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Do Clark County fee waivers add up?

Clark County works to determine if politically charged program actually boosts development and jobs

By , Columbian Education Reporter
Published:
2 Photos
Adam Kozera of C&E Rentals walks through the construction site Monday of a new Marshall's store at Hazel Dell Marketplace. The project benefited from Clark County's fee waiver program, which eliminates fees for all non-residential projects in unincorporated areas.
Adam Kozera of C&E Rentals walks through the construction site Monday of a new Marshall's store at Hazel Dell Marketplace. The project benefited from Clark County's fee waiver program, which eliminates fees for all non-residential projects in unincorporated areas. (AMANDA COWAN/The Columbian) Photo Gallery

Proponents of Clark County’s blanket fee waivers have made some big claims to tout the program’s success.

“The floodgates to local private jobs are open and Free Enterprise is choosing Clark County,” Republican Clark County Councilor David Madore recently wrote in a Facebook post touting the program. Madore introduced the program waiving traffic impact and application fees for all nonresidential development in unincorporated areas in 2013.

But experts at Clark County and in the private sector continue to say the program has played a small role — if any at all — in spurring growth and creating jobs in unincorporated areas. A new assessment is underway.

“I applaud Councilor Madore’s intention to promote economic activity in Clark County’s unincorporated area,” said Republican Auditor Greg Kimsey, a longtime critic of the program. “However, there is no evidence the ‘Job Creation’ resolution has achieved this.”

And indeed, mounting evidence points to the fact that the county’s fee-waiver program is less an economic driver than it is a political talking point.

“The fact is, you can’t look at the program and tie it to a result,” County Finance Director Mark Gassaway said.

In the nearly three years since the policy was adopted, Clark County has waived fees for nearly 370 projects, totaling about $3.9 million in application fees and a projected $8.3 million in traffic-impact fees. Instead of the commercial developers paying, residential developers foot the bill for plan reviews and traffic improvements. In return, commercial developers have claimed they will create 3,157 jobs, drive an additional $14.3 million in local sales taxes into the economy and increase property tax revenue by $2.4 million from 2014 to 2019.

Clark County is currently in the midst of determining if those numbers hold up, studying the actual income from several of the largest fee-waiver projects, as well as looking into whether developers created as many jobs as they claimed.

“What we’re trying to do is compare the numbers in the fee-waiver program with actual results on the ground,” Acting County Manager Mark McCauley said. “That’s not an insignificant task.”

And then there’s the big question: Depending on the results of this study, will this new Clark County council repeat its pattern of repealing controversial policies implemented in recent years? If it remains on the books, will it be changed?

Answers may come in the next few months.

“I haven’t seen all the data that I want to see on the program,” Republican Councilor Julie Olson said. “I just want the questions answered.”

A second look

As Clark County completes its latest review of the program, there’s already evidence that the fee-waiver program is not working as it was advertised by Madore.

The Clark County Auditor’s Office released an audit of the program in November 2014, describing a potentially unsustainable program that at best only accelerated construction projects that would have occurred anyway. Furthermore, the audit report found the majority of jobs created as a result of projects using the fee-waiver program are in low-paying retail, food, consumer service and entertainment industries.

“National research on job incentives programs casts doubt on the overall impact of such programs on job creation in these industries, finding in some instances that up to 90 percent of jobs credited to program incentives would have occurred anyway,” the report said.

The report recommended the county council consider eliminating the program, or else make significant changes to improve performance measures and target industries with greater economic impact. But nothing was changed.

Kimsey’s opinion has not changed since the report was released nearly two years ago. “To protect taxpayers’ interests the program must be changed to include performance and accountability measures,” he said.

Community Development Director Marty Snell is currently in the process of looking at the top 10 projects by several metrics — the most jobs created, the most application fees waived and the most traffic impact fees waived — to determine if they’ve been completed and, if so, how much money is being injected into the local economy. That information was not available for this story.

However, a Columbian analysis of the 10 programs purporting to create the most jobs — covering 1,082 of the 3,157 jobs supposedly created by developers using the program — indicates three are empty fields and three are under construction.

Among those projects is the Padden Parkway Business Park, which is currently a green field on the corner of Northeast 78th Street and St. Johns Road. The developers on the project, CC Land Development, could not be reached for comment, though a sign on the property advertises land for sale. So far, CC Land has received $30,114 in fee waivers since it applied in August 2014.

“That Padden Parkway Business Park was supposedly going to employ about 400 people,” Snell said. “And there’s not one employee on the property because nothing’s there.”

Then there are other, smaller projects that Snell calls “onesie, twosies.” They include coffee carts, for example, that only created a few jobs, or the Fred Meyer fueling station on Northeast 139th Street in Salmon Creek.

“For some of the drive-thru coffee shops or some of the fueling stations, pretty high traffic-impact fees were waived,” Snell said. “Are we seeing a return on our investment?”

Unrealistic comparisons

The fee-waiver program has become highly politicized, particularly by Madore, its biggest supporter.

Madore regularly shares state employment statistics on his Facebook page. Since the recession ended, the news has been unfailingly good. Last month’s report showed 5,800 new jobs have been created in Clark County over the past year. That 3.9 percent annual increase outpaces the national, state and metro area growth rates.

“Our business friendly pro-jobs fee waiver resolution is still in place as free enterprise is still free in Clark County,” Madore posted on April 19. “And entrepreneurs are still doing what they do best, create new wealth for all of us.”

However, the state report shows job growth in all of Clark County, not just the unincorporated areas where the fee waiver is in effect.

A detailed report by Scott Bailey, the state’s regional labor economist, indicates that the unincorporated county’s job growth rate of 5.8 percent annually is greater than the 4.7 percent growth for Vancouver and the other cities. However, 69 percent of all the new jobs created are in the incorporated areas.

Another key talking point for those who support the fee-waiver program is that Clark County boasts a “healthy fund balance” in the Public Works Department’s road fund, which supports construction projects, and in the Community Development Department’s building activity fund, which covers expenses related to permitting, inspections and other building activity.

But fund balances cannot be attributed to the fee-waiver program, Gassaway said.

“There are other factors, moving pieces,” he said.

Gassaway said Clark County’s building activity fund balance has shown gains in recent years because of the recovery of residential development, which does not receive fee waivers.

“Building activity has been self-sustaining largely because of the single-family housing construction activity,” he said.

The fund balance is currently about $4.9 million, compared with $2.9 million in 2012, the year before the fee waiver was adopted. But if homebuilding activity slows, Gassaway said that fund balance could slip quickly.

“When it swings the other way, the fund balance will be used to complete projects that are already in the pipeline,” Gassaway said. “There’s a commitment to existing projects.”

The practice of allowing the building activity fund balance to grow is a relatively recent policy decision by Clark County, Gassaway said. Prior to 2009, Clark County maintained its fund balance around $2 million, adjusting fees accordingly depending on building activity. The county has not reconsidered its building permit application fees since 2009, he said.

Council Chair Marc Boldt, no party preference, said he was concerned about the county putting too much pressure on residential developers.

“My main concern is who is paying for it,” Boldt said. “If the community, if the residential builders are paying for it, then they’re paying too much for their fees.”

Clark County pays for infrastructure improvements using a combination of funding sources including local taxpayer dollars, federal money and private dollars from traffic-impact fees.

The county’s road fund currently contains $14.2 million, but the private funding portion of that is shrinking without contributions from traffic-impact fees. That means funding needs to be backfilled from other sources, said Heath Henderson, public works director. That could force the county to re-evaluate its project schedule, potentially putting off needed road-improvement projects.

“With less private share coming in, there’s more pressure on the public share of infrastructure improvements,” Henderson said.

Audit Services Manager Larry Stafford described a compounding effect to turning down those impact fees. As the county takes in fewer private dollars to spend on road projects related to development, it reduces Clark County’s ability to compete for grants that require matching funds — in some cases, more than doubling the county’s fund losses, depending on the grant.

“There’s no money coming in to backfill the private infrastructure funding,” Stafford said.

Ultimately, the program will force the county to make tough decisions about how to fund infrastructure projects — or to not fund them.

“If you look at any time you’re not covering your costs or expenses, then you have to pay for it somehow, or reduce services,” Gassaway said.

Developers’ reactions

The program has received mixed reviews from those in the private sector. Some, like Prestige Development’s Elie Kassab, said the program has been a detriment to the county and its budget due to the sheer number of subsidies granted.

And all that, he said, came with little to no payoff.

“I don’t think the fee-waiver program has increased a whole lot of jobs at all,” Kassab said. “One commissioner said they were going to open the floodgates of job growth. I respectfully disagree with that notion. It just has not happened. I have not seen it.”

Jamie Howsley, a land-use attorney and the government affairs director to the Building Industry Association of Clark County, was also critical of the program.

“What has been indicated is while the program may have created a few jobs, the county has also waived fees in a lot of cases where jobs weren’t created,” Howsley said.

“It irks me that we do it for things like fueling stations,” he continued. “That’s not what the intent should be.”

The Columbian reached out to several developers who have received fee waivers to ask whether the program made a significant difference in their decision to build in Clark County.

Only one, Gary Bock, a spokesman for fishery technology company Smith-Root, responded. Smith-Root received its first fee waiver in 2013, shortly after the program was adopted. Bock said the company added seven jobs in 2015 due to a variety of reasons.

It’s hard to say whether Smith-Root could have constructed its new 24,000-square-foot facility at 16605 N.E. 50th Ave. without the nearly $237,000 in fees the county waived, Bock said.

“Is it the only thing that got us to put a new building up? Of course not,” he continued. “Was it a factor? Yes.”

“The stars aligned,” Bock said. “We had a particularly wonderful landowner and it just kind of worked out for us.”

Next steps

It’s unclear when Clark County will next consider its fee-waiver program, and to what extent the program could face changes. A workshop on the program was canceled last month in order to give staff more time to get a grasp on the project, McCauley said in April.

To anyone who has traced Clark County’s activity this year, however, it appears possible that the program will be yet another casualty of the council’s record of voting 3-2 to repeal existing policies.

Madore and Republican Councilor Tom Mielke, who voted to support the program in 2013, did not comment for this story. Their fellow councilors, however, all shared an interest in revisiting and finding out more about the waivers’ impact on Clark County.

“It’s like an investment,” Republican Councilor Jeanne Stewart said. “It’s time to do a portfolio analysis of that investment, and to look at what our lost opportunity is, because we waive fees and then have foregone that revenue. What did we lose by not having that revenue? I think that’s a legitimate analysis.”

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