Olympia City officials have proposed increasing utility rates, permit, and impact fees as part of the 2025 budget, aimed at supporting critical infrastructure and other municipal services.
At the Finance Committee meeting on Monday, Community Planning and Development interim director Tim Smith presented the proposed updates to the city's permit and impact fees.
Permit fees are set to increase by 4% to cover the costs of staff time for reviewing applications, inspections, and permit processing. The city aims to recover 85% of these costs through fees, but based on a 2021 study, the current recovery rate is around 76%.
For 2025, the proposed changes include a 4% overall increase in permit fees to account for labor costs. "This 4% increase, we believe, gives a buffer. Not only does it help match the 76% cost recovery, but it also provides a buffer for any changes from the classification and compensation study. So we believe the 4% increase is a reasonable and appropriate adjustment," Smith explained.
Additionally, the proposed changes include:
Impact fees, authorized by state law, help fund capital projects for transportation, parks, and schools to support new growth. Smith said the city has collected these fees for roads, sidewalks, bike lanes, parks, and the local school districts since the 1990s.
The proposed transportation impact fee increase for 2025 is 3%, lower than last year's 10%. The per-trip rate will rise from $3,241 to $3,338.
The fees for single-family homes would rise from $4,652 to $4,792, while multifamily units and commercial properties would also incur adjustment fees.
The city also collects impact fees for the North Thurston public schools, which apply to a small northeast area of Olympia. There are two fee categories: single-family and multifamily.
The proposed fee increases are based on the district's capital facilities plan to support anticipated growth.
Smith mentioned that the Olympia School District is suspending its impact fee program for 2025 due to declining enrollment projections and excess capacity in its schools. As a result, there will be no impact fee collection for building permits submitted in 2025.
Kate Davis from the OSD explained that despite recent enrollment growth, the district still relies on a forecast predicting continued declines.
With excess capacity in nearly all schools and no plans for new facility construction beyond repairs, the requirements for impact fees are not currently being met.
According to Davis, the district is undertaking long-term facility planning with a community group, which will help determine future capacity needs. Based on this planning process, the district will reassess impact fees for 2026.
Councilmember Jim Cooper suggested that suspending OSD's impact fees for 2025 presents an opportunity to advertise a significant reduction in the cost of housing in the city.
Smith pointed out that the multifamily impact fee reduction is a sizable cost savings for developers.
Drinking Water Utility Director Mike Vessey proposed a 3.9% rate increase to help cover the difference between expenses and revenue.
He said the expenses forecast for next year is $17.6 million, while the revenue forecast is only $17.1 million.
Vessey added that the drinking water utility has about 33 employees responsible for water quality, operations, engineering, and planning.
He noted that the budget allows transferring funds from the operating budget into the capital facilities plan to address aging infrastructure. It also includes a 0.5% allocation to support the city's affordable housing initiatives.
Burney further explained the proposed 0.5% allocation in the drinking water budget, saying it relates to the city's efforts around an affordable housing emergency initiative. This could establish a grant program to help nonprofit affordable housing providers with infrastructure improvements, fee waivers, and similar needs. This proposed program will be brought to the city council for approval.
Jesse Barham, Water Resource director, proposed a 5.3% increase with 1% allocated to support affordable housing infrastructure.
In stormwater, he proposed a 5.2% rate hike to fund staffing changes, new equipment, and full coverage of the street sweeping program.
Gary Franks, Waste Resources director, presented the proposed 2025 budget for the solid waste utility.
As part of the proposed 2025 budget, the Clean Team is being reorganized and moved into the Water Resources utility. It was previously funded from the city's general fund and housed within the Public Works General Services Department.
The Clean Team costs around $900,000 annually. To balance the budget and accommodate this new expense, Franks recommended reducing the capital budget for the Carpenter Road maintenance facility by $453,000 rather than implementing a 10% rate increase across the board.
Even with the Clean Team addition, Franks proposed a 7.6% overall rate increase for 2025. This would cover rising personnel costs, increased garbage tipping fees, and higher recycling processing expenses.
Franks noted that a typical customer's total bimonthly utility bill, including drinking water, wastewater, stormwater, and waste, would increase by 4.72% in 2025.
The Finance Committee approved and forwarded the recommended 2025 utility rates and other fees to the city council for consideration.
Comments
No comments on this item Please log in to comment by clicking here