The Zoning Report - July 17, 2024

Rural Clusters on the Chopping Block in Pierce Co. Park Impact Fees Could Cool Housing Demand in Sno Co. And 'Standing for Washington' Gathers Signatures for a Watershed Ballot Measure in Everett.

With periodic comprehensive plan updates progressing towards final approvals in King, Pierce, Kitsap, and Snohomish counties and all their cities, a lot is happening. However, as they say, “But wait, there’s more!” The periodic updates for counties like Thurston, Skagit, Whatcom, etc., and their cities are just now starting with a statutory requirement that those updates be completed by the end of 2025.

We’re still getting occasional calls from folks seeking changes to their property in jurisdictions on the 2024 approval tract. Unfortunately, it may be too late for some to seek a 2024 change, and changes in those communities may be limited in the next couple of years, as I explain here.

I can’t stress enough that all these periodic comprehensive plan updates and their updated development regulations to follow, will have impacts (good and bad) on many property owners. Thus, if you own property in Washington, you should be tracking what’s happening in the jurisdictions where your property is located.

In the meantime, here are some updates.

Rural Clustering is on the Chopping Block in Pierce County

This issue is shaping up to be one of the hottest growth management debates in this periodic comprehensive plan update cycle.

For background, it’s been long-held wisdom under the Growth Management Act (GMA) that if you’re allowing any modicum of growth in the rural environment, you should adopt policies that limit the overall footprint of said growth.

Doing so typically consists of two policies: (a) offer the ability for rural landowners to sell the development rights from their land in exchange for permanent protection of those properties, and (b) allow “clustering” in rural subdivisions. In practice, “rural clustering” offers rural subdividers a modest density “incentive” and the ability to cluster houses on smaller lots in exchange for a hefty requirement to set aside between 50 and 75% of the total land area as permanently protected open space.

Clustering Explained

Pierce County Code at 18A.15.020.E.2 (a) through (g) allows for a density bonus of between 1 and 1.5 dwelling units per acre depending on whether the underlying zoning is Rural 10, Rural 20, or Rural 40, in which zones have base densities of 1 unit per 10 acres, 1 unit per 20 acres, and 1 unit per 40 acres, respectively.

So, for example, say you’re the lucky owner of 140 acres in the Rural 10 zone, you could develop fourteen 10-acre lots with no requirement to protect open space.

You could sell one of those lots to Bob Jones to build his dream home, and there’s minimal regulation preventing him from clearing a large portion of his 10-acre parcel to make room for a pole barn, space to store his boat and RV, and a couple of cars he plans to fix up someday. Then Ed Smith comes along and buys another lot. He builds his house but also seeks out a Conditional Use Permit (CUP) to turn part of his 10 acres into a “contractor yard” (as allowed by code) to support his landscaping business. Neither of these situations bode well for maintaining the rural character.

By contrast, when using rural clustering, you’d subdivide the property into 28 smaller lots,¹ but be required to set aside 50% of the site (70 acres) as permanently protected open space. Under clustering, you’d be allowed to “cluster” the lots together and reduce the lot size from the 10-acre minimum to a more typical size range of 1.0 to 2.5 acres. This dramatically reduces the total development footprint on each lot, and more importantly throughout the entire subdivision.

Further environmental benefits from clustering are that it encourages leaving larger areas around critical areas undisturbed, provides greater natural protections to critical areas, affords more opportunities to save large tracts of trees, and presents opportunities for developers to work with land trusts or local governments to turn portions of these protected open spaces into publicly accessible passive/active recreation (e.g., hiking trails, etc.).

Clustering also cuts down on the distance utilities must be extended across the rural landscape. In the case of rural public water systems, the smaller lot sizes decrease the amount of potential landscaping the homeowner expects to irrigate. And while sewer is not allowed in rural areas (even with clustering), clustering can improve the economics of constructing community septic systems that are overseen by an HOA responsible for maintenance in lieu of individual systems that aren’t always regularly maintained.

What’s the County proposing?

Despite some clear benefits from clustering, the Pierce County Council passed a resolution in May that included eliminating the rural density bonus within the preferred comprehensive plan alternative being studied in the Environmental Impact Statement (EIS).

This action was disappointing to property rights advocates and rural landowners, including the Pierce County Chapter of the Citizens Alliance for Property Rights (CAPR), who showed up en masse to push back on both the elimination of the Rural 5 zone and the end of rural clustering.²

If you want to get a sense of the hornet’s nest this kicked, you can read some of the online comments submitted here.

If you’re sad you missed the public hearings, don’t be. The debate will be back in front of the Pierce County Council later this fall when the Council must make its final decision as part of approving the 2044 Comprehensive Plan.

Expect some big crowds.

A Heat Wave of Park Impact Fee Increases Could Cool Housing Demand in Sno Co

Despite a proverbial ferry hull full of legislative enactments on housing during the last two sessions, not much has changed in the housing market³: the state remains hundreds of thousands of units in deficit, interest rates continue to stay high, and the average sales price of a home isn’t really coming down.

So, it’s a great time to lower raise the cost of housing, right?

Admittedly, there’s a lot that goes into the price of housing. One such input is the cost of impact fees.

Long championed by proponents as a way of making “developers” or “growth” pay their fair share of improvements, most jurisdictions charge impact fees for parks, traffic, and schools, but some also charge impact fees for fire. Impact fees are paid by the developer, typically at issuance of a building permit, at which time they’re tallied up like all the other inputs and passed on to the homebuyer in the price of a new home.

Thus, it’s not really “developers” or “growth” that pays the price, but actual people like first-time homebuyers, young families, etc.

New Park Impact Fees Proposed

Arlington and Snohomish County are two jurisdictions eyeing updates to their park impact fees.

Arlington recently sought to raise its impact fee from $1,662 per single-family unit to as much as $5,033.66 per unit - an increase of about $3,371/unit depending on whether the development project constructs its own “mini-park” or not. By contrast, Snohomish County’s proposal would more minimally raise park impact fees by $300 to $700 per unit depending on the park service area where the new housing unit is located.⁴ The difference in the fees between the two comes down to what each jurisdiction includes in its cost fee basis.⁵

The Legalese (Simplified)

State law at RCW Ch. 82.02 requires that an impact fee be based on new growth’s proportionate share and a formula (a) based on identified facilities necessitated by new development, (b) calibrated to account for past and future tax payments attributable to new growth,⁶ and which also accounts (c) for the availability of other funding means, (d) the cost of existing facilities and (e) the manner in which existing facilities were financed.

Potential Problems with Arlington’s Proposal

This past Monday night, the Arlington City Council delayed a final vote on new park impact fees, directing staff to delve into the cost fee basis supporting the fee to ensure the fees as calculated were proportionate (as called for in RCW 82.02) and that there was a nexus between the fees to be paid and the impacts of the new development paying them. The latter of these issues stems from the recent 2024 decision in Sheetz v. El Dorado County⁷ where the US Supreme Court ruled that the Nollan (‘essential nexus’) and Dolan (‘roughly proportional’) cases applied to a transportation fee very similar to what we call impact fees in Washington.

Letters from the Master Builders Association and Toyer Strategic Advisors raised oncern that Arlington’s cost fee basis relied heavily on a single service area, as well as one level of service standard that lumped all types of projects into a single cost basis without attribution to existing or future growth. Thus, it was unclear whether new development was paying for improvements not solely and directly attributable to a new development’s proportionate impacts. In a July 8th letter to the city, Toyer Strategic noted:

The PRMP [Parks and Recreation Master Plan] assumes that a new development’s share of proposed park improvement is uniform across the board. But certain types of new improvements identified in the plan may be required not because of new developments but because of existing community-wide demand for certain types of new facilities.  For example, in the case of “skate dots,” the city presently does not have any of these facilities.  But the PRMP proposes to add six skate dots, including improvements (additions) to existing parks. Another example is a pump track, which is not required solely because of new development but because of changes in the types of park facilities the existing community desires. While the city does provide for a % reduction in the total fee that new development would pay towards the Community Park Impact Fee (further reduced by providing mini parks), it is unclear whether new development may be paying impact fees for facilities that are not necessary to serve the new growth.   

This current issue is similar to a situation David Toyer encountered nearly 20 years ago when another Snohomish County city (no need to name them now) wanted to include equestrian trails, wayfinding, and “welcome to our city’ landscaped entry signs within the cost fee basis of a new park mitigation fee. At the time, it was noted by representatives from the building industry that new houses built on 6,000 to 9,000-square-foot lots were less likely than existing residents with horses on their two and five-acre mini-farms to use these types of trails, and the wayfinding and entry landscaping were community beautification projects, not park capital improvements.

Impact Fees and Housing Costs

Although impact fees become part of the sales price of a home, most homeowners don’t realize there paying the fee, making impact fees like a hidden credit card that a city or county takes out in the name of the future homebuyer so the city can buy some new stuff.

As shown in the table below, a future homebuyer pays thousands of dollars in interest on the impact fees over the life of a mortgage. It’s money that doesn’t build parks, schools, or transportation improvements but instead pads the pockets of financial institutions and mortgage lenders on Wall Street.

The following table outlines what Arlington’s impact fees would have looked like under the proposal before it was sent back:

What’s the Implication for Housing Supply/Demand?

According to a 2021 study by the National Association of Home Builders (NAHB), every $1,000 in additional housing costs contributes to 2,524 more households in Washington State being unable to qualify for a new mortgage. That was before interest rates took a turn for the worse.

Ultimately, It’s About Who Votes

Impact fees have become the local decision-making equivalent of a Staples’ easy button. It’s much easier for a city council to financially obligate the person who doesn’t yet live in their community than it is to explain to one’s existing voters why local taxes may need to be increased to invest in quality infrastructure.

But no one asks the question of whether it might be a lot easier to get voters to approve new taxes to invest in improvements if those voters weren’t so heavily cost-burdened and experiencing property taxes increases rising quickly because of higher valuations (which are influenced by higher home sales prices).

“Standing for Washington” Gathering Signatures for Watershed Ballot Measure in Everett

Standing for Washington, a political action committee (PAC), is underway with a signature-gathering campaign in Everett to attempt to qualify a citizen initiative ballot measure for this November’s general election.

The backers are promoting the measure to Everett voters as “enact[ing] an ordinance that would recognize the Snohomish River Watershed’s rights to exist, regenerate, flourish, and be free from harmful activities so that it’s able to perform its functions.”

So exactly how would the watershed exercise its rights to exist, regenerate, flourish, and be free from harm enforced?

Simple, litigation. The initiative proposes to grant any and every legal resident of Everett the standing to sue on behalf of the watershed in the watershed’s name at any time for any thing. It’s a proposition that puts every future project in Everett at risk —an action that could, for example, be used by neighborhood groups to fight affordable or subsidized housing projects.

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