Impact Fees
Missoula County commissioners at their May 25, 2023, public meeting voted to adopt the resolution establishing impact fees in Missoula County, and directed staff to work with the City of Missoula on an intergovernmental agreement.
Impact fees are one-time payments that developers pay to support growth-related infrastructure related to parks and trails, public safety and emergency services, and general government services.
Over the next 10 years, Missoula County is expected to add 12,000 new residents, 4,500 new homes and 15,400 new jobs. Unincorporated areas in the County are expected to add 4,400 new residents, 1,600 new homes and 4,200 new jobs. This will account for nearly $17 million in growth-related infrastructure needs, like new roads and changes to utility lines. Without impact fees, these costs may otherwise fall to county property taxpayers at large.
After nearly a year of working with consultants, holding public meetings and targeted interviews and engaging with various community groups to gather feedback, the Impact Fee Advisory Committee came up with recommendations for the commissioners, listed under the "News Feed" tab below. In short, County staff, with input from the citizen Impact Fee Advisory Committee, determined existing levels of service and capital needs to accommodate future growth. This helped inform how much the fees should be.
The fees would only apply to new development in the Missoula urban area, Lolo, Bonner, Frenchtown and Seeley Lake. Fees generated in an area must be spent in that same community. For example, if a condominium complex is built in Bonner, impact fees from the project could be used to improve county-owned parks in Bonner, such as adding restrooms or playground equipment. They will be calculated based on whether development is residential or nonresidential, as well as the total square footage of development. Affordable housing development could qualify for exemptions.
Communities across Montana, like Belgrade, Bozeman and the City of Missoula, have implemented impact fees to allow new growth and development to pay its equitable share and encourage disciplined and comprehensive planning and growth management. The authority to create impact fees in Missoula County rests solely with the county commissioners. Jurisdictions with impact fees had to inform the impact fee advisory committees to review proposals and make recommendations to the county commissioners on what projects should receive funding.
Let us know what you think about using impact fees to fund growth-related infrastructure
Missoula County commissioners at their May 25, 2023, public meeting voted to adopt the resolution establishing impact fees in Missoula County, and directed staff to work with the City of Missoula on an intergovernmental agreement.
Missoula County commissioners at their May 25, 2023, public meeting voted to adopt the resolution establishing impact fees in Missoula County, and directed staff to work with the City of Missoula on an intergovernmental agreement.
Who's Listening
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Phone 406-258-3293 Email clounsbury@missoulacounty.us
Dear Commissioners,
Thank you for soliciting our comments on the proposed Smart Growth Fee.
The Missoula Building Industry and Missoula County share a mutual goal: to provide more housing units across all income ranges in Missoula County. We also understand that local government needs revenue to operate. That revenue mostly comes from property taxes. Property taxes are typically paid in two payments spread out over about six months to allow the property owners the opportunity to pay their taxes without having to borrow money.
Smart Growth Fees (Impact Fees) are also used to collect revenue for local government. However, unlike property taxes they are collected as an up-front fee which increases the price of a home or apartment building and is added into the principal amount of the loan. The loan is paid back with interest over the life of the mortgage. At today’s interest rates, that could be an additional fifty to sixty cents on every dollar of impact fee.
If we truly believe that providing more housing is a priority, then we must assess every policy and charge that local government imposes on housing relative to its impact on the cost of housing. The Missoula Building Industry Association would like to work with Missoula County while reducing the overall cost to the residential owner.
There is a solution that would allow local government to assess just the impact fees and not have the interest cost. Simply do what you do with property taxes, assess the fee in appropriate increments over a reasonably short time (in years). This is thinking outside of the box for a way to gain revenue from impact fees while not burdening the residential owner with interest payments.
An even more innovative solution would be to compute the interest payment for the impact over the life of the mortgage and split the difference in interest costs between local government and the residential owner. For example, if the impact fee was one dollar and the total interest was sixty-six cents, the local government could collect one dollar and thirty-three cents in fees and the owner would save thirty-three cents in interest cost savings. Local government gains more revenue and the residential owners have decreased overall costs.
Our plea to Missoula County is to find a way that works better than the current up-front impact fee collection process.
Thanks for listening.
The Board of Directors and
Government Affairs Committee
Representing the membership of the Missoula Building Industry Association
If the County is looking to add impact fees to the cost of new homes and commercial uses I believe several public safeguards should be included in this proposed ordinance.
1. All Impact funds should be held in an independent designated account.
2. The funds may only be spent on infrastructure projects meeting the parameter's of the collected fees designated in the adopted ordinance. (No new phone systems for County departments, or Commissioner Chamber renovations, etc.) If you are collecting a roads impact fee it must be spent on roads affected by the development.
3. All impact fees must be spent within two years of collection within 1000 feet of the property that paid the fees to address impacts in the immediate area of the development. Unspent funds shall be credited towards future county property taxes collected on the properties.
4. Fees should only be charged if a service is provided by the county to the property. If a sewer impact fee is desired by the county but the property doesn't have access to sewer and a new sewer main isn't being installed to the property by the Municipality then that fee shouldn't be allowed to be charged.
5. The property owner should get credit for any public improvements they are installing against the impact fees they are being charged. If the property owner is installing a sewer and water system which is considered a public system then they should not pay an impact fee for those services. If streets, curbs, sidewalks, boulevards, and parks are provided by the property owner then the county should not be able to charge an impact fee to provided that infrastructure as the property owner already paid for them.
6. The Impact fee fund must be audited biannually to ensure they are being spent in the public interested and as intended by the property owners who paid the fees.
7. The fees should not be allowed to increase more than the rate of inflation.
So. Where and what are these so called 15,400 and, 4,200 NEW jobs coming from? Why do you continue to let out of state developers steal our land, and let the taxpayers fund all the infrastructure projects that developers should be doing in the first place? How about getting money from the developers first, put that money aside, so they can't say sorry Ran out of money, then just leave after they finish. Better yet. Get all negotiations in writing, before any building begis.
It seems, every time a questionnaire is put out. It is only because you have to. You will do what you darn well please on your pet projects anyway. And as always people living outside the city limits basically have no say, and their voices never seem to be heard or taken into consideration.
Impact Fees are definitely needed. Particularly when it comes to roads. Homes are getting built and the flow of traffic isn't being addressed and planned for. Traffic flow seems to be an afterthought rather than fore thought.
This should include Condon since POWDR wants to increase the # of tourists who come to the valley by several thousands/year. However the $ should be spent on Condon infrastructure, not just the road leading to the lodge. The County should ensure the money is spent per the Condon Community Council recommendations. Missoula does a poor job keeping up the roads they are responsible for in Condon. This fee could be used to buy badly needed equipment to upkeep critical infrastructure.
If the fees are reasonable (less than $500 per dwelling unit or not to exceed $5000 for a development in total) to help offset the costs a development in a specific area, I would support them. I would require that the fees be spent on planning and impacts within 1000 feet of the parcel boundary. The fees must be spent within 24 months of payment or be returned to the property owner with interest. These fees increase the cost of Housing, Rent and Business expenses for the life of the loan they are paid with. For a home owner or renter that is 30 years of mortgage impact with the loan amount being twice the cost of the fees. For businesses, it impacts the business owner from paying higher wages due to higher development costs over the life of their loan. The city wastes impact fee funds and rarely spends it on impacts close to development that paid the fees. City residence never see the fees helping offset the impacts close to them. I would not want that type of mismanagement to occur at the County level. I know developers that paid over $100,000 in impact fees for an apartment building. The developer paid to improve all streets, boulevards, sidewalks, street curbs, water and sewer mains for the development on top of the impact fees. The city just collected the money and used none of it to offset any impacts to the surrounding neighborhood. The renters are paying the cost of the fees in their rents, plus bank fees, contractor fees, owner profit on the fees, and rental agencies fees on the income generated on the dwelling units, as all costs are passed on to the end user or customer.
The county will be getting additional taxes on these new developments and they should always take this into consideration when looking at increasing the cost to live and do business in the County.
The $17M quoted needs some more explanation and seems very low. All of the utility and roadway infrastructure alone will cost more than that. Let alone all the staff and resources needed to administer and maintain.
If tiered correctly and set high enough to be meaningful, impact fees could be an important growth management tool and help the county and city focus growth where it is more economically, environmentally, and socially sustainable. But, if they are not set appropriately, they will drive up the cost of housing while not actually addressing the issues they are intended to help with.
This will just be passed onto the buyer, which then gets passed onto the renter. Tax second homes more, tax airbnbs out of existence, implement a tourism tax that gets nullified with a state ID.
This appears to be a tax on home builders. A tax that will cut their margins and force them to raise their costs towards the home buyer. That, or it'll just deter builders from adding to our already short housing supply. This will only metastasize the housing problem in Missoula.