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HomeMy WebLinkAbout04-26-07 Impact Fee Advisory Committee Minutes.doc** MINUTES ** CITY OF BOZEMAN IMPACT FEE ADVISORY COMMITTEE THURSDAY, APRIL 26, 2007 6:00 P.M. CALL TO ORDER AND ATTENDANCE Vice Chair Ron Kaiser called the meeting to order at 6:05 p.m., in the Commission Room at the Municipal Building, 411 East Main Street, Bozeman, Montana. Members Present: Ron Kaiser, Vice Chair Debra Becker Ken Eiden Rick Hixson Nicholas Lieb (arrived at 6:20 p.m.) Bill Simkins Members Absent: Randy Carpenter Tim Dean Anna Rosenberry Staff Present: Sean Becker, Commissioner Liaison Chris Saunders, Assistant Planning Director Robin Sullivan, Recording Secretary Guests Present: Randy Goff, HDR Engineering, Inc. CITY COMMISSION LIAISON Commissioner Liaison Sean Becker addressed the issue of the Committee e-mails resulting from the Commission’s decision to use impact fees for a portion of the costs of the transportation plan update. He stated that he tried to make the point, on behalf of this advisory board, that acting on that proposal was not an acceptable course of action, but action was taken anyway. He assured the Committee that its input is very important and that it may have substantial influence on the Commission’s decisions. He concluded by noting that, hopefully, in the future the Commission will have more time and latitude to send things back to the Committee. PUBLIC COMMENT Mr. Art Wittich, attorney representing the Southwest Montana Building Industry Association (SWMBIA) expressed his appreciation for this Committee’s interest in expediting its review of the impact fee studies but requested that he be given more time to review and comment on the revised report that just came out earlier this week. He voiced an interest in having someone with expertise in impact fees review the document and comment on it prior to forwarding his comments. He expressed concern that if adequate time is not given to make the comments to this body and he will be forced to make his comments to the Commission, and the issue may simply be referred back for review and a recommendation. Vice Chair Ron Kaiser stated that, while the agenda indicates the Committee is to make decisions on the water and wastewater impact fee reports, it is simply being briefed on the revisions and will make its decisions at a special meeting to be held next week. Those recommendations will then be forwarded to the Commission for its consideration during the public hearings scheduled for May 14. Responding to Mr. Wittich, Assistant Planning Director Chris Saunders stated that the Commission will conduct its public hearings on May 14. At that time, the Commission may choose to continue to the public hearings to another date, to close the hearings and delay the decisions, or to act immediately. He stressed that, after the Commission makes a decision on adoption of the report, a resolution must be prepared and brought back for Commission action to formally adopt it. Sean Becker noted that if there are any critical flaws in the report, the Commission should receive that information before the May 14 meeting. Vice Chair Ron Kaiser asked that the Committee be kept informed. He noted that, if the Committee receives any comments by next Thursday’s meeting, it will take them into consideration during the decision-making process. Responding to Mr. Wittich, the Assistant Planning Director estimated that the public draft report on street impact fees will be ready in mid-June. MINUTES FROM JANUARY 25 AND APRIL 12, 2007 Since there were no amendments to the minutes of the meetings of January 25 and April 12, 2007, Vice Chair Ron Kaiser announced that the minutes are approved as submitted. DECISION ON WATER IMPACT FEE STUDY A Review and Decision on the recommendation to the City Commission regarding the Final Draft for the Water Impact Fee Study by HDR Engineering. Assistant Planning Director Chris Saunders noted that, in light of discussions with Chair Tim Dean and Committee members, it was determined that this meeting should be devoted to a review of the revised information and that a special meeting be called for May 3, at which time decisions will be made. He indicated that tonight’s meeting was advertised in the newspaper and posted on the City’s website to let the public know that this Committee was considering action on the two impact fee reports. He indicated that a letter from the Southwest Montana Building Industry Association was received late this afternoon, and copies have just been distributed to the Committee. He indicated that staff has been able to respond to only Question No. 5 in the time available, and noted a photocopy of one page in the 1983 Bozeman Area Master Plan has been provided as the answer to that question. He indicated that essentially the same statement was included in the 1990 and 2001 master plans, with slightly different wording. Randy Goff, HDR Engineering, reviewed the revisions to the draft report, noting that that portion of the new transmission main over 30 inches has now been included in the impact fee calculations. The result is a $150 increase in the impact fee per EDU. He noted that the average residential customer uses 2 percent of the water capacity of the meter; however, some large industrial customers may turn on the water full bore and run it 24 hours a day, 7 days a week, 365 days a year. He stated that, based on the cost of $2.31 per gallon for water treatment capacity, the investment cost for an 8-inch meter could be $5.3 million. He proposed that, for large industrial customers, the impact fees be calculated based on the customer’s actual peak day use plus storage and determine the number of EDUs based on those figures. He stressed that this calculation would apply to only those meters over 3 inches, and would probably be used only once every three or four years. Assistant Planning Director Chris Saunders stated that 4-inch meters are used for larger motels, and there is one 6-inch meter providing redundancy for the hospital. Responding to Debra Becker, Randy Goff stated that part of the water storage calculations is for fire protection and, as a result, no additional costs are included in the impact fee calculations. Responding to Ron Kaiser, Randy Goff stated that an electronics manufacturer uses a huge amount of water and typically knows how much is needed. He stressed that the impact fees would not be subject to a negotiated rate schedule; rather, the number of EDUs on which the impact fee is calculated would be negotiated and then the rate schedule used to determine the total fee. Randy Goff also proposed that the resolution adopting the impact fees include a change of use provision that states if the usage exceeds 110 percent of the calculation base, the fee can be revised. He noted this will allow the City to recover additional impacts to the system for a phased in business. Randy Goff concluded his presentation by stating that the text in the draft reports has been revised to reference EDUs rather than ERUs, as requested by the Committee at the last meeting. Responding to questions from Bill Simkins, Randy Goff identified an error in the current impact fee figures in the table on Page 5-1. He then asked if including columns for both the full impact fees and the 80 percent currently charged would be helpful; the Committee members indicated it would be. Mr. Goff indicated he will revise the report to include both columns in both this impact fee report and the wastewater impact fee report. Debra Becker noted she has raised questions about the growth rates via e-mails to staff. She had thought when the capital improvement programs were being reviewed that the Committee was in spending mode and that the growth rates would be reviewed in conjunction with the fees. She now realizes that will not happen, but she remains concerned that the growth rates seem optimistic, which could result in higher impact fees than necessary. Randy Goff stated this issue was discussed at the last meeting, and noted that the impact fees would most likely not change with a slower growth rate. He stated that, if growth slows down, the demands go down and the installation of infrastructure will be delayed accordingly. He stressed, however, that the amount of infrastructure needed for each additional unit will not change. Responding to additional questions from Debra Becker, Rick Hixson stated the water facility plan recommends the installation of a 42-inch transmission line from the water treatment plant, based on the planning boundary and the size of the main needed to serve development within that boundary. He stressed that, while a lower growth rate will slow the need for that main, it will remain. Assistant Planning Director Saunders stated installing the large line is the least costly option, noting that it requires only one set of engineering plans and staging for one construction period, while the area is still generally a green field. He drew attention to the costs and inconveniences encountered in upgrading the infrastructure on the west end of town during the past two summers. Further responding to Debra Becker, Randy Goff stated the number of units to be served by the main are divided into the cost of the pipe, resulting in a cost per unit. He stressed that if fewer units are constructed, the City will recover less of that cost. He concluded by noting this is a cash flow issue, which is separate from the issue of setting impact fees. Bill Simkins stated he sees a potential problem with overestimating growth, particularly if the population stalls at 80,000 rather than reaching the projected population of over 100,000. Randy Goff responded that if that occurs, the ratepayers will bear the costs not recovered through the payment of impact fees. Assistant Planning Director Chris Saunders acknowledged there is a chance that the infrastructure will be oversized based on the growth projections; however, that is less costly than if it is undersized. He then cautioned there are a lot of forces pushing growth into municipalities, including the County Commission’s interest in creating a TDR system that encourages development inside city limits and specific county areas. He stressed that every year the Commission has the right to choose not to expend monies. Randy Goff noted that the master plan will be updated every five years, which will allow for regular re-examination of this issue. He further noted that this impact fee information can be updated at that time as well. Rick Hixson stressed that the master plan and facility plans are designed to look at the next twenty years. The last facility plans lasted ten years, and the transportation plan lasted six years because of the growth rate over the past decade. Assistant Planning Director Saunders reviewed the actual growth rates for the last six years, noting that they range from 2.8 percent to 6.2 percent. He then noted the population projections lag one year behind the number of building permits issues. He also reminded the Committee that industrial and commercial users are part of the demand on the system. Rick Hixson stated the average growth rate over the last five years is 4.7 percent. Vice Chair Ron Kaiser recognized the concerns that have been expressed about the assumptions on growth rates. He suggested that those who have continuing concerns about the growth rate articulate them at next week’s meeting prior to the decision being made. Ken Eiden stated that he, too, feels the growth rate is too high. He noted the community is experiencing the biggest growth it has seen in years, and reminded the Committee members of the 1980s, when there was no growth. He voiced concern that if a high rate is used to calculate the per-unit cost of infrastructure improvements, the result could be that the users are required to bear the costs not covered by growth. Assistant Planning Director Saunders stressed that timing of infrastructure improvements is critical. He noted that once the Commission decides to build a new treatment plant, it will be five years before that plant is in use. If such improvements are not constructed at the appropriate time, the result could be a moratorium, so it is essential that adequate headroom be provided. He then stated that if it is determined an anticipated improvement is not yet needed, it can be deferred for a year. Responding to Ron Kaiser, Rick Hixson stated the size of the transmission main has nothing to do with the growth rate; rather, it has to do with the ultimate demand on that pipe inside the planning boundary and growth boundary as adopted by the City Commission two years ago. He stressed that if the growth rate slows, it will simply take longer to utilize the pipe’s full capacity. He concluded by stating the water facility plan is a demand-based plan and is not based on any projected growth rate. Responding to Nicholas Lieb, Rick Hixson stated that some of the City’s lines are over 100 years old; and with the City’s requirements and maintenance program he anticipates the new lines will last at least that long. In response to concerns voiced by Debra Becker, Assistant Planning Director Chris Saunders stated the property within the growth boundary but not currently within city limits will probably be annexed before the infrastructure is installed. He noted that, in some rare instances a property may be connected to City services without being annexed but will be required to pay City impact fees upon connection. Further responding to Debra Becker, the Assistant Planning Director stated that, under certain circumstances, the City can initiate annexation of properties; however, he stressed that doing so would be a significant departure from the Commission’s policy over the last few decades. Randy Goff noted that cities are always in the development process because they are upgrading infrastructure to provide for future growth. Those improvements are typically funded through the issuance of bonds, so an interest rate of 5 percent for up to ten years can be added to the actual costs of the improvements when calculating impact fees. Responding to Nicholas Lieb, Randy Goff stated that there are strong limitations on the interest that may be earned on bonds, and those monies must be expended within three years. He noted that failure to comply with those requirements results in significant penalties. Responding to Ken Eiden, Assistant Planning Director Saunders stated that grants are available through the Community Development Block Grant program and the Treasure State Endowment Program; however, Bozeman does not compete well with the small communities in Montana because it has other resources available. He indicated that if the City does receive a grant, those monies will be backed out of the calculations. He further noted that, since the City keeps track of all impact fee payers and the amounts paid, the Commission could direct staff to refund monies to those that had already paid the higher fee. DECISION ON WASTEWATERWATER IMPACT FEE STUDY A Review and Decision on the recommendation to the City Commission regarding the Final Draft for the Wastewater Impact Fee Study by HDR Engineering. Randy Goff stated that, in light of concerns voiced at the last meeting, he went through the allocation of costs for Phase I of the wastewater treatment plant expansion. He indicated that the review, conducted in conjunction with engineers from his firm evaluated each component of the new plant and determined those that are part of the current system and those that are capacity expanding. As a result of that process, the percentage eligible for impact fees dropped from 67 percent to 38 percent and the proposed impact fee dropped by $310. Mr. Goff noted that at the last meeting, the possibility of an adjustment factor for high strength customers was discussed. He suggested that a certain strength factor for single-family residential customers be identified and that the cost for extra strength discharge be based on that strength. He stressed that extra strength discharge affects only the treatment plant and not the pipes. Debra Becker requested that the Committee members be provided a copy of the calculations for the wastewater treatment plant and suggested that it may be beneficial to include those calculations as an exhibit to the report. Assistant Planning Director Saunders noted that those with extra strength discharge may choose to pretreat it before discharging it into the system or may choose to pay the additional cost. He noted that, either way, the City recovers its treatment costs. Responding to Ron Kaiser, Randy Goff confirmed that a recommendation to include a negotiation process for extra strength discharge was discussed at the last meeting. He noted that he did not include any specifics in the report, but suggested that it should be addressed in a separate paper. He stated the issue is not addressed in the proposed fee schedule, but noted that if a charge is to be added, it is necessary to clearly state that if the discharge is over a certain percentage of regular strength then additional costs will be incurred based on specific multipliers. In response to a recent newspaper article, Rick Hixson noted a consultant is in the process of finishing the wastewater rate study, and he anticipates that in the next week or two discussions with Darigold regarding its extra strength discharge will be undertaken. COMMITTEE COMMENTS Letter from SWMBIA. Responding to Bill Simkins, Randy Goff stated he will make a written response back to SWMBIA and will also forward a copy to City staff so it can be part of this Committee’s record. Forwarding of report. Responding to Randy Goff, Assistant Planning Director Saunders stated that a cover memo will forward the final draft of the impact fee report as recommended by this Committee, along with copies of the minutes of the meetings, to the Commission for its consideration. He noted the cover memo will identify any significant issues along with the Committee’s recommendations. Belgrade impact fees. Debra Becker reported that she attended the Belgrade City Council meeting on Monday night, when they took action on implementing impact fees. She noted that their advisory body recommended implementation of impact fees for streets, fire, water, wastewater and parks totaling $14,112. As a result of the public hearing held the week before and discussion among the Council members, they chose to implement the fees at 60 percent of the calculated rates plus 5 percent for administration, for a total of $9,172 for a single-family residence and a total of $449,389 for a 50,000-square-foot commercial building. Ms. Becker noted that these figures compare with Bozeman’s current impact fees of $7,158 for a single-family residence and $433,313 for a 50,000-square-foot commercial building. Assistant Planning Director Chris Saunders noted that much of the growth is immediately outside Belgrade rather than within city limits. He cited the River Rock Subdivision, which was originally platted in the 1970s, as an example of a subdivision that pre-dates County subdivision standards but has developed only in recent years and has significantly impacted the road system. ADJOURNMENT There being no further business to come before the committee at this time, Vice Chair Ron Kaiser adjourned the meeting at 7:40 p.m. _____________________________________ _____________________________________ Ron Kaiser, Vice Chair Chris Saunders, Assistant Planning Director Impact Fee Advisory Committee Dept of Planning & Community Development City of Bozeman City of Bozeman