Impact Fees: The law has changed to help improve the opportunity to build new single-family homes
The 2015 State Legislature has passed, and Governor Inslee has signed, Senate Bill 5923 which requires counties, cities, and towns collecting impact fees to adopt and maintain a system for the deferred collection of impact fees for single-family detached and attached residential construction.
The change is especially important because – in the wake of the great recession – lenders are reluctant to lend on soft costs, such as impact fees. Banks are concerned that in the event the builder defaults, the funds lent to pay for impact fees provide no real tangible asset that can be sold in order for the bank to recover its funds.
The reluctance of banks to extend credit to pay for such ‘soft costs’ means (1) the homebuilder must come up with more “front money equity” in order to build the home, or (2) the home doesn’t get built, which is a problem for REALTORS® and their buyers.
The new law allows counties, cities, and towns using the deferral process to withhold certification of final inspection, certificate of occupancy, or equivalent certification until the impact fees have been paid in full. The deadline for most of the new law’s provisions is September 1, 2016, so local governments have time to develop a deferral system that best meets statutory requirements and local objectives.