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HomeMy WebLinkAbout07-07-11 Economic Development Council minutes/ City of Bozeman Economic Development Council (EDC) Meeting Minutes July 7, 2011 10:30 am – 12:00 pm Madison room, City Hall, 121 N. Rouse Members Attending: Cheryl Ridgely (Bozeman Deaconess Hospital), Daryl Schliem (Bozeman Chamber of Commerce), Chris Mehl (City Commission) Anders Lewendal (Contractor), Wendy Bay Lewis (Career Coach/Corp. Trainer) Members Absent: Chris Westlake (Midwest Welding and Machine), Tracy Menuez (Human Resource Development Council) Staff Present: Brit Fontenot (Director of Economic Development), Aimee Kissel (Deputy City Clerk – taking minutes), Anna Rosenberry (Finance Director), Rick Hixson (City Engineer), Chris Saunders (Planning and Community Development) and Dustin Johnson (Engineering) Guests / Public Present: David Graham, Chair of the Impact Fee Advisory Committee NOTE: These minutes are not word for word and should be considered in addition to the audio recording of the meeting. A. Call to Order – Vice Chair Daryl Schliem Daryl Schliem called the meeting to order at 10:34 a.m. B. Public Comment None. C. Non-Action Items 1. May 16th and June 27th appointments to the Economic Development Council a. Anders Lewendal b. Wendy Lewis Mr. Fontenot welcomed Mr. Lewendal and Ms. Lewis to the group. Ms. Lewis spoke to her economic development perspective within the community. 2. Impact Fee Discussion (Fontenot) Mr. Fontenot introduced the topic and introduced David Graham, chair of the Impact Fee Advisory Committee, Anna Rosenberry - Finance Director, Rick Hixson - City Engineer, Tim McHarg and Chris Saunders - Planning and Community Development and Dustin Johnson with Engineering. Mr. Fontenot said the conversation would include facility plans, how we use impact fee dollars, the credit program that exists, the Capital Improvements Program (CIP) as far as the projects that are or are not on the CIP, the CIP as an economic development tool; and finally how the EDC can get engaged in the conversation about impact fees and the current update of impact fees. Mr. Hixson explained that facility planning is the basis for all the infrastructure that allows us to live together. Five facility plans (water, sewer, fire, transportation, parks) all have things in common. These include the planning boundaries that are agreed upon early on; investigation of current infrastructure; and projection of what will be the needs of the community in the future based upon growth rates, where the growth occurs, etc. The transportation plan looks at levels of service at main corridors, need for signalization, recommendations for need for major facilities, etc. Just adopted updated water, wastewater, transportation and fire plans within the last 5 years. The big ones cost about quarter million each to complete and take a year to 18 months to complete with lots of public meetings. These plans help with the synthesis of planning and engineering and what will be needed in the future. Impact fees come in to pay for this future improvement planning. Chris Saunders explained the facility plans are available in several locations on the website. Mr. Saunders said an important factor in the facility plans is to know what the current status of our infrastructure is and what elements are related to growth and what are related to another need. Rick Hixson explained that impact fees are collected for water, wastewater, streets and fire to provide capacity for future service. Repairs are not eligible for impact fees but expansion of services is eligible. Mr. Saunders explained that the impact fee statute defines what impact fees are, or are not. The statute also lists what items need to be accounted for when an impact fee study is completed. The city just finalized a contract with TischlerBiase, who will be working with the community and staff to put together a fee study that looks at what projects are eligible and which are not. Ms. Rosenberry said the city develops the long range plans for facilities. Once those are planned and engineered, the next step is finding a way to pay for them. Revenue sources in general are restricted to certain uses. The capital improvement funding program is put together dividing out our different sources of revenue and then figuring out the projects that those revenues can be used to pay for. We separately designate each of the impact fee streams. All that impact fees can pay for are the capacity expanding elements. Each year the Commission adopts updates of the five year CIP plan. It looks at what money will be coming in from what revenue source and what projects should we pay for in the next five years. Ms. Rosenberry referred to a copy of page 164-165 within the street impact fee CIP. The CIP lists projects that have been identified as qualifying for street impact fees and are scheduled within the next five years. When projects are listed but are listed as unscheduled, it is most often because money is not available, or the project is not needed, or is not able to be completed in coming five years, but we need to keep the project on the horizon. The impact fee advisory committee puts the schedule together with staff and makes a recommendation. The Commission has public hearings and adopts the CIP plans over a course of about three public meetings. Mr. Fontenot asked how a project would become a topic of conversation for the impact fee advisory committee. Ms. Rosenberry said advisory board members talk to members within the community. Board members can then bring a project up for discussion within the impact fee meeting. The discussion will then include whether the project is expanding, how is it prioritized, is there enough money to fund and what would the revenue source be, etc. These are public meetings. Chris Saunders explained staff also brings ideas from staff and public direction and the facility plans. When a big piece of infrastructure is needed for a developer’s project, the planning department tells them if they are interested in pursuing a partnership with the city, get a request into the city. Mr. Hixson explained a lot of the water and sewer projects do come from the facility plans. Some items end on the CIP list because engineering and planning look at projects as what will a developer need for their development. By putting it on the list, the developer then gets credits because it is already on the list. Mr. Saunders explained partnering with a developer helps leverage public funds for the most benefit. Cr. Mehl spoke regarding how the EDC should look at other funds as well – a co-mingling of funds. Mr. Saunders explained that many of the projects have several different funding sources so there would be several bodies that would weigh in on a particular project. The Council spoke regarding the difference between growth and capacity and what is considered additional capacity because of growth versus what is needed for regulatory capacity. These questions are why we need to make a case on each individual project to figure out the nuances on the funding. Chris Saunders explained the Capital Improvement Program is available online through the finance department. Ms. Rosenberry explained the State urban funds are from gas taxes. Commissioner Mehl explained that funding sources are never the same from year to year. Ms. Ridgely asked about the revenue side – what are other towns and cities doing for incentives or impetus for growth? What can we take a look at that might make a difference for economic growth in the valley. What would be the impacts on cash flow if builders were allowed to pay impact fees at occupancy rather than at the time of obtaining a building permit? What are some of the things that can be used to balance between spurring development and not hurting infrastructure cash flow for funding projects long term? Mr. McHarg explained that under current regulations builders pay impact fees when the impact occurs. For example, at building permit you may need fire service so right away they pay the fire impact fee. Water and sewer are paid when they hook up to the water and sewer. You can already pay these separately. Mr. Saunders said they’ve looked at several alternative solutions. The additional time, effort and expense outweighs the benefit. Mr. Leidner asked for clarification of what constitutes additional time, effort and expense and whether the long term horizon was considered and whether this effort is outweighed by taxes coming back. What parameters were used? Mr. Lewendal talked about second generation impact fees. The state may not allow but could the impact fees be spread out over ten years? Mr. Schliem said EDC should get involved in the CIP task force and the impact fee advisory committees with these types of questions and suggestions. Mr. Saunders said one of the challenges is that individual needs of builders are very unique. Ms. Ridgely spoke regarding having joint work sessions with task forces to discuss several things that may be practical, pragmatic and spur growth and encourage businesses to come to our community. It may also be that we need to package the system we have in an attractive, easy to understand manner. Mr. Saunders said this is a great time to be looking at all this as the formal update process is about to begin and the city will have the consultant here. Mr. Lewendal said everyone agrees that you have to pay for growth. The q uestion is, do impact fees affect growth? If yes, how do we compare to other communities? Mr. Lewendal said Belgrade residential home impact fees are about $8,000, Billings 3,000, Bozeman 11,000, White Fish 5500, etc. Why are we higher than other communities and does it matter? Mr. Hixson explained that there are different sources of funding for different communities. For example, Billings has another source of tax that Bozeman does not have. It is an annual, collective assessment based on zoning that pays for things similar to what Bozeman would use impact fees for. The city of Missoula doesn’t own their own water system. Cr. Mehl said we have the largest impact fees, yet the largest growth in the state – may not have an impact on growth. A lot of ways to approach and one data point doesn’t give us a full picture. Mr. Saunders said one of the elements that get to the numbers are individual factors. Mr. Lewendal spoke regarding the impact of impact fees to the homebuyer. Mr. Leidner said primarily in his conversations they are more interested in the commercial side. Here from businesses that need to expand or relocate here and are asking what Bozeman has to offer as incentives? Ms. Ridgely talked about how incentives are one integral piece of the puzzle. When a company comes in they do look at infrastructure, but on the other side is we want to not hinder the organic growth that will create jobs. Companies here that want to expand – can they afford to do that here? What are the low hanging fruit we can offer? David Graham asked whether the Commission wants to see more growth than we currently have and if so, how do impact fees factor into that? Cost up front is a big issue. Cr. Mehl said he does feel this issue is complex and that’s why we need to bring in a number of folks such as staff, people from the school of business, etc. to explore these questions. He also said he does feel the current Commission is pro-growth. The EDC was created by the Commission to make the City a better partner with businesses. We have a huge turnover. How do we capture the entrepreneurs? If we find impact fees are entering it, and we find a better way to finance we can look at it. More narrowly we need to look at what are the cities goals? Ms. Rosenberry spoke towards what if we didn’t have impact fees, how else would improvements be funded and what affect would that have? When we specifically looked at water and sewer rates with the Commission, right now in the rate models we have we have been projecting relatively low revenue from impact fees in the calculation of our rates. This is a conservative estimate because actual revenues have exceeded that number. If we were to temporarily suspend collecting impact fees we would need to raise current water rates about 7% across the board to make up that revenue. If we never collected impact fees at all and still needed to pay for the current water plant costs – we would need about a 16% rate increase for all users. Ms. Rosenberry explained the current average residential water customer pays about $36. per month with sewer about 40. per month. = $76 per month for water and sewer. The average person would pay another $110. per month. Mr. Lewendal said the average impact fee for water on a residential unit is about 3300. He spoke regarding a user fee such as Missoula uses to reduce water use and the possibility of having different ways of paying for the future. Mr. McHarg spoke regarding how extremely difficult it is to come up with and garner support for different revenue sources within local government. Another problem is that user fees cannot be used for transportation. Mr. Schliem spoke about how different groups that feel the impact fees are too high have been asked by the city and Chamber to have their analysts look at the impact fees and tell us what they think is fair. The first model has been trended and the Chamber is working with them to go through that. Mr. McHarg spoke about how the methodology the city has used has been a factor in why the transportation fee has been so high here. The city has intentionally not chosen to determine where growth goes – it is all open. We do have a long list of potential projects because we are willing to entertain wherever those improvements are needed throughout the community. That is an important thing for the EDC to consider. The city has chosen to entertain growth all over the city. Mr. McHarg emphasized that the city would love input on how to administer the program from a business perspective. Cr. Mehl said staff and the impact fee committee are working with the consultant to look at all these things. The contract says the consultant has to complete the project in less than 270 days. Cr. Mehl said there are two issues for the EDC. One we look at the macro economics – How much is this impacting? Is there a better way to finance what’s needed by the City, Is this fair to most? The EDC also needs to look at where we want projects to go. Property taxes vs. impact fees vs. urban funds? The next question is where do you want projects to go and what makes the most sense. The city is now collecting 60% of what was advised to collect for transportation impact fees. The other three impact fees have been far less controversial than streets, but it is the hardest to fund. Mr. Saunders explained that the regular schedule for the impact fee advisory committee is the second and fourth Thursdays of the month at 6 p.m. Since we have new appointees we are setting up a tour of the facility plants. They will be meeting with the consultant in a few weeks. It is a nine member committee. Two applicants will be considered for appointment on Monday. Mr. Saunders referred to a map that was created to show what projects have been completed. Most of the projects came into play because development could not move forward until a particular project or improvement was completed. Mr. Schliem thanked staff for all the work they do day to day. He said that what he hears from the business community is that the cities impact fees are why companies choose not to come to Bozeman. They also have mentioned the need for flexibility. What is the cost of losing a company? Our highest growth sector is retirees. What impact is that having on the business community? Are they paying their fair share? He said he feels this conversation has come a long way and he is glad to be working with staff not against staff to work through these issues. Businesses are now coming and negotiating one on one. Ms. Lewis asked whether anyone with the Local Government Center has been asked if they have a comparative study between the cities. Mr. Fontenot stated he will ask. Ms. Ridgely summed up by saying it has been good to have an overview and input from the staff. We need ideas that can be successfully implemented and as a group we are looking at the balance of companies coming in, local companies, etc. We do know from looking at economic gardening that more jobs come from smaller companies. We need input from the brain trust and this has been very helpful. Mr. Fontenot thanked staff as well for providing their time. D. FYI/Discussion (Westlake ~ 10 minutes) 1. Next steps/agenda items for the August 4, 2011 EDC meeting. (Westlake) E. Adjournment Daryl Schliem adjourned the meeting at 11: 50 p.m. *NOTE – Full audio of this EDC meeting is available at: http://weblink.bozeman.net/ WebLink8/0/doc/45240/Electronic.aspx ____________________________________ Daryl Schliem, Vice - Chair PREPARED BY: ____________________________________ Aimee Kissel, Deputy City Clerk Approved on: August 4, 2011 Economic Development Council meetings are open to all members of the public. 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