AN ACT Relating to the imposition of impact fees and excise taxes on residential development activity to finance school facilities; amending RCW 82.02.020 and 58.17.110; adding a new section to Title 28A RCW; adding a new section to chapter 35.21 RCW; adding a new section to chapter 36.32 RCW; and adding a new section to chapter 58.17 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. Section 82.02.020, chapter 15, Laws of 1961 as last amended by section 6, chapter 179, Laws of 1988 and RCW 82.02.020 are each amended to read as follows:

Except only as expressly provided in RCW 67.28.180 and 67.28.190 and the provisions of chapter 82.14 RCW, the state preempts the field of imposing taxes upon retail sales of tangible personal property, the use of tangible personal property, parimutuel wagering authorized pursuant to RCW 67.16.060, conveyances, and cigarettes, and no county, town, or other municipal subdivision shall have the right to impose taxes of that nature. No county, city, town, or other municipal corporation shall impose any tax, fee, or charge, either direct or indirect, on the construction or reconstruction of residential buildings, commercial buildings, industrial buildings, or on any other building or building space or appurtenance thereto, or on the development, subdivision, classification, or reclassification of land. However, this section does not preclude dedications of land or easements pursuant to RCW 58.17.110 within the proposed development or plat which the county, city, town, or other municipal corporation can demonstrate are reasonably necessary as a direct result of the proposed development or plat to which the dedication of land or easement is to apply.

This section does not prohibit voluntary agreements with counties, cities, towns, or other municipal corporations that allow a payment in lieu of a dedication of land or to mitigate a direct impact that has been identified as a consequence of a proposed development, subdivision, or plat. A local government shall not use such voluntary agreements for local off-site transportation improvements within the geographic boundaries of the area or areas covered by an adopted transportation program authorized by chapter 39.92 RCW. Any such voluntary agreement is subject to the following provisions:

(1) The payment shall be held in a reserve account and may only be expended to fund a capital improvement agreed upon by the parties to mitigate the identified, direct impact;

(2) The payment shall be expended in all cases within five years of collection; and

(3) Any payment not so expended shall be refunded with interest at the rate applied to judgments to the property owners of record at the time of the refund; however, if the payment is not expended within five years due to delay attributable to the developer, the payment shall be refunded without interest.

No county, city, town, or other municipal corporation shall require any payment as part of such a voluntary agreement which the county, city, town, or other municipal corporation cannot establish is reasonably necessary as a direct result of the proposed development or plat.

Nothing in this section prohibits cities, towns, counties, or other municipal corporations from collecting reasonable fees from an applicant for a permit or other governmental approval to cover the cost to the city, town, county, or other municipal corporation of processing applications, inspecting and reviewing plans, or preparing detailed statements required by chapter 43.21C RCW.

This section does not limit the existing authority of any county, city, town, or other municipal corporation to impose special assessments on property specifically benefitted thereby in the manner prescribed by law.

Nothing in this section prohibits counties, cities, or towns from imposing or permits counties, cities, or towns to impose water, sewer, natural gas, drainage utility, and drainage system charges: PROVIDED, That no such charge shall exceed the proportionate share of such utility or system's capital costs which the county, city, or town can demonstrate are attributable to the property being charged: PROVIDED FURTHER, That these provisions shall not be interpreted to expand or contract any existing authority of counties, cities, or towns to impose such charges.

Nothing in this section prohibits a transportation benefit district from imposing fees or charges authorized in RCW 36.73.120 nor prohibits the legislative authority of a county, city, or town from approving the imposition of such fees within a transportation benefit district.

Nothing in this section prohibits counties, cities, or towns from imposing transportation impact fees authorized pursuant to chapter 39.92 RCW.

Nothing in this section prohibits the imposition of impact fees or excise taxes on residential development activity to finance school facilities, as authorized in section 2 of this act.

This section does not apply to special purpose districts formed and acting pursuant to Titles 54, 56, 57, or 87 RCW, nor is the authority conferred by these titles affected.

NEW SECTION. Sec. 2. A new section is added to Title 28A RCW to read as follows:

(1) The board of directors of any school district may adopt a resolution requiring any county, city, or town that issues a permit, or other approval, authorizing residential development activity within the boundaries of the school district to impose impact fees or excise taxes on residential development activity occurring within the school district's boundaries to mitigate potential impacts on school facilities, including impacts arising from the increased use of school facilities or the increased need for additional or expanded school facilities that arises from the residential development activity. Such impacts could arise directly or indirectly from the residential development activity itself or the cumulative impact arising from residential development activity.

The resolution shall specify the formula or other method of calculating the amount of the impact fees or excise taxes, but the maximum rate of such fees or taxes shall not exceed a rate equal to two and one-half percent of the fair market value of the residential development activity. The formula or other method of calculating the impact fees or excise taxes shall provide for a reduction in the impact fees or excise taxes by the fair market value of any land that is given to the school district or any school facilities built by the person engaged in the residential development activity that are given or built in conjunction with the residential development activity.

The resolution shall specify the period during which the capital fees or excise taxes shall be imposed, which may not exceed one year. A board of directors may adopt subsequent resolutions each of which may provide for the imposition of impact fees or excise taxes for an additional period of not to exceed one year.

(2) During the period when such impact fees or excise taxes are imposed, a county, city, or town shall not authorize residential development activity within the school district's boundaries unless either: (a) The school district makes a written finding that the residential development activity will not have a direct or indirect impact on school facilities; or (b) impact fees or excise taxes are imposed on the residential development activity, as a condition of issuing the permit or other approval authorizing the residential development activity, to finance school facilities and other capital costs of the school district. The money from such impact fees or excise taxes shall be transferred monthly by the county, city, or town to the school district. The school district shall place this money into an escrow account and expend the money only for capital projects eligible for allotment of matching funds from the common school construction fund as authorized by the state board of education.

(3) Unless the context clearly requires otherwise, the following definitions apply in this section:

(a) "Residential development activity" includes: (i) The construction or reconstruction of residential structures; (ii) any division of land for purposes of sale, lease, or transfer of ownership, for residential purposes, including subdivisions, short subdivisions, condominium approvals, or binding site plans; and (iii) any planned unit development or other contractual rezoning action authorizing residential land uses.

(b) "Fair market value" means the price in terms of money that a property when developed as authorized by the permit or other approval will bring in a competitive and open market under all conditions of a fair sale, the buyer and seller each prudently knowledgeable.

NEW SECTION. Sec. 3. A new section is added to chapter 35.21 RCW to read as follows:

Cities and towns are authorized and required to impose impact fees or excise taxes pursuant to section 2 of this act.

NEW SECTION. Sec. 4. A new section is added to chapter 36.32 RCW to read as follows:

Counties are authorized and required to impose impact fees or excise taxes pursuant to section 2 of this act.

NEW SECTION. Sec. 5. A new section is added to chapter 58.17 RCW to read as follows:

Counties, cities, and towns are authorized and required to impose impact fees or excise taxes pursuant to section 2 of this act in conjunction with approving a subdivision, short subdivision, or binding site plan.

Sec. 6. Section 11, chapter 271, Laws of 1969 ex. sess. as last amended by section 3, chapter 330, Laws of 1989 and RCW 58.17.110 are each amended to read as follows:

The city, town, or county legislative body shall inquire into the public use and interest proposed to be served by the establishment of the subdivision and dedication. It shall determine if appropriate provisions are made for, but not limited to, the public health, safety, and general welfare, for open spaces, drainage ways, streets, alleys, other public ways, water supplies, sanitary wastes, parks, playgrounds, ((~~sites for~~)) schools, school facilities, and schoolgrounds, and shall consider all other relevant facts, including sidewalks and other planning features that assure safe walking conditions for students who walk to and from school, and determine whether the public interest will be served by the subdivision and dedication.

If it finds that the proposed plat makes appropriate provisions for the public health, safety, and general welfare and for such open spaces, drainage ways, streets, alleys, other public ways, water supplies, sanitary wastes, parks, playgrounds, ((~~sites for~~)) schools, school facilities, and schoolgrounds, and all other relevant facts, including sidewalks and other planning features that assure safe walking conditions for students who walk to and from school, and that the public use and interest will be served by the platting of such subdivision, then it shall be approved. If it finds that the proposed plat does not make such appropriate provisions or that the public use and interest will not be served, then the legislative body may disapprove the proposed plat. Dedication of land to any public body, may be required as a condition of subdivision approval and shall be clearly shown on the final plat. The legislative body shall not as a condition to the approval of any plat require a release from damages to be procured from other property owners.