Bonney Lake Council split on lowering residential development fees

With permit costs and system development charges among the highest in the area, the Bonney Lake city council this weekend discussed the possibility of reducing fees as a way to spur building in the city, but councilmembers were split on the benefits such a reduction might bring.

Led by new councilmembers Tom Watson and Katrina Minton-Davis and joined by Randy McKibbin, those in favor of reducing costs for builders argued that a temporary reduction in fees could help to encourage builders and developers  fill in some of the approximately 700 approved, unbuilt lots within city limit.

Watson argued the city needs to “relieve the pressure” on builders to get things moving again.

But other councilmembers, such as Jim Rackley, argued that despite an across-the-region reduction in permit numbers, Bonney Lake was still the highest and fees were designed to cover the costs of expanding the system, something that would fall to ratepayers if the charges to developers were reduced.

“We’ve got growth and we’ve had growth when no one else did,” he said, adding that he didn’t believe lowering the fees would affect development in the way it was hoped.

The discussion came two weeks after a presentation before the council by Dr. Elliot Eisenberg showing the economic effects of new homes to a regional economy. According to Eisenberg’s presentation, a new home can add $1.3 million to the local economy in the first year and generate nearly $86,000 per year once a family moves in.

During his presentation, Eisenberg noted that Bonney Lake’s fees were high relative to their neighbors.

City Administrator Don  Morrison began the discussion Saturday at Midtown Grill with a slide showing Bonney Lake’s total estimated fees to be the highest in the area at $25,059 per house, not including an estimated $3,000 to $5,000 for mandatory fire sprinklers, which the council in 2010 required for all new home construction.

Buckley’s fees were the closest at $20,828, followed by Puyallup at $16,210 and Sumner at $13,456. Pierce County fees are approximately $2,056, according to the slide.

But when looking at the numbers of permits issued in each municipality, Morrison said they found no correlation between a city’s fees and the number of permits issued.

According to information provided by Bonney Lake, the city issued 75 residential permits in 2011 and 83 in 2010. While well down from a peak of 225 in 2005, Bonney Lake has still issued the highest number of permits each year since 2005. Puyallup finished second behind Bonney Lake in 2001 and 2010 with 64 and 49 permits issued, respectively.

“We’re the highest, but you look at the numbers and we’re still growing,” Councilmember Mark Hamilton said. “I don’t see residential having a problem right now.”

Hamilton argued that the city should look into reducing commercial building fees to encourage business to move to the city because added businesses bring added sales tax revenues to the city.

“You need to grow the people who will spend the money and the commercial will come,” Minton-Davis argued.

Minton-Davis said the city was not collecting much revenue from the fees currently and reducing the fees should spur more building, increasing the amount of money that would be coming into the city.

Public Works Director Dan Grigsby and Morrison told the council studies have shown that rates in fees in Bonney Lake can justifiably be higher because of the work necessary to the city’s system, which are transitioning from smaller, rural standard to those more in line with a city its size.

Grigsby told the council that reducing sewer system development charges, which help pay for the growth of the city’s system, could lead to a “world of hurt” in the future when cash flow starts to dwindle and improvements are needed.

Though the concept of reducing residential building fees did not gain a consensus on the council, the suggestion of a temporary reduction on commercial fees to spur increased retail development gained widespread support.

The council instructed the administration to work on a proposal regarding commercial fees for discussion later this spring.