City benefits from mistake while Whitefish residents pay

Whitefish contracted two consulting firms to produce reports that determined the water usage statistics of Whitefish households. The results of their studies were vastly different.

This created a dilemma for Whitefish management. They needed to reconcile the difference. Without correcting one of these conflicting reports, management would either overstate the city’s water system capacity to a Montana state agency or would overcharge its residents and builders.

In November 2018, the Whitefish city manager calculated water impact fees that the city charged new and existing residents and builders. To calculate these fees, the manager used water statistics for a typical Whitefish household of 744 gallons per day during peak demand. This number was computed by Whitefish and its consultant, The FCS Group, and was nearly double previous study findings. As a result, Whitefish charged its residents high impact fees because each new household was supposedly consuming an excessively high amount of water.

A few months later in 2019, Whitefish filed a water usage and capacity report with the Department of Environmental Quality. The report submitted by the city stated that a typical Whitefish household consumed only 374 gpd of water during peak demand. Using this data, the city assured the DEQ that Whitefish had adequate water treatment and storage facilities to handle its immediate growth. Whitefish asserted that it could service an additional 1,023 new homes because each new household consumed a relatively low amount of water.

What difference does this make?

For new and existing Whitefish residents and builders, it makes a huge difference. The higher the water usage statistic, the more the city charges homeowners and builders in impact fees. It’s pretty simple math. If the city doubles the water demand per day of a typical household, it doubles the water and sewer impact fees charged new and existing residents.

For the DEQ, the lower the water usage statistic, the more homes Whitefish can build before needing to expand its water facilities. If the number were higher, the DEQ could have placed a moratorium on all new Whitefish development in 2019 until the city expanded its water capacity.

The numbers above were found in Whitefish public documents. The DEQ report was produced by AE2S using actual customer billing data. The 2018 Impact Fee Update was produced by The FCS Group using data provided by Whitefish management. Later the city manager used the FCS statistics to significantly raise water impact fees.

What did the Whitefish city management do?

On June 20, 2019, the AE2S report was approved by city management and sent to the DEQ declaring the 374 gpd water demand statistic.

On July 15, 2019, the Whitefish City Council passed Resolution 19-15 which nearly doubled the water impact fees based on the 744 gpd water demand statistic used to calculate these impact fees.

Whitefish management did nothing.

Although one of these two reports was wrong, the City used both of them unaltered to continue economic development and inflate impact fees. City management simply claimed ignorance of the discrepancy. Meanwhile the city benefited at the expense of its residents. The question left unanswered is what will the city management and council do to correct this.

In February 2022, a group of residents and developers sued Whitefish for millions in refunds from impact fees assessed starting in 2019. The class action is pending in federal court. This conflicting water demand problem was not known at the time this suit was filed.

Paul Gillman is author of “Whitefish Impact Fee Problems.”