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The hit of impact fees.

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It's no surprise that new home construction in Bellingham has slowed significantly in the past year. Builders can't get financing, buyers can't get loans and the market is changing.

But the one thing that hasn't changed significantly is the cost of a residential building permit--and the associated impact fees. Before breaking ground on any new home, the builder must first clear the plans with the city to make sure that the house meets current building standards and zoning laws.

This review process, of course, takes time and money. For every home permit, the plans are examined by four city departments, said permit center supervisor Laura Palmatier.

"The building services department is looking for structural and foundation issues, the planning department is looking at setbacks and height, public works is looking for water and sewer availability, and stormwater is looking for the amount of impervious surface on the site and how they are dealing with their stormwater."

The city charges two fees for a permit: one to review the plans and one to issue the building permit. Both fees are based on the valuation of the project, which is based on the total square footage and type of project being built.

For example, a 1,500-square-foot house with a garage and a deck would be valued at more than $157,000. At that level, the city would collect $640.52 at the time of application to review the plans and $985.41 to issue the permit, for a total of $1,625.93.

But that is not the total cost. Under the Growth Management Act, cities and counties can assess impact fees to offset the impact new development has on city or county service. The three most common impact fees are for transportation, schools and parks.

Impact fees

"Building a single family home in Bellingham has significant costs associated with it, but we hear all the time that we should be charging more impact fees," said city transportation planner Chris Comeau. "It's ultimately up to the citizens and the councils what they think is appropriate."

For a new single family home, the city collects $1,711.95 for the transportation impact fee. This impact fee is controlled by the Public Works Department and helps pay for new roads and system improvements to accommodate for growing demand.

"State law is really clear that transportation impact fees are only to be charged for new facilities needed to accommodate new growth," Comeau said. "You can include sidewalk and bike lane projects if they are part of an arterial project, but there has to be a very clear nexus and a need to accommodate for growth."

Compared to other communities, Bellingham's transportation impact fee is about average, Comeau said. The highest transportation impact fee in the state is in Sammamish, which charges $14,853.96 per home.

"The reason for that is that they don't have any commercial or industrial tax base, it's all residential. So for them to do transportation improvements, it all has to come from residential sources," Comeau said. "Here the overall cost of transportation improvements are shared by everybody and each type of use, residential, commercial and industrial."

Sammamish also doesn't have much pass-through traffic, unlike Bellevue or Kirkland where people come into the city for work, said Jeff Brauns, the senior transportation program engineer for Sammamish Public Works. So the city's residential fee combined with expensive lakefront roads leads to a high transportation impact fee.

Bellingham also collects $1,211 for the school impact fee, which helps mitigate the effects of overcrowding in local schools. This fee is also handled by Public Works, but the money goes to the school board.

"What is important to understand about that is that the school board has to pass a resolution requesting that a city collect those fees on their behalf," Comeau said. "In Bellingham, that is not true for the Meridian School District. Horton Road is the cutoff between the Meridian School District and the Bellingham School District and new development up there does not pay school impact fees."

The city then collects $4,808.35 for the park impact fee, which pays for the acquisition and construction of new parks in areas where Bellingham is growing. This may seem rather high, but consider that Bellingham has 51 parks that cover 3,027 acres, which is 15 percent of the city's area.

The park impact fee is fairly new to Bellingham,-enacted in March 2006, and is based on the value that the park system brings to the community, said Paul Leuthold, director of Bellingham Parks and Recreation.

"We've gone through an exhaustive process of determining what the value is of our park system, then we determined a cost per person and a cost per household," Leuthold said. "We're currently assessing at 35 percent of the cost of the level of service--a lot of people would like to see it much higher."

This year, the city has budgeted $550,000 from the park impact fee for the creation of trails at the new Cordata Park. Money collected from this fee also went toward the park master plan, Leuthold said.

Sewer and water

So for that one 1,500-square-foot house with a garage and a deck, the total cost is up to $9,357.23 including permit costs and impact fees.

What that doesn't include, though, is the cost of hooking the house up to the city water and sewer system. This can cost as much as $17,384 if the lot doesn't already have a sewer and water hookup, bringing the whole project price tag to more than $26,000.

While the same house in Everett may fetch around $5,000 for permit and impact fees, the comparison is not apples to apples, Comeau said. Each community pays for its parks and street improvements in its own way, meaning if that cost isn't assessed in a impact fee, the cost is usually put somewhere else. Or not paid at all.

"It's not a black-and-white issue," Comeau said. "That's also why it's never easy to explain this to people who don't deal with this stuff on a daily basis. And that's frustrating because nobody here is trying to do a poor job--we're trying to do a good job and we're trying to plan a good city."

By the numbers

Permits issued in 2007:

* 194 single family units

* Valuation: $35.2 million

* Average permit cost, including impact fees: $14,556.77

* 20 percent of all permits were for new single family homes

Permits issued in 2008:

* 86 single family units

* Valuation: $17.6 million

* Average permit cost, including impact fees: $17,495.88

* 11 percent of all permits were for new single family homes

Isaac Bonnell

ibonnell@thebellinghambusinessjournal.com
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Title Annotation:real estate and construction
Author:Bonnell, Isaac
Publication:Bellingham Business Journal
Date:Apr 1, 2009
Words:1127
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