The Missoula City Council on Monday unanimously approved development fees for the greater Mullan area, calling it the most equitable way to share the cost of current and future growth in the rapidly growing district.
“This is an equitable and more expedient way of expanding infrastructure and extending services for a very fast developing area of town,” said council member Mirtha Becerra. “Through this water and sewer special development fee, for the area the city will be able to recuperate funds from the parcels as the area develops.”
Rather than waiting for individual development projects to complete infrastructure work piecemeal on their own, the city will invest around $6 million up front to lay new water and sewer lines this summer.
The work will play out as the city builds the area’s new transportation grid, which is funded by a $13 million federal grant. The city will then place water and sewer development fees – or latecomer’s fees – on any project that connects to city services in the coming years.
In that way, the city will recover its cost of completing the work.
“This seems like a fair process and a proactive way to guide the right growth in the area,” Becerra said.
The city and county in 2019 applied for a federal BUILD grant to place the infrastructure needed to accommodate an estimated 6,000 new housing units, office and commercial opportunities within the greater Mullan, or Sx͏ʷtpqyen nieghborhood over the next decade.
But the grant provided around $10 million less than what was sought. The project was set to go to construction last year when inflationary costs drove up expenses even more, placing the project on hold for another year.
As a result, the city increased its contribution to the infrastructure work. It now plans to bond the cost and will recover it later from development fees as projects move in behind the city’s work.
“These are costs they (developers) would have been responsible for at the time of development,” city planner Logan McIntosh said last month. “We can’t go build these roads and not put utilities in them. It’s a critical part of this project. We need to do them up front as part of the project.”
Last year, the city also placed impact fees on new development in the area, which is expected to generate around $18.6 million, according to a consultant hired by the city. On Monday night, city staff also said a special improvement district may also be formed in the area to recover the costs of roadways not funded by the federal grant.
Advocates of such fees say it’s a fair way to isolate the cost to the area that benefits from the improvements and not pass those costs on to other taxpayers in other parts of the city. Opponents contend it drives up the cost of housing.