Poulsbo staff propose 50% discount on ADU impact fees, scaled charges for utilities; council to consider code changes

City staff presented proposed changes July 2 to how Poulsbo will charge impact fees and general facilities charges (GFCs) for accessory dwelling units, and recommended council move a draft code change to the business agenda for July 16.

Why it matters: state law limits what cities can charge on newly permitted ADUs; staff said their proposal balances the Legislature’s 50% cap on certain impact fees with the city’s interest in protecting utility ratepayers from unfunded demand. Councilmembers said they support encouraging ADUs as an affordable, middle‑housing option but want to avoid shifting costs onto existing utility ratepayers unnecessarily.

What staff proposed - Impact fees (transportation and parks): charge up to 50% of the single‑family impact fee for new ADUs, consistent with state statute cited by staff. - General facilities charges (water and sewer): apply scaled GFCs when an ADU requires a new or upsized water meter (for example, when the unit would be sold separately or the existing meter is inadequate). Staff proposed a discount factor similar to the city’s existing duplex/triplex discounts (example used: 0.85 ERU factor for small multi‑unit conversions) for qualifying ADUs served by a new meter. - Stormwater/GFCs: internal ADUs that do not add impervious surface would not trigger stormwater GFCs; detached ADUs or new construction that add impervious area would pay the stormwater GFC for the additional impervious surface, and staff noted the city’s 3,000‑square‑foot ISU threshold used on other building permits. - Permit review fees: the city proposed a 50% reduction in the building‑permit review fee for “permit‑ready” ADU plan sets and a reduced engineering review time estimate (from three hours to one hour) for those plans, a practice staff said matches several surrounding jurisdictions.

Staff rationale and tradeoffs City engineer Michael Bateman and planning/engineering staff framed the approach as a compromise: encourage ADU development while preserving long‑term utility solvency. They emphasized that many ADUs will be served off an existing water meter and therefore not require new GFC payments; only ADUs that require separate service or an upsized meter would trigger GFCs in full or scaled form. Staff repeatedly said the 50% cap on certain impact fees was a statutory ceiling and the city may opt for lower fees but not higher ones.

Council response and next steps Councilmembers several times said they favored minimizing barriers to ADU construction while ensuring the city’s utilities remain solvent. Several councilmembers suggested the council could decide to “spread” some of the cost to encourage ADUs (for example, through modest subsidies from the city’s housing fund), but staff and the city attorney flagged that large discounts can create rate or budget implications that council must weigh in a separate policy decision.

Staff asked to schedule the draft code changes for the July 16 business agenda; council agreed to bring the item forward so members can continue questions in workshop format and, if desired, refine fee percentages before formal adoption.

Provenance: the ADU impact fee discussion began in the July 2 workshop at approximately 117:00 into the recorded session and continued through the discussion recorded at roughly 147:00 (transcript timestamps).