Missoula set to consider development fees to recover Mullan-area infrastructure costs

The City of Missoula looks to invest nearly $4 million to install the infrastructure beneath a network of new streets in the greater Mullan area, then recover the cost through latecomer fees placed on future development.

City planner Logan McInnis said the utilities must be installed now as crews extend Mary Jane and England boulevards and George Elmer Drive, and place roundabouts on Mullan Road.

The City Council will consider the fees next week.

“We don't like to build out street networks without the necessary utilities,” he said. “The city agreed to bridge the gap to finance the installation of the utilities until a latecomer's fee can be established and the city can collect those costs back.”

While the city sought a $23 million federal grant for the project in 2019, it received just $13 million, leaving it short of the total funding needed. The work is now underway, and the city will invest around $3.9 million to place sewer and water mains beneath the roadway.

The city plans to bond the cost and recover it later through development fees as the area grows. It wants to collect the fees as quickly as it can, McInnis said.

“We didn't want the fees to be transferred to the subdivided lots that will come out of these parcels. It would significantly delay our timing in collecting these fees,” he said. “When they (developers) go to make that first connection, they would be expected to pay that full water or sewer fee.”

The city anticipates the cost of installing water mains at $2.6 million and recover around $2.3 million back from development as it connects to the system. Wastewater is estimated at $1.3 million of which, development will pay $1.2 million.

“The developer is responsible for the cost of the utilities running through their property. It's consistent with how we do development,” McInnis said. “The (grant) project will allow the developers to delay that cost until they're ready to connect, but with rapid inflation, this is locking in the prices.”