Seattle leader wants developers to help pay for transportation projects

Seattle City Councilmember Alex Pedersen wants real estate developers to pay a fee for each unit they build to help fund city transportation projects, and he has a poll showing 75% of residents support his idea.

Pedersen, who chairs the council’s Transportation and Public Utilities Committee, commissioned SurveyUSA to survey 1,000 Seattle adults in May, asking them policy questions to gauge the sentiment of city voters.

Among several transportation issues raised in the poll, Pedersen asked respondents whether they would support impact fees for developers to fund transportation projects. The question also included this hypothetical: “For example, a real estate developer may have to pay $8,000 to the city government on a condominium project the developer hopes to sell for $800,000.”

The poll found that 42% strongly supported this impact fee and 33% somewhat supported it, for a combined support of 75%. The poll has a credibility interval of plus or minus 3.8 percentage points.

Impact fees are one-time charges imposed on new development projects to help fund certain construction projects, including schools, transportation, parks and fire stations. In Washington state, they’re fairly common, with more than 70 municipalities imposing them already, including Bellevue, SeaTac and Renton.  

As transportation chair, Pedersen sees creating an impact fee in Seattle as a way to address a bridge maintenance backlog estimated at $34 million in 2020, which included the cumbersome, yearslong closing of the now-reopened West Seattle Bridge.

Last year, Mayor Bruce Harrell rejected Pedersen’s efforts to issue up to $100 million in bonds to address bridge repairs, noting there were not enough projects ready for funding to justify the debt. 

It’s unclear if the mayor would back legislation to create an impact fee. 

“The mayor has not yet received Councilmember Pedersen’s legislation, but does look forward to reviewing it and engaging with housing and transportation stakeholders as this effort moves forward,” Karissa Braxton, a spokesperson for Harrell, wrote Tuesday. 

Pedersen said the impact fees would cover more than bridge repairs, and could fund things currently paid for with property taxes like bike lanes, bus lanes and roads, pointing to a study the city published in January.

“What it could do is become a more progressive revenue than just always using property tax,” Pedersen said. “And property taxes might actually go down over time.”

According to a March presentation by council central staff, the fee could bring in between $200 million and $760 million over the next 10 years if the city sets a similar rate to that in other Washington cities, which averages a little over $5,000 per unit and is capped at $12,000 per unit by state law. 

While Pedersen hasn’t proposed a specific rate yet, he said Friday that it would likely be between $5,000 and $8,000. The poll question said $8,000.

“Most cities charge well below the maximum, and I imagine Seattle would charge way below the maximum,” Pedersen said.

The council member hopes that money could help offset some of the $930 million collected in property tax for the Move Seattle levy, which covers transportation costs and was approved in 2015 and will face renewal in 2024. 

Pedersen, who took office in 2020 and is not running for reelection, is not the first council member to suggest an impact fee. 

The council has been discussing this idea since at least 2014, and in 2017, Councilmember Lisa Herbold co-authored an opinion piece for The Seattle Times with then-Councilmembers Mike O’Brien and Sally Bagshaw arguing the money could “help fund our schools, manage the demands of an increasingly strained transportation system and meet our need for open space” as the city’s population grew.

So far, the council hasn’t taken all the steps necessary to put an impact fee in place. To do so, the city has to finish an impact study, amend the eight-year comprehensive plan and then pass an ordinance. 

The city completed its required impact study in January, and council staff published a “determination of nonsignificance,” meaning the proposed change would not have a significant environmental impact. In March, a group of developers appealed that decision for the second time since 2018, saying the city is not adequately considering environmental impacts. 

Housing groups also oppose the fee overall, citing concerns about the cost of developing. 

“We recognize that housing and transportation infrastructure are interdependent issues, however, now is not the time to consider new fees on housing production,” Aliesha Ruiz, Seattle government affairs manager at the Master Builders Association of King and Snohomish Counties, wrote in an email Wednesday. 

While Pedersen says he has “some confidence” that the appeal, which is currently in the city’s Office of Hearing Examiner, will be “resolved in the city’s favor,” it could still delay the other steps needed to pass an impact fee.

The council is limited to one amendment to the city’s comprehensive plan per year under its rules. Pedersen was hoping to “piggyback” on a rezoning amendment this June. With the appeal ongoing, it’s likely Pedersen will have to wait until the fall when the budget is up for debate.

He’s hoping the council would then pass an ordinance before his term expires at the end of the year and before the expiration of the Move Seattle levy.

Asked if he thought the council would be on the same page to approve an ordinance in that little time, Pedersen said he “believes there’s a consensus that our transportation needs more funding.” 

Tuesday, Herbold said she “absolutely” still supports an impact fee to invest in transit. 

But Pedersen and Herbold face opposition from developers and also from some housing advocates, who are concerned that imposing a fee could dissuade developers during a housing shortage. 

In March, a representative of Seattle for Everyone, a group of housing advocates, urbanists, nonprofit and commercial developers, sent a letter to council members and other city officials discouraging them from imposing the fee, noting concerns about affordable housing.

“Our members have a range of views on transportation impact fees,” Brady Nordstrom, a coordinator with Seattle for Everyone wrote. “We agree, however, that now is not the time to consider adding these new fees to housing in Seattle.”

In a full statement signed by groups like the Downtown Seattle Association, The Urbanist, Seattle Metropolitan Chamber of Commerce and several developer groups, the coalition said that even those who support the concept of an impact fee don’t believe the city has a good enough plan to move forward.

“We don’t believe that there is consensus on the fee rate schedule or the use of dollars that would be captured,” the March statement to council reads.

Before drafting the ordinance, the council could discuss exemptions to the fee, and, according to Herbold, would consider more thoroughly the impact on housing and homelessness. Pedersen said Wednesday that Seattle’s fee would likely exempt low-income housing and child care facilities.

Pedersen’s poll asked respondents if they would still support the impact fee if it raised housing costs, 55% said they would still strongly or somewhat support the fee. That number rose to 67% when the poll asked if they would support the fee to prevent an increase in property or sales taxes to earn the same revenue.

Pedersen paid $20,000 for the poll using his council office budget, describing it as “the people’s poll” and he said it should be a standard practice by the city to provide unbiased, scientifically valid data not tied to a specific campaign or issue.  

“I think we should be democratizing the data,” Pedersen said in an interview Friday, calling for the city to do annual polling.

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