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Impact Fees

This page provides a general overview of impact fees for cities and counties in Washington State, including information on how they may be used, rate calculations, waivers and exemptions, deadlines for collecting and expending funds, and sample documents from selected jurisdictions.

What Are Impact Fees?

Impact fees are one-time charges assessed by a local government against a new development project to help pay for new or expanded public facilities that will directly address the increased demand for services created by that development.

What Can Impact Fees Be Used For?

RCW 82.02.050 - .110 and WAC 365-196-850 authorize counties, cities, and towns planning under the Growth Management Act (GMA) to impose impact fees for:

  • Public streets and roads
  • Publicly owned parks, open space, and recreation facilities
  • School facilities
  • Fire protection facilities

These impact fees may only be imposed for “system improvements” - public capital facilities in a local government’s capital facilities plan that are designed to provide service to the community at large (not private facilities), are reasonably related to the new development, and will benefit the new development (WAC 365-196-850).

Impact fees cannot exceed a proportionate share of the cost of the system improvements, and municipalities must have additional funding sources and may not rely solely on impact fees to fund the improvements (RCW 82.02.050).

Impact fees may not be used to correct existing deficiencies. For instance, a school district may use the impact fees from a development to pay for construction of new classrooms at specific schools to accommodate the increased enrollment anticipated from that specific development. But the district may not use the impact fees to build new classrooms to reduce overcrowding caused by existing residents.

An impact fee ordinance, however, “may provide for the imposition of an impact fee for system improvement costs previously incurred by a county, city, or town to the extent that new growth and development will be served by the previously constructed improvements provided such fee shall not be imposed to make up for any system improvement deficiencies” (RCW 82.02.060(8)). For example, if a public works maintenance facility was designed and constructed to address both existing deficiencies (say, 60%) and future growth needs (say, 40%), impact fees could be used to pay for up to 40% of the debt service on the bond issued for that facility.

Transportation Impact Fees

Transportation impact fees must be used for “public streets and roads” that are addressed by a capital facilities plan element of a comprehensive plan adopted under the GMA (RCW 82.02.050(4) and RCW 82.02.090(7)).

It is unclear whether state law allows these impact fees to be used to fund multimodal improvements, but such use is probably acceptable as long as the improvement is within the street right-of-way - such as bus lanes, sidewalks, or bike lanes - and there is a strong transportation-related justification. However, it is doubtful that impact fees could pay for buses, vanpool vehicles, recreational trails, or other projects outside the right-of-way.

Since impact fees are restricted to capital facilities, they cannot be used to fund transportation studies or operating and maintenance costs.

Bellingham has compiled a comparison of 2021-22 transportation impact fee base rates in Western Washington.

Note: This information only applies to transportation impact fees authorized by RCW 82.02.050 - .110 and WAC 365-196-850 for jurisdictions planning under GMA.

Separate legislation (the Local Transportation Act, chapter 39.92 RCW, whose initial passage predated GMA by two years) authorizes all counties, cities, towns, and transportation benefit districts across the state - including those not planning under GMA - to impose transportation impact fees. While this option appears to be less common, some jurisdictions may have adopted transportation impact fees under chapter 39.92 RCW. For instance, see Lacey Municipal Code Ch. 14.21, which imposes transportation mitigation fees under this statute.

Park Impact Fees

Park impact fees must be used for “publicly owned parks, open space, and recreation facilities” that are addressed by a capital facilities plan element of a comprehensive plan adopted under the GMA (RCW 82.02.050(4) and RCW 82.02.090(7)).

Most cities and counties in Washington only charge park impact fees to residential construction or the residential portion of a mixed use building or development, but a few also charge commercial or industrial developments, since employees (and not just residents) can directly benefit from nearby parks and recreational facilities. (See Tukwila's example in the sample documents section.)

School Impact Fees

School impact fees must be used for “school facilities” that are addressed by a capital facilities plan element of a comprehensive plan adopted under the GMA (RCW 82.02.050(4) and RCW 82.02.090(7)). Typically, school impact fees apply only to residential construction or the residential portion of a mixed use building or development.

School districts are responsible for expending the impact fees but are not authorized to collect the fees. As a result, school impact fees require cooperation between school districts and the cities, towns, or counties administering the impact fee program. This cooperation should take the form of an interlocal agreement (ILA) that specifically identifies each party’s role.

Any exemption for school impact fees that would otherwise be distributed to a school district must first be approved by the school district (RCW 82.02.060(3)).

Fire Impact Fees

Fire impact fees must be used for “fire protection facilities” that are addressed by a capital facilities plan element of a comprehensive plan adopted under the GMA (RCW 82.02.050(4) and RCW 82.02.090(7)). Because state law provides no further statutory or administrative definitions, some jurisdictions have taken it upon themselves to define “fire protection facilities” in their own municipal codes. (See Auburn's example in the sample documents section, which includes fire engines and equipment.)

Determining Impact Fee Rates

Local governments must establish a rate schedule for each type of development activity that is subject to impact fees, specifying the fee to be imposed for each type of system improvement (RCW 82.02.060). The schedule must be based on a formula or other calculation that incorporates, among other things:

  • The cost of public facilities necessitated by new development
  • The cost of existing public facilities improvements
  • Adjustments to the cost of the public facilities for past or future payments made or reasonably anticipated to be made by new development
  • The availability of other public funding sources
  • The method by which public facilities improvements were financed

These rate studies should be updated periodically to reflect changes in the cost of facilities. While local governments are not required to hold a public hearing before adopting or increasing impact fees, it may be prudent to do so, especially if the decision might be controversial.

RCW 82.02.060 prohibits local governments from imposing impact fees on the development of an early learning facility (as defined in RCW 43.31.565) that are greater than those imposed on commercial retail or commercial office development activities that have similar vehicle trip characteristics.

Practice Tip: Some jurisdictions automatically adjust their impact fees by indexing them, which protects future revenues and can potentially eliminate the need for the legislative body to go through a formal rate setting process again. For instance, see:

  • Federal Way Municipal Code Sec. 19.91.160 - Transportation impact fees indexed to a three-year moving average of the WSDOT Transportation Construction Cost Index. Rate study must be updated every three years, unless city determines that circumstances have not changed to warrant an update.
  • Ridgefield Municipal Code Sec. 18.070.090 - Park impact fees indexed annually to West Region Consumer Price Index (CPI-U) for first half of the year, but may only increase automatically for three consecutive years. If fees are set to automatically increase for a fourth consecutive year, city council must hold a public hearing and establish new impact fee rates.
  • West Richland Municipal Code Sec. 16.14.105 - Park impact fees indexed annually to Seattle Metropolitan Area Consumer Price Index and rounded to the nearest five dollar increment. (Similar provision for transportation.)

Impact Fee Exemptions

Local governments may provide exemptions or waivers for the development of low-income housing, early learning facilities as defined in RCW 43.31.565, and other development activities with “broad public purposes” (RCW 82.02.060).

Some jurisdictions reduce or waive certain types of impact fees for certain types of development, either to incentivize development or because the development places no significant burden on existing facilities.

Collecting Impact Fees

Impact fees generally must be paid before construction begins. For single-family residential construction, the fees may be deferred by developer request as described in the next section.

The money must be earmarked and retained in special interest-bearing accounts, with a separate account for every type of facility for which the fees are collected (schools, fire, etc.). Each agency that imposes impact fees must provide an annual report on each of the accounts showing the source and amount of revenues, as well as the improvements financed with the revenue (RCW 82.02.070).

For information on accounting requirements, see the GAAP BARS Manual, section 3.6.7 (no equivalent section in the Cash Basis BARS Manual).

Impact Fee Deferrals

All jurisdictions imposing impact fees under RCW 82.02.050 must have adopted, by September 1, 2016, a deferral system for the collection of impact fees for new single-family detached and attached residential construction.

Upon developer request, these jurisdictions must delay payment of impact fees until the time of:

  • Final inspection;
  • Issuance of the certificate of occupancy or equivalent certification; and/or
  • The closing of the first sale of the property

Other statutory provisions include:

  • The term of deferral is 18 months from issuance of the building permit.
  • The amount of impact fees that may be deferred is determined by the fees in effect at the time the applicant applies for a deferral.
  • Deferral of impact fees can be limited to the first 20 single-family residential building permits, annually, per applicant.
  • An applicant seeking a deferral must grant and record a lien against the property in favor of the municipality in the amount of the deferred impact fee.
  • Municipalities may collect reasonable administrative fees from applicants seeking a deferral.
  • To limit the “spin-off LLC” issue, “applicant” is defined to include “an entity that controls the applicant, is controlled by the applicant, or is under common control with the applicant.”
  • Limited grandfathering is authorized for an existing deferral system (in effect on or before April 1, 2015), even if it does not fully match the new state requirements, as long as all impact fees are deferred.
  • Municipalities and school districts are authorized to institute foreclosure proceedings if impact fees are not paid.
  • The Department of Commerce must develop an annual report, beginning December 1, 2018, on the payment and collection of impact fees from school districts, counties, and cities for single-family residential construction.

Below are selected examples of code provisions and deferral forms:

Deadline for Expending Impact Fees

Impact fees must be expended or encumbered within 10 years of receipt, unless there is an “extraordinary and compelling reason” for fees to be held longer, which must be documented in writing by the governing body (RCW 82.02.070).

RCW 82.02.080 requires each jurisdiction to refund the impact fees, plus earned interest, to the developer if:

  • The impact fee is not expended or encumbered within 10 years of collection;
  • The jurisdiction ends its impact fee program and the funds have not yet been expended or encumbered; or
  • The developer does not proceed with the proposed development activity and requests a refund.

Examples of Impact Fee Provisions

Below are selected examples of impact fee ordinances, codes, and rate studies from cities and counties in Washington State.

Rate Studies and Calculations

Impact Fees for Multiple Capital Facilities - Cities

Transportation Impact Fees - Cities

Park Impact Fees - Cities

School Impact Fees - Cities

Fire Impact Fees - Cities

County Impact Fees

The examples listed below contain most of the provisions included in the other examples cited above, but are from various counties in Washington.

Court Decisions

For selected court decisions affecting impact fees, see our page on Impact Fee Court Decisions.

Recommended Resources

  • – Comprehensive website provided by national impact fee consultants Duncan Associates. Includes news, state and local links, surveys, publications, and case law

Last Modified: March 02, 2022