What Are Transportation Impact Fees? • One time charges paid by new development • Authorized by the 1990 GMA as a funding source for transportation improvements • Funds improvements that add capacity to the transportation network • Transportation impact fees can only be used to fund facilities that serve new growth, not for existing deficiencies 1 What Are Transportation Impact Fees? • Must be used within 10 years on public streets and roads • Projects must be in the capital facilities element of a comprehensive plan • Some communities have begun funding more multimodal projects with transportation impact fees • Alternative to SEPA mitigation for ‘system improvements’ 2 Most urban jurisdictions have them, but rates vary widely 16000 14000 12000 10000 8000 6000 4000 2000 0 3 Cost Allocation Methodology Eligible Projects Portion of Projects Addressing Existing De?ciencies Portion of Projects Addressing Growth Portion of Projects Portion of Projects Accommodating Accommodating City Growth Non-City Growth Divide by Growth in Trips to Get Cost Per Trip I (I Shifting our focus to Eligible Projects Sources: Bicycle Master Plan Freight Master Plan Pedestrian Master Plan Move Seattle Plan Capital Improvement Program 6 Cost Allocation Methodology Eligible Project List $1.7 Future Growth Existing De?ciency $1.4 $272.7 Inside City Growth Outside City Growth $968.5 $451.5 Eligible Impact Fee Costs Other Funds $968.5 Needed $724.1 • Fees could vary by area of the city in recognition of how transportation impacts are different • Urban Centers, Urban Villages, and areas nearby rail generate fewer auto trips, given greater densities and transit availability 8 Mode Share LOS Relative footprint of a person trip by mode Drive alone Bibclists Transit Walking 0 180 12. 6 5 .4 0.2 58qft Developing the Fee Schedule • Translates “cost per trip” to actual land uses • Basis is PM peak hour person trip generation • City council can define land uses • Adjustments recommend for Urban Centers, Urban Villages, and areas near light rail to account for lower drive alone percentages 10 Transportation Capital Funding Review Presentation to the Seattle City Council Sustainability and Transportation Committee August 6, 2019 Questions  How do Seattle and other jurisdictions fund their transportation capital improvements?  How do these funding strategies impact cost burdens to households at different income levels?  How does cost burden differ in jurisdictions that emphasize impact fees as a revenue stream? 2 Approach: Capital Funding  Review capital improvement programs (CIPs) for Seattle and comparison jurisdictions to:   Identify transportation capital revenue sources Identify funded transportation expenses Common Revenue Sources General fund taxes • Property • Sales • Business and occupation Federal and state grants REET I and II Transportation impact fees Debt and bond proceeds Levies or other local funds Transportation Benefit District • Vehicle Licensing Fees • Sales Tax Gas tax 3 I. Transportation Capital Funding in Seattle and Comparison Jurisdictions Seattle Transportation Capital Revenues Voted transportation levies: Move Seattle Grants/Intergovernment al transfers: Federal, State, County, Sound Transit REET: Real Estate Excise Tax I and II Taxes and Fees: User fees and camera ticket fees; drainage/ wastewater fees Transportation Benefit District: Vehicle Licensing Fees 5 Bellevue Transportation Capital Revenues Grants/Intergovernment al transfers: Grants, State shared revenue, Interlocal contributions, Transfer from other City funds Taxes and fees: Property tax, Sales tax, B&O tax, Annexation sales tax Impact fees: Transportation impact fees Other sources: Rents/leases, Private contributions 6 Kent Transportation Capital Revenues Taxes and Fees: Street B&O tax, Solid waste utility tax Impact Fees & Other Mitigation Revenue: Transportation impact fees, Mitigation funds Other Sources: Misc. charges and investments, General Fund, Other Street Funds, Local Improvement District funds 7 King County Transportation Capital Revenues Road Fund: Property tax (unincorporated areas of King County), State gas tax (MVFT), General county contributions Transportation Impact Fee: No longer used as of 2017 Other sources: Sale of land, Miscellaneous 8 Portland Transportation Capital Revenues 6% of revenue ($25 Million) comes from system development charges (similar to impact fees) 9 Per Capita Transportation Capital Spending Seattle Bellevue Kent Unincorporated King County Portland* Average Annual transportation Capital Spending Average Annual Population Average Annual Per Capita Transportation Capital Spending $261,006,180 $52,136,174 $13,804,000 666,000 136,320 123,280 $392 $382 $112 $48,736,514 250,282 $195 $83,526,414 629,966 $133 * Use caution when comparing results in Portland to Seattle since transportation capital projects are funded, organized, and reported differently in Oregon. Sources: OFM, 2018; City of Seattle, 2018; City of Bellevue, 2018; City of Kent, 2018; City of Tacoma, 2018; King County, 2018; City of Portland, 2014-2018; BERK, 2018. 10 Transportation Capital Cos?r Burden Analysis Approach: Define Household Types  Upper middle-income homeowner household    Income: 150% of Area Median Income (AMI) Owner of median price single family home (based on jurisdiction) Owns two cars  Moderate-income renter household    Income: 80% of AMI Rents typical apartment in a newer building, built year 2000 or after Owns one car  Low-income renter household    Income: 50% of AMI Rents typical apartment in an older building, built prior to year 2000 Owns one car 12 Identify Costs to Households Direct Costs Potential Indirect Costs  Ongoing or annual taxes and fees paid directly by households:  Revenue from taxes or fees on development and real estate transactions:     Property taxes* Vehicle fees Gas tax Sales tax on household consumption   Impact fees REET  Can raise the cost of housing  Potentially passed onto households through increased housing costs  *For renters: Assumes property taxes passed on in full on a per unit basis 13 Revenues not considered in cost burden  Federal and state grants  Irregular and associated with state or federal taxes that are paid by all  MVET   Regional Transit Authority Motor Vehicle Excise Tax Applies to Sound Transit; revenues are not directed toward cities and counties  SEPA mitigation:  May impact housing costs but do not have a standard rate schedule  Sales tax on construction:  Another potential indirect cost - Not calculated  Some LTGO Debt  CIPs do not clearly indicate revenue sources for paying off debt. It is possible some of these debt payments are not accounted for. 14 Direct Cost Burden: Upper Middle-Income Upper Middle-Income Household Direct Cost Burden (2018) 15 Direct Cost Burden: Moderate-Income Moderate-Income Household Direct Cost Burden (2018) I Property Tax Seattle I Sales Tax I Motor Vehicle Fuel Tax Vehicle BeHevue Licensing Fees Move Seattle Levy King County Direct Cost Burden: Low-Income Low-Income Household Direct Cost Burden (2018) $70 I Property Tax Seattle I Sales Tax I Motor Vehicle Fuel Tax Vehicle BeHevue Licensing Fees Move Seattle Levy Kent King County $89 Comparison: Direct Household Costs Estimated Direct Annual Household Cost Burden for Transportation Capital Projects, 2018 Upper Middle Income Moderate Income Low Income Seattle $417 $189 $169 Bellevue $111 $53 $44 $44 $20 $19 $375 $144 $89 Kent Unincorporated King County Sources: OFM, 2018; City of Seattle, 2018; City of Bellevue, 2018; City of Kent, 2018; City of Tacoma, 2018; King County, 2018; BERK, 2018. 18 Potential Indirect Costs: Upper-Middle Income (Owner) Potential Indirect Costs to Upper Middle-Income Owner Households (2018) 19 Potential Indirect Costs: Moderate-Income (Renter) Potential Indirect Costs to Moderate-Income Renter Households (2018) 20 Potential Indirect Costs: Low-Income (Renter) Potential Indirect Costs to Low-Income Renter Households (2018) 21 Comparison: Potential Indirect Costs Only Estimated Potential Indirect Annual Household Cost Burden for Transportation Capital Projects, 2018 Upper Middle Income Moderate Income Low Income $77 $22 $17 Bellevue $393 $169 $161 Kent $293 $139 $0 $4 $1 $0.5 Seattle Unincorporated King County Sources: OFM, 2018; City of Seattle, 2018; City of Bellevue, 2018; City of Kent, 2018; City of Tacoma, 2018; King County, 2018; BERK, 2018. 22 Total Potential Cost Burden: Seattle Total Potential Cost Burden as % of Household Income by Household Type (2018) 23 Total Potential Cost Burden: Bellevue Total Potential Cost Burden as % of Household Income by Household Type (2018) 24 Total Potential Cost Burden: Kent Total Potential Cost Burden as % of Household Income by Household Type (2018) 25 Total Potential Cost Burden: Uninc. King County Total Potential Cost Burden as % of Household Income by Household Type (2018) 26 Findings Findings  Seattle has higher direct household cost burden across all household types.  Bellevue and Kent have higher potential indirect costs, due to reliance on impact fees and REET.  Total potential cost burden for households in Seattle and Bellevue are similar.  However, not all households in Bellevue would bear the potential indirect costs of impact fees. 28 Who could bear the cost of impact fees?  Impact fees would increase the cost of new development in Seattle.   There is uncertainty regarding how these costs could affect housing production overall. If housing production decreases as a result of impact fees, then all renters and homebuyers could see their costs rise dur to increased competition.  Housing developers could potentially pass on the costs of impact fees to renters or home purchasers, depending on market conditions.   Households renting or buying new housing would be more likely to see their costs rise. Residents that rent or buy older housing would be less likely to see their costs rise. 29 Transportation Impact Fee Implementation Three Steps: Step 1 - Comprehensive Plan Amendments • Incorporate a list of projects eligible for impact fee expenditures into the Comprehensive Plan • SEPA threshold determination appealed to the City Hearing Examiner • Hearing Examiner decision on appeal expected by midAugust Step 2 – Fee Schedule and Program • Policy and regulatory decision on a fee schedule, exemptions, and other procedural requirements Step 3 – Budget Amendments • Amendments to the proposed 2020 budget to appropriate anticipated revenue and authorize expenditures Next Steps - Contingent on Hearing Examiner Decision • August – September • Committee discussion and action on Comprehensive Plan amendment legislation and • Discussion and potential action on implementing regulations • September - October • Discussion of potential amendments to the Mayor’s proposed budget based on an impact fee program • November • Potential Full Council action on Comprehensive Plan amendments, implementing regulations, and associated budget amendments