Council adopts higher impact fees for schools

Covington City Council talks impact fees, property taxes and the budget

Developers looking to build in Covington will see an increase in impact fees for both single-family and multi-family residences to help support the Kent School District create room for potential new students.

Covington City Council held a public hearing and a vote on a proposed ordinance regarding the Kent School District’s Six-Year Capital Facilities Plan and the district’s impact fee schedule at the regular council meeting on Tuesday, Oct. 8.

“The district has a six year facilities plan that they update each year that the city adopts by reference,” Covington Community Development Director Gina Estep told the council. “RCW 8202 authorizes cities to collect, voluntarily, impact fees on behalf of the schools. These impact fees provide school facilities that serve or mitigate any new development that occurs.”

Kent School District created its six-year plan in May and created a new impact fee schedule for 2020 with increases in costs. For new single-family residential units the impact fees would be $5,554, a $157 from the previous year. For new multi-family residential units the impact fee would be $2,345, a $67 increase from the previous year.

The rates would go into affect at the start of 2020 if the city adopted the plan. Councilmember Sean Smith asked how the impact fees were paid.

“Are these a part of the homeowner’s mortgage?” Smith asked.

Estep said the fees are paid directly by the developer before construction begins, the developer may reflect these costs in the sale of residential units.

The Kent School District’s plan includes a “student generation factor” which is “the number derived by a school district to describe how many students of each grade span are expected to be generated by a dwelling unit.” For a single-family unit, the district expects an average of 0.679 students per unit and for multi-family units the district expects to generate 0.174 students per unit.

Smith asked if the district had any influence over the amount the city chose to collect in impact fees. Estep said the city could choose to collect less than the recommended amount for the impact fees but the city could not collect a higher amount.

Councilmember Jennifer Harjehausen asked if it would be appropriate to give feedback to the district on how the district plans for new buildings or for zoning since the city would be helping collect funds for the district.

“If appropriate, we should offer feedback … if they are using this money to adequately provide buildings for our students they need to rezone,” Harjehausen said. “Not just in Kent but in Covington. When looking at the numbers for the schools, Crestwood (Elementary School) is very much overpopulated. I feel there is the opportunity for us to address this.”

After some more discussion Councilmember Marlla Mhoon moved to adopt the impact fee schedule, which was seconded by Councilmember Joseph Cimaomo. The council passed the motion with a unanimous vote.

Council starts public discussion on the 2020 budget, property taxes

The council held another public hearing on a possible increase in property tax revenues. Covington Finance Director Casey Parker explained the city usually adopts a 1 percent increase in property taxes each year, as allowed and outlined by the state legislature. According to the city’s agenda packet, the 2020 taxable assessed value in Covington is over $2.8 billion, which includes over $34 million in new construction. The estimated levy rate is $101.128 per $100,000 is taxable home value. The council described this as an extra “$1 per year per person.”

“Since the assessed value went up, the levy rate went down,” Parker said.

Parker went on to explain other tax revenues to the council. Sales tax revenues have gone up but construction taxes have decreased. For 2020, there will be a 2 percent decrease. The city’s sales tax for 2020 is estimated to collect $4.77 million in revenue. The total sales tax in Covington is 8.6 percent, but only 0.925 percent of the tax rate goes directly to the city. The biggest portion of the sales tax goes to the State of Washington at 6.5 percent. Other portions of the sales tax is distributed to King County METRO, King County, the King County Criminal Justice Levy and King County Mental Health.

No action was taken on the possible property tax increase, but public comment was taken.

“$8 more a year is nothing, we’d probably be willing to spend $100 more a year,” Elizabeth Porter, a Covington resident, said. “But a penny saved is a penny earned. So if we look at trimming some of the excess expenses we can use that money for some of our core functions like roads, police, infrastructure and that type of thing. But I would support a property tax increase at that level, (it’s) so tiny.”

Covington City Manager Regan Bolli also discussed the draft of the 2020 budget, which will be brought up by council in November.

“The last several years we have been able to prioritize and save, and we’ve had great revenues come in,” Bolli said. “But in 2020 we are looking to tighten our belts to prepare and fortify against future economic dents we are projecting.”

In 2020 most tax revenues will remain the same except for a decrease in construction sales tax and an increase in retail sales tax. Bolli said the city’s general fund looks healthy until 2023 when it will dip into the city’s reserve fund. The city’s street maintenance fund is continuing to struggle, and will lose even more money if I-976 passes.

A second public hearing on the budget and tax increase will be held in November after the council’s budget workshop.

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