Commerce outlines proportional impact‑fee guidance and CHIP role in making reduced fees workable

Dave Anderson, managing director of the Growth Management Program at the Department of Commerce, briefed the committee on proportional impact fees and the state’s Capital Infrastructure and Housing Program (CHIP).

Anderson said impact fees and system development charges must be proportional to the cost of facilities required by new development and based on a capital facilities plan. He described four broad funding sources for infrastructure — general taxes/ratepayers, developer up‑front payment, purchaser over time (e.g., local improvement districts) and grants — and noted that debt itself must be serviced by one of those sources.

Commerce’s guidance shows how to set fees that reflect location and actual marginal cost so infill and smaller projects are not overcharged. Anderson said fee reductions or waivers can be structured as incentives for housing types, but jurisdictions must cover the deferred or waived cost to keep enterprise funds solvent; the CHIP program is designed to reimburse or backfill those enterprise revenues when jurisdictions choose to waive or defer fees for affordable housing.

Anderson noted an important tradeoff: an impact‑fee system is predictable and packageable but carries high setup and administrative costs; jurisdictions with low permitting volume may be better off using project‑level mitigation under SEPA. Committee members asked about CHIP scoring and program caps; Commerce said allocation is competitive and promised follow‑up on scoring criteria and data on program usage for housing.