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HomeMy WebLinkAbout10-18-12 Economic Development Council minutes, draft/ City of Bozeman Economic Development Council (EDC) Meeting Minutes October 18, 2012 10:30 am – 12:00 pm Madison room, City Hall, 121 N. Rouse Members Attending: Daryl Schliem (Bozeman Chamber of Commerce) Anders Lewendal (Contractor), Teresa McKnight, (Montana State University Innovation Campus), Tracy Menuez (Human Resource Development Council) Members Absent: Cheryl Ridgely (Bozeman Deaconess Hospital), Deputy Mayor Jeff Krauss (liaison), Stuart Leidner (Prospera Business Network) Staff Present: Chris Kukulski (City Manager), Brit Fontenot (City Director of Economic Development and Community Relations), Aimee Brunckhorst (Deputy City Clerk) Chris Saunders (City Planning and Community Development Assistant Director) Rick Hixson (City Engineering Director), Anna Rosenberry (City Administrative Services) Guests / Public Present: Chris Mehl (Bozeman Commission) Rob Gilmore (Northern Rocky Mountain Economic Development District Director), Rob Evans (City Impact Fee Committee member) NOTE: These minutes are not word for word and should be considered in addition to the audio recording of the meeting. Call to Order Chairperson Daryl Schliem called the meeting to order at 10:35 a.m. Public Comment Daryl Schliem opened public comment. Seeing no public comment, Daryl Schliem closed public comment. Minutes – September 6, 2012 The minutes of September 6, 2012 were unanimously approved with one correction. Non-Action Items Impact Fee Discussion (Fontenot, et al) Impact Fee Update October 8, 2012 City Commission Meeting Packet Materials: Impact Fee Study Update (this document takes a few moments to load) Planning and Community Development Assistant Director Chris Saunders explained the process that staff, the consultant and Commission have gone through up to this point on the impact fee update. Chris Saunders explained the Commission is scheduled to have another discussion on the impact fee update during the November 26th City Commission meeting. They have asked staff to bring back additional information and also to set up the process to take action if the Commission so chooses. The Commission will have some opportunities to act on the shorter term on the impact fees, while other matters may take quite a bit longer. Mr. Saunders also explained that the impact fee related Capital Improvements Program items that are updated annually will be discussed during the Impact Fee Committee meeting on November 8th. Chris Saunders explained that the impact fee update had some significant methodology changes. The state tax database became available for the first time allowing for more detailed profiles. He explained this in further detail. The result is that all four of the fees for the residential side now have a breakout based on the size of the home. On the non-residential side, the water and sewer are still tied to the size of the water meter for the square footage. For water and sewer, the fees have always had a treatment component and a piping component based on the meter size. These fees have now been separated into meter size and now a separate calculation for the piping side. A land efficient pattern would now have a fiscal advantage. This allows benefits for development patterns the city would like to encourage. Chris Saunders explained a change to the fire / emergency service impact fees. Additional, enhanced 911 reporting has allowed the fees to become more accurate based on the actual calls for service. Some of the non-residential category fees went down quite a bit, as they had less actual calls for service while other categories went up considerably because they had more calls for service. Chris Saunders pulled up the impact fee materials from the October 8th City Commission packet to show slides with specific examples of how fees would be calculated if the updated methods were used. Mr. Saunders began explaining the tables beginning on page 198 of the commission materials (linked above). Mr. Saunders explained one of the reasons they changed the meters calculation to a home size calculation was an upcoming issue on residential fire sprinklers. The state adopts the building codes and we act as the implementing agent. There has been a push at the code level (not yet adopted by the state) to adopt a compulsory standard to put fire sprinklers in all residences. Fire sprinklers have the potential to push up the meter size without a significant increase in real demand. By moving to home size, the meter size becomes irrelevant allowing builders to go either way. Chris Saunders explained how to read the tables and where the data sets came from for these tables. This included an explanation of what is referred to with the ‘collector’ columns. He also explained that all of these are the actual 100% calculated cost of service without any adjustments other than the street column which is subject to a 40% discount from a 2008 City Commission decision. Mr. Saunders explained that a third component related to water is not included in the fees right now or in this report. This relates to the source of the water supply. They are waiting to see the outcomes of the Integrated Water Resources Plan and the policy decisions that will come from that. That outcome could result in an additional third water fee being added for this item. Mr. Saunders continued to explain the tables in detail, moving on to non-residential. Mr. Saunders said the consultants are suggesting that the 35 user categories for the street fees be narrowed down to 9 or 10 user categories. Merging office and medical office and retail with restaurant are several examples of this. With these broader categories, redevelopment and rehabilitation of existing sites should be easier as a new tenant would be less likely to trigger a different impact fee category. This helps create a much more stable fee. Mr. Fontenot reminded everyone that impact fees do not apply to a re-use unless the water meter size increases or you are changing use categories; or for a fire impact fee if you are adding on to the building. Rob Evans began a discussion regarding the theory of credits for impact fees. Chris Mehl explained that one of the reasons why the commercial categories were collapsed down was to lessen financial barriers to re-use. The downside becomes less specific categories, which could cause some disparities. The City Commission has asked Mr. Saunders to pull out restaurant from retail for the next Commission discussion so they can see the difference. Mr. Saunders continued going through the tables, moving to page 204 for manufacturing and then on to warehouse impact fees. He explained these fees will be affected by parcel size. Mr. Saunders explained the significant difference in fees between an office building and a manufacturing building. He explained this in detail saying that the majority of the difference relates to the street and fire fees based on usage. Mr. Saunders explained the charts on page 205 that relate to the Trip Exchange District that is essentially the downtown. Based on the physical characteristics of the District there are different demand ratios for the buildings. Mr. Saunders referred to a new study that related to service efficiency that occurs in streets in districts. Service efficiency relates to lower street impact fees. The districts were looked at as a whole so a difference in use would not apply in a Trip Exchange District under the new approach. This allows fees to be more reflective of the specifics of a situation. One of the downsides is it is harder to say, “here is an estimate” because we need much more details on a project to determine the fees. The city is looking into creating a web based program that would allow a user to place details in a spreadsheet and the software would provide an estimate. Once the values are known and the decisions are made, this software program will likely be developed by the city. Mr. Fontenot said some of the fees have gone down, while others have gone up. He asked for an explanation on how the calculations are determined based on lot size in manufacturing and warehouses. Mr. Saunders referred to a map on page 119 that has the planning area of the city. The facility plans look at the planning area and ask what it will take to provide services to this particular area on average. This area is much larger than the actual city limits. The calculations are based on what the cost per acre is to deliver water and sewer services to the planning area in miles of pipe, etc. Mr. Schliem asked about the effects of the County. Mr. Saunders explained if a property is in the County and wants to connect to the city’s water and sewer they will still need to pay impact fees. Rob Evans with the Impact Fee Committee explained why the city needs to add the additional acreage in the County area to the planning map. Mr. Saunders said a land consumptive development will pay a proportionately higher fee as the piping needed would be higher. A discussion occurred among members and guests regarding how these fees are developed and the larger question of how infrastructure should be paid for. Commissioner Mehl said most of the impact fees are related to consumption. Rob Evans said impact fees are about buying capacity and potential. Chris Kukulski spoke regarding the fundamental differences between the ideologies of charging impact fees or not. Either everyone communally pays for the increase in capacity or the specific user who has increased capacity needs pays for that increase. Mr. Evans said the consultants did a great job with the study based on Montana statute. The larger question is whether or not the fees will pay for the infrastructure needs in the future. If the process of paying through new development hurts our property tax collections we may be missing a tremendous opportunity for growth. He feels the impact fee scenario may not consider the impact of economic development. Impact fees are very site specific. Different communities have different needs, costs, physical barriers, etc. Ms. Rosenberry said impact fees are very much driven by your local costs. The community also looks at what base line level of service they want. Impact fees do not deal with maintenance or deferred problems; they only work on hardware per State Statute. Impact fees are one piece in the equation. Through monthly use rates we can encourage conservation and accomplish other related goals. Mr. Lewendal said the question for this group is whether impact fees have any effect on our economic development. He would ask whether other similar communities have other ways of getting this revenue source. He referred to several studies. Most of the fees in the city are consumptive based. Commissioner Mehl would say that our growth rate does not reflect that impact fees are affecting economic development. Commissioner Mehl spoke regarding state law precluding some of the tax sources that communities in other states may have available. Ms. McKnight asked about the affect of high impact fees for industrial parks that take a large piece of land. She feels the fee structure should be more balanced than what is proposed. Mr. Evans spoke about how this becomes a policy decision regarding what type of development the Commission and the city as a whole would like to see. Mr. Schliem asked Commissioner Mehl what policy implementation he feels the council will go towards on the 26th. Commissioner Mehl said there is a macro policy level deciding the ratio of impact fees versus property tax versus fees and utilities. Once that is determined, more specific level questions arise, such as do you incentivize and will incentives work? The first question the Commission has addressed given the reality of state law. Even in Montana our property taxes are lower (with no sales tax), but impact fees are higher. How do we balance the two? What is the annual fee you pay? Does growth pay for itself? Studies are all over the place. How do property taxes play into this discussion? Commissioners have said they would like a high level of service which impacts what we do with impact fees. Utility fees already have been raised dramatically recently. Another question is how incentivizing plays into it and will they work? Mr. Kukulski spoke regarding the need for the EDC to discuss this further as this Council is one of the best groups to provide feedback. Ms. Rosenberry asked about looking at the positive impacts to the community by having an impact fee program and what the city has been able to accomplish with the use of a development impact fee and keeping the water, sewer and general taxes relatively low. That is an element that gets constantly overlooked. If user fees paid for expansion every time water pipes needed to be expanded the city would have to raise water rates often. Maybe the mix of impact fees and user rates is working for us. Mr. Kukulski said water and sewer impact fees have not gone up very little over quite a few years but water and sewer user rates have gone up 60 to 70%. Mr. Evans said a business he is currently working with was shocked by the impact fees. On some level this equates to an entry fee. If a business does not have solid capital coming in they may not be able to start up here. He also spoke about the bigger challenge in competing with the County that does not have these fees. Ms. McKnight asked about lessening start up costs and getting anchor companies and tenants into our community. Mr. Schliem said he does feel impact fees do make a difference in whether companies locate in Montana. November 26th is the next City Commission hearing for this issue. November 1st Brit Fontenot will not be available. The Council decided to carry over discussion on impact fees to the next meeting. They decided to reschedule the November meeting to the 8th and extend the time period from 9 to noon. Council members should look at the (four?) questions that have been raised and do their homework between now and then. Chris Saunders emphasized that the role of the study is not to say, “collect this particular number”. The role of the study is to set side boards for the discussion. The question of how we get there are policy decisions. E. FYI/Discussion Next meeting DATE AND TIME CHANGE: November 8th from 9 to noon. Adjournment Daryl Schliem adjourned the meeting at 12:09 p.m. * NOTE – Full audio of this EDC meeting is available at: http://weblink.bozeman.net/WebLink8/0/fol/46967/Row1.aspx ____________________________________ Daryl Schliem, Chairperson PREPARED BY: ____________________________________ Aimee Brunckhorst, Deputy City Clerk Approved on: Economic Development Council meetings are open to all members of the public. If you have a disability that requires assistance, please contact our ADA Coordinator James Goehrung, at 582-3232 (TDD 582-2301).