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City adjusts public rule to implement state'authorized GFC permissive waiver for certain affordable housing
Summary
Public Works staff described updates to the city's public rule on general facilities charges (GFCs): a 50-year covenant requirement, a 50% permissive waiver aligned with recent state law, an additional 25% waiver for projects that applied for but did not receive CHIP grant funds, and removal of expired ADU waivers.
Public Works staff briefed the PIES Committee on changes to the city's public rule governing general facilities charges, the one-time capital charges that connect new development to the city's water and wastewater systems. Staff said the rule will be updated to reflect a permissive waiver in recent state law and to clean up references to expired accessory dwelling unit waivers.
Marlene outlined background and legal context: general facilities charges are intended to have future customers pay a proportionate share of capital capacity. She cited governing state law, identified in the meeting as RCW 35.92, and said the city's public rule on incentives historically said the city would not waive GFCs unless a non-utility funding source would backfill the charges.
Staff described a narrow permissive-waiver pathway established by state legislation this year referenced in the presentation (transcript reference: "ESP 05/1962"). Under the approach explained to the committee, the permissive waiver applies only to qualifying affordable housing projects that accept a 50-year covenant restricting rents or sales to low-income households. Staff said that for rental units the income limit is 60% of area median income (AMI) and for owner-occupied units a limit of 80% AMI, as defined in state law. A 50% waiver of GFCs is expected for qualifying projects; an additional 25% waiver is available for developments that applied for CHIP (Community Housing Infrastructure Program) grants but did not receive CHIP awards because funding was insufficient.
"This is pretty narrow," Marlene said, noting the city has not set aside a separate incentives budget and that the permissive waiver is limited in scope. She also said the city will remove references to ADU waivers that expired at the end of 2024.
Council members asked about safeguards to ensure CHIP grant funding would not be diverted by developers for unrelated uses if the city waived GFCs. Marlene said the city intends to require projects to apply for CHIP and that staff will work on contractual and policy language; she suggested legal and interdepartmental review to ensure CHIP funds, when awarded, help cover GFCs as intended.
Discussion versus decision: staff described a draft public-rule update and asked for committee guidance; no formal council vote or final rule adoption occurred at the meeting. Staff said legal is preparing a resolution that will document the transaction if and when forgiveness or waiver is authorized.
Next steps: staff will coordinate with legal and housing finance staff to finalize language and bring a resolution forward for council consideration. They also said they will monitor CHIP application rounds and seek to track whether awarded CHIP funds are applied to GFCs as intended.
