Whitefish begins impact-fee work
By LYNNETTE HINTZE
The Daily Inter Lake
In the world of impact fees, the fee assessed for a multimillion-dollar trophy home is the same as the fee assessed for a starter home.
That assertion was a revelation to some Whitefish City Council members as they began discussion about impact fees during a work session on Monday. The city's consultant, Randy Young of Henderson, Young and Co., gave the council a primer on impact fees as the city embarks on the process of determining how much the fees will be and what areas of new development will be affected.
Impact fees for the construction of new homes are almost always based on a flat fee, Young said.
"You may be tempted to base it on value, but if you do that, it becomes a tax," Young said. "Councils find it a challenge" to use a flat fee.
There's the notion that the more expensive the home, the more consumption there is of city services. In reality, though, many trophy homes are second homes and are used very little.
"You're safer defending the average," Young said. "For our purposes, a home is a home is a home."
Impact fees tend to drive up property prices as developers pass the costs on to consumers. And they affect not only new construction but also existing properties, Young said.
"The downside is what it does to affordable housing," Young cautioned.
While he didn't elaborate on the affordable-housing issue, he said cities have a number of proven, viable strategies for addressing affordable housing, but will wait until later to detail those strategies.
Impact fees for businesses are assessed just the opposite of residential construction.
They can be charged through a variety of different scenarios, such as square footage or traffic generation. Sometimes they're assessed per fixture, Young said, using the example that gas stations can be assessed per gas pump.
Proportionate share comes into play when determining impact fees for utilities and street construction. Because existing roads already have some value, it's unlikely that developers would be tapped for 100 percent of street improvements tied to new development, Young said. Impact fees must be tied to capital improvements, so maintenance costs such as resurfacing a road wouldn't qualify for impact fees.
Young explained the parameters of Montana's Senate Bill 185, enacted a year ago to give cities the ability to impose impact fees to pay for public-facility improvements affected by new development.
"It follows the national concept," Young said of the new law, "but what's in the fine print?"
The law allows impact fees for seven kinds of public facilities - water, sewer, transportation, storm water, police, emergency medical rescue and fire services. Other kinds of impact fees, such as those for park development, can be established by cities, Young said, but it takes a two-thirds vote of the City Council.
Montana cities also may charge a recoupment fee, similar to a latecomer's fee, that assesses developers for using extra capacity of a public facility. If a project is bonded, it's easier to get recoupment, Young said.
Here again, proportionate share comes into play.
"It's that portion of cost of capital improvements that reasonably relates to service demands and the needs of new development," he said.
Cities can't use impact fees to pay for operation/maintenance costs, repairs or existing deficiencies, but can accept in-kind contributions - a new fire hall, for example - in lieu of impact fees.
Young will update a 2000 impact-fee evaluation he completed for Whitefish, and expects to spend much of the coming year determining a usable fee structure. An advisory committee will be created next fall.
Features editor Lynnette Hintze may be reached at 758-4421 or by e-mail at lhintze@dailyinterlake.com