SEQUIM — The city of Sequim is considering an ordinance that would put the city ahead of state legislation mandating an 18-month deferral of impact fees on new single-family residential construction.
The City Council will consider approval of the ordinance at 5 p.m. Sept. 28 at the Civic Center, 152 W. Cedar St.
Engrossed Senate Bill 5923, signed into law by Governor Jay Inslee on May 11, mandates that counties, cities and towns collecting impact fees must — by Sept. 1, 2016 — adopt and maintain a system for an 18-month deferral of the collection of impact fees for single-family detached and attached residential construction.
Impact fees are imposed by local governments on new or proposed development projects to pay for all or a portion of the costs of providing public services for a new subdivision.
“The question of impact fees is an issue that deals with paying development costs and other things,” said City Attorney Craig Ritchie.
In Sequim, two types of impact fees are levied on new developments.
The first type is a transportation impact fee of $2,491 per single family residence, according to the city’s website.
The second type is a park impact fee of $2,210 per single family residence.
From Jan. 1 through Aug. 31, the city has permitted construction of 37 single-family residences, resulting in a total of $171,273 in impact fees collected by the city, according to the city’s website.
The fees are paid by the developer as part of the process for receiving a building permit from the city.
That cost is later passed onto the purchaser of the new home.
“It is really easy,” Ritchie said.
“Somebody comes in for a building permit, and you say OK, here is what the fees are to get your building permit.”
The new law will delay collection of such fees by up to 18 months if the new home remains unsold.
If a new home is sold prior to the 18-month expiration date, cities will be able to recoup their expenses as of the sale date.
The ordinance being eyed by the City Council would place the city ahead of the curve, Ritchie said, by starting the 18-month countdown almost a year earlier than is required by the state.
It would move up the time when the city can begin collecting the deferred fees should a home remain unsold to March 2017 instead of March 2018, he added.
Implementation of the ordinance in advance of state law hopefully would encourage builders not to wait until after Sept. 1, 2016 to begin developing local subdivisions, Ritchie said.
“Developers [may] wait until Sept. 1, 2016 to take out a building permit because then they could defer their payment of impact fees for a year and a half,” he said.
And while an ordinance bringing the city in line with state law “is not required until Sept. 1, 2016 . . . an advantage of adopting it early is that developers aren’t going to need to wait, and maybe don’t want to wait and get a head start on lots of developers in cities or counties that haven’t adopted a deferral system,” Ritchie said.
“My recommendation is that we do adopt it early so that everybody knows what is going on.
“It is going to be the law anyway, and I think that it may benefit the city because developers aren’t then going to wait until this gets adopted as a matter of law.”
A big issue would be how to keep tabs on developers to mark when their 18-month period expires so the city can collect the deferred fees, Ritchie said.
“How does the impact fee get paid, and how do we know when somebody is occupying? The answer is, unless we go out and check, we don’t know,” he said.
The city needs “to keep track of the 18-month time limit for impact fee payment and maybe look at real estate transactions to see if sales have occurred,” Ritchie said.
Additionally, the city might need to review properties with pending impact fee collection to ensure they are not being occupied by the builder in lieu of a sale, Ritchie added.
City staff is calculating how much funding would be required for staff members to keep tabs on newly constructed homes to ensure the impact fees are paid after 18 months, he said.
Once calculations are completed, an appropriate administrative fee — yet to be determined — would be tacked on to building permits as part of the new ordinance in order to offset of the cost of the resources needed to surveil new developments, Ritchie said.
“We are trying to find out what it would cost to do the necessary monitoring, and that is how the fee will be determined,” he said.
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Sequim-Dungeness Valley Editor Chris McDaniel can be reached at 360-681-2390, ext. 5052, or cmcdaniel@peninsuladailynews.com.