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HomeMy WebLinkAboutBozeman CIL_CC Presentation_11.10.2026All Rights Reserved ©WestWater ResearchAll Rights Reserved © WestWater Research City of Bozeman City Commission November 10, 2026 Bozeman Water Rights Cash-in -Lieu Fee Update Adam Jokerst Rocky Mountain Regional Director Why Update the Cash-in -Lieu Fee? 2 Requirement •New development must offset its added annual water demand before final approval. Three ways to comply 1.Transfer water rights to the City, 2.Reduce demand through conservation, or 3.Pay cash-in-lieu for the remainder Use of funds •Buys water rights and covers DNRC permitting and change costs. •Infrastructure is funded separately, by water impact fees. What the Fee Is Unchanged since 2008 –$6,000 per acre-foot (AF), set by Resolution 4095. Why Now I. How the fee is applied II. Three valuation perspectives III. Recommendation IV. Regional comparison What This Presentation Covers Bozeman Municipal Code §38.410.130; Commission Resolution 4095 (2008). 1 AF ≈ 326,000 gallons. How the Fee Is Applied: Demand × Unit Cost 3 Single -household unit –0.234 AF per year, per Administrative Order 2013-07. Annual Demand Set by resolution –$ pe r AF of reliable yield. The subject of this update. Unit Cost Due before approval –For the demand not offset by water rights or conservation. Cash-in -Lieu Payment × = To d a y: 0.234 AF × $6,000/AF = $1,404 per home Each AF of demand the City accepts must be served in a 1-in-50-year drought. A Hyalite Share is a 1 AF contract but yields about 0.79 AF in that drought, so $6,000 per share is about $7,620 per AF of reliable yield. Why the Unit Cost Is Stated per AF of Reliable Yield Reliable yield: 2% non-exceedance (1-in-50-year drought). Yields City-supplied. Multi-household units: 0.124 AF per year per unit. Three Valuation Perspectives 4 What the City has paid Seven Hyalite Share purchases, 2007– 2021: 350 shares, 275.6 AF of reliable yield. Restated in 2025 dollars for inflation and for the City’s cost of capital. Full Cost Recovery $11,560–$14,240/AF What equivalent rights are worth Bozeman’s own purchases, western Montana sales, and Gallatin County farmland values. Cross -checked against the fee as a share of home prices. Fair Market Value $9,000–$15,000/AF What new supply would cost Resumed Hyalite Share purchases; irrigation rights bought and changed; a groundwater permit with recharge mitigation. Water rights and DNRC filings only. Cost of New Water Rights $4,900–$10,000/AF No infrastructure in any perspective. All values per AF of reliable yield, 2025 dollars. Results by Perspective 5 $4K $6K $8K $10K $12K $14K $16K $ per AF of reliable yield (2025$) Full Cost Recovery $11.6K $14.2K Fair Market Value $9.0K $15.0K Cost of New Water Rights $4.9K $10.0K Recommended CIL $11.6K $14.5K By design –Recovery and value describe water already held; the cost of new rights describes new water. Floor –Full cost recovery, so new homes repay what the City spent. Check –New rights cost less than the range, so the fee can fund them. Reading the Results White tick = midpoint. Full cost recovery midpoint $12,900; FMV $12,000; cost of new water rights $8,300; recommendation $13,050. Recommendation 6 $11,600–$14,500 per AF of reliable yield Midpoint $13,050/AF ≈ $3,050 per home About 0.4% of Bozeman’s 2025 median home price Today: $1,404 per home, 0.2% Full cost recovery in 2025 dollars. Near-term growth draws on rights the City already bought. Lower Bound Between cost-of-capital recovery ($14,240) and the top of market value ($15,000). Upper Bound Re -evaluate every three to five years as costs, market values and demand change. Keep It Current Per home at 0.234 AF per single-household unit (Administrative Order 2013-07). Median home price $736,600 through May 2025 (Realtor.com). Mountain West Peer Comparison 7Fees per home at 0.234 AF for all cities. Fees primarily 2024; home prices through May 2025 (Realtor.com). Informational, not a representative sample. Low today Bozeman’s current fee is the second lowest of the cities shown. Still modest Proposed fee is about 0.4% of home price; Peer average is about 1.6%. Key Takeaways 4 •Implement a smaller increase immediately •Make further increases over several years •More frequent future adjustments Step In New CIL Over Time •No immediate increase to CIL •Provide additional time to conduct stakeholder outreach •Adjust CIL in future years Delay Implementation of New CIL •Immediate CIL increase •CIL adjusts from $6,000/AF to $13,050/AF •Increase effective Nov. 23, 2026 Implement Full CIL Cost Now Community Development Board Feedback Community Development Board asked City Commission to consider these actions Action as stated in Resolution today Fee update presented to Community Development Board on October 19, 2026 Summary 8 1 The fee has been $6,000 per AF since 2008 and pays for water rights only. 2 Three independent perspectives support $11,600–$14,500 per AF of reliable yield. Midpoint of $13,050 per AF of reliable yield. 3 About $3,050 for a single-household unit: roughly 0.4% of median home price and low among regional peers. All Rights Reserved ©WestWater ResearchAll Rights Reserved © WestWater Research Questions? Adam Jokerst jokerst@westwaterresearch.com 970.485.5673