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HomeMy WebLinkAbout05-24-12 Impact Fee Advisory Committee Minutes IMPACT FEE ADVISORY COMMITTEE Regular Meeting Thursday, May 24, 2012 The City of Bozeman Impact Fee Advisory Committee met in regular meeting at 6:00 p.m. on Thursday, May 24, 2012, in the City Commission Room, City Hall, 121 North Rouse Avenue, Bozeman, Montana. CALL TO ORDER AND ATTENDANCE — Chair James Nickelson called the meeting to order at 6:04 p.m. Present: Absent: Members: James Nickelson, Chairperson Rob Evans Randy Carpenter 04 David Graham (arrived at 6:20 p.m.) Brian Heaston Erik Nelson Anna Rosenberry George Thompson Commissioner Liaison: Chris Mehl Staff: Chris Saunders, Assistant Planning Director Robin Sullivan, Recording Secretary Visitors: Carson Bise, TischlerBise Dwayne Guthrie, TischlerBise MINUTES OF MARCH 8, 2012 MEETING. It was moved by George Thompson, seconded by Randy Carpenter, that the minutes of the meeting of March 8, 2012, be approved as submitted. The motion carried on a 6-0 vote. PUBLIC COMMENT— No comment was received under this agenda item. CITY COMMISSION LIAISON. Commissioner Liaison Chris Mehl stated he has no report at this time. PROJECT REVIEW— Presentation by Carson Bise of TischlerBise of revised Water and Sewer Impact Fee Study updates. Assistant Planning Director Chris Saunders noted that drafts of the Water and Sewer Impact Fee Studies were included in the packets. This morning staff met with Impact Fee Advisory Committee Meeting—May 24, 2012 1 Dwayne Guthrie and, as a result of that meeting, the presentation being made at this meeting is slightly different from the information distributed. Water Impact Fee Study. Dwayne Guthrie, TischlerBise, noted that this update of the studies includes looking at the methodology used in the 2007 study, which was driven by the long range facilities plans. The recommended basis for this study is a hybrid that uses a 10-year horizon, which is between the five years used for budgeting and the twenty years used for facilities plans. He noted this will provide more predictability in the impact fees. Dwayne Guthrie reviewed the process followed in developing the basis for setting impact fees. The firm began with an analysis of water billings from 2009, 2010 and 2011 and then projected the average day demand for 2012 based on that data. He stated that information was then applied to the various meter sizes, using the national standards that were used in previous studies. They found that for one-inch meters, the local demand information was less than the national multiplier; however, for two- and three-inch meters the local demand information as higher than the national standard. He stressed that using local data results in a more accurate calculation of the impact fees for a project. Dwayne Guthrie noted that once the base data was collected and analyzed, they updated the equivalent dwelling unit (EDU) factor, based on the projected 2012 demand. During that analysis they found the actual water supply figures were 11.5 percent higher than the total amount through the meters, which falls within the 5 to 15 percent differential typically found. Based on their calculations, they found an average of 109 gallons per day per person. The result is a demand for 5 million gallons per day today and, based on a 2-percent growth rate for both residents and jobs in the community, by 2030, they project a demand for 7 million gallons of water per day. Responding to Anna Rosenberry, Dwayne Guthrie stated these projections are based on the current water demand and do not take additional conservation measures into consideration. He noted that, since these fees are being reviewed every three to five years, he does not expect a significant change in demand before the next update is undertaken. Dwayne Guthrie noted that analysis for the 2007 HDR study was done on a peak day, and it projected a demand of 8.0 million gallons per day. The actual demand is slowing, however, with the actual demand in 2012 being 5.03 million gallons per day. Anna Rosenberry noted that after that study was completed, the City adopted a new fee structure for water usage, and she thinks that has affected how much water people use. Also, she believes that efforts to encourage conservation measures have helped to reduce demand. Chris Saunders stated that a number of customers have also switched to wells for irrigation, including some large customers. He noted this has also reduced the amount of treated water being used for irrigation purposes. Dwayne Guthrie recognized that the demand for water fluctuates, noting much of that is due to Impact Fee Advisory Committee Meeting—May 24, 2012 2 weather patterns. Mr. Guthrie turned his attention to the list of capital improvements, noting that some adjustments were made to those being considered between 2012 and 2017 to more accurately reflect anticipated costs during that period. Based on those capital projects, a cost of$15.53 per gallon of capacity was calculated, which is very close to the $15.56 calculated in the 2007 HDR report. He then stated a preliminary fee of $3,758 without credits or administrative fee was calculated, which is very close to the fees collected at this time. Assistant Planning Director Chris Saunders showed a map of the community including the water mains as they exist today and the projected water main installations, noting most of them are beyond the ten-year horizon of this study. He observed that there is more uncertainty today about future raw water storage mechanisms, since the Commission is now looking at a greater range of options. Anna Rosenberry noted that all storage options will cost money and asked if an amount should be included in this study to generate revenues for that eventuality. Brian Heaston noted that the water usage figures seem reasonable. He noted that once the Integrated Water Resources Plan is completed, staff will have a set of tools to continually track water demands at any point in time, so those figures can be easily updated. He then noted that, based on current demands, the City can serve roughly 84,000 people at maximum utilization. Responding to Anna Rosenberry, Dwayne Guthrie confirmed that, given growth projections, they are estimating these fees will generate $1.5 million per year to pay down debt on the monies borrowed to construct the new water treatment plant. Dwayne Guthrie noted that they reviewed the data base from the Montana Department of Revenue, which shows the size of each dwelling unit. They analyzed that data for both single- unit and multi-housing units and found that with the high number of attached dwelling units in Bozeman, it was preferable to combine all residential units into a single graph. He noted the graph ranges from under 1,000 square feet to 3,400 square feet and above, with a couple of 12,000-square-foot homes included. Assistant Planning Director Chris Saunders noted that it is important to measure the size of the impact, not the size of the house unless it can be shown there are more people living in the larger house. Dwayne Guthrie presented the proposed impact fee schedule, noting that it includes single-unit residential, multi-unit residential and non-residential categories. The residential categories are based on the size of the residence, broken into 200-square-foot increments. He noted the average single-unit residence is approximately 2200 square feet, and the proposed impact fee for that size is essentially the same as the current fee. The fees for the non-residential uses are based on meter size, with the fees for the smaller meters being slightly lower and the fees for the Impact Fee Advisory Committee Meeting—May 24, 2012 3 2-inch and 3-inch meters being higher. Responding to James Nickelson, Dwayne Guthrie stated there are currently 214, 2-inch meters and 20, 3-inch meters. He feels that using the actual local data for those meters is preferable to using the national standard. Assistant Planning Director Saunders stated the 3- and 4-inch meters are almost entirely in motels, which have a very similar demand. He then noted that if an applicant does not feel the impact fee is fair, he has the option of providing an independent study for his business. He stated that, for businesses requiring a meter over 3 inches, an independent study is the only method for calculating impact fees. Responding to questions from Commissioner Liaison Chris Mehl, Dwayne Guthrie noted that the current impact fees were based strictly on meter size, not house size; and that is the reason for the difference in proposed impact fees. Responding to additional questions from the Commissioner Liaison, Anna Rosenberry stated that water impact fee revenues have been estimated at $400,000 to $450,000 each year because of the recession; however, on average $800,000 has been collected. She noted that the water rates were calculated based on the estimated revenues needed to cover any shortfall in total revenues. Dwayne Guthrie stated that, based on their calculations, these impact fees will generate a projected $1.45 million annually. James Nickelson noted it is important to remember that the actual collections will be based on the amount billed. Sewer Impact Fee Study. Dwayne Guthrie turned attention to the sewer impact fee study, noting that essentially the same steps were followed in developing the calculations. He noted that the monthly sewer rates are based on water consumption during the winter months. He stated the residential units use less water in the winter while the non-residential uses remain relatively constant. He noted the water reclamation facility is processing an average flow of 5.65 million gallons per day. Calculations for single-unit residential result in 195 gallons per day per connection or 87 gallons per person per average day. He noted that, since Phase I improvements are essentially complete and Phases 11 and III are not in the ten-year horizon, additional future plant costs have been eliminated from the calculations. He stated the Phase I improvements actually cost $17 million, which is significantly higher than originally estimated. As a result, the costs per gallon previously projected were $5.21 but were actually $6.65. Responding to Commissioner Liaison Chris Mehl, Assistant Planning Director Chris Saunders stated that many of the growth related elements previously included in Phase 11 were moved to Phase 1, which increased the costs of that phase. The elements now remaining in Phase 11 are regulatory and not capacity expanding; as a result, impact fees cannot be used for those improvements. He noted that since the 2007 study was completed, the City has committed to a Impact Fee Advisory Committee Meeting—May 24, 2012 4 much more aggressive maintenance schedule and lowering the amount of leakage into pipes running to the plant, which allows for more growth since the plant has a capacity of 8.5 million gallons per day. Dwayne Guthrie noted that, while the projected number of gallons per EDU decreased between the 2007 study and this study, the cost per gallon of capacity increased significantly, from $13.74 to $22.11. Based on these calculations, sewer impact fees will increase to $4,311. Assistant Planning Director Chris Saunders showed a map of the City with existing sewer mains and future lines. He noted that, while water mains can be extended by simply looping between existing mains, sewer mains are dependent on a single destination. To the greatest extent possible, sewer lines must run downhill to avoid the expenses of constructing and maintaining lift stations. He cautioned that, at the present time, there are limitations in capacity for west end development. The School District plans to construct a new high school near the intersection of Cottonwood Road and Stucky Lane in the next seven to eight years. There are currently no water or sewer lines to that site at the present time; and installation of those mains will cost a significant amount of money. He indicated that the School District is subject to impact fees; however, those fees will not nearly cover the costs. Responding to David Graham, the Assistant Planning Director confirmed that these impact fees are based on a ten-year plan but will be reviewed again in three to five years. He noted this will help to ensure that no huge unanticipated costs arise, and help to provide a more stable impact fee structure. Dwayne Guthrie reviewed the proposed impact fee table, noting that the fees for the smaller residential units will decrease slightly while the remainder will increase. He acknowledged that the larger residential units and non-residential uses will increase significantly, nearly doubling in some instances. Assistant Planning Director Chris Saunders suggested that, with the fees being based on dwelling size, people can make better choices oithe size of unit they choose to build. Responding to David Graham, Dwayne Guthrie confirmed that he feels it is preferable to use local data when possible instead of national averages. In this instance, he believes the local data is good and should be the basis for calculating fees. General Discussion. Responding to questions from Erik Nelson, Dwayne Guthrie stated the monthly usage fee for water and sewer has more influence on one's habits than a one-time charge. As a result, he does not believe any adjustments to these impact fees would impact one's interest in water conservation. Erik Nelson suggested it would be preferable to incentivize a builder to install water conserving products rather than retrofitting a structure once it is built. Impact Fee Advisory Committee Meeting—May 24, 2012 5 Commissioner Liaison Chris Mehl noted that, when building the new school, there was concern that adequate capacity may not be available; however, once it was built they found usage was less than had been projected. In light of that fact, he is concerned that the projected usages may not be accurate since they don't take into consideration recently implemented conservation measures. Responding to possible options for reducing the impact fees for water conserving devices, Brian Heaston suggested that a builder could certify the standard to which a building is constructed as a condition of final occupancy. Following discussion about various options to decrease impact fees based on lower demand, James Nickelson voiced his concerns. He noted that, while the devices installed in the house are generally not changed, a new owner may change from xeriscape to sod and other landscaping that requires a significant amount of water to maintain. Responding to Assistant Planning Director Saunders, Dwayne Guthrie stated the information he received from the Montana Department of Revenue did not include the year a structure was built. He noted that he does have the parcel numbers so, if that information were available, he could easily incorporate it into the data base. He then stressed that the impact fees run with the land. Commissioner Liaison Chris Mehl stated that if it is possible to evaluate usage on structures built within the last ten years, he would be interested in using that data as the basis for calculating the impact fees since it would be more reflective of current building standards. James Nickelson observed that if the gallons per EDU drops, the rate per gallon will simply increase because the costs don't change. Brian Heaston noted that federal policy from 1996 set forth a series of changes to the plumbing codes that included low flow toilets and other efficiencies. As a result, he suggested that the cutoff for reviewing current construction not be set before 2000. Responding to Randy Carpenter, Assistant Planning Director Saunders stated very few applicants have done their own analysis; rather, they have been willing to accept the averages in the table. James Nickelson asked if this committee is comfortable with the projects as listed for the next ten years, noting that to change them could result in either an increase or a decrease in the proposed fees. Anna Rosenberry stated she has a similar concern, voicing concern that basing the fees on a ten- year horizon could result in less flexibility for the Commission to make changes in projects. James Nickelson observed that the projects outside the ten-year period are also outside current city limits. He noted that if the new high school is built near the intersection of Cottonwood Road Impact Fee Advisory Committee Meeting—May 24, 2012 6 and Stucky Lane, that will force the City's resources to go in that direction. Responding to Erik Nelson, Assistant Planning Director Saunders stated it is becoming more and more difficult to obtain approval for individual wells and septic systems, particularly on an institutional scale. Brian Heaston cautioned that sewer lines are very geographic in nature, and it is important to use gravity flow whenever possible. Responding to concerns expressed about providing water and sewer services to the new school site, Assistant Planning Director Saunders cautioned that the national standard is 50 acres for a high school site; and there are very few parcels of that size near or within city limits. He also stressed the importance of recognizing that the boundary for the high school district area extends well beyond city limits. James Nickelson noted that the list of projects is critical in setting the impact fees and, as a result, it is important to get it right. Assistant Planning Director Chris Saunders stated staff will pursue gathering data on development that has occurred since 2000; include water conservation standards in the calculations; and provide more information on the high school annexation issue. He then noted the next meeting will be on June 14, at which time similar presentations will be made on the transportation and fire impact fee studies. Chair James Nickelson thanked the consultant and staff for the presentations. OLD BUSINESS — By-laws. Assistant Planning Director Chris Saunders distributed copies of an e-mail he received from City Attorney Greg Sullivan expressing strong concerns about the use of proxy votes and asking that the practice be stopped. He noted the City Attorney and City Clerk are working on the development of standard bylaws and rules of procedure for all advisory boards. He stated that revoking the proxy portion of the by-laws will be placed on next meeting's agenda for action. Responding to Commissioner Liaison Chris Mehl, the Assistant Planning Director stated the only other body that uses a proxy vote is the InterNeighborhood Council, which plays a very different role from other advisory bodies. COMMITTEE COMMENTS. Randy Carpenter asked if staff has thought about communication regarding why impact fees are at the level they are. He noted a lot of people in the community wonder why the fees here are higher than others in the state and why they are going up again in this economic environment. Assistant Planning Director Chris Saunders stated staff has not done any cost comparisons with Impact Fee Advisory Committee Meeting—May 24, 2012 7 other cities. He then cautioned that it is difficult to compare the levels of impact fees because the basis on which they are calculated can vary widely as well as other funding sources available to a local government. He indicated that staff would be willing to review the fees and how they fit into the bigger picture for funding infrastructure. Commissioner Liaison Mehl thanked Randy Carpenter for raising this issue. He noted that at the present time, the City is consumed with the annual budget, a large portion of which is for infrastructure. He stated it is important to get a story in the newspaper identifying the key issues surrounding the fee, probably the week before this committee takes action on the proposed fees. Randy Carpenter stated that if Bozeman's fees were similar to those in other cities around the state, he does not think revisions to the fee would be an issue; however, a huge discrepancy exists. Anna Rosenberry noted that impact fee studies are long and difficult to understand. She stated that, while it is easy to compare the dollars, it is extremely difficult to identify what is in them. Randy Carpenter recognized the difficulties involved, but noted the alternative to that is to say "trust us." David Graham recognized the benefits of comparing the basis of the impact fees from other communities, noting that more information is always better and makes it easier for people to accept. Erik Nelson asked if, beyond impact fees, it is more expensive to build in Bozeman than in Belgrade or in the county, including land prices, building materials, labor, etc. George Thompson noted cost is not the only factor that people consider when choosing where to live, stating some people may prefer to live in Livingston or Belgrade. Commissioner Liaison Mehl noted the Commission will need to also consider how much current people should pay and how much new peope should pay for infrastructure. He noted it is important to first get the numbers and the committee recommendations and then to make the policy decisions. Randy Carpenter stated he does not think that justification of the numbers or communication are this committee's job. David Graham noted that more than just the cost of the impact fees needs to be considered. He stated that when those costs push people outside the densely populated area, sprawl occurs and that results in other costs. Randy Carpenter noted that if the County were charging impact fees, these concerns would not be an issue. Impact Fee Advisory Committee Meeting—May 24, 2012 8 ADJOURNMENT — 8:33 P.M. There being no further business to come before the Board at this time, Chair Nickelson adjourned the meeting. James Nickelson, Chairperson Chris Saunders, Assistant Planning Director Impact Fee Advisory Committee Dept. of Planning & Community Development City of Bozeman City of Bozeman Impact Fee Advisory Committee Meeting—May 24, 2012 9