HomeMy WebLinkAboutCommission Memo - Impact Fee Discussion.docx
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Anna Rosenberry, Finance Director
Chris Saunders, Assistant Planning Director
Chris Kukulski, City Manager
SUBJECT: Impact Fee Discussion
MEETING DATE: October 18, 2010
AGENDA ITEM TYPE: Policy Discussion
BACKGROUND: The purpose of this meeting is to review and discuss the policies that have brought about the City's Impact Fee programs, and the work that will be done in the coming
months/year related to impact fees. We have attached relevant reading material, and plan to have an open discussion format for the evening. The Engineering Department, Finance Department,
Building Inspection Department, and the Planning Department will be leading their relevant portions. Below is an outline of the discussion points and links to the related materials:
Policy Decisions on Growth of the City
Community Plan (foremost, in Chapters 1-3) http://www.bozeman.net/Smarty/files/e6/e6a049b8-fad5-4886-b7f5-3ebfbd2f4556.pdf
Facility Plans and Infrastructure Expansion Needs to accommodate growth while maintaining defined Level Of Service standards
Find the following Facility Plans at:
http://www.bozeman.net/Departments-(1)/Public-Service/Engineering/Plans
Transportation Facility Plan
Wastewater Facility Plan
Water Facility Plan
http://www.bozeman.net/Smarty/files/e6/e63eff8a-50ae-435a-95e8-bd60e6d3a037.pdf
Fire Protection (Master) Plan
Options to Fund Infrastructure Development
Different from Funding Maintenance of Existing Infrastructure;
General Taxes.
Voted Levies/Bonds.
Increased Utility Rates to Residents.
Creation of Assessment Districts (Special Improvement Districts, Special Improvement Lighting Districts.)
Increased Assessments to existing Districts (for instance, Street Maintenance District.)
Tax Increment Finance Districts.
Federal Funds.
State Funds.
Developer Exactions.
Impact Fees.
Why Impact Fees were added.
Advantages of Impact Fees.
Disadvantages of Impact Fees.
Our Impact Fee Programs: Codified in Bozeman Municipal Code - Chapter 3.24 http://www.bozeman.net/Smarty/files/55/5561f2ec-9214-4ed3-820e-b6d23c74b43f.pdf
Lawsuit & Settlement – The City’s impact fees were legally challenged in the spring of 1999. The case remained in district court and had not reached the trial phase in the spring of
2005. In 2005, the Legislature passed a bill specifically authorizing local governments to establish impact fees. A settlement of the suit was reached in the spring of 2005. After the
settlement of the suit the City contracted for and completed the scheduled update of the fee studies.
Water Impact Fees – Study found at http://www.bozeman.net/Smarty/files/86/86505cf9-de28-467f-9538-b54edd003c1c.pdf
The water impact fee covers impoundment, storage, treatment, and transmission of water. Acquisition of additional water rights are not included in the impact fee but are handled separately
through Commission Resolution 4095. Fees are typically set by the size of the water meter, although there are defined exceptions. The City can allow connection to its water system by
unannexed properties who would then be subject to the water impact fee. A new treatment plant south of town is in design and construction is expected to begin work in 2011.
Sewer Impact Fees – Study found at http://www.bozeman.net/Smarty/files/bf/bfc27851-d4cd-4ee3-a344-8ad696368d56.pdf
The sewer impact fee covers collection and treatment sewage. Fees are typically set by the size of the water meter serving the property. The City can allow connection to its sewer system
by unannexed properties who would then be subject to the sewer impact fee. A new sewer plant which is funded in part by impact fees is now under construction.
Street (Transportation) Impact Fees – Study found at http://www.bozeman.net/Smarty/files/b4/b44785fa-43e7-4753-9060-b02c3a4256b5.pdf
The transportation impact fee is the most complex of the impact fees adopted by the City. During the most recent update, the City asked the consultant to examine whether there was adequate
data to distinguish between the development norms and Low Income/Affordable Housing impacts and Downtown. The consultant did locate and incorporate the needed information and the Commission
did adopt a differentiated transportation impact fee. The service area and cost for service per unit of demand remained the same. The difference was based upon a demonstrated distinction
in the demand for service. The difference in demand then changes the equation so that the cost paid per unit is less. The Downtown area is called the Trip Exchange District in the impact
fee ordinance. Other areas that could demonstrate a similar difference could be considered for creation of a Trip Exchange District.
Fire Impact Fees – Study found at http://www.bozeman.net/Smarty/files/e6/e68ae60b-c0bd-45fa-b49e-11d0d098f5be.pdf
The Fire/EMS impact fee methodology changed with the most recent update. The original study in 1995 relied upon the fire flow methodology which measures demand by the amount of water
required to suppress a fire. With the passage of time new record keeping mechanisms were put in place and duties changed. The current study relies upon a call response methodology. This
reflects that many of the service calls for Fire/EMS are to events like car accidents or injuries which do not require fire flow. The capacity must still be available to respond to all
types of calls. The change in methodology significantly changed the cost allocations between residential and commercial/industrial development.
Police Impact Fees – A contract for a study was awarded. Due to the projected length of time to obtain the necessary information on future development of law enforcement facilities the
contract was terminated.
Recreation Impact Fees – The Parks, Recreation, Open Space and Trails plan is the City’s facility plan for parks. It examines the current status of park and recreation facilities, looks
at future needs, and identifies options for making improvements. Chapter 10 includes a recommendation to consider the possibility of impact fees as a one of several possible funding
sources for specific facilities. Chapter 11 includes discussion of impact fees among other possible local funding sources for park improvements. Although some other Montana communities
do collect impact fees for parks, Bozeman has not seriously looked at impact fees for parks to date.
Impact Fee Credits.
Upcoming Issues:
Updates to Current Studies (Water/Sewer/Street/Fire) - Draft Request for Proposals.
September 2009 Commission Memo (attached.)
Advisory Board vacancies.
Recent Gallatin Association of Realtors (GAR) letter regarding reduction of Street Impact Fees.
Documents Attached:
September 2009 Commission Memo
Chapter 3.24, Impact Fees, BMC
Water Impact Fee Study
Sewer Impact Fee Study
Street Impact Fee Study
Fire Impact Fee Study