Covington terminates impact fees agreement with Kent School District

By the Covington Reporter

A legal battle between the city of Covington and the Kent School District reached the nuclear option Oct. 27 when the Covington City Council unanimously approved an ordinance terminating the collection of school impact fees.

The dispute began more than a year ago and culminated in the ordinance that severed the interlocal agreement between the district and the city for the collection of impact fees that dates back to 1997.

According to the interlocal agreement and the city code, the city collects school impact fees on development projects for capital facilities for the district.

The new ordinance repeals the municipal code concerning school impact fees and terminates the interlocal agreement.

According to the city the district has received about $5 million in impact fees since 1999.

BACKGROUND

The dispute began around May 2014 when Inland group requested a partial exemption from the school impact fees of $700,000 for a Town Center development for low-income families.

The city staff determined an 80 percent exemption was necessary for the development to be built. The city staff wrote in the documents with the new ordinance, “…the City also recognizes that though school impact fees support the District’s infrastructure, without impact fee exemptions affordable housing development, which is an equally important public need governed and required to be provided for by state growth management regulations, would not be built….”

The city’s point was a developer cannot pass the cost of the impact fees onto a buyer because the price of low-income housing is determined by state law.

According to the city the district was notified in May 2014 of a preliminary decision to grant the exemption to Inland.

The district notified the city in September 2014 of its objection to the exemption.

In October of 2014 the city officially granted the developer an 80 percent exemption. The full fee would have been about $700,000 and an 80 percent exemption brought the fee to $135,120, which Inland paid to the district.

DISPUTE

The district disagreed with the city’s decision that it had the legal standing to decide whether an exemption could be granted. The district contended state law did not give the city the authority to approve the exemption without approval from the district.

The city disagreed and stated the interlocal agreement gives the authority to the community development director to make the impact fees determination.

In the end the two parties could not come to an agreement over the interpretation of the state law RCW 82.02.020(3), and which entity had the authority over the collection of school impact fees.

The district filed a request for a declaratory judgment with the King County Superior Court on June 5. The city filed a motion to dismiss the district’s request.

The district is asking the court through a declaratory judgment request to rule the city is required to ask for approval before granting an exemption.

The city’s motion to dismiss stated the exemption is a land-use decision and the district should have filed a Land Use Petition Act or LUPA appeal within 21 days of the exemption decision by the city.

ORDINANCE REPEAL

According to the city documents the action to repeal the school impact fee ordinance and end the interlocal agreement was to stop the litigation, make the request for a declaratory judgment “moot” and halt the spending of public money.

City officials stated, “the City may terminate the ILA and its obligation to collect school impact fees on behalf of the District at any time, for any reason….”

The ordinance also noted the City Council can decide at any time to, “….reinstitute the collection of school impact fees should the state legislature amend RCW 82.02.060(3) to clearly state the city’s authority to independently issue final approvals for exemption requests or exclusions from school impact fees and/or should the City and District together reach a similar agreement….”