SENATE BILL REPORT

SHB 2566

As Reported by Senate Committee On:

Financial Institutions, Housing & Insurance, February 24, 2010

Title: An act relating to exempting low-income housing from impact fees.

Brief Description: Creating an exemption from impact fees for low-income housing.

Sponsors: House Committee on Local Government & Housing (originally sponsored by Representatives Simpson, Chase and Ormsby).

Brief History: Passed House: 2/13/10, 71-24.

Committee Activity: Financial Institutions, Housing & Insurance: 2/23/10, 2/24/10 [DP, w/oRec].

Majority Report: Do pass.

Signed by Senators Berkey, Chair; Hobbs, Vice Chair; Franklin and McDermott.

Minority Report: That it be referred without recommendation.

Signed by Senator Schoesler.

Staff: Alison Mendiola (786-7483)

Background: Growth Management Act (GMA). The GMA is the comprehensive land use planning framework for county and city governments in Washington. Enacted in 1990 and 1991, the GMA establishes numerous planning requirements for counties and cities obligated by mandate or choice to fully plan under the GMA (planning jurisdictions) and a reduced number of directives for all other counties and cities. Twenty-nine of Washington's 39 counties, and the cities within those counties, are planning jurisdictions.

Impact Fees. Planning jurisdictions may impose impact fees on development activity as part of the financing of public facilities needed to serve new growth and development. This financing must provide a balance between impact fees and other sources of public funds and cannot rely solely on impact fees. Additionally, impact fees:

• may only be imposed for system improvements, a term defined in statute, that are reasonably related to the new development;

• may not exceed a proportionate share of the costs of system improvements; and

• must be used for system improvements that will reasonably benefit the new development.

Impact fees may be collected and spent only for qualifying public facilities that are included within a capital facilities plan element of a comprehensive plan. Public facilities, within the context of impact fee statutes, are the following capital facilities that are owned or operated by government entities:

• public streets and roads;

• publicly owned parks, open space, and recreation facilities;

• school facilities; and

• fire protection facilities in jurisdictions that are not part of a fire district.

County and city ordinances by which impact fees are imposed must conform with specific requirements. Among other obligations, these ordinances:

• must include a schedule of impact fees for each type of development activity for which a fee is imposed;

• may provide an exemption for low-income housing and other development activities with broad public purposes. The impact fees for this development activity, however, must be paid from public funds other than impact fee accounts; and

• must allow the imposing jurisdiction to adjust the standard impact fee for unusual circumstances in specific cases to ensure that fees are imposed fairly.

State Environmental Policy Act. The State Environmental Policy Act (SEPA) establishes a review process for state and local governments to identify possible environmental impacts that may result from governmental decisions, including the issuance of permits or the adoption of or amendment to land use plans and regulations. Any governmental action may be conditioned or denied pursuant to the SEPA, provided the conditions or denials are based upon policies identified by the appropriate governmental authority and incorporated into formally designated regulations, plans, or codes.

Summary of Bill: Local governments granting impact fee exemptions for low-income housing are not obligated to pay the exempted fees from qualifying public funds. Local governments may only grant impact fee exemptions for low-income housing if the developer records a covenant prohibiting the use of the property for any purpose other than for low-income housing. Conversions of use are permitted, however, provided the applicable impact fees are paid by the property owner at the time of conversion.

Local governments granting an impact fee exemption for low-income housing may not impose a fee under the SEPA for the system improvements for which the exemption applies.

Appropriation: None.

Fiscal Note: Not requested.

Committee/Commission/Task Force Created: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony: PRO: This bill applies statewide and gives local jurisdictions the opportunity to waive impact fees and not have to use other public funds to make up those fees in order to support long-term affordable housing in the community. Anything we can do to address affordable housing is helpful. The Governor convened a task force on the growth management act in 2008 which included a diverse range of stakeholders. The final report only included recommendations that received a consensus vote and this issue was one of those that was fully supported by the task force.

Persons Testifying: PRO: Representative Simpson, prime sponsor; Arthur Sullivan, A Regional Coalition for Housing; Kim Herman, Washington State Housing Finance Commission; Dave Williams, Association of Washington Cities.