Cities, developer give waiver programs mixed review
A plan promoted by Clark County Commissioner David Madore to boost jobs by eliminating traffic and permitting fees for all non-housing projects is a tough sell among some commercial developers who would benefit from the construction work.
Experts in land use and development say the small fee cuts — typically costing $25,000 to $300,000 per project, based on size — won’t sway employers who are looking to build multimillion-dollar operations. Leaders of those companies base their decisions on such things as proximity to their supply chain, the area’s trained workforce, demand for their products and the construction timeline.
“People don’t make the decision based upon your fee,” said Eric Fuller, president of commercial real estate firm Eric Fuller and Associates Inc. “It’s more about predictability and time.”
The county’s own research, obtained by local attorney John Karpinski, appears to support Fuller’s view. The county surveyed applicants on 57 projects that had received $360,000 in fee waivers between October 2010, when a “fee holiday” was adopted by the county commission, through the following October. Two-thirds of the 47 applicants who responded to the survey said the fee waiver made no difference in the location or timing of their project, according to the undated document. Forty-seven new jobs were created, with the possibility of 34 to 90 more new jobs. Eighteen of the applicants learned of the fee waiver at the permit center, and the projects were expected to generate $150,000 in new revenue from various taxes between 2011 and 2015.
But some contractors say doing away with the fees provides an incentive for businesses looking to relocate in the area.
“We need to keep the construction costs down for people bringing jobs here,” said Larry Schlecht of Schlecht Construction. “It’s another thing that can make (Clark County) more competitive.”
Among those against the measure, Ron Frederiksen, president of RSV Building Solutions, said removing development fees could mean further staff cuts at the county’s already sluggish development department, delaying projects and increasing the cost of development.
“The county is really struggling now to review projects and get the permits out in a good timeline,” said Frederiksen, whose company builds office, retail and industrial buildings.
Frederiksen is hardly alone in his concerns about Madore’s proposal, set to go before the Board of Commissioners on June 11, to eliminate fees such as those commonly levied by cities and counties statewide. Others in the county’s development-related industries worry that traffic projects and other infrastructure improvements required by the state Growth Management Act might not be completed, potentially triggering a development moratorium. Last week, four Clark County elected officials told the three-member commission they worried about how the county would pay for development services and infrastructure improvements, and expressed skepticism about whether the fee waiver would “open the floodgates” for jobs, as Madore hopes.
Madore said at that meeting that he doesn’t know if the fee waiver, which will also be granted to new churches and nonprofit facilities, will bring new jobs to Clark County. The resolution eliminates a requirement in the existing, temporary “fee holiday” that requires employers who receive a fee waiver to generate at least 10 jobs that continue for two years or more.
Madore did not respond to requests for an interview for this story. Commissioner Tom Mielke. also a Republican, appears to support the new proposal, which would tip the three-member county board to a yes vote on the measure.
Madore has been pushing to remove the fees as long as the county’s unemployment numbers remain above the state level. Commissioner Steve Stuart, the board’s only Democrat, has pushed back with slight concerns over certain retail developments, although he appears to agree on the principle of the fee reduction.
Worries about staff cuts
Frederiksen, whose company builds for employers who will add new jobs, fears potential impacts to the county personnel who review project plans and issue permits to build could lead his clients to face higher costs if the measure goes through.
He dreads further road blocks to construction for developers and their commercial clients — businesses that are trying to adhere to time-sensitive schedules.
“My concern is, you cut all their (the county’s) funding and now it even gets worse,” Frederiksen said.
Madore has said his alternative to reducing staff would be to finance permit-processing services using money from the county’s general fund. He would pay for traffic improvement projects by dipping into the county’s road fund. Those changes would likely mean cutting public services that are financed through the road fund and also the general fund, two-thirds of which goes to public safety.
One county official acknowledged the trade-off that would be in play, saying the proposal represents a major shift in policy.
“At the time the traffic impact fee program was created, much of the county’s philosophy was that growth should pay for growth,” said Peter Capell, the county’s public works director. “But now, with high unemployment and an interest in doing things to create jobs, maybe there’s more of an interest in the public paying for it.”
But prominent Vancouver land-use attorney Steve Horenstein said not everyone believes county residents should subsidize development-related traffic improvements and fees, even if the development does generate new jobs.
“Whatever the numbers are, what you have is the taxpayer disproportionately funding development,” he said.
Madore’s proposal to resuscitate county employment by waiving development and traffic impact fees would expand on a program already in place to waive fees on commercial projects. But unlike the current plan, which requires proof that an employer has added 10 new workers within two years of project completion, Madore’s plan would waive fees regardless of how many jobs will be housed in the finished project. It also would eliminate fees on facilities built for nonprofits and churches, and waive all fees for retail projects, which are required to pay 50 percent of the fees under the current plan.
Madore has offered no projections of the job growth he expects by eliminating fees. Karpinski, the Vancouver attorney who is opposed to the fee waiver, says simply that waiving fees won’t create jobs.
“I want to get to an agreed set of facts,” he said. “Then you can make a policy decision based on the facts. The fact is that it doesn’t work.”
Horenstein likewise doesn’t expect the fee waiver to be a major job producer. “We only have to look at how successful the current fee waiver has been to tell us whether it will generate jobs,” he said. “It’s not a major factor, but a minor factor in whether projects go forward.”
Fee holiday impact
Since the first fee holiday was adopted in 2010, the county has earmarked more than 200 commercial projects for fee waivers that add up to approximately $430,000 in total fees waived. That number may increase to more than $452,000 if projects started in 2012 continue development in 2013, according to Marty Snell, director of Clark County’s Community Development Department.
If the new proposal is adopted, the waiver on development fees would take effect within 30 days of passage.
It could take longer to change traffic impact fees, a decision that must be approved by the state’s Growth Management Hearings Board.
In the meantime, the proposed traffic fee cuts also are drawing some criticism from those in the commercial building industry who worry the loss could trigger land-use moratoriums. The fees help pay for the county road improvements required to happen in concurrency with new development, a rule set forth by the state’s Growth Management Act.
“We still have to comply,” Horenstein said, “Eliminating traffic impact fees could very quickly put the county in a moratorium.”
Paid upfront, the fees offer the county more flexibility to launch the roadwork needed to keep up with the traffic generated by new development, which may otherwise overwhelm the existing roads with congestion.
For example, new development in the County’s Salmon Creek area caused east-west route Northeast 134th Street to become one of the area’s most traffic-clogged arterials, prompting the state- and county-funded $133 million Salmon Creek Interchange project, which includes a freeway overpass at 139th.
The majority of the project was financed with about $34.7 million from the county’s road fund and public works trust fund, with about $820,000 coming from traffic impact fees, Capell said. State and federal funding paid for the rest of the work, set for completion in early 2014.
Some in the commercial real estate industry see merit in the potential developments that spring from the proposed fee waiver.
As vacant lands develop, the projects will increase the value of property taxed by the county, said Roger Qualman, a commercial real estate broker and chief operating officer of NAI Norris, Beggs & Simpson.
“That’s beneficial to the county and the school districts, the port and everybody on the list of tax beneficiaries, and they (the developers) pay the sales tax on all the building materials,” he said.
Qualman predicted the proposal to waive all fees would encourage development, although “it’s not a big enough item to create a tipping point,” he said.
Frederiksen said he would advise the commission to resume charging fees and use the revenue to streamline the county’s permitting process.
“What kills the project is the time and confusion that is sometimes generated by conflicting information from the building and development department,” he said. “Keep the fees, but improve the process. Make it work better.”
Cami Joner is a Columbian business reporter. 360-735-4532, http://twitter.com/camijoner, http://www.columbian.com/weblogs/strictly-business, or cami.joner@columbian.com
