Title
Approval of a Park Impact Fee Methodology Recommendation, as Required by State Law
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to approve the recommended New Park Impact Fee Methodology, as required by State law, and forward to the full City Council for approval.
Report
Issue:
Whether to approve the recommended New Park Impact Fee Methodology, as required by State law, and forward to the full City Council for approval.
Staff Contact:
Laura Keehan, Director of Parks Planning & Maintenance, Parks Arts and Recreation, 360.570.5855
Tammy LeDoux, Finance & Policy Coordinator, Parks Arts and Recreation, 360.753.8053
Presenter(s):
John Ghilarducci, Principal, FCS Group
Laura Keehan, Director of Parks Planning & Maintenance
Tammy LeDoux, Finance & Policy Coordinator
Background and Analysis:
In 2023, the Washington Legislature adopted Senate Bill 5258, amending RCW 82.02.060 to require impact fee schedules to reflect the proportionate impact of different housing unit types. The law requires lower impact fees for smaller housing units based on square footage, number of bedrooms, or trips generated. The City must adopt a compliant methodology within six months of adoption of the Comprehensive Plan, requiring implementation by June 30, 2026.
The City hired FCS Group to scale the current park impact fees to comply with this recent change in State law. An update of the fees is not included as a part of this study as this change is only to the methodology and is intended to be revenue neutral. The next park impact fee rate study will be completed in the Fall of 2028 after the next Parks Plan is adopted.
Staff recommends using habitable square footage as the basis for scaling park impact fees. This approach is commonly used by jurisdictions across Washington and is supported by reliable data correlating housing size with occupancy levels. It is also the most straightforward methodology to administer and avoids ambiguity associated with determining bedroom counts. Trip generation is used for transportation impact fees.
This item will be presented to full the full City Council on June 2, 2026. Once direction from the City Council has been received, staff will prepare the ordinance for approval at their June 16, 2026, business meeting.
Background
An impact fee is:
• A payment of funds imposed upon new development as a condition of development approval.
• Intended to help fund public facilities needed to serve growth and development.
• Assessed only for facilities that are reasonably related to, and necessitated by, the additional demand created by new development.
• Limited to a proportionate share of the cost of system improvements that reasonably benefit the new development.
• Required to be spent in conformance with the Capital Facilities Plan element of the Comprehensive Plan.
• Subject to a statutory requirement that funds generally be expended within ten years of collection.
The City began collecting park impact fees in 1992. Current fee rates are based on the 2022 Park Impact Fee Rate Study and are calculated using the Capital Investment Strategy project list and level-of-service standards identified in the 2022-2028 Parks, Arts & Recreation Plan.
The Parks, Arts and Recreation Department updates the Parks Plan every 6 years and will update the park impact fee rates after the adoption of a new plan. Annually, the Department also evaluates the fee for inflationary increases.
The collection of park impact fees is a critical piece to the success of the Olympia Parks system. As described in the 2022 Parks, Arts and Recreation Plan, Parks began shifting from acquisition to development, and this revenue is our primary source of match funding for grants.
Recent projects that were funded with impact fees include:
• Grass Lake Nature Park - construction of trails
• Woodruff Park and Lions Park - development of spraygrounds
• Jolene Unsoeld (Yelm Highway) Community Park - design and upcoming construction
• Three off-leash dog parks - construction
• West Bay Park Master Plan - completion
• Rebecca Howard Park - development planning and upcoming design work
• Marj Yung (Kaiser Woods) Park - design and upcoming construction
Climate Analysis:
Park impact fees pay for park facilities to serve new residential development at urban densities and infill, which is consistent with the City's Comprehensive Plan and is a key climate mitigation strategy.
Equity Analysis:
This new methodology is designed to fairly fund park infrastructure while reducing the cost burden on smaller-sized dwelling units, to support community needs and housing affordability. Also, dwelling units that meet affordable housing criteria are given an 80% discount on their park impact fees in Olympia.
Parks play an important role in the community as places that are free and accessible to the public for social connection and gathering, physical and mental health, and preservation and connection with nature.
Neighborhood/Community Interests (if known):
Olympians have shown a strong level of community support for Parks, Arts and Recreation services, as demonstrated by two voted funding measures and strong participation in the development of the Parks Plan. The YES Olympia Parks Coalition was heavily involved in the formation of the Olympia Metropolitan Park District and members continue to take a strong interest in the parks system.
The Olympia Master Builders (OMB) and housing community may have interest in this proposed methodology change for park impact fees. Staff has informed the OMB about the proposed park impact fee methodology change.
Financial Impact:
Annual park impact fee revenue varies with development activity. Collections totaled approximately $778,877 in 2023, $461,990 in 2024, and $988,134 in 2025. The proposed scaling methodology is intended to be revenue-neutral overall.
While the Department has other dedicated funding sources, those revenues primarily support operations, land acquisition, or debt service. Park impact fees remain an important funding source for development of new parks and park amenities needed to serve growth.
Options:
1. Move to approve the recommended New Park Impact Fee Methodology, as required by State law, and forward to the full City Council for approval.
2. Direct staff to prepare methodology based on a different basis, such as the dwelling unit’s number of bedrooms or trip generation. This will require additional time to prepare and will be challenging for staff to administer at time of building permit.
3. Provide other direction. This could delay compliance with State law.
Attachments:
Residential Scaling for Park Impact Fees Memo