Bill Summary – FastDemocracy

ENGROSSED HOUSE BILL 1468
     State of Washington         68th Legislature      2023 Regular Session
     By Representatives Goehner, Duerr, Jacobsen, Griffey, Barkis,
     Robertson, Hutchins, Chapman, Riccelli, Berg, Bateman, and Pollet
     Read first time 01/20/23.   Referred to Committee on Local Government.
     AN ACT Relating to impact fee deferrals; amending RCW 82.02.050;
 and repealing RCW 43.31.980.
 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
     Sec. 1.   RCW 82.02.050 and 2015 c 241 s 1 are each amended to
 read as follows:
     (1) It is the intent of the legislature:
     (a) To ensure that adequate facilities are available to serve new
 growth and development;
     (b) To promote orderly growth and development by establishing
 standards by which counties, cities, and towns may require, by
 ordinance, that new growth and development pay a proportionate share
 of the cost of new facilities needed to serve new growth and
 development; and
     (c) To ensure that impact fees are imposed through established
 procedures and criteria so that specific developments do not pay
 arbitrary fees or duplicative fees for the same impact.
     (2) Counties, cities, and towns that are required or choose to
 plan under RCW 36.70A.040 are authorized to impose impact fees on
 development activity as part of the financing for public facilities,
 provided that the financing for system improvements to serve new
                                       p. 1                         EHB 1468
 development must provide for a balance between impact fees and other
 sources of public funds and cannot rely solely on impact fees.
     (3)(a)(((i))) Counties, cities, and towns collecting impact fees
 must, by September 1, ((2016)) 2025, adopt and maintain a system for
 the deferred collection of impact fees for single-family detached and
 attached residential construction. The deferral system must include a
 process by which an applicant for a building permit for ((a)) single-
 family detached or attached residences may ((request a deferral of
 the full impact fee payment. The deferral system offered by a county,
 city, or town under this subsection (3) must include one or more of
 the following options:
     (A) Deferring collection of the impact fee payment until final
 inspection;
     (B) Deferring collection of the impact fee payment until
 certificate of occupancy or equivalent certification; or
     (C) Deferring collection of the impact fee payment until the time
 of closing of the first sale of the property occurring after the
 issuance of the applicable building permit.
     (ii) Counties, cities, and towns utilizing the deferral process
 required by this subsection (3)(a))) execute a promissory note in
 favor of the county, city, or town imposing the impact fee for the
 full value of the impact fees imposed. The note must come due at the
 time provided for in (b) of this subsection (3). The note must
 identify each impact fee that it covers and the total amount of fees
 that are due. The note must be recorded with the county auditor at
 the expense of the applicant. If lots have not been created on the
 subdivision, the note must be recorded for the entire subdivision.
 The payment of the fees detailed in the promissory note is the legal
 responsibility of the applicant.
     (b) The promissory note must include a provision for payment of
 the impact fee:
     (i) At the time of the issuance of a certificate of occupancy or
 equivalent certification for the lot or unit;
     (ii) At the time of the closing of the first sale of the lot or
 unit occurring after the issuance of the applicable building permit;
 or
     (iii) At the time of final inspection.
     (c)(i) If a county, city, or town has determined that payment of
 the impact fees is due at the time of the issuance of the certificate
 of occupancy or equivalent certification or at the time of the final
                                     p. 2                         EHB 1468
 inspection, the county, city, or town may withhold certification of
 final inspection, the certificate of occupancy, or equivalent
 certification until the impact fees have been paid in full. If the
 applicant has not paid in full by the time of the first sale of the
 lot or unit occurring after the issuance of the applicable building
 permit, then the impact fees are due immediately at the time of sale.
     (ii) If the full impact fees have not been paid within one month
 of the sale of the first sale of the lot or unit occurring after the
 issuance of the applicable building permit, then the note bears
 interest at the rate provided for in RCW 82.32.050(2). The rate must
 be adjusted on the first day of January of each year for use in
 computing interest for that calendar year. The county treasurer must
 provide the county, city, or town covered by the promissory note with
 the variable rate on or before December 31st of the year preceding
 the year in which the rate applies.
     (iii) In addition to the interest provided for in (c)(ii) of this
 subsection (3), if an applicant has not paid the impact fees in full
 within one month of the first sale of the lot or unit occurring after
 the issuance of the applicable building permit, the applicant must
 additionally be assessed a penalty of five percent of the total
 amount remaining due on the promissory note. If the promissory note
 has not been paid in full within two months of the time of the first
 sale of the lot or unit occurring after the issuance of the
 applicable building permit, the applicant must instead be assessed a
 penalty of 10 percent of the total amount remaining due on the
 promissory note. If the promissory note has not been paid in full
 within three months of the time of the first sale of the lot or unit
 occurring after the issuance of the applicable building permit, the
 applicant must instead be assessed a penalty of 20 percent of the
 total amount remaining due on the promissory note.
     (iv) The interest and penalties provided for in this subsection
 (3)(c) are collectible only from the applicant and may not be a lien
 against the property sold by the applicant for which the impact fees
 were due. Owners of an applicant who has not paid the impact fees in
 full within one month of the first sale of the lot or unit occurring
 after the issuance of the applicable building permit are personally
 liable for the full amount of the note, unless the sale has been
 recorded in the official county property record.
                                     p. 3                         EHB 1468
     (((iii))) (d) The amount of impact fees that may be deferred
 under this subsection (3) must be determined by the fees in effect at
 the time the applicant applies for a deferral.
     (((iv) Unless an agreement to the contrary is reached between the
 buyer and seller, the payment of impact fees due at closing of a sale
 must be made from the seller's proceeds. In the absence of an
 agreement to the contrary, the seller bears strict liability for the
 payment of the impact fees.
     (b))) (e) The applicant must provide written disclosure of a
 deferral agreement to a property buyer as required by chapter 64.06
 RCW.
      (f) The term of an impact fee deferral under this subsection (3)
 may not exceed ((eighteen)) 18 months from the date of building
 permit issuance.
     (((c) Except as may otherwise be authorized in accordance with
 (f) of this subsection (3), an applicant seeking a deferral under
 this subsection (3) must grant and record a deferred impact fee lien
 against the property in favor of the county, city, or town in the
 amount of the deferred impact fee. The deferred impact fee lien,
 which must include the legal description, tax account number, and
 address of the property, must also be:
     (i) In a form approved by the county, city, or town;
     (ii) Signed by all owners of the property, with all signatures
 acknowledged as required for a deed, and recorded in the county where
 the property is located;
     (iii) Binding on all successors in title after the recordation;
 and
     (iv) Junior and subordinate to one mortgage for the purpose of
 construction upon the same real property granted by the person who
 applied for the deferral of impact fees.
     (d)(i) If impact fees are not paid in accordance with a deferral
 authorized by this subsection (3), and in accordance with the term
 provisions established in (b) of this subsection (3), the county,
 city, or town may institute foreclosure proceedings in accordance
 with chapter 61.12 RCW.
     (ii) If the county, city, or town does not institute foreclosure
 proceedings for unpaid school impact fees within forty-five days
 after receiving notice from a school district requesting that it do
 so, the district may institute foreclosure proceedings with respect
 to the unpaid impact fees.
                                     p. 4                         EHB 1468
     (e)(i) Upon receipt of final payment of all deferred impact fees
 for a property, the county, city, or town must execute a release of
 deferred impact fee lien for the property. The property owner at the
 time of the release, at his or her expense, is responsible for
 recording the lien release.
     (ii) The extinguishment of a deferred impact fee lien by the
 foreclosure of a lien having priority does not affect the obligation
 to pay the impact fees as a condition of final inspection,
 certificate of occupancy, or equivalent certification, or at the time
 of closing of the first sale.
     (f))) (g) A county, city, or town with an impact fee deferral
 process on or before April 1, 2015, is exempt from the requirements
 of this subsection (3) if the deferral process delays all impact fees
 and remains in effect after September 1, 2016.
     (((g)(i)   Each   applicant  for   a  single-family   residential
 construction permit, in accordance with his or her contractor
 registration number or other unique identification number, is
 entitled to annually receive deferrals under this subsection (3) for
 the first twenty single-family residential construction building
 permits per county, city, or town. A county, city, or town, however,
 may elect, by ordinance, to defer more than twenty single-family
 residential construction building permits for an applicant. If the
 county, city, or town collects impact fees on behalf of one or more
 school districts for which the collection of impact fees could be
 delayed, the county, city, or town must consult with the district or
 districts about the additional deferrals. A county, city, or town
 considering additional deferrals must give substantial weight to
 recommendations of each applicable school district regarding the
 number of additional deferrals. If the county, city, or town
 disagrees with the recommendations of one or more school districts,
 the county, city, or town must provide the district or districts with
 a written rationale for its decision.
     (ii))) (h) For purposes of this subsection (3)(((g))), an
 "applicant" includes an entity that controls the applicant, is
 controlled by the applicant, or is under common control with the
 applicant.
     (((h) Counties, cities, and towns may collect reasonable
 administrative fees to implement this subsection (3) from permit
 applicants who are seeking to delay the payment of impact fees under
 this subsection (3).
                                     p. 5                         EHB 1468
     (i) In accordance with RCW 44.28.812 and 43.31.980, counties,
 cities, and towns must cooperate with and provide requested data,
 materials, and assistance to the department of commerce and the joint
 legislative audit and review committee.))
     (4) The impact fees:
     (a) Shall only be imposed for system improvements that are
 reasonably related to the new development;
     (b) Shall not exceed a proportionate share of the costs of system
 improvements that are reasonably related to the new development; and
     (c) Shall be used for system improvements that will reasonably
 benefit the new development.
     (5)(a) Impact fees may be collected and spent only for the public
 facilities defined in RCW 82.02.090 which are addressed by a capital
 facilities plan element of a comprehensive land use plan adopted
 pursuant to the provisions of RCW 36.70A.070 or the provisions for
 comprehensive plan adoption contained in chapter 36.70, 35.63, or
 35A.63 RCW. After the date a county, city, or town is required to
 adopt its development regulations under chapter 36.70A RCW, continued
 authorization to collect and expend impact fees is contingent on the
 county, city, or town adopting or revising a comprehensive plan in
 compliance with RCW 36.70A.070, and on the capital facilities plan
 identifying:
     (i)   Deficiencies   in   public   facilities  serving   existing
 development and the means by which existing deficiencies will be
 eliminated within a reasonable period of time;
     (ii) Additional demands placed on existing public facilities by
 new development; and
     (iii) Additional public facility improvements required to serve
 new development.
     (b) If the capital facilities plan of the county, city, or town
 is complete other than for the inclusion of those elements which are
 the responsibility of a special district, the county, city, or town
 may impose impact fees to address those public facility needs for
 which the county, city, or town is responsible.
     NEW SECTION.   Sec. 2.   RCW 43.31.980 (Impact fee annual report)
 and 2015 c 241 s 4 are each repealed.
                                  --- END ---
                                     p. 6                         EHB 1468
Statutes affected: 
Original Bill: 82.02.050, 43.31.980
Engrossed Bill: 82.02.050, 43.31.980