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Sticker shock over new Snoqualmie school impact fee?

Some city officials and developers are showing signs of sticker shock over Snoqualmie Valley School District impact fees set to take a 300-percent leap next year.

Fees are collected during construction to offset the impact of new development on school capacity, and have averaged about $3,100 annually over the last four years. However, the district's proposed 2011 fee of $8,139 per single family residence is a $5,400 increase over the 2010 amount.

By comparison, developers in neighboring Riverview School District would pay a proposed $5,629 fee. Tahoma School District's 2011 fee is $7,791; Issaquah School District builders would pay $3,808.

Presenting the new numbers to the Snoqualmie City Council last Monday, Aug. 23, outgoing school Business Director Ron Ellis and incoming finance head Ryan Stokes described the fees as soft revenue, difficult to predict and count on. The fees make up a small portion of both home sale price and district funding for new projects. Half of the impact fee is collected at plat approval, the other half when building permits are issued.

"To be responsible public officials, we have to pursue all revenue avenues available to us," Ellis said. "That's what we're trying to do."

The impact fees will combine with money from a potential February 2011 bond for projects including a new middle school on Snoqualmie Ridge replacing Snoqualmie Middle School, which is proposed as an extension campus to Mount Si High School.

Based on demographic projections, the district's six-year capital facilities plan calls for new construction to add capacity for 2,000 additional students by 2015.

Impact fees are calculated based on factors including the cost of new construction and temporary facilities— about $10,300 per single family residence— minus offsets from property taxes and state matching funds. In 2009, a failed bond meant there were no new construction projects in the pipeline, so property tax offsets meant that developers paid no impact fees.

The 2011 hike is in large part because the district does not qualify for state matching funds. That money was unavailable because the district is swapping middle school capacity for high school capacity.

"When we opened Twin Falls Middle School, as far as the state was concerned, we no longer had unhoused students," Ellis said. "We solve one problem, we create another one."

The district has grown 22 percent in the last six years, and enrollment is still rising, with a bulge in the lower grades.

With a three-year turnaround involving public votes and construction time, the district is challenged to add capacity quickly.

"A huge bubble is pushing through the system," Stokes said. "We're trying to anticipate that. Once you have the problem, you don't have time to react to it."

Ellis said he recognizes the fairness issue in asking newcomers to pay for a capacity fix for a population already going through the school system. However, the district is constrained by the numbers.

"From our perspective, this is what, mathematically and legally, we are able to charge," Stokes said. "It's not that this year is punitive because the builders have had a break in the past. This is what this year's mathematical equation gives us."

On average in King County, four out of every 10 single family homes generate an elementary student. One out of every six homes add a middle school student to school populations, and roughly one in every eight homes generate a high school student. Impact fees average the cost of school construction over all new homes.

If the district is unable to add capacity and schools become more crowded, the district will become eligible for state matches again, and the fees will go down.

Ellis told local officials that cities are not on the hook for legal challenges to fee calculation. The district is legally obligated to refund impact fees if they aren't spent on facilities within 10 years.

Now, Valley cities can either approve, deny or change the fee amount, but they cannot increase it, only lower it.

City reaction

Besides Snoqualmie, King County and the cities of Sammamish and North Bend are considering fee approval this fall. The North Bend City Council is expected to vote on it in late September.

North Bend Mayor Ken Hearing recognizes that the fee will raise housing costs, but he accepts the district's numbers.

"Theyr'e doing what the law tells them to do," he said. "It's not far off from what other districts are charging. It's based on the facts of what their capital facility needs are, going into the future."

"I think we're all concerned about the significant rise in the request, but we're more concerned with doing what is right," said North Bend City Administrator Duncan Wilson.

Snoqualmie Mayor Matt Larson admitted that there is a lot of public pressure to place school burdens on developers. But considering the expiration of the federal housing tax credit last April, he described the impact as a $16,000 double whammy on local growth.

"It's a pretty big wet blanket on the housing market," he said.

Called to the podium Monday evening by Larson, Quadrant Homes Vice President Dave Dorothy said his company has started an external review of the impact fee. He told the council that the amount seems excessive.

Development has been a big part of the city's economic engine, with development taxes paying for city capital projects as well as school construction.

To the mayor, the new fee puts a disproportionate burden on a few homebuyers. With the city council's Finance and Administration Committee meeting in the next few weeks to discuss the fee, Larson has directed city staff to forward resolutions to council making fee approval contingent on stronger language protecting the city from developer challenges, and delaying its collection until a school bond is approved by voters.

"There would be an advantage to finding a middle ground between protecting the market and protecting the interests of the school district," Larson said. "The impact fee is based on a plan that includes a new middle school. Why not wait until we know for certain?"

While a delay could mean a "feeding frenzy" of permit applications during the lull, Larson said it would also give developers more time for the market to recover.

"We're trying to find a fine balance between a lot of conflicting values and priorities," he said.

To Ellis, the outcome of a 2011 bond won't change the district's underlying challenge.

"Our need will still be there whether the bond passes or fails," he said. "If the bond fails, we'll use the impact fees to build portables to help us manage the growth."

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