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HomeMy WebLinkAboutE- Packet 07-16-2007_Provisionally adopt Ordinance No_ 1711, Workforce _15 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Paul Luwe, City Attorney Chris Kukulski, City Manager SUBJECT: Ordinance 1711 MEETING DATE: Monday July 16, 2007 BACKGROUND: A component of the workforce housing ordinance is the timing of payment and waiver of impact fees. Should the Commission adopt, Ordinance 1710, the workforce housing ordinance, the Commission will need to amend the impact fee provisions of the Bozeman Municipal Code to comport with the newly adopted workforce housing ordinance. Depending on the final version of the workforce housing ordinance, there may be three areas that affect the impact fee ordinance: the timing of payment of impact fees, declining to impose the 5% administrative fee, and waiving impact fees. Ordinance 1711 amends the impact fee section of the Bozeman Municipal Code to address the timing of payment of impact fees and the waiving of impact fees. There is no need to amend the code to effectuate declining the imposition of the administrative fee. The waiving of impact fees in Section 5 of the Ordinance requires the replacement by other city funds and is consistent with the opinion of the City Attorney. RECOMMENDATION: Amend, if necessary, this ordinance to conform to your decision on the workforce housing ordinance and approve this ordinance or an amended version. FISCAL EFFECTS: The effect of waiving impact fees requires replacement to the extent of the fee waived. As of today the total impact fee is $7,160.01 per detached home, and $6,346.60 per attached home. These amounts are likely to increase in the future. ALTERNATIVES: As may be recommended by the Commission. Respectfully submitted, _________________________________ ____________________________ Paul J. Luwe, City Attorney Chris A. Kukulski, City Manager Attachments: as 253 MEMORANDUM TO: Honorable Mayor and City Commission FROM: Paul J. Luwe, Bozeman City Attorney DATE: July 11, 2007 RE: Workforce Affordable Housing Ordinance – Impact Fees ISSUE: Can impact fees be waived for workforce affordable housing without the subsequent repayment into the particular affected impact fee fund? ANSWER: Impact fees can’t be waived either under SB 185 or the current impact fee ordinance without first repaying the particular affected impact fee fund. However, the City Commission can delay the payment of the impact fee until later in the process. The Commission also may waive the 5% Administrative fee that is payable to the City. DISCUSSION: There was apparently some confusion at the City Commission Meeting during the first reading of the Workforce Affordable Housing Ordinance on June 18th as to what the Legal Department’s recommendation is concerning waiver of impact fees. I apologize for any confusion that my April 8th memorandum may have caused. In this memorandum, I wrote: Assistant City Manager Ron Brey points out that there may be an issue with the waiver of impact fees. Ever since the City’s implementation of impact fees, the City has not permitted waiver of impact fees, unless the fee payment is replaced by another source. In other words, the City could waive the impact fee by a particular payer by paying that impact fee into the proper impact fee fund. This was consistent with the advice of the consultant and existing legal precedent. The Task Force indicates that crucial to the workforce affordable ordinance is a waiver, reduction, or adjustment of timing of impact fees payment. There was also testimony that our current impact fee consultant has indicated that waiver of impact fees for affordable housing may be possible, without the subsequent repayment into the particular impact fee fund. However, on following up with the Planning Department, I have been unable to confirm this statement from the consultant or the legal basis which would support a waiver of impact fees.(FN1) State 254 law, however, does permit the delaying of impact fees. See, MCA §7-6-1603(2) (impact fees must be paid no earlier than the drawing of building permit or water/wastewater permit). I recommend that if the Commission includes a waiver of impact fees in the ordinance, that the fee waived be replaced by another source.(FN2) The footnotes read: 1.The consultants are looking into this issue but the planning department has not yet received their analysis. 2. Care must also be taken as to where the funds are drawn to pay for such a waiver. In a recent case challenging City of Seattle’s use of offset contracts to achieve greenhouse gas reductions, the Washington Supreme Court held that combating global warming is a general government purpose and mitigation expenses must be borne by the general taxpayer rather than the ratepayer. Okeson v. City Of Seattle, No. 77888-4 (Wash. Jan 18, 2007) I believe that the confusion was caused by a statement of the impact fee consultant made to the City Commission in one of the consultant’s presentation. The Task Force members in attendance understood the consultant to say that you could waive impact fees for affordable housing. I followed up with the Planning Department to confirm whether this statement was made and if made, to provide the legal basis supporting such a waiver so that I could review the legal authority. The consultant has not provided any authority to support a waiver to the Planning Department. The current City Impact Fee ordinance provides in BMC § 3.24.110H: H. In order to promote the economic development of the city and the provision of affordable housing in the city, the City Commission may agree to pay some or all of the development impact fees imposed on a proposed development by this chapter from other funds of the city that are not restricted to other uses. Any such decision to pay development impact fees on behalf of an applicant shall be at the discretion of the City Commission and shall be made pursuant to goals and objectives previously adopted by the City Commission to promote economic development and/or affordable housing. This provision was prepared by the original impact fee consultant in response to the City wanting to waive impact fees for both economic development and affordable housing.1 Otherwise, you place at risk the collection of impact fees.2 1 Consultant James Duncan in response to a question on how to deal with affordable housing beyond this provision, i.e., crafting mechanisms for mitigating the impact of impact fees on projects the City wants to encourage, advised that “one additional tool to address affordable housing would be to adopt lower fees for smaller – and presumably more affordable houses…. [but] making it clear that the difference between the two will be made up by other City Funds…” See Memorandum, James Duncan to Andy Epple, dated December 14, 1995. 2 The most likely risk is a successful challenge that the other fee payers’ impact fee is no longer proportionate or that the burden on these fee payers are disproportionate. 255 Subsequent to the adoption of Bozeman’s impact fee ordinance, the Montana Legislature passed SB 185 which has been codified in MCA Title 7, Chapter 6, Part 16. This act allows for the Commission to delay impact fees until later in the process. See § 7-6- 1603(2) (impact fees must be paid no earlier than the drawing of building permit or water/wastewater permit). The Commission also may waive the 5% Administrative fee. See § 7-6-1601(5)(a) (the administrative charge is discretionary). MCA § 7-6-1603(6) allows for refunds3 and credits, but does not specifically allow for waivers. The Legislature by specifically including refunds and credits but not waivers intended to exclude waivers under the doctrine of expressio unius et exclusion alterius also known as the rule of negative implication. 4 Under this canon, when a statute provides specifics, usually by lists, any specific not mentioned is not included by implication. The Legislature’s intent not to include waivers is further supported by MCA § 7-6-1603(7) which states “An impact fee represents a fee for service payable by all users creating additional demand on the facility.” (emphasis added). Thus, SB 185 does not authorize the City Commission to grant waivers. SB 185 does not currently apply to Bozeman. Section 9 of SB 185 made the bill applicable only when a self-government power City amends its impact fee ordinance and only to the portion amended. However, if the Commission adopts the current Workforce Affordable Housing Ordinance, the Commission will need to amend BMC § 3.24.110H to implement the waiving of impact fees thus invoking SB 185. Under SB 185, the Commission does not have authority to waive impact fees. PJL cc: Chris Kukulski, City Manager Ron Brey, Assistant City Manager Andy Epple, Planning and Community Development Director 3 Refunds are amounts over paid or inappropriately paid by the fee payer. 4 I have not read the legislative history of the SB 185 which may contain additional evidence of the intent of the legislature. 256 ORDINANCE NO 1711. AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, PROVIDING THAT THE BOZEMAN MUNICIPAL CODE BE AMENDED BY REVISING SECTIONS 3.24.050A, 3.24.060A, 3.24.070A, 3.24.080A, AND 3.24.110H; PROVIDING FOR PAYMENT AND WAIVER OF IMPACT FEES FOR WORKFORCE HOUSING. NOW, THEREFORE, BE IT ORDAINED BY THE BOZEMAN CITY COMMISSION: Section 1 That Section 3.24.050A of the Bozeman Municipal Code be amended so that BMC Section 3.24.050A reads: “3.24.050 Street Impact Fees A. Imposition of Street Impact Fees 1. On or after March 23, 1996, any person who seeks to obtain: a. A building permit; or b. Any other permit that will result in the construction of improvements that will generate additional traffic; or c. Any extension of any such permit that was issued before the effective date of this chapter, is required to pay a street impact fee in the amount specified in this chapter; or d. Any delayed payment of impact fees as specified and approved by the City Commission in accordance with the BMC Title 17, Chapter 2 for Workforce Housing Lots.” Section 2 That Section 3.24.060A of the Bozeman Municipal Code be amended so that BMC Section 3.24.060A reads: “3.24.060 Fire Protection Impact Fees A. Imposition of Fire Protection Impact Fees 1. On or after March 23, 1996, any person who seeks to obtain: a. A building permit; or b. Any other permit that will result in construction that will generate demand for fire protection services; or c. Any extension of any such permit that was issued before the effective date of this chapter, is required to pay a fire protection impact fee in the amount specified in this chapter; or 257 d. Any delayed payment of impact fees as specified and approved by the City Commission in accordance with the BMC Title 17, Chapter 2 for Workforce Housing Lots.” Section 3 That Section 3.24.070A of the Bozeman Municipal Code be amended so that BMC Section 3.24.070A reads: “3.24.070 Water Impact Fees A. Imposition of Water Impact Fees 1. On or after March 23, 1996, any person who seeks to obtain a permit for connection to the city water system, or any extension of such a permit issued before the effective date of this chapter, is required to pay a water impact fee in the amount specified in this chapter; or 2. Any delayed payment of impact fees as specified and approved by the City Commission in accordance with the BMC Title 17, Chapter 2 for Workforce Housing Lots.” Section 4 That Section 3.24.070A of the Bozeman Municipal Code be amended so that BMC Section 3.24.070A reads: “3.24.080 Wastewater Impact Fees A. Imposition of Wastewater Impact Fees 1. On or after March 23, 1996, any person who seeks to obtain a permit for connection to the city wastewater system, or any extension of such a permit issued before the effective date of this chapter is required to pay a wastewater impact fee in the amount specified in this chapter; or 2. Any delayed payment of impact fees as specified and approved by the City Commission in accordance with the BMC Title 17, Chapter 2 for Workforce Housing Lots.” Section 5 That Section 3.24.110H of the Bozeman Municipal Code be amended so that BMC Section 324.110H reads: “H. In order to promote affordable workforce housing of the City, the City Commission may waive impact fees for Workforce Housing Lots approved by the City Commission pursuant to the BMC Title 17, Chapter 2 by paying some or all of the impact fee from other funds of the city that are not restricted to other uses. In order to promote the 258 economic development of the city and the provision of affordable housing in the city, the City Commission may agree to pay some or all of the development impact fees imposed on a proposed development by this chapter from other funds of the city that are not restricted to other uses. Any such decision to pay development impact fees on behalf of an applicant shall be at the discretion of the City Commission and shall be made pursuant to goals and objectives previously adopted by the City Commission to promote economic development and/or affordable housing.” Section 6 Repealer. All resolutions, ordinances and sections of the Bozeman Municipal Code and parts thereof in conflict herewith are hereby repealed. Section 7 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. Section 8 Severability. If any portion of this ordinance or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions of this ordinance which may be given effect without the invalid provisions or application and, to this end, the provisions of this ordinance are declared to be severable. Section 9 Effective Date. This ordinance shall be in full force and effect thirty (30) days after passage on second reading. PASSED AND ADOPTED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the ____ day of _______________, 2007 __________________________________________ JEFF KRAUSS, Mayor ATTEST: _____________________________________ CYNTHIA DELANEY Deputy City Clerk PASSED, ADOPTED AND FINALLY APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the ________ day of ________________, 2007. 259 - 4 - __________________________________________ JEFF KRAUSS, Mayor ATTEST: _____________________________________ CYNTHIA DELANEY Deputy City Clerk APPROVED AS TO FORM: ___________________________________ PAUL J. LUWE City Attorney 260