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City of Missoula raises impact fees to ensure new growth pays for itself

Saying new development must fund the services it requires, the Missoula City Council on Monday agreed to increase impact fees by roughly 10%, though three conservatives opposed the measure, saying crime rates and fires were less in newer neighborhoods, therefore reducing the need for additional services.

The fees represent one-time payments placed upon new development. They’re used to fund capital improvements when growth takes place. They provide a mechanism to fund new infrastructure without raising taxes on other residents living elsewhere in the city.

“In 2019, we received about $1.2 million in impact fee revenues paid by new development,” said Dale Bickell, the city’s chief administrative officer. “Presuming we have that same level of development, we estimate we’ll have about $120,000 in new revenue. That’s all been allocated to transportation.”

Bickell said the increase brings Missoula’s fees in line with peer communities across the region. They remain less than Kalispell, Grand Junction and Bozeman but slightly more than Coeur d’Alene, Flagstaff and Pocatello.

“We’re proposing an average 10% increase,” said Bickell. “The council hasn’t changed the impact fees since they were implemented in 2004. They haven’t been subsequently adjusted.”

According to a recent study by TischerBise, Missoula can expect an additional 12,630 new residents over the next 10 years, along with 6,640 housing units. Commercial growth will generate an additional 8,130 new jobs and require 4.7 million square feet of additional floor space.

The impact fees are intended to make sure that growth pays for itself.

Bickell said the recent study identified the need for $8.7 million in additional community services over the next 10 years, along with $4.1 million in fire, $1.2 million in law enforcement and $19.2 million in transportation needs.

Missoula County is also looking at increasing its fees.

“We need to have new fire engines, increase our capacity, add more police cars, build more streets and build more sidewalks,” said council member Gwen Jones. “When we increase our capacity because we have more people living in the city, impact fees are one tool we use to soften that blow.”

While others disputed the correlation, council member Jesse Ramos, leader of the conservative block, suggested that crime rates were less in new subdivisions, therefore reducing the need for police services.

He also suggested the need for fire services was less in new developments given modern construction. He applied the same philosophy to roads, parks and trails.

“These impact fees are meant to cover capital costs that recover their proportional share of increased services,” said Ramos. “But these new developments will have lower crime rates, statistically speaking. That’s just how it works.”

Ramos was joined in the minority by council members Sandra Vasecka and John Contos. He suggested there were other ways to collect revenue to fund essential services. The other two offered no input.

Some council members took issue with Ramos’ speculations. They pointed out, for example, that the fire department responds to medical calls more often than fire calls, and new construction has no bearing on the need for emergency services.

“Impact fees are based on a quantitative study, actual data from trip generation and other quantifying measures of impacts,” said council member Jordan Hess. “It makes impact fees one of the most conservative forms of tax there is. It’s pretty strait forward in my opinion.”

The measure passed on a 9-3 vote.

In other business, Ramos, Vasecka and Contos also opposed the renewal of the Downtown Business Improvement District and the weekly ritual of paying bills due to city vendors.

Renewal of the BID won wide support from the downtown business community last year, along with a petition signed by business owners requesting the renewal. The three gave no reason for opting not to pay the city’s bills or renew the business district at Monday night’s hearing.

It wasn’t immediately known what local vendors the city owed.