facilities. The legislature recognizes that impact fee provisions, including time limits associated with their use, can affect the operations and choices of developers, including developers of affordable housing. The legislature recognizes also, that facilitating the construction of school facilities and affordable housing are both essential public responsibilities. The legislature, therefore, in recognition of its duties to provide for public education, and to promote the health and well-being of its citizens, intends to acknowledge the financial and administrative challenges that many local governments and private enterprises are experiencing and provide additional flexibility to local governments that choose to impose impact fees.

Sec. 2   RCW 82.02.060 and 1990 1st ex.s. c 17 s 44 are each amended to read as follows:
     The local ordinance by which impact fees are imposed:
     (1) Shall include a schedule of impact fees which shall be adopted for each type of development activity that is subject to impact fees, specifying the amount of the impact fee to be imposed for each type of system improvement. The schedule shall be based upon a formula or other method of calculating such impact fees. In determining proportionate share, the formula or other method of calculating impact fees shall incorporate, among other things, the following:
     (a) The cost of public facilities necessitated by new development;
     (b) An adjustment to the cost of the public facilities for past or future payments made or reasonably anticipated to be made by new development to pay for particular system improvements in the form of user fees, debt service payments, taxes, or other payments earmarked for or proratable to the particular system improvement;
     (c) The availability of other means of funding public facility improvements;
     (d) The cost of existing public facilities improvements; and
     (e) The methods by which public facilities improvements were financed;
     (2) May provide an exemption for low-income housing, and other development activities with broad public purposes, from these impact fees, provided that the impact fees for such development activity shall be paid from public funds other than impact fee accounts;
     (3) May exempt housing projects that are affordable to households earning less than eighty percent of the adjusted area median income from impact fees for school facilities. Impact fees exempted under this subsection (3) are not required to be paid from other funds;
     (4) Shall provide a credit for the value of any dedication of land for, improvement to, or new construction of any system improvements provided by the developer, to facilities that are identified in the capital facilities plan and that are required by the county, city, or town as a condition of approving the development activity;
     (((4))) (5) Shall allow the county, city, or town imposing the impact fees to adjust the standard impact fee at the time the fee is imposed to consider unusual circumstances in specific cases to ensure that impact fees are imposed fairly;
     (((5))) (6) Shall include a provision for calculating the amount of the fee to be imposed on a particular development that permits consideration of studies and data submitted by the developer to adjust the amount of the fee;
     (((6))) (7) Shall establish one or more reasonable service areas within which it shall calculate and impose impact fees for various land use categories per unit of development;
     (((7))) (8) May provide for the imposition of an impact fee for system improvement costs previously incurred by a county, city, or town to the extent that new growth and development will be served by the previously constructed improvements provided such fee shall not be imposed to make up for any system improvement deficiencies.

Sec. 3   RCW 82.02.070 and 1990 1st ex.s. c 17 s 46 are each amended to read as follows:
     (1) Impact fee receipts shall be earmarked specifically and retained in special interest-bearing accounts. Separate accounts shall be established for each type of public facility for which impact fees are collected. All interest shall be retained in the account and expended for the purpose or purposes for which the impact fees were imposed. Annually, each county, city, or town imposing impact fees shall provide a report on each impact fee account showing the source and amount of all moneys collected, earned, or received and system improvements that were financed in whole or in part by impact fees.
     (2) Impact fees for system improvements shall be expended only in conformance with the capital facilities plan element of the comprehensive plan.
     (3)(a) Except as provided otherwise by (b) of this subsection, impact fees shall be expended or encumbered for a permissible use within six years of receipt, unless there exists an extraordinary and compelling reason for fees to be held longer than six years. Such extraordinary or compelling reasons shall be identified in written findings by the governing body of the county, city, or town.
     (b) School impact fees must be expended or encumbered for a permissible use within ten years of receipt, unless there exists an extraordinary and compelling reason for fees to be held longer than ten years. Such extraordinary or compelling reasons shall be identified in written findings by the governing body of the county, city, or town.
     (4) Impact fees may be paid under protest in order to obtain a permit or other approval of development activity.
     (5) Each county, city, or town that imposes impact fees shall provide for an administrative appeals process for the appeal of an impact fee; the process may follow the appeal process for the underlying development approval or the county, city, or town may establish a separate appeals process. The impact fee may be modified upon a determination that it is proper to do so based on principles of fairness. The county, city, or town may provide for the resolution of disputes regarding impact fees by arbitration.

NEW SECTION.  Sec. 4   A new section is added to chapter 82.02 RCW to read as follows:
     Criteria must be developed by the office of the superintendent of public instruction for extending the use of school impact fees from six to ten years and this extension must require an evaluation for each respective school board of the appropriateness of the extension."