Issue Paper #11 1st Draft

Incentives

1. IDENTIFICATION OF THE ISSUE

Currently, over 200 cities and 29 counties in Washington are fully engaged in GMA planning and implementation.

Most of the attention and debate about GMA has focused on those jurisdictions and situations where jurisdictions are having trouble adopting their initial plans and regulations to be in conformance with the GMA. Far less attention has been focused on what tools are needed within those GMA planning cities and counties who are ready and willing to implement their GMA visions.

It's important to remember that within the cities and counties fully planning under the GMA reside over 90% of the state's population. Within these jurisdictions is where new homes, businesses and jobs will be created over the next 20 years. Public and private investments designed to respond to this growth should be facilitated by the individual and collective actions of jurisdictions involved in GMA.

Issues raised in this paper are:

II. BACKGROUND

A. Legislative History

GMA PLANNING GRANTS

Since passage of the GMA in 1990, the state has provided a total of $40,325,773 in planning grants to cities and counties (see attached breakout by county by year). The bulk of these funds have been made available to jurisdictions during the first 3-4 years of their GMA activities as a way to support, but not fully fund, their mandated planning. While costs associated with meeting GMA requirements vary widely depending upon the level of pre-GMA planning activity, size and sophistication of local staff and very localized experiences with growth, a CTED/City/County survey in 199x found that on average, state GMA planning grants covered one-third of what it cost to develop and adopt basic GMA plans and regulations. These cost estimates have not included any costs associated with things such as legal costs to defend a GMA action, development of any sub-area plans or updating and refining initial GMA products.

State planning grants began to shift focus in 1995. While several jurisdictions who became involved in GMA planning later than 1990/91 (such as those in Spokane County) are still receiving basic GMA grants to complete their initial work, the bulk of GMA-planning jurisdictions were supposed to complete their basic planning requirements within 1994-95. Grants available since 1995 to these jurisdictions have been for "special projects" such as efforts to integrate GMA and SEPA in particular geographical areas.

GMA TECHNICAL ASSISTANCE

After adoption of the GMA in 1990, the Growth Management Division of CTED was established. It is directed by statute to "establish a program of technical and financial assistance and incentives (emphasis added) to counties and cities to encourage and facilitate the adoption and implementation of comprehensive plans and development regulations throughout the state." (RCW 36.70A.190(1))

Since 1990, the Division has primarily utilized staff and resources to:

OTHER STATE EXPENDITURES

Only in two (2) instances do statutes specify how the state should expend resources in response to local GMA actions. In both cases, funds may be withheld for failure to comply with GMA provisions. In no case do statutes specify funds shall either be directed or prioritized to those GMA jurisdictions who are in compliance with GMA responsibilities.

NONCOMPLIANCE AND SANCTIONS (RCW 36.70A.340)

This section specifies how the Governor may selectively withhold funds for jurisdictions who have either failed to convene required initial meetings to develop countywide planning policies, or who have been found by actions of a Growth Management Hearings Board to not be in compliance with specific GMA provisions. Funds that may be withheld are: the motor vehicle fuel tax; the transportation improvement account; the urban arterial trust account; the rural arterial trust account; the sales and use tax; the liquor profit tax; and the liquor excise tax. To date, the Governor has selectively withheld funds only in Chelan County.

FAILURE TO MEET DEADLINES (RCW xxxxx)

This section specifies that jurisdictions failing to meet GMA planning deadlines are not eligible for funds from either the public works trust fund or centennial fund accounts. To date, the state has taken a position that <<ADD a discussion of how the state has interpreted/used this authority.>>

To date, there have been no actions of either the Legislature to prioritize funding allocations, such as budgeting for transportation projects, based upon whether or not a particular jurisdiction has completed and is implementing a GMA-based plan.

OTHER TYPES OF INCENTIVES

Since passage of GMA in 1990, a number of issues have arisen concerning what needs "fixing" in the statutes, but little attention has been paid on how the state might modify statutes to either reflect new planning "realities" under GMA or how implementation of "good" GMA plans/regulations might benefit from more creative state statutes and/or utilization and targeting of state resources.

Some creative approaches have been initiated. As an example, in 1995 the legislature authorized a "pilot" to help encourage the development of multi-family housing within urban growth areas in cities of 150,000+ people (Seattle, Spokane and Tacoma). IF within an urban growth area in these cities, the local legislative body has designated an area as "lacking in sufficient housing", new multi-family housing (both low income and market rate) may receive a 10-year exemption from the property tax. To date, in an area so designated within Tacoma, the city has approved 414 units and several are now under construction.

III ISSUE DISCUSSION

A. GMA PLANNING GRANTS/TECHNICAL ASSISTANCE

By its nature, the GMA planning and implementation process is ongoing. Both state and local agencies remain obligated to complete, revise and implement GMA plans and regulations. Current statutes recognize this obligation, yet to date, the question of what types of state funding assistance should be available to implementing agencies has been somewhat of an ad hoc process by which the Legislature evaluates whether or not to obligate funds on an annual basis. This may or may not be the most appropriate means to allocate funds.

During the initial phase of GMA planning, there was a relatively consistent level of funding to aid local jurisdictions in plan preparation. In very small cities mandated to plan under GMA, funds provided may have covered the costs of hiring consultants and/or contracting with another jurisdiction to prepare basic GMA planning components. In the vast majority of jurisdictions (all counties and most cities with any growth), most interests familiar with the costs of local implementation recognize that state funds did not anywhere near cover local costs to develop and adopt GMA mandated planning components.

At the present time, there has been little or no systematic consideration of what, if any further obligations the state maintains as local agencies strive to implement these plans. Anyone familiar with GMA ongoing responsibilities recognizes that plan implementation, refinement, updating and monitoring does require resources. Many jurisdictions are currently reducing staff devoted to planning as they struggle to prioritize expenditures of local resources. What, if any impacts such staff reductions have on the success or failure of GMA is unknown.

Similarly, the state has not evaluated or defined what level and types of resources are necessary for the state to maintain both a program of technical assistance and data gathering/evaluation necessary to insure the success of GMA.

B. OTHER STATE EXPENDITURES/LOCAL FISCAL CAPACITY

In theory, if not in practice, public and private investments in communities implementing GMA plans should benefit from the coordinated land use, environmental and capital facilities planning required by the GMA. All parties invested in a better understanding of where growth will be situated and how it and existing development will be served benefit from knowledge gained by this effort and actions and decisions made consistent with the plans.

Currently, there is a recognition that whether in GMA planning jurisdictions or not, there aren't sufficient resources at the state or local level to maintain EXISTING infrastructure, let alone provide it at sufficient levels for anticipated growth. Given that the bulk of new growth in Washington will be located in GMA-planning jurisdictions, the question arises as to how public and private investments can best be coordinated and channeled to these areas.?

The state has "collected" over a hundred local GMA plans which contain detailed descriptions of needed capital investments to accommodate anticipated growth. As required, GMA jurisdictions must specify needed capital improvements and how they will be funded for at least a 6-year window of anticipated growth. To date, the state has not compiled information from these plans to determine what capital expenditures are anticipated, nor how they will be funded. After the delivery of the first 50 or so GMA plans to the state several years ago, there was an effort to identify what those local governments assumed would be supported by just the Public Works Trust Fund account. At that time, it was determined from an evaluation of those 50 capital facilities plans that locally anticipated funding would exceed available Trust Funds by six times the amount available.

It is critical that information available from these plans be evaluated to determine the adequacy of both local and state fiscal capacities to accommodate anticipated growth. Such information is critical to determine whether or not Washington can indeed accommodate projected growth. Similarly, such information can help decision makers at all levels determine how to prioritize funding. A better understanding of the "funding gap" can also allow decision makers to determine what if any other funding mechanisms should be made available to state and local agencies.

Currently, the state's only clear reaction to local governments planning under the GMA is to have a set of tools available to "punish" those who aren't complying. There are no distinct tools to "reward" those that are complying.

C. INCENTIVES/DISINCENTIVES FOR LOCAL GOVERNMENT GMA COMPLIANCE

While the issue of sufficient funding for planning and implementation activities requires attention, there are a host of other things that the state might consider to aid GMA implementation in those jurisdictions who are meeting their GMA responsibilities. Following is a discussion of some that might be considered.

(1) The Transformation of Governance within Urban Growth Areas (UGA's)

GMA-planning jurisdictions are required to differentiate the types and intensities of growth that is planned for inside and outside of UGA's. Statutes modified along with adoption of the GMA preclude cities from annexing or incorporating outside of UGA's. Statutes addressing annexation procedures inside a UGA once it has been established have not been modified since GMA was adopted other than to remove the requirement for conducting a SEPA evaluation of such annexations prior to their consideration.

In areas planning under the GMA, there has been evidence in recent years of a recognition that most areas within urbanized UGA's will eventually become part of a city. A large number of annexations to cities in the Central Puget Sound and Vancouver area have occurred in part because of this recognition. Current annexation statutes don't acknowledge that once UGA's have been established, there are frequently agreements between a county, individual cities and other interests about how unincorporated areas will be provided services. GMA-planning cities must develop capital plans that anticipate service provision outside current municipal boundaries, yet there is no acknowledgment that such areas may or may not annex. This is particularly problematic in the many so-called "islands" of unincorporated land surrounded entirely by existing cities - lands not efficiently served by a county government. There are other obstacles within current annexation statutes that make it difficult for cities to annex, especially developed residential areas that in most instances don't produce revenues equal to the cost of providing services. Until and unless annexation statutes are revisited, a patchwork of governance and service provision within UGA's will continue.

Any consideration of changes to annexation statutes within GMA planning jurisdictions will likely require discussion of the impacts on the fiscal health of counties and to a lesser extent, special districts. There are numerous successful examples of how the concerns of these jurisdictions have been accommodated and the fact remains that the GMA does anticipate the transformation of governance within urbanized UGA's from counties to cities. The question that needs to be addressed is within those jurisdictions that have adopted their GMA plans, how can such a transition be facilitated, and should new annexation procedures exist within such jurisdictions and not in those not planning under GMA?

(2) Facilitating the Siting of Commercial and Industrial Development

As evidenced by the last several legislative sessions, the debate continues on where to site industrial and commercial uses - both within and outside UGA's. Is there a way to "redefine" this debate, at least inside adopted and recognized UGA's by finding ways to facilitate development/redevelopment of by-passed or underutilized parcels (such as those contaminated)? For example:

(3) School Siting

Siting of new schools is often done without sufficient regard to long-term land use planning such as is being done under GMA. As an example, can and should the current 40 acre standard for a new High School site be used in all UGA's? Are there disincentives for School Districts to renovate existing buildings as compared to building new ones in another location? How do School Districts get help finding the "right land at the right price" inside UGA's?

(4) Environmental Standards

Development within many parts of UGA's, especially on lands within already urbanized areas, is sometimes hindered by problems developing specific sites with environmental constraints (ex. steep slopes, wetlands). Are there ways to facilitate development/redevelopment of such sites, while also protecting and enhancing environmental quality? Should such tools as "wetlands banking" be more fully utilized in both UGA's and outside UGA's? Should there be different standards for environmental protection inside and outside UGA's?

(5) Tax incentives

If state and local policy envisions that the bulk of new growth will occur within UGA's, and public agencies are making infrastructure and other capital investments in UGA's to accommodate this growth, are there ways to help facilitate and attract private investments to make sure this occurs? Most experts agree that lands within UGA's are more expensive to develop than raw land outside UGA's. This may or may not be true if the real costs of providing services are accounted for. Nevertheless, might there be discreet tax incentives available to attract development/redevelopment such as has been allowed on a pilot basis with the deferral of property taxes to spur multi-family development within certain portions of the UGA?

IV. OPTIONS

A. GMA PLANNING FUNDS

(1) Discontinue State Funds (Planning and Implementation)

Pro:

Con:

(2) Phase Out Basic Planning Funds/Continue Some Level of Implementation Funding

Pro:

Con:

(3) Gather More Data on How State Funds Have Been Spent/Where the Needs Are at the Local Level

Pro:

B. TECHNICAL ASSISTANCE

<<Consult with CTED>>

C. STATE AND LOCAL FISCAL CAPACITY TO IMPLEMENT GMA

(1)Maintain the Status Quo

Pro:

Con:

(2) Prioritize State Funds/Channel to GMA Implementing Jurisdictions ex. Transportation, PWTF, Centennial, other funds)

Pro:

Con:

(3) Authorize New Local Funding Sources for Infrastructure, Housing, Open Space and Environmental Protection (in addition to or in the absence of Prioritized State Funds)

(4) Initiate/Fund State & Local FISCAL CAPACITY STUDY to Evaluate Implementation Opportunities and Obstacles.

D. IMPLEMENTATION INCENTIVES (other than specific funding)

(1) Facilitate the Transformation of Governance within Urban Growth Areas (UGA's)

Pro:

(2) Facilitate Clean-Up of By-Passed Commercial/Industrial Sites which are contaminated within UGA's. This is an area where not only state and local regulations apply, but also Federal ones.

(3) Create a means of helping "market" identified sites for residential, commercial and industrial development within UGA's

(4) Provide greater flexibility in School Siting Standards (i.e., size) within UGA's

(5) Facilitate Off-site environmental mitigation within UGA's (ex. Wetlands Banking)

(6) Examine and Expand Tax Incentives for Development/Redevelopment within UGA's (such as Tacoma's multi-family property tax exemption)

(7) Seek means to Establish/Promote "BEST OF LOCAL GMA PLANS/ACTIVITIES" to help foster "good" development, redevelopment and environmental protection.

(8) Establish and Commit to the Maintenance of a Statewide system of collecting and analyzing data on GMA implementation - "What's really working and not working?"