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Home My WebLink AboutCOW 2008-11-24 Item 5A - Ordinance - Fire and Parks Impact FeesOrdinances in draft form are attached. RN\'IIi\\'itD BY COW Mtg. CA &P Cmte 1 MTG. DATE I 11/24/08 MTG. DATE 11/24/08 12/01/08 1 1 Go UNCIL AGENDA SYNOPSIS InitralJ ITEM NO. ttileeteno Date Pn'pared I,y Mayor's review I Council review 11/24/08 1 LV I� 1 12/01/08 1 LV 7 `4 ITEM INFORMATION I CAS NUMBER: 08-146 ORIGINAL, AGENDA DATE. NOVEMBER 24, 2008 Ordinances for Fire and Parks Impact Fees C. \'i'i•.(;Oity Discussion n Motion Resolution Ordinance Bid Award Public' Heanrrg n Other Mfg Date 11/24/08 Mt; Date 111tg Date Jilts Date 12/01/08 lltg Date 1Itg Date 11/24/08 Mtg Date SPONSOR Cowiiii Mayor Adm Svcs DCD Finance Fire n L i P&R Police PIV SPONSOR'S Discussion regarding adoption of impact fees for Fire and impact fees for Parks. Decisions St'MM,\RY needed include: 1) what total dollar value of capital projects for Fire, 2) the split in revenues between impact fees and City contribution for Fire. 3) what total dollar value of capital projects for Parks, 4) the split in revenues between impact fees and city contribution for Parks. Utilities Cmte Arts Comm. F &S Cmte n Parks Comm. DAih: 11/18/08 F &S (action); 11/24/08 CAP (info only) RECOMMENDATIONS: SPONSOR /ADMIN. Approve and forward to COW for discussion COMMITTEE Forward to Committee of the Whole for discussion and public hearing COST IMPACT FUND SOURCE EXPENDITURE Ri?()UTRI D AMOUNT BUDGETED APPROPRIATION REQUIRED Fund Source. REVENUE IS FROM IMPACT FEES; PROJECTS ARE NOT CONSTRUCTED UNLESS FUNDS ARE AVAILABLE Comments: RECORD OF COUNCIL ACTION A ATTACHMENTS Informational Memo regarding Fire impact fees with Attachments Ordinance adopting Fire impact fees with Attachments Informational Memo regarding Park Impact Fees with Attachments Ordinance adopting Parks impact fees with Attachments Performance Audit Report Minutes from Finance Safety Committee meeting of 11/18/08 U Transportation Cmte n Planning Comm. CC: Mayor Haggerton Rhonda Berry FROM: Lisa Verner, Mayor's Office Nick Olivas, Fire Chief DATE: November 18, 2008 RE: Proposed Fire Impact Fees ISSUE BACKGROUND Additionally, RCW 82.02.050 (4) says, in part: INFORiMATION MEMORANDUM To: Finance and Safety Committee (action) Community Affairs and Parks (information) Adopt an ordinance for Fire impact fees and an ordinance for Parks impact fees, both for funding of capital facilities needed by Fire services and Parks services due to anticipated new growth and development. The Administration is evaluating new sources of revenue for the City. One such source is "impact fees" through which new development helps to pay for capital facilities necessitated due to the new growth. Mayor Haggerton's goal is to analyze options and to adopt impact fees by the end of 2008: The Growth Management Act allows impact fees for parks services and for fire services, in addition to the traffic impact fees the City has already enacted. In order to consider and adopt impact fees, the City needs to have adopted a Fire Master Plan and identified a level of service goal for fire services. The 2008 Fire Master Plan, the Mayor's recommendations on implementation, and the Level of Service for the Fire Department are scheduled for adoption by Council on December 1, 2008. Impact fees may be collected and spent only for the public facilities defined in RCW 82.02.090 which are addressed by a capital facilities element of a comprehensive land use plan adopted pursuant to the provisions of RCW 36.70A.070... An ordinance to amend the Capital Facilities Element of the City's Comprehensive Plan is before the COW on November 10 for public hearing and discussion. It is scheduled for adoption on December 1. Among other things, the amendment will incorporate by reference the 2008 Fire Master Plan and the 2008 Parks, Recreation and Open Space Plan, as amended. The Fire Master Plan, which includes Fire capital projects (some of which will be paid for through impact fees) is scheduled for adoption on December 1. Then the City will be consistent with RCW 82.02.050 (4). A public hearing on impact fees is advertised for November 24, 2008. DISCUSSION The State Legislature authorized impact fees when it adopted the Growth Management Act in 1990 as one mechanism to help communities address growth. According to RCW 82.02.050 (1), it is the intent of the State Legislature: (a) To ensure that adequate facilities are available to serve new growth and development; (b) To promote orderly growth and development by establishing standards by which counties, cities, and towns may require, by ordinance, that new growth and development pay a proportionate share of the cost of new facilities needed to serve new growth and development; and (c) To ensure that impact fees are imposed through established procedures and criteria so that specific developments do not pay arbitrary fees or duplicative fees for the same impact. Impact fees can be assessed for traffic, parks, fire and schools The City already assesses a traffic impact fee. The Mayor is asking the Council to consider assessing a parks impact fee and a fire impact fee. None of the school districts which serve Tukwila have asked the City to collect a school impact fee on their behalf. Impact fees are used to provide funds for capital projects or capital facilities which are needed because of new growth. They are used to fund projects which maintain the same level of service for new growth as is provided for existing development. They may not be used for projects which are needed due to current deficiencies in public facilities serving existing development. In essence, impact fees are a mechanism for "growth to pay for growth." For consideration are two ordinances, one for impact fees for fire services and one impact fees for parks services. The text of the ordinances is similar. The ordinances address the fee formula, adjustments, credits, appeals, refunds and exemptions as well as use of the impact fees. Also, each ordinance includes a spreadsheet for calculating an impact fee and a list of projects for which the impact fee would be collected. Conceptually, the fee formula identifies the anticipated growth between 2009 and 2020 (12 years) in several land use categories and the cost of capital facilities needed to serve that growth and divides the two. The variables include the request for service (either calls for fire /aid service per land use category or amount of parks needed per resident) and the growth anticipated in each land use category. Because the City has a strong track record of both residents and employees using park facilities and fire services, an impact fee for commercial/industrial uses as well as an impact fee for residential uses is proposed. Council members may choose which impact fee /city contribution split results in acceptable levels of impact fees. RECOMMENDATION Adopt an ordinance which authorizes assessment of impact fees for capital facilities for Fire services needed due to new growth Attachment A: Capital Facility Projects Attachment B: Fire Services Impact Fee Options Attachment C: Fire Impact Fee Calculation Attachment D: Excerpts from Performance Audit ATTACHMENT A Questions for consideration: 1) Should the City collect impact fees on the entire list of proposed projects? 2) At what percentage should the City implement Fire Impact fees (90/10 split or 80/20 split Fire Department Capital Facilities List 1. Construct/build relocated Station 51 25,000 sf S 10,000,000 station; existing 15,000 sf station replacement due to growth, including bays for ladder truck and new aid car 2. Purchase aid car for Station 51 (new) 185,000 3. Purchase engine for Station 54 to replace aerial 750,000 ladder truck 4. Purchase land for relocated Station 52, if Station 51 5 544,500' is relocated 5. Construct/build relocated Station 52, if Station 51 is 5 3,000,000 relocated 1 25,000 gsf building x $400 /psf building construction cost 2 acre site (21,780 sf) x $25 /psf land cost 7,500 gsf building x S400 /psf building construction cost Cost TOTAL 14,479,500 ATTACHMENT B FIRE Impact Fee OPTIONS Total Project Amount over 12 years (through 2020) $14,479,500 $10,000,000 FIRE Single Family Multi Family All Commercial Office Retail Industrial Hotel /Motel /Resort Hospital /Nursing Home Medical /Dental Leisure Facilities Restaurant/Lounge Church /Non profit Education Special Public Facil Fees 90% $13,031,550 $2,060 $2,683 $3,628 $1,297 $283 90% $9,000,000 $1,423 $1,853 $2,506 $896 $195 Issaquah (2006) $622.25 $853.42 $200.00 $640 00 $200.00 $280.00 $9,610.00 $6,680.00 $2,090.00 $6,090.00 $390.00 $810.00 $3,120.00 City 10% $1,447,950 SF MF Office Retail Industrial 10% $1,000,000 SF MF Office Retail Industrial Renton $488.00 $388.00 $520.00 Fees 80% $11,583,600 $1,831 $2,385 $3,225 $1,153 $251 $8,000,000 $1,265 $1,647 $2,227 $796 $174 Kev: SF Per Single Family Dwelling I does not have Fire impact fees MF Per Multi Family Dwelling I $0.52 per gsf no com'I assm't since 1/1/08; Fire Office Per 1,000 gsf Office Uses I Authority Retail Per 1,000 gsf Retail Uses Industrial Per 1,000 gsf Industrial Uses City 20% $2,895,900 SF MF Office Retail Industrial 80% 20% $2,000,000 SF MF Office Retail Industrial Redmond Kent* Bellevue* (1999) $94.48 132.73 $110.80 $126.76 $13.07 AWC Averages (2008) Single Family Multi Family Auburn*** $362.66 $383.09 Fees 70% $10,135,650 $1,602 $2,082 $2,822 $1,009 $220 $7,000,000 $1,107 $1,441 $1,949 $697 $152 $4,343,850 SF MF Office Retail Industrial 70% 30% $3,000,000 SF MF Office Retail Industrial Per Dwelling I High I Low $622 00 I $104.00 $853 00 $104.00 City 30% TABLE 1. Tukwila Fire Impact Fee Calculation, 2008 Net Growth, 2008 -2020 2007 2007 Land Use Housing Employme Housing Units 3 Units -I nt 2 Single family 3,822 516 Multi- family 4,107 2,384 Office 6,245 370,500 Retail 20,384 2,418,000 Industrial 20,343 3,860,800 TOTALS 46.972 6,649,300 1. OFM numbers 2. PSRC 2007 Covered Employment Estimates 3. 43 SF dufyr. rest is \1F from 2007 Buildable Lands Report 4. Retail: 500gsf per emp: Office: 250esf per emp; Industrial: 800e.sf per emp; X emp growth 5. 90% of Buildable [ands Repon estimates. at some as 2007 employment TABLE 2. Tukwila Fire Service Demand Calculation, 2008 Land Use Single family Multi- family Office Retail Industrial NET TOTAL PERCENT OF SUBTOTAL Reallocation of Special Property Unclassified 2007 Responses Incident Responses 619 866 445 1.039 362 3.332 13% 19% 10% 22% 8% 71% Other 1.341 29% I I TOTAL 4,673 100% 100% 1,341 1 4,673 1 100% Note: The 513,031,550 capital cost is 90% of 514,479,500 (the growth related fire capital cost). TABLE 3. 2007 Incident Responses by Property Type Allocation to Impact Fee Categories IMPACT FEE CATEGORIES Fire Dept. Land Multi Fire Aid Total Single family family Office Retail Industrial TOTAL Use Categories Public Assembly 12 42 54 Educational 18 Health Care* 27 Single- family 159 Apartments 224 Boarding House 0 Hotels 102 Business** 441 Industrial 12 Manufacturing 57 Storage 81 SUBTOTAL 1.133 Special Property 1 275 1 855 1 1,130 1 Unclassified 1 148 1 63 1 211 1 SUBTOTAL 1 423 1 918 I 1,341 1, TOTAL INCIDENT RESPONSES BY IMPACT FEE CATEGORY split 60% Multi- family, 40% Office (Redmond) split 34% Office, 66% Retail (2007 Tukwila) Based Proportional Incident on Net Reallocation Responses Total of "Other" Building Employme Area -4 nt -5 249 1 868 1 19% 349 1 1,215 1 26% 179 1 625 13% 418 I 1,458 1 31% 146 508 1l% 1,341 1 4,673 1 100% 619 619 19% ATTACHMENT C Tukwila Fire Impact Fees, 2008 1,482 4,836 4,826 11,144 249 349 868 1,215 I Impact Fee Per Residential Unit SO SO Revised 2007 Responses Per GFA 50.00 SO 50.00 SO S0.00 SO Incident Responses per 1,000 Units 227 296 54 48 70 I 47 794 2 305 351 680 866 1 445 1,039 26% 13% 31% 1 1 1 179 418 625 1,458 Per 1,000 Sq. Ft. GFA Increase in Annual Incident Responses clue to Growth Incident Capital Costs Responses Incident Allocated by per 1,000 Responses Incident Employees Responses due to Growth 117 8% SO 705 49% SO 100.0 148 10% SO 71.5 346 24% 50 25.0 120 8% 50 1.437 100% SO 14 104 244 362 3,332 146 1,341 508 4,673 100% Brian Sonntag, CGFM Washington State Auditor he Puget Sound Region experienced an unprecedented building boom during this decade. Impact fees' purpose is to help offset the costs of services associated with new development, such as roads, schools, fire facilities and parks. We chose this audit to examine whether cities are effectively and efficiently using of this revenue source. We selected the five cities with the state's highest impact fee revenue from fiscal years 2004 to 2006 to find out if: Cities are collecting and administering impact fees appropriately and in accordance with state law. The public is getting what it is paying for Performance audits are conducted under the provisions of citizens Initiative 900. This audit was conducted on our behalf by Ernst Young in accordance with Generally Accepted Government Auditing Standards. Cities have an opportunity to improve transparency and access to public information by posting their annual impact fee reports on their Web sites. While cities are required by state law to report the information annually, not all cities are posting the information on their Web sites. It is good policy to make that information readily available to citizens. We hope all cities and counties that impose imact fees will take advantage of the best practices identified in this audit. If you are interested in following up on the audit resolution or public hearings, please check our Web site at: http: /www.sao.wa.gov/ PerformanceAudit /audit_reports.htm. Mission Statement The State Auditor's Office independently serves the citizens of Washington by promoting accountability, fiscal integrity and openness in state and local government. Working with these governments and with citizens, we strive to ensure the efficient and effective use of public resources. a� hat is an impact fee? A one -time fee to offset the cost of services associated with new development. Cities can collect four types of impact fees: School, fire, park and transportation impact fees. Impact fees are intended to supplement other funding sources and state law requires that they be spent on the facilities for which they are collected. How are they administered? State law allows municipalities that are required to or choose to plan under the Growth Management Act to assess impact fees. Cities set the rate for and collect the impact fees. Who pays impact fees? Impact fees are charged to builders as part of the building permit process. Impact fees are typically passed invisibly from the builder to the customer. 1 nitiative 900 requires the State Auditor's Office to identify best practices About Initiative 900 during each performance audit. The following best practices were in place at Washington voters approved the cities during the audit: Redmond The City of Redmond Fire Department's method of allocating costs of new capital facilities between the City and Fire District 34 should be evaluated for implementation in other cities and districts. The City of Redmond's fire impact fee calculation and schedule met all aspects of the related state laws and demonstrates a leading practice by taking the following items into consideration: System improvements that are reasonably related to growth The proportionate share of the costs of system improvements related to new development Redmond employs several leading practices with respect to calculating, charging, and maintaining its transportation impact fee. These leading practices Include: Inflation indexing Costs based on a long -range plan Adopted fee schedules by land use Initiative 900 in November 2005, giving the State Auditor's Office the authority to conduct independent performance audits of state and local government entities on behalf of citizens to promote accountability and cost effective uses of public resources. 1 -900 directs the Office to address the following elements in each performance audit: 1 Identification of cost savings. 2. Identification of services that can be reduced or eliminated. 3. Identification of programs or services that can be transferred to the private sector. 4. Analysis of gaps or overlaps in programs or services and recommendations to correct them. 5 Feasibility of pooling auditee's information technology systems. 6. Analysis of the roles and functions of the auditee and recommendations to change or eliminate roles or functions. 7. Recommendations for statutory or regulatory changes that may be necessary for the auditee to properly carry out its functions. 8. Analysis of the auditee's performance data, performance measures and self- assessment systems. 9 Identification of best practices. Initiative 900 provides no penalties for auditees that do not follow recommendations in performance audit reports. The complete text of the Initiative is available at: www.sao.wa.gov/ PerformanceAudit/ PDFDocuments /i900.pdf. 5 State of Washington Performance Audit of Impact Fees relating to Fire (Performance Audit attached at end of packet) State of Washington Performance Audit of Impact Fees AUDIT AREA 6 FIRE IMPACT FEE SCHEDULE/CALCULATION FINDING The City of Redmond has developed a leading practice in its fire impact fee schedule /calculation. Specifically, the schedule /calculation takes into account the impacts of fire and aid calls by land use type, projected growth by land use type and the fire Capital Facilities Plan (CFP). Fire Impact Fees in the City of Redmond Next, Ernst Young met with the City of Redmond to gain an understanding of the formula it used to calculate the City's fire impact fee schedule. Exhibit 12 below shows the City of Redmond's fire impact fee schedule for the performance audit period. Exhibit 12 City of Redmond's Fire Impact Fee Schedule 1999 -2006 Land Use Single- family Multi family Office 1 Retail 1 Industrial Excerpts Impact Fee $94.48 per residential unit $132.73 per residential unit $0.11 per square foot $0.13 per square foot $0.01 per square foot In order to develop the different rates for land use categories as shown above, the City of Redmond used historical data to determine the number of emergency (fire and aid) calls per land use type. Ernst Young noted that national emergency call data is available; however, it was important for Redmond to use Redmond data instead of national data, given that the jurisdiction has unique fire safety requirements. Page 45 of 67 Ernst Young noted that the City of Redmond's fire impact fee calculation and schedule met all aspects of RCW 82.02.050 and 82.02.060 and demonstrates a leading practice. Redmond's fire impact fee calculation and schedule takes the following items into consideration: System improvements that are reasonably related to growth The proportionate share of the costs of system improvements related to new development Finally, the City of Redmond reviewed its fire impact fee schedule in 2006 and noted that updates were needed. Therefore, the schedule was updated in 2006, and new rates were charged for fire impact fees. RECOMMENDATION Other cities within the State of Washington should be aware of the City of Redmond's leading practice for the fire impact fees schedule /calculation. Page 47 of 67 Page 41 of 67 DRz- F AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ESTABLISHING THE ASSESSMENT OF FIRE IMPACT FEES ON NEW RESIDENTIAL, COMMERCIAL, AND INDUSTRIAL DEVELOPMENT IN THE CITY; PROVIDING FOR SEVERABILl'1 Y; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, pursuant to the Growth Management Act of the State of Washington and RCW 36.70A, the City of Tukwila has an adopted Comprehensive Plan, which includes provisions for fire protection facilities as part of its Capital Facilities Element; and WHEREAS, RCW 82.02.050 authorizes cities to impose impact fees on development activity as part of the financing for public facilities, including fire protection facilities, and WHEREAS, the Tukwila City Council desires to provide funding for fire protection facilities, as referenced in the Capital Facilities Element of the Comprehensive Plan, through the imposition of residential and non residential development impact fees; NOW, THEREFORE, THE CITY COUNCIL OF THE CFI Y OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section I. Findings. The City Council finds and determines that new growth and development in the City creates additional demand and need for public fire protection facilities in the City, and the City Council finds that new growth and development should pay its proportionate share of the costs for new fire service facilities to serve new growth and development in the City. The City Council believes that this can be accomplished by the assessment of fire impact fees on new residential, commercial, and industrial development in the City. It is the Council's intent that the provisions of this ordinance be liberally construed in establishing the fire impact fee program. Section 2. Definitions. Terms or words not defined herein shall be defined pursuant to RCW 82.02.090 when given their usual and customary meaning. For the purposes of this ordinance, unless the context or subject matter clearly requires otherwise, the words or phrases defined in this section shall have the following meanings: 1. The "Act" means the Growth Management Act, Chapter 17, Laws of 1990, First Extraordinary Session, Chapter 36.70A RCW et seq., and Chapter 32, Laws of 1991, First Special Session, as now in existence or hereinafter amended. 2. "Building permit" means an official document or certification of the City of Tukwila issued by the City's building official which authorizes the construction, alteration, enlargement, conversion, reconstruction, remodeling, rehabilitation, erection, placement, demolition, moving, or repair of a building or structure. 3. "City" means the City of Tukwila, Washington, County of King 4. "Development activity" means any construction of a building or structure that creates additional demand and need for fire safety facilities. 5. "Development approval" means any written authorization from the City, which authorizes the commencement of the "development activity C. \Documents and Settings \A 11 Uses\ Desktop \Kelly \MSDATA Ordinances \Fire Impact F=_es.doc LV:ksn 11/21/2008 Page 1 of 5 6 "Encumber" means to reserve, set aside, or earmark the fire impact fees in order to pay for commitments, contractual obligations, or other liabilities incurred for the provision of fire protective services. 7 "Fee payer" is a person, corporation, partnership, an incorporated association or governmental agency, municipality, or similar entity commencing a land development activity that requires a building permit and creates a demand for additional fire capital facilities. 8 "Impact fee" means the payment of money imposed by the City on development activity pursuant to this ordinance as a condition of granting development approval in order to pay for the fire facilities needed to serve new growth and development that is a proportionate share of the cost of fire capital facilities that is used for facilities that reasonably benefit new development. Impact fees do not include a reasonable permit fee, an application fee, and the administrative fee for collecting and handling fire impact fees or cost of reviewing independent -fee calculations. 9. "Owner" means the owner of record of real property, as found in the records of King County, Washington, or a person with an unrestricted written option to purchase property; provided, that if the real property is being purchased under a recorded real estate contract, the purchaser shall be considered the owner of the property. 10. "Proportionate share" means that portion of the cost for fire facility improvements that are reasonably related to the service demands and needs of new development. 11. "Public facilities" means the following capital facilities owned or operated by governmental entities: (1) public streets and roads; (2) publicly owned parks and open spaces and recreational facilities; (3) school facilities; (4) fire protection facilities not part of a fire district; and (5) police facilities and essential public facilities as defined by Chapter 36.70A RCW. Section 3. Fire Impact Fee Assessment. A. The City shall collect fire impact fees from applicants seeking development approvals from the City for any development activity in the City for which building permits are required. This will include the expansion of existing uses, which create the demand for fire protection services. B. Fire impact fees shall be assessed at the time of a technically complete building permit application that complies with the City's zoning ordinances and building and development codes. Fire impact fees shall be collected from the fee payer at the time the building permit is issued. C. Except if otherwise exempt, the City shall not issue the required building permit unless or until the fire impact fees are paid. Section 4. Use of Fire Impact Fees. A. Pursuant to this ordinance, fire impact fees shall be used for fire facilities that will reasonably benefit the City and its residents. B. Fees shall not be used to make up deficiencies in City facilities serving an existing development. C. Fees shall not be used for maintenance and operations, including personnel. D. Fire impact fees shall be used for but not limited to land acquisition, site improvements, engineering and architectural services, permitting, financing, administrative expenses and applicable mitigation costs, and capital equipment pertaining to fire protection facilities. E. Fire impact fees may also be used to recoup public improvement costs incurred by the City to the extent that new growth and development will be served by the previously constructed improvement. C \Documents and Settings \All Users Desktop Kelly MSDATA Ordinances Fire Impact Fees.doc LV:ksn 11/21/2008 Page 2 of 5 F. In the event bonds or similar debt instruments are or have been issued for fire facility improvements, impact fees may be used to pay the principal on such bonds. Section 5. Fire Impact Fee Capital Facilities Plan. In order to collect fire impact fees, the City must first adopt a Fire Capital Facilities Plan as an element of the City's Comprehensive Plan. The City's Capital Facilities PIan for fire protection services shall consist of the following elements: 1. The City's capacity over the next six years, based on an inventory of the City's fire facilities both existing and under construction; 2. The forecast of future needs for fire facilities based upon the City's population projections; 3. A six-year financial plan component, updated as necessary, to maintain at least a six-year forecast for financing needed within projected funding levels; 4. Application of the formula set forth in this ordinance based upon the information in the Capital Facilities Plan; and 5. City Council Action. No new or revised impact fee shall be effective until adopted by the City Council following a duly advertised public hearing to consider the City's Capital Facilities Plan or plan update. Section 6. Fire Impact Fee Formula. The impact fee formula is based on the assumptions found in Tukwila Fire Impact Fees, 2008, Exhibit A, and Tukwila Fire Department Capital Facilities List, Exhibit B, attached hereto and by this reference fully incorporated herein. FIRE IMPACT FEE CALCULATIONS Impact Fee Land Use 1 Per Residential Unit Per 1,000 Sq. Ft. GFA Single family 1 Multi family Office Retail 1 Industrial 1 Section 7. Fire Impact Fee Adjustments. A. The City may adjust a fire impact fee at the time the fee is imposed to consider unusual circumstances in specific cases to ensure that impact fees are imposed fairly. B. In calculating the fee imposed on a particular development, the City shall permit consideration of studies and data submitted by a developer to adjust the amount of the fee. The developer shall submit an independent fee calculation study to the Fire Chief who shall review the study to determine that the study 1. is based on accepted impact fee assessment practices and methodologies; 2. uses acceptable data sources and the data used is comparable with the uses and intensities planned for the proposed development activity; 3. complies with the applicable state laws governing impact fees; 4. is prepared and documented by professionals who are mutually agreeable to the City and the developer and are qualified in their respective fields; and 5. shows the basis upon which the independent fee calculation was made. C. In reviewing the study, the Fire Chief may require the developer to submit additional or different documentation. If an acceptable study is presented, the Fire Chief may adjust the fee to that appropriate for the particular development activity. If an acceptable study is not presented, the developer shall pay the impact fees required prior to submitting the study C. \Documents and °xttina \All Users Desktop Kelly \MSDATA Ordinances \Fire Impact Fees.dcc LY_ksn 11/21/2005 Page 3 of 5 D. A developer requesting an adjustment or independent fee calculation may pay the impact fees imposed by this ordinance to obtain a building permit while the City determines whether to partially reimburse the developer by making an adjustment or accepting the independent fee calculation. Section 8. Credits. A fee payer can request that a credit, or credits, be awarded to the fee payer for the value of dedicated land, improvements to, or new construction of any system improvements provided by the developer to facilities that are identified in the Capital Facilities Plan and that are required by the City as a condition of approving the development activity Section 9. Appeals. A. Arty fee payer may pay the impact fees imposed by this ordinance under protest in order to obtain a building permit. B. Appeals regarding fire impact fees imposed on any development activity may only be taken by the fee payer of the property where such development activity will occur. No appeal shall be permitted unless and until the impact fee at issue has been paid. C. Determinations of the City staff with respect to the applicability of fire impact fees to a given development activity, or the availability of a credit, can be appealed to the City's Hearing Examiner pursuant to this section. D An appeal shall be taken within 10 working days of payment of the impact fees under protest or within 10 working days of the City's issuance of a written determination of a credit or exemption decision by filing with the City Clerk a notice of appeal giving the reasons for the appeal with an accompanying appeal fee as set forth in the existing fee schedule for land use decisions. Section 10. Refunds. A. If the City fails to expend or encumber the impact fees within six years from the date the fees were paid, unless extraordinary circumstances or reasons exist, the current owner of the property on which the impact fees were paid may receive a refund of such fees. B. The City shall notify potential claimants by first class mail that they are entitled to a refund. In determining whether impact fees have been expended or encumbered, impact fees shall be considered expended or encumbered on a first -in, first out basis. C. Owners seeking a refund must submit a written request for a refund of the fees to the City within one year of the date the right to claim a refund arises or notice is given, whichever comes later. D. Any impact fees for which no application has been made within the one -year period shall be retained by the City and expended on appropriate fire facilities. E. Refunds of impact fees shall include any interest earned on the impact fees by the City Section 11. Exemptions. The fire impact fees are generated from the formula for calculating the fees as set forth in this ordinance. The amount of the impact fees is determined by the information contained in the adopted fire department master plan and related documents, as appended to the City's Comprehensive Plan. All new development located in the City will be charged a fire impact fee, provided that the following exemptions shall apply. Any development activity or project which has submitted a technically complete building permit application prior to the effective date of this ordinance shall be exempt from the payment of fire impact fees. The following shall be exempt from fire impact fees: 1. Replacement of a structure with a new structure having the same use, at the same site, and when such replacement is within 12 months of demolition or destruction of the previous structure; C: Documents and Settin \All us, D \Kelly \MSDATA ordinances \Fire Impact Fees.dcc LV:ksn 11/21/2008 Page 4 of 5 2. Alteration or expansion of or remodeling of an existing dwelling or structure where no new units are created and the use is not changed; 3. Construction of an accessory residential structure; 4. Miscellaneous improvements including, but not limited to, fences, walls, swimming pools, and signs; 5. Demolition of or moving an existing structure within the City from one site to another; 6. Low income housing developed by individuals, nonprofit corporations, or a housing authority may be exempted from impact fees at the discretion of City staff subject to: a. Fiscal impact analysis of the effect of impact fees upon low- income housing and how exempting housing from impact fees would forward the goals for low- income housing in the City and King County; b That adequate documentation be provided that the housing will remain available for low- income persons for a 10 -year period of time at affordable rents; and c. In the case of owner occupied dwellings, that such housing will be sold or leased at affordable rates to low- income households for a period of 10 years; and d. The impact fee for exempt development shall be calculated as provided by this ordinance and paid with public funds. Such payments may be made by including such amounts in the public share of the system improvements undertaken within the City for fire protection services and facilities. Section 12. Authority Unimpaired. Nothing in this ordinance shall preclude the City from requiring the fee payer to mitigate adverse and environmental affects of a specific development pursuant to the State Environmental Policy Act, Chapters 43.21C RCW and/ or Chapter 58.17 RCW, governing plats and subdivisions, provided that the exercise of this authority is consistent with Chapters 43.21C and 82.02 RCW Section 13. Severability. If any section, subsection, paragraph, sentence, clause or phrase of this ordinance or its application to any person or situation should be held to be invalid or unconstitutional for any reason by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of the remaining portions of this ordinance or its application to any other person or situation. Section 14. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force five days after passage and publication as provided by law. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of 2008. Al T E ST /AUTHENTICATED: Christy O'Flaherty, City Clerk APPROVED AS TO FORM BY- Office of the City Attorney Jim Haggerton, Mayor Filed with the City Clerk: Passed by the City Council: Published. Effective Date: Ordinance Number- Attachments: Exhibit A Tukwila Fire Impact Fees, 2008 Exhibit B Fire Department Capital Facilities List C: \Documents and Setting \All riser, Desktop Kelly \MSDATA Ordinances \Fire Impact Fees.doc I.v:ksn 11/21/2005 Page 5 of 5 EXHIBIT A Tukwila Fire Impact Fees, 2008 TABLE 1. Tukwila Fire Impact Fee Calculation, 2008 Net Growth, 2008 -2020' Impact Fee 2007 2007 Per Land Use Housing Em to me Housing Building Employme g p y Units 3 Area 4 nt 5 Residential Per GFA Units -1 nt -2 Unit Single family 1 3,822 516 1 SO Multi- family 1 4,107 2,384 I 50 Office 1 6,245 370,500 1,482 80 Retail 1 20,384 1 2,418,000 4,836 80.00 Industrial 1 20,343 1 3,860,800 4,826 50.00 TOTALS 1 46,972 1 6,649,300 11,144 1. OFM numbers 2. PSRC 2007 Covered Employment Estimates 3. 43 SF du/yr, rest is ?.4F from 2007 Buildable Lands Report 4. Retail: 500gsf per emp; Office: 250gsf per emp; Industrial: 800gsf per emp; X emp growth 5. 90% of Buildable Lands Report estimates, at same as 2007 employment TABLE 2. Tukwila Fire Service Demand Calculation, 2008 Land Use Single family Multi family Office Retail Industrial NET TOTAL PERCENT OF SUBTOTAL 2007 Responses Incident Responses 619 866 445 1,039 362 3,332 13% 19% 10% 22% 8% 71% Fire Dept Land Fire Aid Total Use Categories Public Assembly I 12 1 42 54 Educational 18 1 30 1 48 Health Care* 1 27 1 90 1 117 Single- family 1 159 1 460 1 619 Apartments 224 1 570 1 794 Boarding House 1 0 1 2 1 2 Hotels 1 102 1 203 1 305 Business 1 441 1 590 1 1,031 Industrial 1 12 1 2 1 14 Manufacturing 1 57 1 47 1 104 Storage 1 81 1 163 1 244 SUBTOTAL 1 1,133 1 2.199 1 3,332 Proportion Based al on Net Reallocatio Total n of "Other" 19% 1 249 26% 1 349 13% I 179 31% 418 11% 1 146 100% 1 1,341 619 619 Revised 2007 Responses Incident Responses 868 1,215 625 1,458 508 4,673 Single- MuIti- family family 794 2 19% 26% 13% 31% 11% 100% Other 1,341 29% TOTAL 4,673 100% 1, 100% 1 1,341 4,673 1 100% Note: The 513,031,550 capital cost is 90% of 514,479,500 (the growth related fire capital cost). 227 296 TABLE 3. 2007 Incident Responses by Property Type Allocation to Impact Fee Categories IMPACT FEE CATEGORIES 48 70 47 54 305 351 680 14 104 244 866 445 1,039 362 Per 1,000 Sq. Ft. GFA SO 80 50 Incident Incident Responses Responses Incident per 1,000 per 1,000 Responses Units Employees 117 705 100.0 148 71.5 346 25 0 120 1,437 Office Retail Industrial TOTAL 3,332 19% 26% 13% 31% 11% 100% Special Property 1 275 1 855 1 1,130 1 1 1 1 1 1 Unclassified 1 148 1 63 1 211 1 1 1 1 1 1 SUBTOTAL 1 423 1 918 1 1,341 I I 1 1 1 1 Reallocation of Special Property 249 349 179 418 146 1,341 Unclassified TOTAL INCIDENT RESPONSES BY 868 1,215 625 1,458 508 4,673 L1IPACT FEE CATEGORY split 60% Multi family, 40% Office (Redmond) split 34% Office, 66% Retail (2007 Tukwila) Increase in Annual Incident Responses due to Growth 8% 49% 10% 24% 8°% 100% 100% Capital Costs Allocated by Incident Responses due to Growth 80 50 50 50 50 50 Fire Department Capital Facilities List EXHIBIT B Capital Facility Cost 1. Construct/build relocated Station 51 25,000 sf station; existing 15,000 sf station replacement due to growth, including bays for ladder truck and new aid car 2. Purchase aid car for Station 51 (new) 3. Purchase engine for Station 54 to replace aerial ladder truck 4. Purchase land for relocated Station 52, if Station 51 is relocated 5. Construct/build relocated Station 52, if Station 51 is relocated 25,000 gsf building x $400 /psf building construction cost 2 acre site (21,780 sf) x $25 /psf land cost 3 7,500 gsf building x $400 /psf building construction cost C:\Documents and Settings\All Users\ Desktop \Kellyy\MSDATA \Ordinances\Fire Exhbit B.doc LV:ksn 11/14/2008 10,000,000 185,000 750,000 544,500 3,000,000 TOTAL 14,479,500 Page 1 of 1 CC: Mayor Haggerton Rhonda Berry RE: Proposed Parks Impact Fees ISSUE INFORMATION MEMORANDUM To: Finance and Safety Committee (action) Community Affairs and Parks (information) FROM: Lisa Verner, Mayor's Office Rick Still, Deputy Parks Recreation Director DATE: November 18, 2008 Adopt an ordinance for Parks impact fees for funding of capital facilities needed by Parks services due to anticipated new growth and development. BACKGROUND The Administration is evaluating new sources of revenue for the City. One such source is "impact fees" through which new development helps to pay for capital facilities necessitated due to the new growth. Mayor Haggerton's goal is to analyze options and to adopt impact fees by the end of 2008. The Growth Management Act allows impact fees for parks services and for fire services, in addition to the traffic impact fees the City has already enacted. In order to consider and adopt impact fees, the City needs to have an adopted Parks Plan. The City Council adopted the Parks, Recreation and Open Space Plan on June 23, 2008 and amended this plan on November 17, 2008 by establishing a level -of- service for parks and opens space. Additionally, RCW 82.02.050 (4) says, in part: Impact fees may be collected and spent only for the public facilities defined in RCW 82.02.090 which are addressed by a capital facilities element of a comprehensive land use plan adopted pursuant to the provisions of RCW 36.70A.070... An ordinance to amend the Capital Facilities Element of the City's Comprehensive Plan was before the COW on November 10 for public hearing and discussion. It is scheduled for adoption on December 1. Among other things, the amendment will incorporate by reference the 2008 Parks, Recreation and Open Space Plan, as amended. The Parks LOS ordinance was approved on November 17, 2008 and includes a list of Parks capital projects (some of which will be paid for through impact fees). A public hearing on impact fees is scheduled for November 24, 2008. DISCUSSION The State Legislature authorized impact fees when it adopted the Growth Management Act in 1990 as one mechanism to help communities address growth. According to RCW 82.02.050 (1), it is the intent of the State Legislature: (a) To ensure that adequate facilities are available to serve new growth and development; (b) To promote orderly growth and development by establishing standards by which counties, cities, and towns may require, by ordinance, that new growth and development pay a proportionate share of the cost of new facilities needed to serve new growth and development; and (c) To ensure that impact fees are imposed through established procedures and criteria so that specific developments do not pay arbitrary fees or duplicative fees for the same impact. Impact fees can be assessed for traffic, parks, fire and schools. The City already assesses a traffic impact fee. The Mayor is asking the Council to consider assessing a parks impact fee and a fire impact fee. None of the school districts which serve Tukwila have asked the City to collect a school impact fee on their behalf. Impact fees are used to provide funds for capital projects or capital facilities which are needed because of new growth. They are used to fund projects which maintain the same level of service for new growth as is provided for existing development. They may not be used for projects which are needed due to current deficiencies in public facilities serving existing development. In essence, impact fees are a mechanism for "growth to pay for growth." The ordinance address the fee foiniula, adjustments, credits, appeals, refunds and exemptions as well as use of the impact fees. Also, the ordinance includes a spreadsheet for calculating an impact fee and a list of projects for which the impact fee would be collected. Conceptually, the fee formula identifies the anticipated growth between 2009 and 2020 (12 years) in five land use categories and the cost of capital facilities needed to serve that growth and divides them proportionally. The variables include the request for service (the amount of parks and recreation services needed per resident or per person employed in the City of Tukwila) and the growth anticipated in each land use category. Because the City has a strong track record of both residents and employees using park and recreation facilities, an impact fee for commercial/industrial uses as well as an impact fee for residential uses is proposed. A brief discussion of two of the attachments is a follows. Attachment B: The PARKS Impact Fee Options page compares two differing project totals, three differing City contributions, and three corresponding differing impact fees for five different land use categories. These numbers are representing the collection of fees over a 12 year period, 2009 to 2020. The five land use categories below each Capital Project Total amount is: per single family dwelling, per multi- family dwelling unit, per 1,000 gsf of office use, per 1,000 gsf retail use and per 1,000 gsf of industrial use. Option A indicates the impact fees and City contribution amounts if the Capital Projects Totaled $12,250,000. This is the total amount of projects that corresponds to the Level -of- Service adopted by the City Council. Option B indicates the impact fee and City contribution amounts if a lesser level -of- service is chosen for a total project amount of $8,750,000. This lesser level -of- service is shown to represent another option the City Council could choose. Both Options A B, have three additional breakdowns included identifying what the cost association is for three different collection rates and corresponding City contribution rates. If impact fees are collected at 90% of the total and the City's Contribution is 10 80% impact fees and 20% City's contribution; and 70% impact fees and 30% City's Contribution are listed across the page to the right for each land use category. The main issue before the City Council is adopting an ordinance for Parks impact fees for funding of capital facilities needed by Parks services due to anticipated new growth and development. There are two main sub issues the City Council needs to determine to establish the Parks Impact Fees Sub -Issue One: The City Council needs to determine what Level -of- Service they want to collect impact fees. Sub -Issue Two: The City Council needs to determine what percentage of the Capital Projects Total Cost they want to contribute. SPECIAL NOTE: The finance and Safety Committee has requested two pieces of additional information: 1. What is the Impact Fee /City Contribution percentage being collected /paid by the city for future growth for the six sample cities' park impact fees near the bottom of Attachment A. This information is being collected from these cities and will be provided to the City Council. 2. What is the justification for the `Hours Der Week' listed on Attachment B? An analysis of the Tukwila Community Center users indicates that a resident uses their facility pass 2.44 times more than that of a business pass holder. The ratio for the formula would be the same if we use 1.0 time per week for a business user and 2.44 times per week for resident OR if we use 0.41 times per week for a business user and 1.0 time per week for resident. Since the ratio would be the same the percent used for the Impact Fee Cost Allocation would be the same. Attachment C Table 1: 2008 Park Impact Fee Calculation was based upon the City of Redmond's Park Impact Fee model. On the left of the foiiii, the five land use categories are listed. The next three columns indicate the 2007 units for the respective land uses; followed by the next three columns indicate the 2020 estimated units for the respective land uses. The Net Growth from 2008 to 2020 is calculated by subtracting the 2020 minus the 2007 numbers. At the very top right hand comer of Attachment C, a formula is shown for how the numbers are calculated to develop a `percent of hours' of park use for each land use category. These percentages are then multiplied by Impact Fee to collect the funds to meet the level -of- service identified on Attachment B to determine the Cost Allocation per land use. The Cost Allocation is multiplied by the number of units (A -1 or A -2, respectfully) to determine the cost per unit or Impact Fee. Note: Exhibit A, Table 1: 2008 Park Impact Fee Calculations the sample used is the adopted Level of Service of $12,250,000 and a 90% Impact Fee ($11,025,000) with a 10% City's Contribution ($1,225,000). The City will need to contribute the $1,225,000 for the capital improvements plus the ongoing maintenance and operations cost for the life of the projects RECOMMENDATION Adopt an ordinance which authorizes assessment of impact fees for capital facilities for Parks Level -of- Service services needed due to new growth Attachment A: Project List Park Impact Fees Attachment B: Parks Services Impact Fee Options Attachment C: Parks Impact Fee Calculations Attachment A Questions for consideration: 1) Should the City collect Impact Fees on the entire list of projects? 2) At what percentage should the City implement Park Impact Fees (90/10 split or 80/20 split Project List Park Impact Fees Duwamish Riverbend Hill Trail Connections Tukwila Pond Southgate Park City of Tukwila Pool Boat Launch TOD Pedestrian Bridge Develop Phase II Green River Trail to Renton Black/Cedar River Development Phase II Expand and Develop [Extend land lease]; expand features and services Christianson, Codiga, Fort Dent, Log Cabin Sounder Connection Total Project Cost $3,000,000 1,000,000 $3,000,000 1,000,000 $1,500,000 $750,000 52,000,000 S12,250,000 ATTACHMENT B PARKS IMPACT FEE OPTIONS ATTACHMENT C TUKWILA PARKS IMPACT FEES 2008 TABLE 1: 2008 PARK IMPACT FEE CALCULATION a T '1% t ii AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ESTABLISHNG THE ASSESSMENT OF PARKS IMPACT FEES ON NEW RESIDENTIAL, COMMERCIAL, AND INDUSTRIAL DEVELOPMENT IN THE CITY; PROVIDING FOR SEVERABILITY; AND ESTABLISHNG AN EFFECTIVE DATE. WHEREAS, pursuant to the Growth Management Act of the State of Washington and RCW 36.70A, the City of Tukwila has an adopted Comprehensive Plan, which includes provisions for parks facilities as part of its Capital Facilities Element; and WHEREAS, RCW 82.02.050 authorizes cities to impose impact fees on development activity as part of the financing for public facilities, including parks facilities; and WHEREAS, the Tukwila City Council desires to provide funding for parks facilities, as referenced in the Capital Facilities Element of the Comprehensive Plan, through the imposition of residential and non residential development impact fees; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. Findings. The City Council finds and determines that new growth and development in the City creates additional demand and need for public parks facilities in the City, and the City Council finds that new growth and development should pay its proportionate share of the costs for new parks facilities to serve new growth and development in the City. The City Council believes that this can be accomplished by the assessment of parks impact fees on new residential, commercial, and industrial development in the City. It is the Council's intent that the provisions of this ordinance be liberally construed in establishing the parks impact fee program. Section 2. Definitions. Terms or words not defined herein shall be defined pursuant to RCW 82.02.090 when given their usual and customary meaning. For the purposes of this ordinance, unless the context or subject matter clearly requires otherwise, the words or phrases defined in this section shall have the following meanings: 1. The "Act" means the Growth Management Act, Chapter 17, Laws of 1990, First Extraordinary Session, Chapter 36.70A RCW et seq., and Chapter 32, Laws of 1991, First Special Session, as now in existence or hereinafter amended. 2. "Building permit" means an official document or certification of the City of Tukwila issued by the City's building official which authorizes the construction, alteration, enlargement, conversion, reconstruction, remodeling, rehabilitation, erection, placement, demolition, moving, or repair of a building or structure. 3. "City" means the City of Tukwila, Washington, County of King. 4. "Development activity" means any construction of a building or structure that creates additional demand and need for parks facilities. 5. "Development approval" means any written authorization from the City, which authorizes the commencement of the "development activity C. \Documents and Setting \All Users Desktop Kelly \MSDATA Ordinances \Parks Impact Fees.doc LV_ksn 11/21/200S Page 1 of 5 6. "Encumber" means to reserve, set aside, or earmark the parks impact fees in order to pay for commitments, contractual obligations, or other liabilities incurred for the provision of parks services. 7. "Fee payer" is a person, corporation, partnership, an incorporated association or governmental agency, municipality, or similar entity commencing a land development activity that requires a building permit and creates a demand for additional parks capital facilities. 8. "Impact fee" means the payment of money imposed by the City on development activity pursuant to this ordinance as a condition of granting development approval in order to pay for the parks facilities needed to serve new growth and development that is a proportionate share of the cost of parks capital facilities that is used for facilities that reasonably benefit new development. Impact fees do not include a reasonable permit fee, an application fee, and the administrative fee for collecting and handling parks impact fees or cost of reviewing independent fee calculations. 9. "Owner" means the owner of record of real property, as found in the records of King County, Washington, or a person with an unrestricted written option to purchase property; provided, that if the real property is being purchased under a recorded real estate contract, the purchaser shall be considered the owner of the property. 10. "Proportionate share" means that portion of the cost- for parks facility improvements that are reasonably related to the service demands and needs of new development. 11. "Public facilities" means the following capital facilities owned or operated by governmental entities: (1) public streets and roads; (2) publicly owned parks and open spaces and recreational facilities; (3) school facilities; (4) fire protection facilities not part of a fire district; and (5) police facilities and essential public facilities as defined by Chapter 36.70A RC41'. Section 3. Parks Impact Fee Assessment. A. The City shall collect parks impact fees from applicants seeking development approvals from the City for any development activity in the City for which building permits are required. This will include the expansion of existing uses, which create the demand for parks services. B Parks impact fees shall be assessed at the time of a technically- complete building permit application that complies with the City's zoning ordinances and building and development codes. Parks impact fees shall be collected from the fee payer at the time the building permit is issued. C. Except if otherwise exempt the City shall not issue the required building permit unless or until the parks impact fees are paid. Section 4. Use of Parks Impact Fees. A. Pursuant to this ordinance, parks impact fees shall be used for parks facilities that will reasonably benefit the City and its residents. B. Fees shall not be used to make up deficiencies in City facilities serving an existing development. C. Fees shall not be used for maintenance and operations, including personnel. D. Parks impact fees shall be used for but not limited to land acquisition, site improvements, engineering and architectural services, permitting, financing, administrative expenses and applicable mitigation costs, and capital equipment pertaining to parks facilities. C. \Documents and Setting \All Users \Desktop Kelly \MSDATA Ordinances \Parks Impact Fees.doc LV_ksn 11/21/2008 Page 2 of 5 E. Parks impact fees may also be used to recoup public improvement costs incurred by the City to the extent that new growth and development will be served by the previously constructed improvement. F. In the event bonds or similar debt instruments are or have been issued for parks facility improvements, impact fees may be used to pay the principal on such bonds. Section 5. Parks Impact Fee Capital Facilities Plan. In order to collect parks impact fees, the City must first adopt a parks capital facilities plan as an element of the City's Comprehensive Plan. The City's Capital Facilities Plan for parks services shall consist of the following elements: 1. The City's capacity over the next six years, based on an inventory of the City's parks facilities both existing and under construction, 2. The forecast of future needs for parks facilities based upon the City's population projections; 3. A six-year financial plan component, updated as necessary, to maintain at least a six-year forecast for financing needed within projected funding levels; 4. Application of the formula set forth in this ordinance based upon the information in the Capital Facilities Plan; and 5. City Council Action. No new or revised impact fee shall be effective until adopted by the City Council following a duly advertised public hearing to consider the City's Capital Facilities Plan or plan update. Section 6. Parks Impact Fee Formula. The impact fee formula is based on the assumptions found in Tukwila Parks Impact Fees, 2008, Exhibit A, and Tukwila Parks Capital Facilities List, Exhibit B, attached hereto and by this reference fully incorporated herein. Land Use Single Family Multi- Family Office Retail Industrial PARKS IMPACT FEE CALCULATIONS Impact Fee Per Residential Unit 1 Per 1,000 Sq. Ft. GFA Section 7. Parks Impact Fee Adjustments. A. The City may adjust a parks impact fee at the time the fee is imposed to consider unusual circumstances in specific cases to ensure that impact fees are imposed fairly. B. In calculating the fee imposed on a particular development, the City shall permit consideration of studies and data submitted by a developer to adjust the amount of the fee. The developer shall submit an independent fee calculation study to the Director of Parks and Recreation, who shall review the study to determine that the study: 1. is based on accepted impact fee assessment practices and methodologies; 2. uses acceptable data sources and the data used is comparable with the uses and intensities planned for the proposed development activity; 3. complies with the applicable state laws governing impact fees, 4. is prepared and documented by professionals who are mutually agreeable to the City and the developer and are qualified in their respective fields, and 5. shows the basis upon which the independent fee calculation was made. C: \Documents and setting \,"-J1 Useis\ D K \MSDATA Ordinances \Parks Impact Fees.doc LV :ksn 11/21/2008 Page 3 of 5 C. In reviewing the study, the Director of Parks and Recreation may require the developer to submit additional or different documentation. If an acceptable study is presented, the Director of Parks and Recreation may adjust the fee to that appropriate for the particular development activity If an acceptable study is not presented, the developer shall pay the impact fees required prior to submitting the study D. A developer requesting an adjustment or independent fee calculation may pay the impact fees imposed by this Ordinance to obtain a building permit while the City determines whether to partially reimburse the developer by making an adjustment or accepting the independent fee calculation. Section 8. Credits. A fee payer can request that a credit, or credits, be awarded to the fee payer for the value of dedicated land, improvements to, or new construction of any system improvements provided by the developer to facilities that are identified in the Capital Facilities Plan and that are required by the City as a condition of approving the development activity. Section 9. Appeals. A. Any fee payer may pay the impact fees imposed by this ordinance under protest in order to obtain a building permit. B Appeals regarding parks impact fees imposed on any development activity may only be taken by the fee payer of the property where such development activity will occur No appeal shall be permitted unless and until the impact fee at issue has been paid. C. Determinations of the City staff with respect to the applicability of parks impact fees to a given development activity, or the availability of a credit, can be appealed to the City's Hearing Examiner pursuant to this section. D. An appeal shall be taken within 10 working days of payment of the impact fees under protest or within 10 working days of the City's issuance of a written determination of a credit or exemption decision by filing with the City Clerk a notice of appeal giving the reasons for the appeal with an accompanying appeal fee as set forth in the existing fee schedule for land use decisions. Section 10. Refunds. A. If the City fails to expend or encumber the impact fees within six years from the date the fees were paid, unless extraordinary circumstances or reasons exist, the current owner of the property on which the impact fees were paid may receive a refund of such fees. B The City shall notify potential claimants by first class mail that they are entitled to a refund. In determining whether impact fees have been expended or encumbered, impact fees shall be considered expended or encumbered on a first -in, first out basis. C. Owners seeking a refund must submit a written request for a refund of the fees to the City within one year of the date the right to claim a refund arises or notice is given, whichever comes later D Any impact fees for which no application has been made within the one -year period shall be retained by the City and expended on appropriate parks facilities. E. Refunds of impact fees shall include any interest earned on the impact fees by the City Section 11. Exemptions. The parks impact fees are generated from the formula for calculating the fees as set forth in this ordinance. The amount of the impact fees is determined by the information contained in the adopted parks master plan and related documents, as appended to the City's Comprehensive Plan. All new development located in the City will be charged a parks impact fee, provided that the following exemptions shall apply. Any development activity or project which has submitted a technically complete building permit application prior to the effective date of this C \Documenis and Setting All Users \De ktop \Ke_lly \MSDATA\ Ordinances\ Parks Impact Fees.dcc LV:ksn 11/21/2CO5 Page4of5 ordinance shall be exempt from the payment of parks impact fees. The following shall be exempt from parks impact fees: 1. Replacement of a' structure with a new structure having the same use, at the same site, and when such replacement is within 12 months of demolition or destruction of the previous structure; 2. Alteration or expansion of or remodeling of an existing dwelling or structure where no new units are created and the use is not changed, 3. Construction of an accessory residential structure; 4. Miscellaneous improvements including, but not limited to, fences, walls, swimming pools, and signs; 5. Demolition of or moving an existing structure within the City from one site to another; 6. Low income housing developed by individuals, nonprofit corporations, or a housing authority may be exempted from impact fees at the discretion of City staff subject to: a. Fiscal impact analysis of the effect of impact fees upon low income housing and how exempting housing from impact fees would forward the goals for low- income housing in the City and King County; b. That adequate documentation be provided that the housing will remain available for low- income persons for a 10 -year period of time at affordable rents; and c. In the case of owner- occupied dwellings, that such housing will be sold or leased at affordable rates to low income households for a period of 10 years; and d. The impact fee for exempt development shall be calculated as provided by this ordinance and paid with public funds. Such payments may be made by including such amounts in the public share of the system improvements undertaken within the City for parks services and facilities. Section 12. Authority Unimpaired. Nothing in this Ordinance shall preclude the City from requiring the fee payer to mitigate adverse and environmental affects of a specific development pursuant to the State Environmental Policy Act, Chapters 43.21C RCW and /or Chapter 58.17 RCN, governing plats and subdivisions, provided that the exercise of this authority is consistent with Chapters 43.21C and 82.02 RCW. Section 13. Severability. If any section, subsection, paragraph, sentence, clause or phrase of this ordinance or its application to any person or situation should be held to be invalid or unconstitutional for any reason by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of the remaining portions of this ordinance or its application to any other person or situation. Section 14. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force five days after passage and publication as provided by law. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of 2008. ATTEST /AUTHENTICATED: Christy O'Flaherty, City Clerk APPROVED AS TO FORM BY: Office of the City Attorney Jim Haggerton, Mayor Filed with the City Clerk: Passed by the City Council: Published: Effective Date: Ordinance Number. Attachment: Tukwila Parks Impact Fees, 2008, Exhibit A Tukwila Parks Capital Facilities List, Exhibit B C. \Documents and Setting \All w ars \Desktop\ K \MSDATA \Ordinances \Parka Impact Fees.doc LV :ksn 11/21/2COS Page 5 of 5 EXHIBIT A TUKWILA PARKS IMPACT FEES 2008 TABLE 1 2008 PARK IMPACT FEE CALCULATIONS Tukwila Parks Capital Facilities List Project List Impact Fees 2009 to 2015 Duwamish Riverbend Hill Trail Connections Tukwila Pond Southgate Park City of Tukwila Pool Boat Launch TOD Pedestrian Bridge EXHIBIT B Develop Phase II Green River Trail to Renton Black/Cedar River Development Phase II Expand and Develop [Extend land lease]; expand features and services Christianson, Codiga, Fort Dent, Log Cabin Sounder Connection C:\Documents and Settings\A11 Users\ Desktop \Keilp\.MSDATA \ordinances\Parks Impact Exhibit B.doc LV:ksn 11/14/2008 Total Page 1 of 1 Project Cost 3,000,000 1,000,000 3,000,000 1,000,000 1,500,000 750,000 2,000,000 12,250,000 Use of Impact Fees in Federal Way, Olympia, Maple Valley, Redmond and Vancouver Report No. 1000014 October 14, 2008 www.sao.wa.gov Washington State Auditor Brian Sonntag, CGFM PERFORMANCE AUDIT REPORT Brian Sonntag, CGFM Washington State Auditor Li he Puget Sound Region experienced an unprecedented building boom during this decade. Impact fees' purpose is to help offset the costs of services associated with new development, such as roads, schools, fire facilities and parks. We chose this audit to examine whether cities are effectively and efficiently using of this revenue source. We selected the five cities with the state's highest impact fee revenue from fiscal years 2004 to 2006 to find out if: Cities are collecting and administering impact fees appropriately and in accordance with state law. The public is getting what it is paying for. Performance audits are conducted under the provisions of citizens Initiative 900. This audit was conducted on our behalf by Ernst Young in accordance with Generally Accepted Government Auditing Standards. Cities have an opportunity to improve transparency and access to public information by posting their annual impact fee reports on their Web sites. While cities are required by state law to report the information annually, not all cities are posting the information on their Web sites. It is good policy to make that information readily available to citizens. We hope all cities and counties that impose imact fees will take advantage of the best practices identified in this audit. If you are interested in following up on the audit resolution or public hearings, please check our Web site at: http: /www.sao.wa.gov/ PerformanceAudit/audit_reports.htm. Mission Statement The State Auditor's Office independently serves the citizens of Washington by promoting accountability, fiscal integrity and openness in state and local government. Working with these governments and with citizens, we strive to ensure the efficient and effective use of public resources. What is an impact fee? A one -time fee to offsetthe cost of services associated with new development. Cities can collect four types of impact fees: School, fire, park and=- transportation impact fees. impact fees are intended to= supplement other funding sources and state law requires that they bespent on facilities for which they are== collected. How are they administered? =State law allows municipalities I required to or choose-= =to plan under the Growth Management Act to assess impact fees. Cities set the_ rate_:= for and -the impact :Who pays impact fees? _Impact fees are charged to builders as part of the building____ permit process. Impact fees typically passed .invisibly frorn__- the builder to the customer 1 Objectives The audit was designed to determine: 1. The method each city uses to calculate impact fees based on the direction in state law (RCW 82.20.050); 2. How each city demonstrates that these fees are appropriate; and 3. How effectively each city uses impact fees to pay for public facilities that: Correspond to the demand for public facilities from new development. Benefit new development proportionate to its share of the financing of new or expanded facilities; and are consistent with a comprehensive plan or a capital element of a comprehensive land use plan that has been adopted in accordance with state law. If the city does not meet these objectives, what are the resulting costs to all residents and what can be done to reduce those costs? Additionally, the audit addressed the nine elements contained in Initiative 900, outlined on page 5 of this summary. The audit cost $726,466. Legislature Several of the issues identified during the audit are caused by a lack of clarity in laws governing impact fees, particularly regarding the items cities may purchase with impact fee money. For instance, Olympia interpreted the law regarding road impact fees to allow it to spend the money on bike trails. Redmond interpreted the law regarding fire impact fees to allow the City to purchase fire trucks. The law states the fees can only be spent on fire "facilities;" however the law does not define a fire facility. The Legislature has an opportunity to empower cities to improve their performance and definitively comply with state law. Issues The audit identified three main conclusions regarding the five cities' collection and use of impact fees. Lack of clarity in state law may be causing some cities to calculate and spend impact fees in a manner that could be inappropriate. One city is charging builders higher impact fees than they should and their fees are not supported by a capital facilities plan as prescribed by law. We recommend that city discontinue charging the fees until they are supported. New developments in some cities are receiving questionable benefits for the impact fees paid. Best Practices Identified for All Municipalities The audit identifies a number of best practices that streamline or improve the collection, assessment and use of impact fees in order to minimize the costs and maximize the benefits associated with them. The complete text of Initiative 90015 available at www.sao.wa.gov/ PerformanceAudit PDFDocuments /i900. pdf. Visit www. sao.wa.gov/ PerformanceAudit/ audit reports.htm for: Full report Cities' responses, action plans Public hearings Cities' annual status reports 2 Audit Issues udit R inanciiaf Impacts 1. Capital Facilities State law defines capital facilities for fire, transportation, park and school impact fees. However, the definitions are ambiguous, resulting in cities applying varying interpretations of the term. 2. Fire Districts The City of Redmond Fire Department has developed a leading practice in its relationship with Fire District 34. The fire department's method of allocating costs of new capital facilities between the city and Fire District 34 should be evaluated for use by other cities and districts. 3. Park Zoning Olympia may not be spending park impact fees as effectively as it could, based on the results of a citizen survey and based on other cities' use of multiple park zones. 4. Interest- Bearing Accounts Each city uses a different method to allocate interest payments to impact fee general ledger accounts. The City of Vancouver's method of allocating interest is a leading practice among the Cities. 5. School Impact Fee Interest Olympia and Federal Way do not remit any interest they earn on school impact fees to the school districts; therefore, the interest income is not spent on the purpose for which the impact fee was imposed, as required by state law. The Washington Legislature should amend RCW 82.02.090 to better define capital facilities and the following terms: 1. "Fire protection facilities" 2. "Public streets and roads" 3. "School facilities" 4. Address whether transportation impact fees can be spent on multimodal transportation (i.e., biking, walking, etc.). Washington cities should be aware of the City of Redmond's leading practice in its relationship with Fire District 34 and attempt to institute a similar contract if that city has a relationship with a neighboring fire district. Olympia should consider removing the "one-haft to one mile" and "10- to 20- minute walk" from its definition of a "Neighborhood Park." Olympia should consider dividing the City into two park zones to demonstrate a clear relationship between where impact fees are collected and spent. Two zones for park impact fees would appear to be reasonable, as the City is approximately six miles across. Cities should consider using technology similar to Vancouver's system that allows for daily allocation of interest and minimizes manual data entry. Cities should not allocate interest based on a rate that is not equal to actual interest earned. The Legislature should consider modifying RCW 82.02.070 to better define "separate interest- bearing accounts." Cities should allocate actual interest earnings on school impact fees collected and remit those interest earnings to the appropriate school district(s) so the interest earned on impact fees can be spent in accordance with state law. $876,709 A more accurate allocation of costs between a city and related fire districts. $36,974 Using an automated system will reduce staff time currently used in manual processes. Accurately tracking interest income reduces the risk of errors or fraud. Clarifying an ambiguous law will help cities. $9,469 3 Audit issues l udit Recommendations F inancial Impacts- 6. Fire Impact Fee Schedule/ Calculation Olympia's fire impact fee schedule/ calculation does not effectively demonstrate the connection between growth and system improvements. Olympia does not take into account the cost of public facilities necessitated by new development or the availability of other financing. Redmond has developed a leading practice in its fire impact fee schedule /calculation, specifically the method it uses to take into account the impacts of fire and aid calls by land use type, projected growth by land use type and the fire Capital Facilities Plan. 7. School Impact Fee Schedule/ Calculation Some cities that collect school impact fees are not consistently reviewing impact fee calculations prepared by school districts. 8. Transportation Impact Fee Schedule /Calculation Redmond uses several leading practices in calculating, charging and maintaining its transportation impact fee. 9. Permit System Redmond inputs collection, interest earnings, and expenditure of each impact fee in a database and in the City's cash receipt system. The City is duplicating work by entering the same information twice. Vancouver and Olympia integrated their permitting systems with their accounting systems. This is a leading practice that results in more effective intemal controls and limits manual data entry. Cities should be aware of Redmond's leading practice for the fire impact fees schedule /calculation. The City of Olympia should revisit its fire impact fee schedule and consider if it is suitable to continue charging the fire impact fee. Specifically, Olympia should more effectively address RCW 82.02.050 and 82.02.060 in its calculation and demonstrate the fire impact fee it charges reasonably relates to system improvements that are reasonably attributable to growth. Additionally, the City of Olympia should consider implementing a periodic review of its fire impact fee calculation and schedule to determine if the fee is still adequate, given the city's capital facility needs and anticipated growth. Cities should revisit their review process of the school impact fee calculation /schedule and capital facilities plan, knowing they may be involved if litigation results from the school impact fee assessed. Cities should consider a construction cost adjustment to align transportation impact fees with the cost of projects they fund. Cities that calculate impact fees based on a short-term project list should consider expanding that list to include projects farther in the future that will be needed to accommodate growth. -Cities should adopt a transportation impact fee schedule that allows developers to easily determine the impact fee to be paid upon building permit issuance. The transportation fee schedule should be based on typical land uses and trips per land use. Redmond should eliminate database tracking of individual impact fee collection, expenditures, and interest allocation to save staff time. All cities should maintain a permit system that automatically interfaces with its accounting system. Leading practices are in place in Vancouver and Olympia. $185,565 $345,313 Cities benefit by having more confidence that the school impact fee they charge is appropriate. Impact fees will more closely match the costs they support. Cities may charge a fee that better represents the cost of growth. Developers will be able to calculate and understand their transportation impact fee without outside assistance. $76,280 4 i_ nitiative 900 requires the State Auditor's Office to identify best practices ei dur each performance audit. The following best practices were in place at the cities during the audit: Redmond The City of Redmond Fire Department's method of allocating costs of new capital facilities between the City and Fire District 34 should be evaluated for implementation in other cities and districts. The City of Redmond's fire impact fee calculation and schedule met all aspects of the related state laws and demonstrates a leading practice by taking the following items into consideration: System improvements that are reasonably related to growth The proportionate share of the costs of system improvements related to new development Redmond employs several leading practices with respect to calculating, charging, and maintaining its transportation impact fee. These leading practices include: Inflation indexing Costs based on a long -range plan Adopted fee schedules by land use Vancouver The City of Vancouver uses the Emphasys SymPro system to assist in managing the city treasury function, including interest allocation. The system tracks investment earnings and interfaces with the city's general ledger to retrieve the daily balances for all accounts to which to allocate interest. Investment earnings are then allocated across the general ledger accounts based on their average daily balances. The City of Vancouver's school impact fee review process is a leading practice, as the City demonstrates the most in -depth and comprehensive review of the school impact fee calculation and schedule. Vancouver and Olympia The cities of Vancouver and Olympia integrated their permitting systems with their accounting systems. This was identified as a leading practice among the Cities due to the tighter internal controls and minimal manual entry. About Initiative 900 Washington voters approved _Initiative 900 in November_ 2005; giving the State Auditor's Office the authority to conduct independent performance audits of state and local government_- entities on behalf of citizens toprornote accountability and cost- effective uses 'of public resources. 1 -900 directs'the Office to address the following elements in each performance audit: Identification of cost savings. 6: Identification of services that can be reduced or eliminated:: Identification of programs or services that can be transferred_ if to the private sector. Analysis of gaps or overlaps in programs or services and recommendations to correct them. Feasibility of pooling auditee's_ information technology systems. Analysis of the roles and functions of the auditee and. recommendations to change or eliminate roles or functions. Recorrimendations forstatutory or regulatory changes that rnay_° be necessary for the auditee to properly carry out its functions. Analysisof the auditee's per formance__data, performance self assessment systems= 9. identification of best practices_. :Initiative 900 provides no penalties forauditees that do riot- followrecommendations in performance audit reports._ The`complete text of -the Initiative is available' at: ww w.sao.wa.gov/ PerformanceAudit PDFDocuments /i900.pdf. 5 We made the following recommendations to the Washington Legislature: Amend RCW 82.02.090 to better define capital facilities and alleviate ambiguity. Consider modifying RCW 82.02.070 to better define "separate interest bearing accounts." n 900 requires the legislative bodies for the governments in this report to hold at least one public hearing to consider the audit results and receive comments from the public within 30 days of this report's issue. The corresponding legislative body must consider this report in connection with its spending practices. A report must be submitted by the legislative body by July 1 each year detailing the status of the legislative implementation of the State Auditor's recommendations. Justification must be provided for recommendations not implemented. Details of other corrective action must be provided as well. The state Legislature's Joint Legislative Audit and Review Committee (JLARC) will summarize any statewide issues that require action from the Legislature and will notify the appropriate fiscal and policy committees of public hearing agendas. Follow -up performance audits of any state or local government entity or program may be conducted when determined necessary by the State Auditor. Initiative 900 provides no penalties for state agencies or local governments that do not follow recommendations made in performance audit reports. To receive electronic notification of audit reports, sign up at: https: /www.sao.wa.gov /applications/ subscriptionservices/ ILARCposts its 1 -900 public hearings and agendas at: http: www.leg.wa.gov/ ILARC/i- 900.htm 6 Washington State Auditor sonntagb @sao.wa.gov (360) 902 -0360 Director of Performance Audit Linda Long, CPA, CGFM, CGAP Iongl @sao.wa.gov (360) 902 -0367 Brian Sonntag, CGFM Communications Director Mindy Chambers chamberm @sao.wa.gov (360) 902 -0091 To request a public record from the State Auditor's Office: Mary Leider, Public Records Officer Ieiderm @sao.wa.gov (360) 725 -5617 For general information from the State Auditor's Office: Main phone number (360) 902 -0370 Web site http: /www.sao.wa.gov Toll-free hotline for reporting government waste and abuse (866) 902 -3900 To find your legislator http: /apps.leg.wa.gov /districtfinder To contact the City of Federal Way: Mayor Jack Dovey jack.dovey @cityoffederalway.com (253) 835 -2401 To contact the City of Olympia: Mayor Doug Mah dmah @ci.olympia.wa.us (360) 753 -8447 To contact the City of Maple Valley: Mayor Laure lddings council@ci.maple-valley.wa.us (425) 413 -8800 To contact the City of Redmond: Mayor John Marchione mayor @redmond.gov (425) 556 -2101 To contact the City of Vancouver: Mayor Royce Pollard mayor @ci.vancouver.wa.us (360) 696 -8211 Americans with Disabilities In accordance with the Americans with Disabilities Act, this document will be made available in alternate formats. Please call (360) 902 -0370 for more information. 7 State of Washington Performance Audit of Impact Fees i!i ERNST& YOUNG Quallfyln Everything We Do AUDIT AREA 3 PARK ZONING State of Washington Performance Audit of Impact Fees FINDING The use of multiple zones is seen as an effective way to reasonably relate the collection and expenditures of park impact fees to areas experiencing growth as discussed at the end of this page. Based on the use of one zone, the City of Olympia is potentially spending neighborhood park impact fees that are inconsistent with its definition of a neighborhood park and results of a citizen survey. Therefore, the City of Olympia may not be spending park impact fees as effectively as it could using multiple zones. BACKGROUND Original Finding Identification During Phase 1 of the performance audit, Ernst Young noted that the City of Olympia and the City of Redmond use only one zone for the assessment, collection, and expenditure of park impact fees. The City of Vancouver uses multiple park zones in an effort to demonstrate a reasonable relationship between the fee charged to the developer and the park needs generated by growth in that zoning area. According to RCW 82.02.050 3 (a), impact fees "Shall only be imposed for system improvements that are reasonably related to the new development." While there are no requirements in Washington State law to have multiple park zones, Ernst Young noted that other cities find zoning to be an effective way to make the impact fee relationship, a reasonable relationship. Audit Work Conducted During Phase 3 of the audit, Ernst Young examined the potential finding further. First, Ernst Young met with the City of Vancouver to gain an understanding of how multiple park zones work for Vancouver. Next, Ernst Young met with the City Olympia to gain an understanding of why one zone was selected for assessing, collecting, and spending park impact fees in Olympia. Finally, Ernst Young sampled some park impact fees that were collected to determine where they were potentially spent within the City of Olympia. Ernst Young LLP Page 26 of 67 State of Washington Performance Audit of Impact Fees Vancouver's Rationale for Multiple Park Zones Ernst Young noted that the City of Vancouver has chosen to implement ten different park zones (or districts) so as to provide a clear demonstration between where fees are spent and where fees are collected. The size of each zone is large enough so that an adequate amount of funding can be collected in each area. The ten park zones span the urban unincorporated area of the county, as the City of Vancouver and Clark County operate under the same parks department. If one were to look at the city limits of Vancouver, there would be approximately four park zones within the City limits. In addition to multiple zones effectively demonstrating the connection between where fees are spent and where they are collected, the City offered the following other benefits of having multiple park zones: The impact fees assessed vary by zone to account for the differences in and value across the city. Therefore, a developer building a house in zone one, where and is more expensive, will pay a higher impact fee, where as a developer building a home in zone ten, where land is cheaper, will pay a smaller impact fee. Multiple park zones allow the City to have the ability to not collect impact fees in a zone if the zone at some point contains all necessary parks to meet the level of service standards and there is not significant anticipated growth in the zone. The City of Vancouver did provide some disadvantages to having multiple park zones, which included the following: Accounting is more difficult with multiple park zones. There is Tess flexibility with spending the park impact fees collected_ Spending the impact fees within the six -year time period (as required by law) is more difficult. City of Olvmoia One Zone Research Ernst Young met with the City of Olympia to gain an understanding of how one park zone works for the City and how effectively the single zone demonstrates the connection between where fees are collected and where they are spent. Ernst Young noted that because the City operates its parks system as a single zone, Olympia may spend park impact fees collected in the City on any park within the City limits. Ernst Young LLP Page 27 of 67 State of Washington Performance Audit of Impact Fees Types of Parks in Olympia First, Ernst Young noted that the City of Olympia develops the following types of parks using park impact fees, as per the City's Capital Facilities PIan Neighborhood Parks: Neighborhood parks are a common gathering place for families and children, all within a 10 -20 minute walk from home. Community Parks: Community parks are places for organized recreation programs and sports activities. Community parks will include athletic fields and picnic shelters or other facilities for large -scale community use. Special Use Parks: Special use parks offer unique features and are typically more special- interest oriented. Examples of these parks are the Japanese Garden and Heritage Fountain. These parks are used by the entire community and become treasured places in the community. Open Space Parks: Open space is for passive use, nature trails, and wildlife habitat. Questions Regarding the Neighborhood Park Designation After gaining an understanding of the various types of parks, Ernst Young became concerned about the neighborhood park designation. All other parks (community, special use, and open space) in the City of Olympia are built for use by the entire City (as per their definition shown above); thus, implementation of a single park zone appears reasonable, as the entire community benefits from the development of these parks regardless of where a home is built. However, neighborhood parks are built specifically for neighborhoods, as the definition in Olympia's capital facility plan indicates that they are a 10 -20 minute walk from a home. Furthermore, Olympia's Park and Open Space Standards and Definitions document describes neighborhood parks as generally small in size and serve an area of approximately one -half to one mile radius but serve all residents in the community." Based on this understanding, Ernst Young noted that one park zone might allow a park impact fee to be collected on one side of the City, yet be spent on building a neighborhood park across town, outside of the City's own definition of neighborhood parks. In this scenario, the neighborhood park may not benefit the citizens and developers who paid the park impact fee, as the neighborhood park is built further than a 10 -20 minute walk and further than one -half to one mile away. The City of Olympia's Justification for One Zone The City of Olympia implemented park impact fees in 1993 and has utilized one zone since its implementation. The justification for the City's determination to use one zone in 1993 is based Ernst Young LLP Page 28 of 67 State of Washington Performance Audit of Impact Fees on reasoning similar to that identified by the City of Vancouver as disadvantageous to having multiple park zones (noted above). The City of Olympia further explained to Ernst Young that the "reasonableness" of one zone can be understood based on the outcome of an Olympia citywide survey conducted in 2006. The survey was conducted by the City to assess residents' opinions and behaviors regarding City services. The survey included the following City government programs and services: Communication with citizens Garbage and recycling Sewer Drinking water Storm and surface water Parks Public safety Transportation services The survey selected 400 residents, at random, from a list of utility customers. The survey was conducted over the phone and has a margin of error of ±1- 5% at the 95% confidence interval. The direct results of the parks portion of the survey included the following: "39% visited a park in Olympia 12 or more times in the past year 7 in 10 were "very satisfied" with their park experiences. Majorities were "definitely" willing to travel up to six miles to get to an open space area (59 and a special use park (52 44% were "definitely" willing to travel to a community park. 3 in 5 were "definitely" (36 or "probably" (25 willing to travel three miles to a neighborhood park. 1 in 3 respondents (or someone in their household) had participated in a recreational activity provided by the City. 9 in 10 agreed that art events are valuable to the quality of life in the City "4 Ernst Young's Views on the Survey Results The survey results for the special use, open space, and community parks (bullet three above) do support the City's definition and plan for usage of these parks by citizens across the City in a single park zone. However, the survey results (bullet four above) do not support the City's definition and /or implementation of a single park zone for neighborhood parks. The survey Ernst Young LLP Page 29 of 67 State of Washington Performance Audit of Impact Fees shows that a total of 61% of Olympia residents would "definitely" or "probably" travel up to three miles to visit a neighborhood park. The City of Olympia is approximately six miles across; therefore, survey results for neighborhood parks do not correlate to the City's approach of one zone. Testing of Park Impact Fees Collected Ernst Young conducted an analysis of park impact fee collections during the audit period 2004 2006 and the expenditure of the 2004 and 2005 collections Ernst Young found that although there were community, special use, or open space park systems located close to where the impact fees were gathered, roughly 96% of the neighborhood parks were not built within the one -half to one mile radius of where the impact fees were gathered. Ernst Young also found that the average distance between the location where an impact fee was collected and the location where the impact fee was potentially used (the average distance of the impact fee collection to the three possible parks where the impact fee was spent) on a neighborhood park was approximately four and one -half miles. This four and one -half mile average shows that neighborhood parks are not built within the one -half to one mile radius or 10 to 20- minute walking distance from the location of the development, based on Olympia's definition of neighborhood parks. Given that neighborhood parks are constructed at locations that on average may be several miles from the impact fee collection development site, neighborhood parks are being developed in current neighborhoods lacking parks, raising the question of whether the single zone approach most effectively demonstrates the connection between the impact fees and the growth that paid them. System Approach to Parks in Olympia To support its neighborhood park definition, City planners in Olympia explained the one -half to one mile distance is a goal for the City's system of parks This goal is based on a standard level of service of neighborhood park acres for 1,000 residents. Olympia has a goal of 1.44 acres per 1,000 residents. Olympia utilizes a 20 -year plan for its parks system. In the next 20 years, the City hopes to realize its current definition of a neighborhood park. Olympia explained to Ernst Young that its park planning utilizes a "systems approach." According to RCW 82.02.050 3(c), Impact fees are permitted to be "used for system improvements that will reasonably benefit the new development." Olympia's parks may be considered appropriate improvements given the definition of System Improvements in RCW Ernst Young LLP Page 30 of 67 State of Washington Performance Audit of Impact Fees 82.02.090: "public facilities that are included in the capital facilities plan and are designed to provide service to service areas within the community at large, in contrast to project improvements RECOMMENDATIONS Cities should consider the use of multiple zones to more effectively demonstrate a clear relationship between where impact fees are collected and spent. Ernst Young recommends that the City of Olympia take both of the following actions in its approach to park planning: 1. Consider revising the "one -half to one mile" and "10-20 minute walk" statements from its definition of a "Neighborhood Park" if the City's intent is to build these neighborhood parks for the entire City rather than for a more localized neighborhood. 2. Consider dividing the City into two park zones to more effectively demonstrate a clear relationship between where impact fees are collected and spent. Two zones for park impact fees would appear to be reasonable, as the City is approximately six miles across and according to the survey: "3 in 5 were "definitely" (36 or "probably" (25 willing to travel three miles to a neighborhood park." If 61% of the citizens are "definitely" or "probably" willing to travel three miles to a neighborhood park, then dividing the City into 2, three -mile wide zones would appear to be appropriate to meet the demands of the City residents. Note: The City of Redmond uses only one park zone as well; however, the audit focused on the City of Olympia because it exhibited the greatest opportunity during the Phase 1 planning process. No detailed performance audit work was conducted at the City of Redmond; however, the City of Redmond should consider the above recommendations as well. POTENTIAL COST SAVINGS AND /OR OTHER IMPACTS There is no direct potential cost savings associated with the recommendations above. However, with the current definition of a neighborhood park, Ernst Young calculated the dollar amount of impact fees that were collected during the performance audit period (2004 -2006) that Ernst Young LLP Page 31 of 67 were potentially spent more than three miles away (Note. Ernst Young used three miles, rather than one -half to one mile, due to the results of the survey discussed above). This dollar figure was calculated by performing the following steps: 1. Randomly selected a sample of 50 neighborhood park impact fees collected during the period (12% of the entire population). A total of 417 neighborhood park impact fees collected during the performance audit period have been expended. 2. Determined the distance between the address where the impact fee was collected and where the impact fee could have potentially been spent within the City on a neighborhood park. Ernst Young used Google Maps to perform this function. 3. Out of 50 samples selected, Ernst Young noted that 80% of impact fees were potentially spent on a neighborhood park more than three miles away 4. Ernst Young then extrapolated the results of the testing to the remaining 417 impact fees collected for the period by determining that 80% of the entire amount was potentially spent on neighborhood parks greater than three miles away. The total dollar figure came to $36,974. 5. Finally, Ernst Young noted that park impact fees have been collected in the City of Olympia since 1993 under the same methods and park definitions. However, Ernst Young did not obtain data outside of the performance audit period (i.e., outside the scope of the audit) and was therefore unable to calculate the total dollar amount of park impact fees spent on neighborhood parks in areas that did not experience growth since the inception of the fee in 1993. Refer to Appendix E Olympia Park Impact Fee Collection and Spending for a detailed map of the sample of 50 park impact fees tested. Exhibit 7 Estimated Olympia Park Impact Fees Potentially Spent on Neighborhood Parks Greater Than Three Miles Away During the Performance Audit Period of 2004 -2006 Estimated Olympia Park Impact Fees Potentially Spent on Neighborhood Parks Greater Than Three Miles Away Ernst Young LLP State of Washington Performance Audit of Impact Fees $36,974 Page 32 of 67 State of Washington Performance Audit of Impact Fees AUDIT AREA 6 FIRE IMPACT FEE SCHEDULE /CALCULATION FINDING The City of Redmond has developed a leading practice in its fire impact fee schedule /calculation. Specifically, the schedule /calculation takes into account the impacts of fire and aid calls by land use type, projected growth by land use type and the fire Capital Facilities Plan (CFP). The City of Olympia's fire impact fee schedule /calculation does not appear to effectively demonstrate the fee's connection to system improvements related to growth, the cost of public facilities necessitated by new development or the availability of other financing. BACKGROUND Original Finding Identification During Phase 1 of the performance audit, Ernst Young noted that the City of Olympia collects fire impact fees at a flat per- square -foot rate ($0.159 per square foot), regardless of the land use type. Therefore, a single family home pays the same rate per square foot as a restaurant or manufacturing facility. The fire impact fee rate was determined by an outside consultant in 1994. Ernst Young noted that the fire impact fee has not been updated since its adoption in 1994. During Phase 1, Ernst Young noted that the City of Redmond assesses fire impact fees based on the type of land use. To determine the fire impact fee that each type of land use pays, the City of Redmond takes into consideration the number of historical fire and aid calls based on the type of land use (i.e., multi- family vs. retail, etc.). Audit Work Conducted During Phase 3 of the performance audit, Ernst Young spent more time working with the cities of Redmond and Olympia to gain a better understanding of how the impact fee calculation and schedule were determined. Ernst Young LLP Page 41 of 67 State of Washington Performance Audit of Impact Fees Fire Impact Fees in the City Olvmr is City of Olympia Planning and Fire Department Ernst Young met with the City of Olympia's Fire Department and Planning Department to gain a better understanding of the impact fee calculation that what was prepared in 1994 to determine the reasoning behind a flat rate for all land uses. The City of Olympia was initially unable to explain how the calculation was determined in 1994, as there were no individuals currently within the City who were working when the calculation was determined Further information was later provided by the City to speak to the independent study that was conducted in 1994 to determine the impact fee rate. The information provided explained how the City's approach was standards driven, using prior years' costs against the total area of fire coverage to define a per- square -foot fee for any new development in the City to maintain that standard level of service. The City maintained that this method allows it to forecast the cost of new fire protection based on prior years' incurred expenses. However, the City did state that this method did not directly relate to its forecasted expenses for fire protection facilities in its capital facilities plan. The City of Olympia also explained to Ernst Young that there have been very few (if any) developer complaints regarding the fire impact fee requiring a detailed explanation of the study. Rate Study Ernst Young was able to obtain a copy of the fire impact fee study prepared for the City by an independent consultant in 1994 Ernst Young reviewed the study to gain an understanding of how the calculation was prepared, and the rate was ultimately determined. Ernst Young noted that the fire impact fee rate per square foot was calculated by the independent consultant using the following steps: 1. Determined the City of Olympia's fire protection facilities inventory as of June 1992 and the 1992 square feet of development served by the current inventory. Using these figures, a fire apparatus per square foot was determined for the City for 1992. See Exhibit 9 below. Ernst Young LLP Page 42 of 67 Exhibit 9 - Fire Apparatus per Square Foo of Development AiparatuS. Per eveloprnerit 7 u��' 3 38,171,851 1 000000078 6 38.171,851 1 .000000157 3 38,171,851 1 .000000078 1 38.171.851 1 .000080028 38,171,851 1 .000000026 Stations Pumpers Rescue Units 1 Aerial Units Hazardous Materiais Units 1 2. Next, the 1992 cost per inventory item was determined, as well as a cost per square foot. See Exhibit 10 below. Exhibit 10 - Capital Cost per Square Foo of Development' po en. Stations Pumpers Rescue Units Aerial Units Hazardous Materials Units .*guarOlfti Oda .000000078 .000000157 .000000078 .000000026 .000000026 Total Cost/Sq Ft 3. Previous years' expenditures for fire protection facilities were then determined. See Exhibit 11 below. Exhibit 11 Previous Expenditures for Fire Protection Facilities ga 1985 1986 1987 1088 1989 1990 |1881 1992 1993 9-Year Total State of Washingto Performance Audit of Impact Fees $.131352 .043175 .00429 1 0104 1 .00208 1 0.1012971 1,684,000 275,000 55,000 400,000 80,000 �37,870 285,940 137,530 47,120 47,280 42,460 109,780 28,308 36,410 4. An annual average of the nine-year total was calculated ($85 Using this number, along with the 1992 square feet of development (38.171.851). an annual average per square foot of development was computed: $0.0022491. Ernst Young LLP Page 43 of 67 State of Washington Performance Audit of Impact Fees 5. Using a discount rate of 7 the net present value of 27.5 years of future payments (at $0.0022491) will total $0 032157 per square foot. 6. Therefore, the impact fee rate is $0.159140 per square foot ($0.191297 (from Exhibit 14) minus $0.032157.)) Upon completion of reviewing Olympia's fire impact fee calculation to arrive at the $0.159 per square foot assessed to developers, Ernst Young could not determine whether Olympia's rate study meets the following requirements by Washington State law: "Should only be imposed for system improvements that are reasonably related to the new development" (RCW 82.02.050). Furthermore, "system improvements" are defined in RCW 82.02.090 as public facilities that are included in the capital facilities plan and are designed to provide service to service areas within the community at large, in contrast to project improvements." "Should not exceed a proportionate share of the costs of system improvements that are reasonably related to the new development" (RCW 82 02.050) A schedule of impact fees adopted for each type of development activity subject to impact fees, including (RCW 82.02.060): The amount of the impact fee to be imposed for each type of system improvement The schedule should be based on a formula or other calculation method The formula should take into account proportions including, but not limited to: 1. The cost of public facilities necessitated by new development 2. The methods by which public facilities were financed 3. The availability of other means of funding public facility improvements 4. An adjustment to the cost of the public facilities for past or future payments either made or anticipated to be made, including payments proratable to the system improvement, along with a. User fees b. Debt service payments c. Taxes Ernst Young noted that the City of Olympia's fire impact fee calculation does not appear to include all required considerations: Ernst Young LLP Page 44 of 67 1. System improvements that are needed due to growth (a requirement of RCW 82.02.050); rather, the calculation uses previous years' expenditures. 2. Proportionate share of the costs of system improvements related to new development (a requirement of RCW 82.02.050), as no such information related to new development is mentioned in the calculation. 3. The formula used to determine the fire impact fee amount does not appear to take the following items into consideration (a requirement of 82.02.060): The cost of public facilities necessitated by new development The methods by which public facilities have been financed The availability of other means of funding public facility improvements 4. The calculation was conducted in 1994 and has not been revised or updated since implementation, even though costs and growth patterns have changed. 5. The calculation includes capital facilities that are currently ambiguous under RCW 82.02.090. As stated in Audit Area 1 of this report, RCW 82.02 090 defines the term capital facilities for fire, transportation, park and school impact fees. However, the definitions provided are ambiguous, resulting in the Cities applying varying interpretations of the definition of a "fire protection facility." Under the same guidelines as those defined in Audit Area 1 of this report, the City of Olympia's use of fire apparatus (i.e., pumpers, rescue units, aerial units and hazardous materials units) as components to its fire impact fee calculation should be considered. Fire Impact Fees in the City of Redmond Next, Ernst Young met with the City of Redmond to gain an understanding of the formula it used to calculate the City's fire impact fee schedule. Exhibit 12 below shows the City of Redmond's fire impact fee schedule for the performance audit period. Exhibit 12 City of Redmond's Fire Impact Fee Schedule 1999 -2006 Y_ a id. In pact:Fe a Single- family 1 $94.48 per residential unit Multi- family I $132.73 per residential unit Office 1 $0.11 per square foot 1 Retail 1 $0.13 per square foot 1 Industrial 1 $0.01 per square foot 1 State of Washington Performance Audit of Impact Fees in order to develop the different rates for land use categories as shown above, the City of Redmond used historical data to determine the number of emergency (fire and aid) calls per Ernst Young LLP Page 45 of 67 State of Washington Performance Audit of Impact Fees land use type. Ernst Young noted that national emergency call data is available; however, it was important for Redmond to use Redmond data instead of national data, given that the jurisdiction has unique fire safety requirements. The City of Redmond determined its fire impact fee schedule (Exhibit 12) by performing the following calculation steps in 1999: 1. Determined the capital facility needs for the fire department as of 1999 Once the capital facility needs were identified, the City of Redmond determined the percentage of those needs that arose due to growth. 2. Obtained 1997 historical incident response (fire and aid) data from the City fire department. Response data is logged by the City of Redmond according to 13 land use categories. The land use incident response data was further organized into the following land use categories: a. Single- family b. Multi- family c. Office d. Retail e. Industrial 3. Determined the increase in annual incident responses due to growth, by land use type 4 Allocated the capital facility needs by incident responses due to growth (calculated in step one above) to each land use type, based on the proportionate number of incident calls per land use type. 5 Calculated the anticipated growth per land use type over a 17 -year period. 6. Determine the impact fee to be paid by each land use type (Exhibit 16) by dividing the capital costs allocated to each land use type (step four) by the anticipated growth per land use type (step five). Ernst Young noted that the City of Redmond's fire impact fee calculation and schedule met all aspects of RCW 82.02.050 and 82.02.060 and demonstrates a leading practice. Redmond's fire impact fee calculation and schedule takes the following items into consideration System improvements that are reasonably related to growth The proportionate share of the costs of system improvements related to new development Ernst Young LLP Page 46 of 67 State of Washington Performance Audit of Impact Fees Finally, the City of Redmond reviewed its fire impact fee schedule in 2006 and noted that updates were needed. Therefore, the schedule was updated in 2006, and new rates were charged for fire impact fees. RECOMMENDATION Other cities within the State of Washington should be aware of the City of Redmond's leading practice for the fire impact fees schedule /calculation. The City of Olympia should revisit its fire impact fee schedule and consider if it is suitable to continue charging the fire impact fee. Specifically, Olympia should more effectively address RCW 82.02.050 and 82.02.060 in its calculation and demonstrate that the fire impact fee charged reasonably relates to system improvements that are reasonably attributable to growth. Additionally, the City of Olympia should consider implementing a periodic review of its fire impact fee calculation and schedule to determine that the fee is still adequate, given the yearly changes in growth expectations and capital facility needs. POTENTIAL COST SAVINGS AND OTHER IMPACTS There are no direct potential cost savings associated with this finding and recommendation. However, Ernst Young looked at and compared the City of Olympia's fire impact fee in two ways: 1. Scenario 1: Ernst Young used the City of Redmond's calculation and growth data to project what the City of Olympia's fire impact fee schedule could have potentially been during the audit period, based on actual costs defined in the City of Olympia's 2003 capital facilities plan. 2. Scenario 2: Ernst Young took the City of Olympia's current fire impact fee calculation and removed the capital facilities in question (i.e., fire apparatus). Ernst Young then took the above two scenarios and compared them to the amount of fire impact fees that were collected during the audit period. Ernst Young LLP Page 47 of 67 Scenario 1: Fire Impact Fee Schedule Calculation Based on the City of Redmond's Calculation Ernst Young used the City of Redmond's calculation, noted as a leading practice in our finding in this audit area, as a way to demonstrate what the City of Olympia's fire impact fee might have been if it was directly tied to its fire CFP. Ernst Young also used the City of Redmond's growth data and historical statistical fire and aid response data to develop a potential fire impact fee schedule for the .City of Olympia. To do this, Ernst Young performed the following steps 1. Used the City of Olympia's Fire CFP from 2003 as a basis for the needed capital facilities. (Note: Ernst Young could not determine the capital facilities in the 2003 CFP that were due to growth; therefore, Ernst Young used 100% of the fire capital facilities from the plan for purposes of this calculation.) 2. Inserted Olympia's CFP data into Redmond's calculation Olympia did not have sufficient historical incident response data (determines the fee each land use type pays) or anticipated growth data to use in the calculation Therefore, for purposes of this calculation, Ernst Young used Redmond's historical incident response data and Redmond's anticipated growth with the following adjustments Ernst Young noted that the City of Redmond is a high growth city, where as the City of Olympia is somewhat of a low- growth city; therefore, Ernst Young did not use 100% of the City of Redmond's growth in the calculation for the City of Olympia. Rather, Ernst Young looked at the population growth between the two cities during the period 2000 -2007 and noted that the City of Olympia's growth was 36% of the City of Redmond's growth, based on population statistics. Therefore, Ernst Young used 36% of Redmond's growth in the calculation and applied this to the growth rates by land use type noted below. Note: The City of Redmond's anticipated growth over the 17 -year period varies by land use type. The information below details the City of Redmond's anticipated growth rate by land use type for the 17 -year period and the City of Olympia's estimated growth rate by land use type at 36% of Redmond's anticipated growth. Single- family 1 Multi- family 1 Office Retail Industrial State of Washington Performance Audit of Impact Fees c f %R tiiorid'.s_ -_.City`of-Qlyrripia's_Estiiiiafed pr as a C'fo�rvth Forecas ted Growth 54% 19% 63% 23% 133% 48% 65% 23% 24% 1 9% Ernst Young LLP Page 48 of 67 After performing the above steps, Ernst Young estimated the potential fire impact fee schedule for the City of Olympia for the performance audit period. Exhibit 13 below shows the potential fire impact fee schedule for the City of Olympia. Exhibit 13 Potential Olympia Fire Anticipated Growth YLaidse Single- family Multi- family Office J _Retail 1 Industrial Impact Fee Schedule Based on Anticipated Growth Equal to 36% of Redmond's State of Washington Performance Audit of Impact Fees Im pact Fee- 1 $82.73 per residential unit 1 $116.22 per residential unit 1 $97.02 per 1,000 sq. ft. 1 $110.99 per 1,000 sq. ft. 1 $11.45 per 1,000 sq. ft. Next, Ernst Young obtained a list of all fire impact fees collected for the performance audit period (2004 -2006) (Note: A total of $491,036 in fire impact fees was collected for the period.) Using this data, Ernst Young recalculated each fire impact fee collected. Using the above fire impact fee schedule, it shows that the City of Olympia under this scenario would have potentially collected $145,723 in fire impact fees, which is $345,313 less than what the City charged under its current calculation. Scenario 2: Recalculation of the City of Olympia's Fire Impact Fee Calculation Ernst Young used the fire impact fee study prepared for the City by an independent consultant in 1994' to recalculate the fire impact fee schedule by removing the capital facility items in question (i.e., fire apparatus, etc.). 1. Ernst Young determined the City of Olympia's fire protection facilities inventory as of June 1992 and the 1992 square feet of development served by the current inventory This was done by removing the capital facilities (Le., fire apparatus) in question, as seen in Exhibit 14 below. Ernst Young LLP Page 49 of 67 Exhibit 14 Fire Apparatus per Square Foot of Developrnent Stations Pumpers Rescue Units 1 Aerial Units Hazardous Materials Units 2. Next, the 1892 cost per inventory item was datannined, as well as a cost per square foot. See Exhibit 15 below. Exhibit 15 Capita Cost per Square Foo of Development' Stations 3 /g |Z 4 i4 3B.171.8§� 38,171,851 38.171.851 30.1-74.851- State of Washingto Performance Audit of impact Fees Apparatus ~x '.r��--�-' Foot 38.171.851 .000000078 1 704000045-7 ,04900-909-7g Total Cost/Sq Ft 0.1313521 izsot 3. Previous years' expenditures forfina protection facilities were then determined. See Exhibit 16 below (same as Exhibit 15 shown above). Exhibit 16 Previous Expenditures for Fire Protection Facilities 1985 1988 1987 1988 1989 1990 1991 1992 1993 1 9-Year Total :Expenditures 37,870 285,940 137,530 47,120 47,280 42,460 109,780 28,308 36,410 $772,698 4. An annua average of the n r tota was calculated ($85,855). Using this number along with the 1992 square feet of development (}8.171.851). an annual average per square foot of development was computed ao$O.0U224S1. 5. Using a discount rate of 7%, the net present value of 27.5 years of future payments (at $0.O0224S1) will total $O.O32157 per square foot. Ernst Young LLP Page 50 of 67 6. Therefore, the fire impact fee rate is $0.099 per square foot ($0.131352 [from Exhibit 19] minus $0.032157).) Ernst Young took the new fire impact fee calculation of $0.099 per square foot of development and recalculated under this scenario what should have been collected in fire impact fees over the audit period. Ernst Young calculated that $305,470 would have been collected; which is $185,656 less than what the City charged under its current calculation. Comparison of Scenarios 1 and 2 above to the Actual Fire Impact Fees Collected Finally, Ernst Young compared the above two fire impact fee calculations to the actual amount of fire impact fees collected by the City of Olympia during the audit period (2004- 2006). Exhibit 17 Comparison of Potential Fire Impact Fees Collected During the 2004 -2006 Performance Audit Period 491,036 Potential Overcharge Potential Undercharge 145,723 345,313 State of Washington Performance Audit of Impact Fees otential Fire tmpact=F_ees ollected=Utnder 'cePario 2 305,470 185,565 Potential. Fire Impact Fees ollected Based :PPiiserOf .updated CFP 7 In looking at the above table, the City of Olympia has potentially overcharged for fire impact fees anywhere from $185,565 to $345,313; however, please note the potential for an undercharge, as stated below in the final comments to this audit area. Lastly, Ernst Young noted that the City of Olympia's fire impact fee schedule /calculation has been the same since its inception in 1994; however, since Ernst Young only had fire impact fee collection data for the audit period, it was unable to calculate an overcharge for the life of the fire impact fee (i.e., 1994 2008). Please note that this is simply an estimated fire impact fee schedule for the City of Olympia, as growth and historical fire and aid call data was not sufficient from the City. The City asserts it has undercharged the fire impact fee. Ernst and Young believes this assertion may be possible based on the fire impact fee calculation the City uses not being tied to its Capital Facilities Plan (CFP) and the City's CFP appears to not be up -to -date. The City is planning on building a new fire station that costs roughly $7.9 million; however, this facility was not included on the 2003 Ernst Young LLP Page 51 of 67 State of Washington Performance Audit of Impact Fees CFP. Had the City tied its impact fee calculation to its CFP and updated its CFP, it is possible that the City may have undercharged, rather than overcharged. Although, the City provided Ernst Young population statistics, fire and aid call data, and construction data, it was insufficient to validate the City's assertion. Ernst Young LLP Page 52 of 67 City of Tukwila Finance and Safety Committee FINANCE AND SAFETY COMMITTEE Meeting Minutes November 18, 2008, 5:00 p.m.; Conference Room #3 PRESENT Councilmembers: Dennis Robertson, Chair; Pam Linder and Kathy Hougardy Staff: Rick Still, Lisa Verner, Gail Labanara, Viki Jessop, Shawn Hunstock, Mary Miotke, Nick Olivas, David Haynes, Derek Speck, Rhonda Berry and Melissa Hart Guests: Mark Segale, Bill Arthur and Chuck Parrish CALL TO ORDER: Chair Robertson called the meeting to order at 5:04 p.m. The agenda was amended to reflect the new order of business as presented below. I. PRESENTATIONS No presentations. II. BUSINESS AGENDA A. Interlocal Aereement to Provide Tourism and Marketing Services to the City of Des Moines Katherine Kertzman indicated that the proposed agreement is very similar to the previous interlocal agreement with the City of Des Moines. The notable change is the term of the agreement, which went from a three -year term to a one -year term that will renew for subsequent one -year terms unless otherwise terminated with 120 days notice. Des Moines's payment will remain the same, 100% of lodging tax collected per year. UNANIMOUS APPROVAL. FORWARD TO NOVEMBER 24 COW FOR DISCUSSION. B. Impact Fee Ordinances for Fire and Parks Staff reported that Administration is evaluating new sources of revenue for the City. One such source is impact fees; through which new development helps to pay for capital facilities necessitated due to the new growth. The Growth Management Act allows impact fees for parks services and fire services, in addition to traffic impact fees, which the City has already enacted. Lisa Verner stated the regulations regarding impact fees state that the amount collected must be used for capital facilities and the amount collected cannot fund a 100% of a project. Since impact fees cannot fund 100% of a project, prior to impact fee implementation, the City would need to indicate the fee split, such as 90% impact fees and 10% City funding. The information proposed by staff is based on the City of Redmond's model. The State of Washington conducted a Performance Audit of impact fees which stated, "The City of Redmond has developed a leading practice in its fire impact fee schedule /calculation." Committee members asked clarifying questions from staff and recommended the following information be provided to Council at the Committee of the Whole Meeting: Do neighboring cities collect impact fees and what are their impact fee /city splits? What is the impact fee /city funded split for the City of Redmond? How were the percentages achieved in the calculation worksheets? Committee Chair Robertson requested staff to simplify the information provided and reorganize the packet of back -up documentation so the presentation is more straightforward. FORWARD TO NOVEMBER 24 COW FOR DISCUSSION.