Whitefish collects less in impact fees as construction slows

Impact fee collections in Whitefish have decreased by 21%, which the city says is the result of less construction activity.  

The city recorded about $814,500 in the impact fee fund for fiscal year 2024 as compared with fiscal year 2023 at $1.03 million. 

City Council on Monday is set to review and adopt the annual impact fee report at its meeting. Council meets at 7:10 p.m. at City Hall, 418 E. Second St. 

“Impact fees have a high correlation with building activity and revenue the city receives reflect the amount of construction seen throughout the community,” said Finance Director Lanie Gospodarek in a memo to Council. 

Impact fees are one-time charges for new development or remodels to compensate for the cost of public infrastructure required to provide services. The fees can be spent for public improvements and also used to recoup public improvement costs previously incurred by the city that serves new growth.  

For the group of impact fees that include trails, parks maintenance building, the Emergency Service Center, City Hall and stormwater, the city collected about $42,000 in fiscal year 2024 compared with about $16,700 in the previous fiscal year.  

For water impact frees the city collected $217,000 compared with $355,000. For wastewater, it collected $274,000 compared with $421,700.  

However, some of the categories include a half year of collections because in January the city revised its impact fees. New funds were created for each of the impact fees that would be collected going forward — water, wastewater, City Hall and paved trails. The Emergency Services Center impact fee has been separated to reflect an impact fee for fire and ambulance and police, and the parks maintenance fee was revised to address growth-related park improvement projects. The stormwater impact free was eliminated due to limited expansion projects on the horizon.  

Gospodarek points out that the city saw a decrease in building permits in fiscal year 2024, which runs from July 2023 through June 2024, that are reflected in the collection totals.  The city also saw a decrease in impact fee collections in fiscal year 2023 over the previous year.  

“Building costs remain high and interest rates have been slow to drop so, the city anticipates that the number of building permits will see continued potential for a slow-down,” she said.  

In fiscal year 2024, the city spent nearly $79,000 in impact fee funds. Over the course of the life of the fees, the city has spent a total of about $9.3 million in impact fee funds.  

ALSO ON the agenda, Council will consider a resolution approving an amendment to the license agreement with Gold Creek Cellular for a wireless facility at the city’s Emergency Services Center. The city approved a license agreement in 2018 for the facility, but Verizon this year asked to change the agreement.  

Council is expected to approve a new five-year agreement that would begin when the current agreement ends in 2028. Under the agreement rent will be reduced from $25,619 to $23,300 and shall increase 4% each year through 2033.  

The current agreement increases rent by 4% each year. The amendment means the city would collect almost $100,000 less at the lower rate, but Verizon would not agree to an extension of the current agreement, according to City Manager Dana Smith.  

Smith said Verizon is seeking to cut costs for its leased properties and may look at other locations if the agreement does not have a certain amount of savings over the long-term.  

While not a significant source of revenue per year, Smith said, the rent payment does go to the Fire and Police departments and the Municipal Court.  

During a work session at 5:30 p.m., Council will hear an update on the Safe Streets For All plan and have a discussion with Police Chief Bridger Kelch regarding open container laws and safety and security of city staff and Council.  

Deputy Editor Heidi Desch may be reached at 758-4421 or hdesch@dailyinterlake.com.