City studies capital improvement funding

Kalispell City Council members are expected to bear down later this spring on the issue of capital improvements funding.

Through informal discussions, a few council members already have been trying to brainstorm ways to possibly set aside more money for capital improvement needs, council member Phil Guiffrida said.

“A few of us feel the city needs to change the way it looks at things, and look at continuous capital improvement funding versus one-time impact fees,” he said.

Impact fees for water, sewer, storm water, police and fire are charged for construction, addition and renovation projects that put more demand on city infrastructure and services.

Revenue from the fees goes into dedicated funds to pay for future, growth-related costs and in some cases major capital improvement projects and purchases.

By law, council members can’t meet with a quorum — enough people to take action or “conduct business” — without giving notice of a public meeting.

Guiffrida said council members have not and will not violate that law in their discussions.

After repealing transportation impact fees in early February, council members agreed to hold a series of work sessions to discuss other ways of raising money for major growth-related road projects.

Since then, no such work sessions have been held.

Charles Harball, city attorney and interim city manager, said those work sessions will be held as preliminary budget figures materialize this spring. He hopes the City Council will take a bigger-picture look at the city’s capital improvements needs.

“I would rather have them see the big picture, the cash flows. And out of those, how do you preserve some of that and put it aside for capital needs,” Harball said.

One concept publicly raised so far would steer a portion of property taxes from new developments into a dedicated capital improvements fund.

Another idea is steering some of the money being used to build up the city’s general fund reserves into a dedicated capital improvements fund.

Another possibility is lobbying the Montana Legislature to let cities such as Kalispell adopt a local option sales tax, a push that has been defeated in the past.

Under state law, impact fees can be used only for projects or equipment purchases depreciated over 10 or more years.

That system has been working well for utilities such as water and sewer collection and treatment, all of which have rolling five-year capital improvement plans, Harball said.

But it doesn’t work so well for the capital improvement needs of other departments such as parks and recreation, streets or police.

Some major equipment purchases such as police cruisers, depreciated over five years, are paid for out of maintenance and operations budgets that come from the city’s general fund.

“We’ve been doing that for too long. That’s not the best practice. It should be split out and separate for planning and accounting purposes,” Harball said.

Kalispell still is in the process of identifying all of its assets and capital needs, a daunting task started by former city Manager Jane Howington.

“This year as we go through the budget, we’ll discuss the capital needs of each department. Then we can sit down and talk about what our revenue streams are, and see what is adequate to do and inadequate to do,” Harball said.

The transportation impact fees that ended in February were not raising money for major street equipment purchases that can be depreciated over long periods of time, a decision that was made by the city’s impact fee advisory committee.

“Their argument was, ‘You’re using this equipment to maintain the roads as well as build them.’ I get the argument, kind of,” Harball said.

“A grader can last a long time and it’s very expensive. If we’re not doing it with impact fees, we should have some other means of putting money aside when it becomes toast.”

A concept for a revised, trip-based street maintenance assessment also is being developed.

It would reduce the amount paid by residential property owners and assess businesses based on the amount of traffic they generate, potentially raising millions of dollars more for annual street maintenance funding.

Harball said he has cautioned council members not to get too involved in their behind-the-scenes brainstorming.

“What we don’t want to hear is someone come to council and say, ‘So and so and so and so and I met and we decided what we want to do,’” Harball said.

Guiffrida said talks have been very preliminary and informal and infrequent.

“I think the public understands that the city council doesn’t just go Monday nights. And if they don’t, they should. We’re very active. We’re constantly in communication with city staff and constantly floating ideas back and forth and that’s the way it needs to be,” he said.

Reporter Tom Lotshaw may be reached at 758-4483 or by email at tlotshaw@dailyinterlake.com.