Missoula County eyes fee increase to correct fiscal imbalance in building division

While Missoula County opted to postpone a proposed increase in building fees last month, it will use the next few weeks to conduct public outreach and articulate why the increase is needed.

The service, provided by the Department of Public Works and its Building Division, is currently on an unsustainable path, the county said. The program has been subsidized by other departments and if not addressed, it could put a pinch on county services.

“For a long time, at the detriment of the Road Department, we were subsidizing other programs,” said Shane Stack, director of Public Works. “We run a shoestring budget here and we can’t do it anymore. We haven’t increased our fees since 2011. If we don’t increase fees, what we’re doing is not going to be sustainable.”

Nicole Whyte, coordinator of building and development for Missoula County, said the program has been losing revenue while the department’s work load continues to increase.

While the number of building permits are up, the resulting revenue has fallen. She attributed the reasons to recent city annexations, the cost of providing the service and the type of development taking place.

“Last year the (permits) were more commercially based and we had a ton in the development park and these big, luxury houses,” Whyte said. “This year it’s small remodels, roofing permits and small spec houses. Even though were seeing more actual permits, the revenue is way down.”

Whyte said the program has an estimated cash reserve of around $500,000, though expenses continue to outpace revenue. In 2016, the program ran a deficit of $61,000. This year, it’s expected to reach $185,000.

The Building Division is intended to be self-sustaining, generating its own revenue through the fees generated from inspections and permits. The revenue in turn funds the services it provides, such as electrical and building inspections.

Those are intended to protect the public and future buyers, the county said. The program receives no funding from the county’s general fund.

“There are other jurisdictions that don’t let their cash balance get below a certain number before doing a fee increase,” said Whyte. “Right now we’re at about 50%. After this year, we’ll be at about 30% percent.”

Whyte has researched a number of other counties across the region to see how they handle fee increases. The counties have each adopted their own approach, though the process applied in Great Falls stood out.

“Great Falls has a resolution in place saying if their cash balance falls below $600,000, then they automatically do a 2.5% increase for the year,” said Whyte. “If it’s over $600,000, then there’s no increase that year.”

Missoula County may consider adopting a similar approach. In the meantime, it plans to attend community council meetings in Seeley Lake, Condon, East Missoula and possibly Frenchtown and Evaro to answer questions and dispel any myths.

It also plans to attend the Missoula Building Industry Association’s upcoming show in Missoula to discuss the fees and the proposed increase.

“I’d be open to the idea of creating by resolution some mechanism where a fee increase would kick in,” said Commissioner Dave Strohmaier. “It would be fiscally irresponsible not to increase fees. We need to make it structurally balanced.”