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HomeMy WebLinkAbout06-19-17 City Commission Packet Materials - C6. Impact Fee Credit to Flanders Mills Page 1 of 4 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris Saunders, Policy and Planning Manager Martin Matsen, Community Development Director Craig Woolard, Director of Public Works SUBJECT: Approval of the Oak Street – Ferguson to Ryun Sun Way widening impact fee credit request, IFCR1704 in the amount of $130,567.75. MEETING DATE: Monday, June 19, 2017 AGENDA ITEM TYPE: Consent RECOMMENDATION: Approve impact fee credit request IFCR1704 for construction of the Oak Street – Ferguson to Ryun Sun Way widening and waiving criterion 5. EXECUTIVE SUMMARY: Chapter 2, Article 6, Division 9, BMC authorize the City to conduct an impact fee program. This program includes mechanisms for impact fee credits. The City Commission has approved the widening of Oak Street – Ferguson to Ryun Sun Way, project SIF135 as a priority project for the use of transportation impact fees. The City has required a private development to construct a portion of this project by conditions of approval for development of the Flanders Mill subdivision. It is very cost effective to complete the remainder of the work at the same time. This project is related to, but not included in, the West Side joint funding project approved by the Commission this spring. A request for impact fee credits to reimburse the private party for constructing the larger project scope has been received. The requested amount to be funded with impact fees is $130,567.75. A breakdown of the costs is included in the impact fee credit request. The total project cost is estimated at $261.135.50. The completion of this link will interact favorably with the West Side project and was contemplated to potentially be included in that project. Due to design delays, the project was not ready and was left out. Public Works was well aware of the project and the CIP shows the project as being impact fee funded in FY2019. Due to some miscommunication the impact fee request was not submitted prior to the preconstruction conference which normally would bar the project from funding. The Commission is asked to waive this criterion. If the Commission decides favorably on the impact fee credit request, the following four items are recommended conditions of approval: 1. The credit will be paid by check as a single amount. 2. An engineer’s estimate of project costs has been provided and results in a preliminary credit value of $130,567.75. A final value will be determined upon completion and acceptance of 29 Page 2 of 4 the work. 3. The reimbursement check will not be issued until the construction has been completed, the work accepted by the City, and final costs including evidence of those costs is provided to and accepted by the City. 4. The applicant shall agree in writing to the above listed conditions of approval prior to the credit offer becoming effective. The fourth condition will be satisfied with the proposed credit proffer. The final text of the agreement will be revised as needed to reflect any changes directed by the City Commission. A draft text is attached. BACKGROUND: Requirements for Impact Fee Credits The City’s impact fee program is established in Chapter 2, Article 6, Division 9 of the Bozeman Municipal Code. This local ordinance implements impact fees under the authorizing statute of Title 7, Chapter 6, Part 16 of the Montana Code Annotated. A mechanism for impact fee credits is required under state law and is implemented under Section 2.06.1690, BMC. To qualify for an impact fee credit, a proposed infrastructure construction project must meet certain criteria. If the criteria are not met then the project is not approved. Some of the criteria are adopted to ensure correct use of impact fees, and some are to help ensure that the impact fee program can operate smoothly and effectively. All of the criteria must be satisfied. Criteria 1) Capacity Expanding (beyond project related). Impact fees solely exist to create more infrastructure capacity to serve new development. This criteria ensures that a project is not maintenance or other ineligible activity. The measure of capacity expansion varies by infrastructure type. This is not a locally generated or flexible criteria. The proposed construction includes both capacity expanding and project related elements. The credit request submittal material has separated the costs for these two components. Only the impact fee eligible portions are the subject of the credit request. Staff will verify with the final bills that impact fees have only been used for appropriate work. A condition of approval includes this restriction. Staff finds that this criterion has been met. Criteria 2) Not Project Related. This criterion separates the capacity expanding improvements which are necessary for the minimum service to the installing development from those which expand capacity in the overall infrastructure systems. Compliance with minimum standards are included in the definition of “project related” improvements. Examples of project related improvements include local streets and minimum diameter water mains. This is not a locally generated or flexible criterion. A local definition of Project Related is established in Section 2.06.1630.A.14, BMC. The proposed construction includes both capacity expanding and project related elements. The credit request information has separated the costs for these two components. Only the impact fee eligible portions are the subject of the credit request. Staff will verify with the final bills that fees have only been used for appropriate work. A condition of approval includes this restriction. Staff finds this criterion has been met. 30 Page 3 of 4 Criteria 3) CIP Listed. The City prepares a Capital Improvement Program (CIP) to schedule the construction of infrastructure. The CIP provides a means to describe future work and its sequencing that can be available both to staff and the public. The CIP coordinates multiple funding sources, including impact fees, to support construction of major projects. The CIP contains a subset of the possible capacity expanding projects described in the facility plans. As a rolling five year document, the CIP provides a near term understanding of expected expansion work. The work is included as scheduled project SIF135 in FY2019. Staff finds that the criterion has been met. Criterion 4) CIP Funded. The impact fee CIP lists funding for capacity expanding projects over the next five years. The project is funded in FY 2019 for an appropriate amount. The requested amount is a bit higher than listed but there is an adequate balance in the CIP so that the fund retains a positive balance. A copy of the listing sheet is attached. Staff finds that the criterion has been met. Criterion 5) Timely Request (before construction or dedication). The City Commission has stewardship for the paid impact fee funds and the City’s infrastructure. To enable the Commission to act deliberately in establishing the impact fee work program, the provisions of Chapter 2, Article 6, Division 9, BMC include a requirement that prior to undertaking work for which impact fee credits are desired an applicant must first get approval for impact fee credits. This enables the City to manage the financial commitments of the City and the overall health of the impact fee program without unexpected surprises and funding commitments which interfere with high priority projects. The impact fee program is required to keep a positive projected fund balance at the end of the five year time horizon of the CIP. The time limit for submittal is prior to a preconstruction conference with the City or commencement of construction, whichever is earlier. The applicant did not submit the required request for credit in a timely manner. There was a misunderstanding on the project coordination between the private development and public works. The City staff were well aware of the project and its integration with other large projects the City is participating in with the applicant. The Commission has authority to waive this criterion. Staff finds that the intent of this criterion has been met and recommends the Commission waive the criteria and award the credit. Credit Types If a credit is requested and meets the adopted criteria, Section 2.06.1690.G provides for three different means to award a credit. The three options are described in the ordinance: “Upon receipt of such a written request, the city may, at its discretion: 1. Arrange for the reimbursement of such excess credit from the impact fee fund for the same type of service or facility from development impact fees paid by others; 2. Arrange for the reimbursement of such excess credit through the issuance of a promissory note payable in not more than ten years and bearing interest equal to the interest rate paid by the city for its long-term debt; or 31 Page 4 of 4 3. Reject the request for cash and provide credit. Such excess credit shall be valued at 100 percent of actual developer costs for the excess improvements, or at the actual appraised value of such excess improvements, at the city's option. The choice of which credit mechanism to use is at the discretion of the City. Option 1 will provide the simplest and most expeditious processing of the request. Staff supports this request as it is minimizes administrative effort in paying the credit. UNRESOLVED ISSUES: None FISCAL EFFECTS: The commitment from the transportation impact fee fund is $130,567.75. ALTERNATIVES: 1) Grant the credit as requested. 2) Make findings as to why the credit does not meet the required criteria and do not approve the requested credit. Attachments: Initial credit application request form and proposal Capital Improvement Program project listings Cost estimate sheet Schematic street design Draft impact fee cost share agreement Report compiled on: June 9, 2017 32 33 34 35 36 Page 1 of 1 STATEMENT OF CONSENT TO CONDITIONS OF APPROVAL CITY OF BOZEMAN IMPACT FEE CREDIT OFFER IFCR-1704 WHEREAS, the City of Bozeman has offered transportation impact fee credit in exchange for widening of Oak Street – Ferguson Avenue to Ryun Sun Way to a five lane arterial standard; and WHEREAS, the impact fee program is governed by Sections 2.06.1600 through 2.06.1700, BMC and all actions must comply with the standards and procedures of that text; and WHEREAS, the impact fee credit request from Flanders Mill LLC complies with the required purposes impact fees as set for in the municipal code; and WHEREAS, the approval of the credit offer is subject to the following four (4) requirements: 1. The credit will be paid by check as a single amount. 2. An engineer’s estimate of project costs has been provided and results in a preliminary credit value of $130,567.75. A final value will be determined upon completion and acceptance of the work. 3. The reimbursement check will not be issued until the construction has been completed, the work accepted by the City, and final costs including evidence of those costs is provided to and accepted by the City. 4. The applicant shall agree in writing to the above listed conditions of approval prior to the credit offer becoming effective. NOW, THEREFORE, BE IT HEREBY KNOWN, that applicant agrees to the above-noted four (4) conditions of approval for the offered impact fee credit. DATED THIS _________ DAY OF __________________ , 2017. ________________________________________ By: STATE OF MONTANA ) ) ss. County of _______________ ) On this ____ day of ___________________, 2017, before me the undersigned, a Notary Public for the State of Montana personally appeared, __________________________, known to me to be the ____________________________ of Flanders Mill LLC and the person whose name is subscribed to the within instrument and acknowledged to me that he executed the within instrument for and on behalf of Flanders Mill LLC. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the day and year first above written. 37