With an eye on anticipated growth, the City Council on Wednesday began looking at its impact fees and what increases may be necessary to fund new services, including fire, police and transportation.
Impact fees represent a flat, one-time charge placed upon new development to help offset the cost of infrastructure needed to support growth.
“They’re designed to offset development’s demand for growth-related infrastructure,” said consultant Carson Bise of TischerBise. “They’re used to construct capital improvements needed to serve new development.”
Bise presented the findings of his 2019 Service Area Report and Impact Fee Study, which suggests a 10% increase in impact fees based upon projected growth over the next decade and the additional demands that will place on city services.
An increase in fees would leave Missoula in the middle of the pack when compared to the fees in other Montana cities.
“The residential growth, we’re projecting about 6,640 additional housing units,” said Bise. “That equates to about 12,630 additional persons over the next ten years.”
The study also anticipates the demand for an additional 83,000 square feet of facility space at a cost of $8.4 million based upon today’s figures. The city’s westward growth will also require a new fire station at some point in the future.
Some in the city believe that station is already needed.
“When we look at the level of service standards and compare that to the 10 year growth projection, there’s an estimated station need of about 10,000 square feet,” said Bise. “That has a cost of about $2.7 million.”
Growth also places new demands on the transportation infrastructure. The 10-year model calls for an additional 6 miles of complete streets at a cost of $9.6 million. Nine intersections also need improving at a cost of $4.1 million, while roughly 3.9 miles of commuter trails are needed at a cost of $5.5 million.
While the city and Missoula County recently received a $13 million federal grant to fund infrastructure work west of Reserve Street, the grant alone won’t be enough to keep up with growth.
“While the grant will help, we asked for $10 million more than they gave us,” said Dale Bickell, the city’s chief administrative officer. “The impact fees are part of the solution of closing that gap. To the extent we can’t find other revenues, we’ll have to reprioritize projects to pay for these things.”
In 2019, impact fees generated roughly $1.2 million. A 10% increase to the fees would net the city an additional $120,900. That would increase the impact fee on a newly constructed single-family home from $2,123 to $2,335.
It would also increase fees on commercial construction, though rates would vary depending on size. The City Council will hold a hearing on the issue next month and the city is set to meet with the development community this week.