City wants control of appraiser contracts in parkland pricing for new development

Issues around parkland dedication and cash-in-lieu payments have become an issue of concern that some city planners ad members of the Missoula Consolidated Planning Board say need to be addressed. (Missoula Current file)

An effort to shift the appraisal of undeveloped land away from developers and place it under the purview of the city failed to win enough votes this week after several members of the Missoula Consolidated Planning Board saw it as municipal “power grab.”

Others however suggested that developers and their selected appraisers couldn’t be trusted, thus robbing the city of precious revenues needed for parks and trails.

Either way, city planners want to remove the ambiguity in city ordinance and improve the process, according to Grant Carlton, planning manager of the city’s open space program. Initial efforts to do so failed to pass the planning board this week on a 5-4 vote.

“It has created tension between the city and the development community,” Carlton said. “We’ve heard some challenges related to expediency, clarity and predictability in the process. We’re hoping to clear all that up. It’s meant to be surgical in nature.”

The number of subdivision applications in Missoula have grown as the development community attempts to meet the area’s demand for housing. Depending on their size, those subdivisions are either required to dedicated 11% of their property for parkland, or donate cash to the city instead of parkland.

The “cash-in-lieu” payment is set by the fair-market appraisal of an undeveloped parcel. Historically, hiring the appraiser has been the responsibility of the developer, though city planners have proposed changing the language to shift that requirement to the city.

“We’re making it where the city would chose and hire the appraiser, but the developer would still be responsible for that appraisal fee,” said Carlton. “The idea is that the city would retain under professional contract a small pool of appraisers. The reports would be consistent and we’d get used to seeing their structure.”

Rising land values are making it hard for the city to secure parkland in certain areas experiencing growth, especially when using funds collected through the cash-in-lieu program. Over time, those cash-in-lieu funds are pooled together, allowing the city to purchase parkland, trails or open space.

At least in theory.

Some members of the planning board believe that Development Services hasn’t been consistent in requiring parkland dedication, or in directing proceeds from the cash-in-lieu system toward anything of substance.

“I don’t see cash-in-lie achieving our parkland goals,” said board member Neva Hassenein. “I’m looking forward to a report in where these cash-in-lieu fees have gone for the last 50 years. I’ll even take the last 30 years. Where do they go? I can’t think of one new park that came from cash-in-lieu.”

The value of the cash-in-lieu system is set by the fair market appraisal of land. But some board members believe the development community and its selected appraisers have taken advantage of the system by using outdated comparisons to establish a property’s market value, thus bringing less revenue to the cash-in-lieu system.

The issue split the planning board down the middle. Others took issue with allegations suggesting that by allowing a developer to hire the appraiser, then the appraiser was somehow in the pocket of the developer.

“If we’re to trust appraisers to do their jobs as independent contractors, then why should it matter who hires it,” said board member Andy Mefford. “How I am to believe this isn’t just a role reversal where the city wants to be in charge of setting the values? We haven’t changed the arena we’re playing in, it’s just who’s leading the circus. It’s very concerning to me. These are certified appraisers, and we shouldn’t be influencing that.”

Planning board member John Schroeder said the advantage went to whoever hired the appraiser, be it the city or developer. If the city hired the appraiser, it would soon collect more revenue through the cash-in-lieu option, he said.

“It will probably lead to higher valuations for the city,” said Schroeder. “Whoever hires the appraiser and provides them with the best inputs is generally able to influence the outcome to a fairly large extent.”

Others agreed that the city should be responsible for selecting the appraiser, including board member Jim Bachand, who said the “perception of objectivity and the reality of objectivity” appear stronger on the city side rather than the developer.

City planners said the revenue is needed to keep up with the rising cost of land.

“The underlying intent is to provide the city sufficient funds to compete in the open market to purchase parkland in the vicinity of these subdivisions, or increase the capacity of parks and other open space areas already there,” Carlton said. “The goal is to keep up with growth.”