Impact fees: 'Growth paying for growth'

Kalispell council gets lesson in fee plans

New homes and business buildings add to what the city of Kalispell must provide in utilities, police, fire and park services.

Consequently, the city government wants to set one-time standard fees that a new house or business building will pay to offset those extra expenses.

The Kalispell City Council was briefed Monday on how the city plans to set up these "impact fees."

Kalispell is growing more rapidly than normal, which translates to the city providing more water, treating more sewage, and setting up more fire and police protection - all of which require more money.

"We've been struggling with how to fund capital improvements related to growth," said James Hansz, the city public works director.

Randy Goff of the Portland consulting firm of HDR/EES said: "It's basically growth paying for growth."

The city hired the firm for roughly $80,000 to help set up an impact fee system by early 2006 that meets the state's legal requirements.

Last spring, the Legislature passed a law that governs how cities collect this money through impact fees. Since Kalispell has water and sewer impact charges already on the books and a storm-water charge ready to enact, the city must comply with this new law.

Impact fees would be only levied one time against a newly constructed house or business building within city limits, or against an annexed building on a septic system and wells that the owner wants to hook into the city's utilities, Hansz and Goff said.

Right now, the city's existing sewer and water impact fees add a few thousand dollars to the sales price of a newly constructed dwelling or other building. The addition of storm water, parks, fire, police and street fees would likely add a few more thousand dollars to the price, an HDR/EES briefing document showed.

However, council members speculated Monday that market pressures might limit how much impact fees will increase prices of brand-new buildings.

Goff outlined what is allowed and forbidden under the state's impact fee law.

The impact fee money will go to capital projects such as expanding the sewage treatment or water plants, building new fire and police substations, constructing new streets or creating parks.

The money cannot be used for routine operations and maintenance, replacing worn-out equipment, routine upgrades and to buy vehicles. The exception to the vehicle prohibition is that impact fees can pay for fire trucks because they have six-figure price tags and are used for more than 10 years.

The city staff and the consulting firm will work out formulas on how the impact fees will be calculated and levied. These will be based on factors including how much the water and sewer systems' overall capacity will be affected, water and sewer demands on a specific area, meter sizes, traffic figures, parks-and-population figures, police and fire response times, and the types of dwellings and businesses involved.

The parks aspect likely will wait until after early 2006 because Kalispell does not yet have a master plan set for parks development, Goff said.

When an impact fee is collected for a specific service, that money is to go to an account only for that service. The money cannot be shifted to another use.

The City Council's next step will be to appoint a state-mandated advisory committee, which will review the city staff's drafts and recommendations before they go to the council. To finish the project by early 2006, the council needs to appoint the advisory committee within 30 days, Goff said.

There are no state requirements on the committee's size and makeup other than it include at least one developers' representative and one certified public accountant.

Reporter John Stang may be reached at 758-4429 or by e-mail at jstang@dailyinterlake.com.