Developer challenges mitigation fee proposal on homes

The landowner for a proposed 50-duplex subdivision is challenging the Pasco School District's claim that developers should pay a fee for adding the new homes.

Columbia Villas is the first development within the city of Pasco where the district has pursued this type of fee during the preliminary plat process.

The district is trying to find a way to keep up with its skyrocketing enrollment. Pasco schools, with about 15,000 students, are expected to reach nearly 21,000 students in the next five years.

Pasco City Council members and Franklin County commissioners haven't acted yet on the district's request of an ordinance that would require impact fees on new subdivisions. One proposal would have developers paying $6,012 for each single-family home built and $5,572 for each apartment unit.

So the school district is asking the city and county to require developers to negotiate a payment agreement with the district when projects go through the State Environmental Policy Act (SEPA) and platting process. The district individually must ask for the fee for each project.

State law requires the city to determine if there are adequate services such as schools, streets, sidewalks and parks for the new homes, said David McDonald, Pasco city planner. One way to meet that is to provide mitigation if, as in this case, schools don't have the capacity for more students.

FBA Land Holdings, which owns the nearly 14 acres north of Sandifur Parkway and west of Road 76 where Big Creek Land Co. of Idaho plans to build 50 duplexes, submitted a letter challenging the legal basis of the so-called mitigation fees.

The school district claims fees are required under SEPA and the negotiated agreements are supported by case law.

The Pasco Planning Commission will consider both opinions Thursday when it decides what it will recommend to the city council.

Maggie Lyons, plan administrator and trustee for Metropolitan Creditors' Trust of Spokane, said FBA Land Holdings wants to ensure that the plat approval process is fair, timely and predictable.

The Metropolitan Creditors' Trust set up FBA Land Holdings to hold real estate properties received for the sale of Metropolitan Mortgage & Securities, a Spokane company that went bankrupt in 2004, she said.

The company is trying to sell property to pay back the 10,000 mostly elderly investors in the failed company, Lyons said. Hundreds are Tri-City residents. The company owns another 18 acres of residential property in Pasco.

Lyons said they are concerned that the fee could be as much or more than the property is worth, which would discourage developers from buying it.

But John Morgan, the school district's executive director of operations, said just because the district has asked for one set of fees on the proposed ordinance doesn't mean it will ask for the same amount on this project.

For example, an agreement between the district and EL & JH Ray Farms, owned by Ed Ray of Pasco, did not use the proposed ordinance amounts, he said.

The 10-lot subdivision off Columbia River Road already was approved by county commissioners June 22. Morgan declined to give any details about that agreement.

Morgan said impact fees are a way to help the district accommodate growth.

The district is looking at multi-track, year-round schools or doubleshifting to handle the students. Fees through SEPA or an ordinance could go toward portables, which is where Morgan said about 30 percent of students in the district are taught.

At the beginning of the 2012-13 school year, the district will have 171 portables, which together is larger than Chiawana High School, Morgan said.

The district used $2.5 million from its operations budget to pay for 11 new portables for the coming school year. It costs about $200,000 to open a new portable.

Rene Dahlgren, Home Builders Association of Tri-Cities director of government affairs, said the association doesn't dispute that the school district is in a bind when it comes to paying for space for new students.

But the district needs to use broad-based solutions such as changes to state law instead of targeting new construction, she said.

Growth pays its own way by adding to tax revenue and drawing economic development, she said.

But Morgan said the district doesn't receive additional local revenue with new development. The district can collect only the amount approved by voters on operations and maintenance levies and bonds.

FBA Land Holdings understands good schools are essential, Lyons said.

"We are just really looking forward to the city and the district coming up with a fair solution," she said.

That should be one based on bonds and state capital facility money rather than payments by landowners and developers, Lyons said.

The earliest the city council would consider the Columbia Villas plat approval would be Sept. 6, McDonald said. If an appeal is filed, the issue would go before the council Oct. 3.