WA State: SB 5258 Impact Fees

Impact fees are one-time charges levied by local governments on new development projects to fund necessary infrastructure improvements like roads, parks, schools, and fire protection. Washington state law (RCW 82.02) mandates that these fees be proportional to the impact of the development and, specifically for housing, must be calculated to result in lower fees for smaller units. This proportionality must consider factors like square footage, number of bedrooms, or trip generation. The 2023 legislative update (SB 5258) reinforces this requirement, giving jurisdictions three options for calculating these tiered fees. Furthermore, state law (RCW 36.70A.681) limits impact fees for accessory dwelling units (ADUs) to no more than 50% of the fee for the primary dwelling.

Local jurisdictions must update their impact fee schedules within six months of their next comprehensive plan update (RCW 82.02.060). This update must reflect the proportionate impact of different housing types, ensuring that smaller units, including multifamily and condominiums, pay less. The calculation must be on a per-unit basis, not the total building size. Jurisdictions working with other agencies, like school or fire districts, to collect fees on their behalf, must coordinate on fee schedules and capital facilities plans.

While the law mandates proportional impact fees for housing based on size, bedroom count, or trip generation, it doesn't specify how square footage or bedrooms should be measured. For square footage, common areas in multi-unit buildings are excluded, and the method used (gross or net) must be consistent. For bedrooms, the International Building Code definition is relevant, excluding rooms not intended for sleeping. Studio apartments may have lower or equal fees to one-bedroom units, and co-living units, being smaller, should also have reduced or no impact fees.

It's important to note that adopting impact fees is optional for local governments. If adopted, they must adhere to state regulations. While fee reductions for smaller units are required, these reductions may lead to increased fees for other housing types to maintain funding levels. Exemptions or reductions are allowed for certain housing, such as low-income housing or emergency shelters. Some cities exempt ADUs, citing their minimal impact on infrastructure.

Beyond impact fees, utility connection fees (also called system development charges or tap-in fees) are another cost consideration for development. While not subject to the same proportionality requirements as impact fees, utilities are encouraged to consider the lower usage of smaller housing units. State law allows or requires reduced or waived connection fees for certain housing types, like those developed by non-profits for affordable housing. Specifically for co-living, connection fees should generally be no more than half of those for multifamily units. Utility providers should have updated fee studies reflecting current costs. The Washington State Department of Commerce is available to provide guidance on impact fees and related regulations.