Postponing or outright eliminating development-related fees comes with mixed results for Clark County cities that offer the incentives, even though the approach is championed as a potential boon for business development by some county officials.
City leaders say that while they’re optimistic about a return to building activity following a multiyear downturn in real estate activity, they’re also uncertain about what effect waiving building fees has in spurring new development.
“I am convinced the bigger issue is a predictable and quick permitting process,” Camas Mayor Scott Higgins said.
Most developers are interested in knowing their building permits will be processed in a timely fashion, he said. Other incentives — such as not charging for business license fees — are in place to differentiate Camas from its neighbors.
While Camas provides developers 50 percent reductions to their system development charges and transportation impact fees, the program won’t last beyond 2013, Higgins said.
Nonetheless, the city has been successful this year in attracting new development. Fisher Investments announced last month it would double the size of its Camas campus by developing a companion building, a project that’s expected to start taking shape later this year.
But Higgins said the city’s short-term fee incentives had little to no impact in swaying Fisher Investments to expand in Camas. The city approved the reductions, in particular to system development charges, last year.
In general, development fees are used to cover the costs of maintaining roads and sewer lines, with the assumption being that new development adds capacity to the existing infrastructure. Cutting or otherwise reducing when builders pay the fees is intended to create an incentive for new development, an idea promoted by Clark County Commissioner David Madore as a way of fostering business development.
Many remain unconvinced that waiving fees is something that could be done in the long term, however.
Higgins said it’s untenable to waive certain fees for multiple years because the city would inevitably have to pay for them down the road.
“If there’s a reduction (to the fee),” Higgins said, “then the city has to find another way to pay for it.”
If there’s a one-size-fits-all approach to enticing development, the county hasn’t found it. For each city, there’s a different approach to sweetening a land deal.
Battle Ground, for one, allows builders to ask for what’s known as an alternative engineering analysis. The analysis takes a second, independent glance at a building’s water use, so the fees paid accurately reflect what’s being used.
Laurelwood Public House & Brewery used the program, and its fees were slashed in half, Battle Ground’s Community Development Director Robert Maul said.
Elie Kassab, a Vancouver-based developer and president of Prestige Development, said incentives are a secondary consideration for many developers. He points to Vancouver, a city that doesn’t eliminate development fees, as the best place in Clark County to build.
Even cities that don’t waive or defer fees tend to work with developers to keep construction costs down, he said.
As the developer of Prestige Plaza, a $16 million urban apartment complex going up near Vancouver’s former City Hall, Kassab said the city offered to provide credits for system development charges and transportation impact fees. The concessions have saved the project between $200,000 and $240,000, Kassab said.
Despite not waiving development fees, Vancouver is the “friendliest” city in expediting the permitting process, Kassab said.
“Time is money,” he said. “If they delay you a year or more, it can cost you 10 to 20 percent.”
In Washougal, where development is expected to pick up this summer, the city has temporarily eliminated some of its development fees, resulting in a loss of $7,192.
In total, the city has budgeted a $76,000 deficit to pay for the temporary program. Washougal will make up the difference by transferring unrestricted and unallocated reserves to its general fund.
The move, known as a “fee holiday,” isn’t expected to have a significant impact on Washougal’s budget, Mayor Sean Guard said.
Some cities don’t expect developers to pay fees until people start occupying buildings. La Center is one such city, where officials say the program has gone off without a hitch since it was enacted in 2009.
Jeff Sarvis, the city’s public works director, said the program makes sense because buildings don’t affect a city’s infrastructure until people move into them.
“The impact on the system doesn’t really occur until there’s a home in there and people occupy it, and there are kids in the park and people are using the sewer system,” he said.
Sarvis said the program has been working, so the city plans to continue using it in the future.
Ridgefield has a similar program in place, which it offers to a handful of subdivisions under construction.
With a variety of programs offered throughout the county, Kassab, president of Prestige Development, said it’s up to developers to do their own due diligence.
“A good developer should call and ask the county or city what they can do for them,” he said.