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HomeMy WebLinkAbout06-18-18 City Commission Packet Materials - C4. Approval of Graf Street - YTI Impact Fee Credit Request 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 Sean Kohtz, Interim Director of Public Works SUBJECT: Approval of the Graf Street -YTI impact fee credit request, IFCR-1803 in the amount of $461,350.93. MEETING DATE: Monday, June 18, 2018 AGENDA ITEM TYPE: Consent RECOMMENDATION: Approve impact fee credit request IFCR-1803 for construction of the Graf Street – YTI project 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 construction of Graf Street between S. 19th and S. 3rd as a priority project for the use of impact fees. There are three elements to this project, water main, sewer main, and transportation. The City has required a private development to construct a portion of this project by conditions of approval for development of the Yellowstone Theological Institute (YTI) subdivision. It is very cost effective to complete the remainder of the work at the same time. A request for impact fee credits to reimburse the private party for constructing the larger project scope has been received. The City previously granted impact fee credit for design of the project through impact fee credit IFCR-1601. The requested amount to be funded with impact fees with this request is $461,350.93. A breakdown of the costs is included in the attached reimbursement summary. The total project cost is estimated at $2,240,220.40. The City has been continuously working with the developer for the construction of this project. Public Works was well aware and engaged in the design 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 and Staff support this waiver. If the Commission decides favorably on the impact fee credit request, the following four items are recommended requirements of approval: 1. The credit will be paid by check as a single amount. 2. The final value has been determined upon completion and acceptance of the work at 63 Page 2 of 4 $461,350.93. 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 has verified the final bills that impact fees have only been used for appropriate work. 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 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 has verified this criterion has been met. 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 projects WWIF25, SIF077, and WIF07 in the CIP published by the City. Staff finds that the criterion has been met. 64 Page 3 of 4 Criterion 4) CIP Funded. The impact fee CIP lists funding for capacity expanding projects over the next five years. The work is included as scheduled and funded projects WWIF25, SIF077, and WIF07 in the CIP published by the City. 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 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 and costs in paying the credit. UNRESOLVED ISSUES: None FISCAL EFFECTS: The commitment from the impact fee funds are: 65 Page 4 of 4 Transportation $344,058.60 Sewer $98,960.25 Water $18,332.08 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: Credit application request form Capital Improvement Program project listings Cost sheets Report compiled on: June 7, 2018 66 67 68 69 CIP Project Fund Impact Fees Streets PROJECT NUMBER SIF077 DEPARTMENT STREET IF PROJECT NAME GRAF STREET EXTENSION (RITTER TO 19TH)* - CONSTRUCTION FY17 $1,035,000 FY18 Unscheduled DESCRIPTION OF PROJECT Complete Graf from Ritter to 19th to a 2 lane urban collector standard with bike lanes. ALTERNATIVES CONSIDERED Leave as-is. Wait for the developer to build the street. ADVANTAGES OF APPROVAL This project will expand the capacity of our street network and improve safety for drivers and pedestrians. ADDITIONAL OPERATING COSTS IN THE FUTURE, IF FUNDED Annual Operating & Maintenance Costs: Incremental increases in sweeping, plowing and general maintenance costs. Current cost estimate of $8,725 per street mile maintained annually. FUNDING SOURCES This project is funded by Street Impact Fees ($1,035,000). A development payback district will be created to reimburse Street Impact Fees for any local share (project related) costs that may be allocated to future developments (estimated at $517,500). New Replacement Equipment Project FY19 FY20 FY21 233 CITY OF BOZEMAN CAPITAL IMPROVEMENT PLAN 70 CIP Project Fund Impact Fees Water PROJECT NUMBER WIF07 DEPARTMENT WATER IMPACT FEES PROJECT NAME GRAF STREET EXTENSION* FY17 $701,929 FY18 Unscheduled DESCRIPTION OF PROJECT This project is to extend Water Mains below Graf Street approximately ¼ mile in order to connect infrastructure east from 19th Avenue. This is an important connection for public safety purposes – allowing fire service to meet their response time requirements in areas where they currently cannot. The Water infrastructure should be installed at the same time the street connection is made. ALTERNATIVES CONSIDERED Do nothing and wait for development to connect the infrastructure. ADVANTAGES OF APPROVAL Improves distribution network ADDITIONAL OPERATING COSTS IN THE FUTURE, IF FUNDED Routine annual maintenance FUNDING SOURCES 100% Water Impact Fee – to be recovered by developer payback. New Replacement Equipment Project FY19 FY20 FY21 407 CITY OF BOZEMAN CAPITAL IMPROVEMENT PLAN 71 CIP Project Fund Impact Fees Wastewater PROJECT NUMBER WWIF25 DEPARTMENT WW IMPACT FEES PROJECT NAME CATTAIL CREEK BASIN EXTENSION (19TH FROM GRAF TO STUCKY AND STUCKY FROM 19T FY17 $1,263,674 FY18 Unscheduled DESCRIPTION OF PROJECT This project consists of increasing capacity to the existing sewer network by installing a sewer extension along 19th (from Graf to Stucky) and Stucky (from 19th to 0.5 miles west of 19th) ALTERNATIVES CONSIDERED Limit future development in the area. ADVANTAGES OF APPROVAL If constructed to the line sizes master planned in the City’s Wastewater Facilities plan, capacity will be provided for anticipating the long-term future growth in this area ADDITIONAL OPERATING COSTS IN THE FUTURE, IF FUNDED Annual Operating and Maintenance Costs: Impact fees can not fund operating and maintenance costs. The city’s wastewater utility will pay for these costs, which are estimated to be a small increment of the city’s system as a whole. FUNDING SOURCES Wastewater Impact Fees, with local share recovered via payback district New Replacement Equipment Project FY19 FY20 FY21 346 CITY OF BOZEMAN CAPITAL IMPROVEMENT PLAN 72