The Spokesman newspaper is reporting that the Spokane City Council has passed a series of fee increases on new housing construction, including a water connection fee increase on multi-family units from $18,000 to $470,000.

Additionally, many other fees are seeing significant increases, including a 300% increase for residential water connections and an almost 250% increase in transportation fees with estimates showing the impact fee could be as high as $7,500 per home.

In a housing crisis, increasing development fees will not increase housing availability and reduce costs. The cost of increased fees will be passed onto the home buyer as higher home prices. Developers will be less incentivized to cover the cost of the fees during construction of the home and housing starts will decline as a result.

Homes in Spokane are still selling above list price 23.4% of the time in a market that is still rated somewhat competitive, despite cooling in the last year, according to the Redfin real estate website. Adding the additional fees to new construction will reverse that trend.

During the council meeting, Spokane City Councilmember Jonathan Bingle proposed a much less aggressive plan which garnered significant support from local developers, the Spokane Home Builders Association and the Spokane Realtors. The proposal was not adopted, despite the warnings from the industry groups that the fee increases in the original proposal, would continue to increase the cost of housing.

In a statement to the council, Tom Hormel, president of the Spokane Realtors commented on the use of the fees for a multi-million dollar project at Spokane airport, “It had better be a nice upgrade to the airport, because it’s going to be busy with all the citizens leaving Spokane to find a place that’s affordable to live.”

Spokane City Council needs to repeal the onerous fee increases on housing construction to reduce the cost of housing in Spokane.

For WPC’s recommendations on how to increase housing affordability and availability, without increasing fees and taxes, click here.