SB 5748
In CommitteeSenate
Impact fees
Incentivizing the substantial reduction or elimination of impact fees.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill lets Washington cities and counties replace some or all of their impact fees with a local sales or use tax—up to 1%—to fund infrastructure, but only if they first cut impact fees by at least half and voters approve the new tax. The goal is to reduce barriers to new housing while ensuring local governments can still afford essential infrastructure.
- Allows cities and counties to impose a local sales or use tax of up to 1% to replace revenue lost from reducing or eliminating impact fees.
- Requires cities and counties to first adopt a resolution or ordinance that substantially reduce or eliminate impact fees (defined as a 50% or greater reduction in fee collections).
- The new tax must be earmarked for the same infrastructure purposes (e.g., roads, schools, parks) as the original impact fees.
- Requires local voter approval (a simple majority of those voting) before the tax can be implemented.
- Mandates that the tax rate be reviewed and adjusted every three years, and set based on the estimated cost of needed infrastructure minus expected impact fee collections.
Who is affected
- Cities and counties — Local governments (cities and counties) that choose to reduce or eliminate impact fees and replace them with a local sales or use tax to fund infrastructure like roads, schools, and parks.
- Developers and homebuilders — Developers and homebuilders who may face lower upfront fees when building new housing, but could see local sales taxes increase depending on the tax rate adopted.
- Residents — Residents in cities or counties that adopt the new sales tax, who may pay slightly higher sales taxes but benefit from improved infrastructure funded by the new revenue.
- Homebuyers and renters — Homebuyers and renters who may benefit from increased housing supply due to lower development costs, though prices could be affected by local tax changes.
Pro/Con Analysis
Potential Benefits (5)
Requires voter approval for the new tax, giving residents direct democratic control over whether to trade higher sales taxes for reduced development fees—potentially increasing local accountability and transparency.
Local GovernmentPeopleRef: Sec. 2(5)By allowing cities/counties to replace lost fee revenue with a broad-based tax, the bill may reduce the regressive burden of impact fees—which disproportionately affect first-time homebuilders and developers of affordable housing—potentially increasing supply of all housing types.
HousingPeopleRef: Sec. 2(1), Sec. 2(4)Developers of all scales may benefit from lower upfront capital requirements due to reduced impact fees, potentially accelerating project timelines and lowering barriers to entry for smaller builders—though the new sales tax ultimately spreads cost to consumers.
Business & EmploymentPeopleRef: Sec. 2(1)If localities redirect some of the new sales tax revenue toward school infrastructure (per original fee purpose), this could support long-term educational outcomes—especially in underserved areas where school capital needs are greatest.
EducationPeopleRef: Sec. 2(1), Sec. 2(4)Earmarking tax revenue for transportation infrastructure (e.g., roads, transit) aligned with original fee purposes may improve traffic flow and safety—though benefits depend on local implementation and prioritization.
TransportationLean peopleRef: Sec. 2(1)
Potential Concerns (5)
Local governments gain new authority to impose up to a 1% sales tax to replace lost impact fee revenue, but must first reduce fees by ≥50%—potentially reducing upfront developer contributions before new revenue is secured, creating fiscal uncertainty during transition.
Local GovernmentRef: Sec. 2(1)While intended to increase housing supply, the requirement to reduce impact fees by at least 50% before adopting a new tax may disproportionately benefit high-end development (where fees are a smaller share of total cost), potentially reducing affordability incentives for low- and moderate-income units.
HousingPeopleRef: Sec. 2(2), Sec. 2(5)The tax must be earmarked for the same infrastructure purposes as the original impact fees (e.g., roads, schools, parks), but this may limit local flexibility to redirect funds to urgent needs like affordable housing, climate resilience, or public health infrastructure.
Public SafetyPeopleRef: Sec. 2(1), Sec. 2(4)The 1% sales tax applies broadly to consumers, meaning low- and middle-income households—especially those in high-sales-tax jurisdictions—may bear a disproportionate burden, as sales taxes are regressive.
Business & EmploymentPeopleRef: Sec. 2(1)Mandatory triennial tax-rate reviews could create administrative burden and uncertainty for local governments, especially smaller jurisdictions lacking dedicated revenue modeling staff.
Local GovernmentRef: Sec. 2(1)
Who Is Most Affected
Local governments gain fiscal flexibility but face political risk: voter approval is required, and revenue depends on economic activity rather than predictable developer contributions. Smaller jurisdictions may struggle with administrative costs and modeling.
Developers benefit from lower upfront fees, especially large firms with capital to absorb transition costs; smaller builders may benefit more from reduced barriers to entry. However, all developers ultimately pass some cost to consumers via higher prices if sales tax increases drive up land/development costs.
Residents in high-growth areas may see improved infrastructure and possibly more housing supply, but low- and middle-income households bear a disproportionate share of the new sales tax burden. Renters may benefit indirectly if supply increases outpace demand.
Homebuyers may benefit from increased housing supply and lower developer costs, but could face higher purchase/rental prices if developers pass on sales tax costs or if increased demand outpaces supply. First-time buyers are especially vulnerable to regressive tax shifts.
Low- and middle-income households are most affected by the regressive nature of the sales tax, especially in jurisdictions where the tax is adopted. They spend a higher share of income on taxable goods, making this an inequitable funding mechanism without offsetting progressive measures.