The city of Stanwood is evaluating how to calculate developer park impact fees so that new park costs are fairly distributed.
Park Impact Fees, PIF, should follow a formula, “not just pull a number out of a hat,” said Community Development Director Patricia Love.
She walked Stanwood planning commissioners, a few residents and a Master Builders Association representative through the details during the Monday, July 22, meeting.
“You might be surprised that we’re looking at the fee again since the rate was only updated a year and a half ago, after being the same for 25 years,” she said, poking fun at how long it’s been.
She is working to get the fee on a regular review schedule now that council has asked city staff to review the costs associated with park projects and evaluate a path for the fairest cost distribution.
The impact fee should be based on the parks listed in the city’s current Capital Improvement Plan, Love said. The CIP changes from year to year as work is done and new goals are added. To ensure developers are paying the right amount, she said the impact fee should be calculated annually or biannually when the CIP is set.
“The intent is to get it into a cycle,” Love said.
City Council increased the fee in December 2017 — the only update since it was established in 1993 — in an attempt to “catch up,” so developers are charged a fair share of the expense of adding parks for an expanding population. Although that update doubled the original fee, it was just half of the lowest of three options offered by city staff.
Now the city is looking to fine-tune the 2017 formula and create a process to keep the fee current. The rate now is $1,330 for a single-family residence and $1,042 per unit in a multiple-family residence.
According to data gathered by city staff, Stanwood’s park impact fee is the lowest of Snohomish County cities. The 2017 formula is set in the municipal code. The city is now considering how to update it and whether to continue cutting the fee in half as was done in 2017.
Love has brought up the PIF formula with time to study it before it comes up as an ordinance with public hearings starting in September.
The formula uses the average cost per acre to acquire and develop park projects already in the queue. It also uses the number of people per unit in a development and sets the level of service at five acres per 1,000 residents.
Love has examined the listed costs for parks in the CIP and removed expenses that should not be in the calculation, such as expenses that are covered by grants.
Along with using hard, data-driven numbers, the formula includes a 40% discount. The city could change this number. Other cities commonly use a 50% discount.
The adjustment ensures the development doesn’t pay the full cost of the new parks, which state law does not allow. The city has discretion to use a portion of other revenue sources, like tax on the sale of real estate and property taxes, toward parks.
In September the issue will come to the planning commission and council. Eventually public hearings will be held prior to final adoption.
“We’re at the beginning stages,” Love said.
The city is evaluating the impact fee itself. She said there will be opportunities for the public to be involved.
Fees for building in Stanwood
Developers must pay certain fees to build within Stanwood city limits.
Typical fees for a new single family home amount to about $26,500, according to city records. Costs include impact fees for traffic, parks and fire at about $5,000, plant investment fees for water, sewer and drainage at about $16,000, hookup fees for water, sewer, drainage and driveway at $1,500. Building permit, plan review, mechanical and plumbing fees vary around $4,000.
The city uses money from these fees to help directly cover expenses for the development and generally to improve and construct infrastructure for a larger population. For example, in June, Stanwood council approved $2.2 million for a new water reservoir to accommodate growth. Other capital expenditures include resurfacing roads and upgrading the wastewater treatment drainage systems.
Dylan Sluder, Snohomish County manager of Master Builders Association, said the fees are payable at different times, however the park impact fees are typically due prior to the building permit. Impact fees are usually covered by the loan a developer takes out to fund the project.
“It’s important to know how these fees work and their impact on feasibility. The certainty factor is very important. It can change the feasibility of the project, so predictability of the cost is key,” Sluder said.
Builders and developers pay the fees, which are passed down to the homeowners who buy the houses.
“It’s hard to make housing more affordable when you’re making building more expensive,” Sluder said. “Our main concern is building what is affordable, so people can get the homes that they desire.”