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HomeMy WebLinkAboutProvisional Adoption of Ordinance No. 1823, amending section 2.06.1680 prohibition on refunds of impact fees paid Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris Saunders, Assistant Planning Director Tim McHarg, Planning Director SUBJECT: First reading of Ordinance 1823 which amends Section 2.06.01680, BMC to prohibit refunds of paid impact fees in exchange for impact fee credits MEETING DATE: March 5, 2012 AGENDA ITEM TYPE: Action. RECOMMENDATION: Approve the first reading of Ordinance 1823. Recommended motion: Having heard and considered public testimony, the recommendation of the impact fee advisory committee, and information from staff I move to provisionally approve Ordinance 1823 as presented. BACKGROUND: The City issues impact fee credits to reimburse persons who build qualifying capacity expanding projects in defined infrastructure systems. Credits can be issued in three different forms: cash, cash over time with interest, or a book balance which can off-set fees charged to particular building permits. The City’s preference is to pay in cash as that has the least long term cost for the City and is most advantageous to the private party. A decision to issue a book balance credit is done because the decision maker has determined it is in the best interest of the City to do so at that time. The City issues refunds of impact fees paid for several reasons. Refunds are given when needed to preserve standards of fairness and the linkage between the fees charged and delivery of services. Recently a question arose of whether a refund can be given when a person who has already paid impact fees on a project later acquires impact fee credits from a third party and wishes to give the credits to the City in exchange for a refund of the fee already paid. Finance, legal, and planning staff discussed the matter. The present code language neither prohibits nor authorizes the practice at this time leaving the matter to administrator discretion. After discussion, Staff concluded that there were more possible problems with this practice than benefits. Staff discussed whether less than an absolute prohibition was workable and concluded that there was no meaningful basis upon which to draw distinctions in time, cost, or other objective factor. Therefore, Ord. 1823 is proposed to adopt language specifically prohibiting this kind of refund. 148 The impact fee program has been in place for sixteen years. Credits have been issued to many parties for work performed. It is estimated that there have been over 200 transfers of issued credits between private parties. This question has only arisen in the last few months and only from one party. Staff does not believe that there will be any meaningful negative impact on any credit holder or future project from this amendment to the code. UNRESOLVED ISSUES: None ALTERNATIVES: No substantive alternatives have been identified. The Commission may adopt or not adopt the ordinance as they believe is best. FISCAL EFFECTS: This ordinance does not have any specific cost associated with it and does not alter any adopted departmental budget. Attachments: Draft Ordinance 1823 Report compiled on: February 24, 2012 149 Ordinance 1823 Page 1 of 4 Ordinance No. 1823 AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, PROVIDING THAT THE BOZEMAN MUNICIPAL CODE BE AMENDED BY REVISING SECTION 2.06.1680 TO PROHIBIT REFUNDS OF PAID IMPACT FEES IN EXCHANGE FOR IMPACT FEE CREDITS. WHEREAS, the City of Bozeman is committed to addressing the community’s expressed needs and desires for services; and WHEREAS, the City of Bozeman is committed to meeting those desires and demands for services in a fiscally responsible manner; and WHEREAS, the City of Bozeman is committed to meeting those desires and demands for services in a manner which recognizes the fiscal and legal interest of all of the system users now and in the future; and WHEREAS, Sections 7-6-1601 through 7-6-1604, MCA provide specific authority and guidance about the necessary documentation to establish an impact fee and procedures to adopt and administer an impact fee; and WHEREAS, the City of Bozeman adopted an impact fee program in 1996 through ordinance 1414 which has been amended from time to time; and, WHEREAS, it is desirable to clarify elements of the ordinance relating to refunds of impact fees after having been paid and upon a request to exchange the payment for credits; and WHEREAS, the City Commission considered all public comment offered at their regular meeting on March 5, 2012. 150 Ordinance 1823 Page 2 of 4 NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA: Section 1 That Section 2.06.1680 of the Bozeman Municipal Code be amended so that it reads: 2.06.1680 Refunds of Development Impact Fees Paid A. Refunds of development impact fees shall be made only in the following instances and in the following manner: 1. Upon application to the impact fee coordinator by the applicant, the city shall refund the development impact fee paid if capacity is available and service is denied. 2. Expenses and encumbrances. a. Upon application to the impact fee coordinator, the city shall refund the development impact fee paid and not expended or encumbered within ten years from the date the development impact fee was paid or spent in a manner not in accordance with this division or MCA 17-6- 1602. Refunds shall be paid to the owner of the property at the time the refund is due. In determining whether development impact fees have been expended or encumbered, fees shall be considered encumbered on a first-in, first-out (FIFO) basis. b. When the right to a refund exists due to a failure to expend or encumber development impact fees, the city shall publish written notice within 30 days after the expiration of the ten year period from the date development impact fee was paid. The published notice shall contain the heading "Notice of Entitlement to Development Impact Fee Refund." 3. If an applicant has paid a development impact fee required by this division and has obtained any of the types of permits or extensions listed in 2.06.1640.A.1, 2.06.1650.A.1, 2.06.1660.A.1, or 2.06.1670.A.1, and the permit or extension for which the fee was paid later expires without the possibility of further extension, then the applicant who paid such fee shall be entitled to a refund of the fee paid, without interest. In order to be eligible to receive such refund, the applicant who paid such fee shall be required to submit an application for such refund within 30 days after the expiration of the permit or extension for which the fee was paid. 4. A refund application shall be made to the impact fee coordinator within one year from the date such refund becomes payable under subsections A and B of this section, or within one year from the date of publication of the notice of entitlement of a refund under subsection B of this section, whichever is later. Any refund not applied for within said time period shall be deemed waived. 5. A refund application shall include information and documentation sufficient to permit the impact fee coordinator to determine whether the refund claimed is proper and, if so, the amount of such refund. 6. A refund shall include a pro rata share of interest actually earned on the unused or excess development impact fee paid. 7. All refunds shall be paid within 60 days after the impact fee coordinator determines that such refund is due. 8. Any refund payable pursuant to subsections A and B of this section, shall be made to the record owner of property as of the date the refund was due. 151 Ordinance 1823 Page 3 of 4 9. Once paid, an impact fee may not be refunded in exchange for impact fee credits issued according to 2.06.1690. Section 2 Repealer. All provisions of the ordinances of the City of Bozeman in conflict with the provisions of this ordinance are, and the same are hereby, repealed and all other provisions of the ordinances of the City of Bozeman not in conflict with the provisions of this ordinance shall remain in full force and effect. Section 3 Savings Provision. This ordinance does not affect the rights and duties that matured, penalties that were incurred or proceedings that were begun before the effective date of this ordinance. All other provisions of the Bozeman Municipal Code not amended by this Ordinance shall remain in full force and effect. Section 4 Severability. That should any sentence, paragraph, subdivision, clause, phrase or section of this ordinance be adjudged or held to be unconstitutional, illegal, or invalid, the same shall not affect the validity of this ordinance as a whole, or any part or provision thereof, other than the part so decided to be invalid, illegal or unconstitutional, and shall not affect the validity of the Bozeman Municipal Code as a whole. Section 5 Codification. This Ordinance shall be codified as indicated in Section 1. Section 6 Effective Date. This ordinance shall be in full force and effect thirty (30) days after final adoption. 152 Ordinance 1823 Page 4 of 4 PROVISIONALLY PASSED by the City Commission of the City of Bozeman, Montana, on first reading at a regular session held on the _____ day of ________________, 2012. ____________________________________ SEAN A. BECKER Mayor ATTEST: ____________________________________ STACY ULMEN, CMC City Clerk FINALLY PASSED, ADOPTED AND APPROVED by the City Commission of the City of Bozeman, Montana on second reading at a regular session thereof held on the ___ of ____________________, 2012. The effective date of this ordinance is __________, __, 2012. _________________________________ SEAN A. BECKER Mayor ATTEST: _______________________________ STACY ULMEN, CMC City Clerk APPROVED AS TO FORM: _________________________________ GREG SULLIVAN City Attorney 153