Woodland has reinstated a one-year program city officials believe could bolster development in the city by reducing the upfront costs builders pay before breaking ground.
But just how much of an uptick in new construction the city will see as a result of the program is a question mark, said Carolyn Johnson, Woodland’s community development director. A prior version of the program was never used, despite being around for about two years.
“These programs are being put in place as a way to spur development,” Johnson said. “Whether we will see that is questionable.”
Questions aside, Woodland wants to try impact-fee deferrals again in earnest.
The program gives developers and builders the opportunity to defer impact fees they pay to support fire, school and park services. Deferment applies to residential, commercial and industrial projects, giving developers the ability to lease or sell their buildings before paying thousands of dollars in fees.
Under Woodland’s municipal code, developers of single-family residences pay $5,396 in impact fees when the city issues the project a building permit. The code calls for developers of commercial or industrial properties to pay fire impact fees at a rate of 51 cents per square foot.
The practice has become an attractive tool in development-hungry small cities following the collapse of the real estate market in 2008 and the resulting downturn in the construction industry.
Originally approved in 2009, Woodland’s first iteration of the program expired at the beginning of the year. City leaders approved an extension of the program through December 2013, and it went into effect Oct. 15.
Officials say they’ve taken steps to ensure builders eventually pay the fees, even if projects go belly up once built.
Instead of paying impact fees, builders will sign an agreement with the city, allowing the city to place a lien on the property for the amount of the suspended fees. The agreement locks in the terms of the fee when the document is signed.
The developer is responsible for an upfront $230, the cost of processing paperwork and reporting lien fees.
Elsewhere, impact-fee deferrals have been a mixed bag.
• In 2010, Washougal launched a three-year pilot program, which also gave developers the option of deferring the fees until buildings were occupied. Since then, only a handful of developers have used the program.
• La Center also has a fee deferral program, which has no expiration date. One developer is currently using that program.
• Ridgefield doesn’t have a citywide program, but it has entered into developer agreements covering two subdivisions.
When Woodland’s program expires at the end of 2013, city officials will again re-evaluate whether to extend it for another year, said Woodland Mayor Grover Laseke.
That decision will partially depend on the state of the economy and whether new construction starts have shown signs of improvement.
“I guess I won’t know how popular or successful the program will be until it gets out there,” Laseke said.