Two Tri-Cities jurisdictions have made headlines this quarter with major moves on development impact fees: one decision finalized, the other still unfolding.

In Kennewick, a fire impact fee was narrowly approved by the City Council on April 15 after a 5–2 vote on the ordinance and a tight 4–3 vote on the fee schedule. The new fees will apply to new development in the rapidly growing Southridge area and are meant to fund the construction of a long-planned fire station.

Council debate centered on two primary questions: Should these costs be borne solely by new Southridge homeowners, or should the city as a whole share the burden? And should the fees include financing costs (i.e., bond interest) or only the base construction price? After lengthy discussion, the majority opted to keep the fee limited to Southridge and approved the higher-cost scenario that includes bond interest recovery, a decision that generated concern from several councilmembers and stakeholders alike.

The fee structure sets a precedent, but also highlights a larger trend: cities increasingly relying on impact fees as a backstop to long-term planning and budgeting.

Meanwhile, in Pasco, the conversation has focused on traffic and school impact fees. The city had been planning to increase traffic impact fees across the board, with early drafts proposing as much as a fivefold increase in certain zones. However, the council appears to have delayed formal action, choosing instead to hold off until a separate reduction in school impact fees takes full effect.

For housing advocates, the delay represents a mixed result: one fee going down, one potentially going up, and a larger question about whether cities are thinking far enough ahead to prevent affordability erosion.

From TCAR’s perspective, impact fees aren’t just a budget line. They are a tax on housing, paid by future residents, often as a consequence of past planning failures. And they don’t come cheap. Every fee added at permitting eventually shows up in the final price, and the cumulative effect can price entire families out of the market.

To help cities better understand this long-term burden, TCAR is preparing a detailed impact fee analysis, drawing from economists at NAHB, NAR, BIAW, and other organizations. The final report will explore how modest-sounding fees evolve through markup, financing, and transaction costs and what smarter alternatives (including better planning tools, funding mechanisms, and transparency requirements) may offer a more sustainable path forward.

Final Thought:
Impact fees may fund infrastructure, but they also function as a hidden tax on the next generation of homebuyers. Cities must plan for growth before it arrives, not tax it after the fact. If we fail to correct course, we’ll keep repeating the same cycle: growth, scramble, fee, fallout.