Olympia, WA — The City of Olympia's newly imposed construction fees, which took effect as part of the 2024 fee schedule, are stirring controversy among local developers and business owners. While city officials argue that these fees are essential for maintaining infrastructure and environmental standards, local construction professionals are sounding the alarm, claiming that the financial burden could stifle growth and development in the region.

New Fees: A Financial Burden on Developers

The revised fee structure, which includes increased costs for stormwater management, environmental impact assessments, and infrastructure connections, applies to all new construction projects in Olympia. These fees range from hundreds to thousands of dollars, depending on the size and type of the development. For example, stormwater system review fees alone can range from $118 for small projects to over $2,700 for larger developments.

Contractors and affordable housing advocates argue that these costs, layered on top of existing permit and inspection fees, are excessive. "We are already paying property taxes that should be covering these infrastructure costs. Imposing additional fees is like paying twice for the same services," says local contractor and legal analyst Rob Cornett, co-owner of Seven Gables Contracting (a local construction contactor) and CCPROS LLC (an advanced computer tech company geared toward public interest in justice innitiatives).

Impact on Future Projects and Local Economy

One of the major concerns from contractors and developers is that these fees are creating hesitation among potential clients, particularly small business owners and those working on tighter budgets. Rob shared that several clients have either paused or canceled their projects due to concerns over budgetary constraints caused by the new fees. "Customers are rethinking their plans entirely. These fees are making it harder for them to proceed, and as a result, we're seeing fewer contracts coming through."

This sentiment is shared by many in the local construction industry. Affordable housing projects, which are already operating on thin margins, are expected to be hit the hardest. Developers worry that this fee increase will not only reduce the number of new projects but also drive up housing costs, exacerbating the region's housing affordability crisis.

Constitutional Concerns and Calls for Legal Action

In addition to financial concerns, some contractors are exploring the possibility of challenging the fees on legal grounds. Critics argue that the fees may constitute an unauthorized tax and fail to meet the constitutional requirements for a direct nexus and proportionality between the fee and the specific impact of the development. Under U.S. Supreme Court precedents, fees imposed on contractors and developers must be directly related to the costs incurred by the government due to the development.

"These fees are arbitrary and disproportionate to the impact our projects have on infrastructure," said Mr. Cornett, who is considering filing for an injunction to halt the enforcement of the fees. "We're not against paying our fair share, but the City has failed to show how these fees are justified or necessary."

City Response

City officials maintain that the fees are necessary to ensure that new developments do not strain the city’s infrastructure and environmental resources. They point to growing demands for stormwater management, road maintenance, and public utilities as justifications for the new fee structure.

However, local contractors and developers remain unconvinced, arguing that the lack of transparency and clear justification from the city government raises questions about the legality and fairness of the fees. "If these fees continue unchecked, the local economy will suffer, and Olympia could see a slowdown in the very growth that these fees are supposedly supporting," said Mr. Cornett.

The Road Ahead

As developers and contractors remain at odds with city officials, many in the construction industry are left wondering how these fees will affect their ability to sustain business in the coming years. While some are hopeful that a legal challenge could bring relief, others fear that without action, Olympia’s development landscape could be permanently altered.