Covington to nullify impact fee denial

The city of Covington appears ready to move forward with granting an impact fee waiver for a pair of apartment complexes despite opposition from the Kent School District.

The apartment complexes are part of Covington’s proposed Town Center project.

The Kent School District Board of Directors denied a request Oct. 8 by the Inland Group for a reduction on school impact fees for the Polaris apartment buildings it plans to build for the Town Center project. The development would be located adjacent to Covington Elementary School.

Richard Hart, Covington community development director, said Tuesday that he sent a decision to the city’s attorney that would disregard the school district’s recommendation and would instead recommend going forward with the fee waiver at 80 percent. He said the final decision is expected to be issued sometime this week

Hart said the city has reviewed its interlocal agreement with the school district and is confident that the city has the final say on determining impact fee waivers for affordable housing.

“It’s very clear,” Hart said. “We have the authority to make the decision on impact fee waivers and that’s what we are doing.”

Kent School Board Director Russ Hanscom is perplexed by the whole scenario.

“It’s all so weird and totally inappropriate,” Hanscom said. “I don’t get it.”

Inland Group originally requested a 100 percent waiver, which was later modified to a 90 percent reduction. In a letter to the district, Inland wrote that the fee waiver was “critical to the financial feasibility of the project.” The sides discussed multiple other options at the Oct. 8 meeting, including 50, 80 and 65 percent waivers, with various deals and accommodations thrown into the mix by the city. Chris Loftis, spokesman for the Kent School District, said the board of directors ultimately decided against any of those options for four main reasons: policy, precedent, the money itself and how granting a waiver looks politically.

“It’s a tough call,” Loftis said. “We all have to work together. There is give and take in all operations, but this was just one that the district was being asked to give more than it was prepared to give.”

A 90 percent reduction would have dropped fees from $3,378 to $337.30 per 200 units. That is a potential drop in fees from $675,760 to $67,460. The amended 50 percent request would have meant $337,800 to the district. Of the expected 80 percent waiver, 10 percent would be paid by the city, the rest by Inland, Hart said.

Inland Group’s proposed development includes a 156-unit age-restricted apartment community, known as Affinity, and Polaris, a 200-unit “affordable family apartments” community for low-or-moderate income households.

Developers pay school impact fees as compensation for new growth that will affect school facilities. The district accepted the Senior Housing Exemption for Affinity, but took exception with the two Polaris buildings.

Hanscom said he couldn’t speak for the whole board, but he is completely against the city’s decision.

“I would never voluntarily give away $680,000 to a private developer,” Hanscom said.

The city has already knocked off more than $1.5 million for the developer in three areas: by waiving impact traffic fees, local tax revenues for the first 12 years and some building permit fees based on property valuation.

Once the city’s decision is final, Inland can move forward, Hart said. He said Inland would like to start with site work and grading by December.

Hart said he wouldn’t comment on whether there could be any reaction from the public or school district. He said it’s important not to be short-sighted in this issue, seeing the buildings as an investment in the Town Center that will increase property values and add taxes from future commercial property.

“We don’t make this decision lightly,” he said. “We look at this project as critical and it does qualify for such a waiver. The key to my decision, is that are the long-term benefits for granting this waiver to the city, downtown town center and the school district.”

“Covington has no affordable housing and we critically need affordable housing,” he said.

Loftis said the board fully supports equity in housing, but sometimes support doesn’t mesh with realistic options.

Hanscom doesn’t believe the city is looking at the whole picture, saying there will be ongoing additional costs with building a low-income complex that will be placed on the district.

Beyond dollars and cents, Hart said this is a social equity issue. The city is responsible under the Growth Management Act to provide a variety of housing to all types of people.

Loftis said the Board looked at the issue and considered the financial gymnastics for more than a month, taking opinions from the public and members of the business community.

He said the board’s policy is not to waive fees. Doing so for this project could start a precedent for all other development projects in the future. And the simple fact is that the district needs all the money it can get.

“There was strong sentiment by some of the board members that by waiving these fees you are basically giving money to the developers at the expense of increased tax rates from levies and bonds,” Loftis said.

This causes a political issue of sorts, since the district will likely need to ask the public for more funding through a bond in three years for the new elementary school.

“To ask the voters to tax themselves to have a better school and then give that money away to developers, even if it is developing properties that we fully support… you just have to weigh the financial realities and financial responsibilities that we have to the taxpayers,” Loftis said.

In the letter to the district, Inland said Polaris would share a boundary with the school and that Inland’s site plan features “significant infrastructure improvements,” including an estimated $559,716 in road improvements.

Loftis said he didn’t expect the school board’s decision to reject the waiver to impact its “rock solid” relationship with the city.

“These are people who solve problems for a living,” he said. “You don’t throw your hands in the air and walk away from life-long partners because something didn’t go the way you wanted it to go.”

Cities, towns and counties collect school impact fees, Hart said, not the school districts themselves. Hart said the city has collected more than $5 million in fees for the school district since 1999 and will continue to do so in the future. Hart sees this as a net gain over a 20-year period.

“Sometimes I think the school district is losing sight that this is a one-time, unique project,” he said.