The 2011 Washington Legislature is still considering a measure that could benefit residential lot developers and homebuilders by passing on the obligation to pay impact fees to the buyers of the new lots. Engrossed Bill 1702 permits counties and cities to adopt local ordinances establishing this deferral program. Through adoption of a new ordinance, a county or city may allow a developer to finalize a residential plat without paying impact fees if the developer records a covenant against the lots. The covenant must put any potential buyer of the lots on notice of the impact fee obligation. Currently, most local ordinances require the payment of impact fees for all lots when the developer records the final plat.

The covenant describing the impact fee obligation will act as a lien. The county or city must receive the impact fees at the closing of the sale of the lot through escrow, or 18 months after the county or city issues the building permit, whichever occurs earlier. The county or city can establish a longer period than 18 months. If the legislature passes this bill, local jurisdictions must still adopt a deferral program by ordinance. While the developer will likely factor in the amount of the impact fees in the purchase price, the fact that a developer can spread out this obligation over multiple sales and buyers, and at a time when the developer is due sales proceeds, could be economically advantageous. I will provide an update if the legislature passes this bill and if Clark County or a city is considering adopting an impact fee deferral program.