Castles to Peterson/Impact Feesf£ r= City of Kalispell Public Works Department
Post Office Box 1997, Kalispell, Montana 59903-1997 - Telephone (406)758-7720, Fax (406)758-7831
February 25, 2008
John W. Peterson
Architects Design Group
No. 1 Sunset Plaza
Kalispell, Montana 59901
RE: Morrison-Maierle Office
Old School Station
Stormwater Impact Fees
Dear John,
We have reviewed your email sent February 18, 2008, and our documents, and have found
there is no discrepancy in the City's calculation of the storm water impact fee for the referenced
project.
The'NEW IMPACT FEES' form provided by the City does list a fee of $1,092.00 per ERU for
STORMWATER IMPACT FEES. The same form lists a fee of $2,433.00 per ERU for
WASTEWATER IMPACT FEES. You are correct that the City calculated the ERU's at 3.351,
however, this calculation is for the WASTEWATER (sanitary sewer) IMPACT generated by
the building occupants.
Attached is a copy of Resolution No. 5151 approved by the City Council on October 2, 2006.
This resolution set the stormwater impact fee(s) and adopted by reference the
recommendations of the City's consultant, HDR/EES. Attached is a copy of Section 7 of the City
of Kalispell Revised Final Report titled Impact Fees for the Water, Wastewater, and Storm Water
Systems, December 2006, by HDR/EES. Under Paragraph 7.5 of the Final Report, the City
determined that 6 ERU's per acre would be utilized to determine the stormwater impact fee(s)
for commercial developments. The referenced project site contains 1.50 acres which would
have 9 ERU's of Stormwater Impact. With a fee of $1,092.00 per Stormwater ERU this would
generate a fee of $9,828.00.
If you have any questions, please do not hesitate to contact this office.
S:'�T4e
Frank Castles, P.E.
Deputy Public Works Director/Assistant City Engineer
Cc: James H. Patrick, City Manager
WHEREAS, pursuant to authority granted to municipalities to charge impact fees to fund
capital improvements by 7-6-1601 to 7-6-1604, MCA, the City of Kalispell did
consider it proper to set the fees, schedules, charges and classifications imposed
for utility services to its inhabitants and other persons served by the City of
Kalispell Stormwater Utility; and
WHEREAS, the Kalispell Impact Fee Committee met in noticed public meetings with the
City's consultant, HDRIEES, reviewed its report and recommendations on the
stormwater utility facilities and examined the methodology utilized and issued its
recommendations for the adoption of an impact fee schedule along with the data
sources and methodology supporting adoption and calculation of the impact fees
to City Council dated the 28th day of August, 2006; and
WHEREAS, the City Council did, on September 5, 2006 set a public hearing to be held on
October 2, 2006 on said proposed amendments to the fees, schedules, charges and
classifications of the Stormwater Utility services of the City of Kalispell and gave
the necessary Notice thereof as required by Section 69-7-11.1, MCA; and
WHEREAS, due and proper Notice of said Public Hearing has been given by the City Clerk by
publication and mailing as required by law; and
WHEREAS, said public hearing was duly held by the City Council at a public meeting thereof
in the Kalispell City Hall beginning at 7:00 o'clock P.M. on October 2, 2006, and
all persons appearing at said hearing and expressing a desire to be heard were
heard, and all written comments thereon furnished to the City Clerk at said
meeting prior thereto were given consideration by the Council.
WHEREAS, based upon the report and recommendations of the Kalispell City Impact Fee
Committee, the evidence provided by the public, in writing and at the public
hearing, the City Council finds said proposed amended fees, schedules, charges
and classifications to be reasonable and just and further adopts as its findings the
report and recommendations of the City's consultant, HDRIEES, along with the
data sources and methodology used supporting adoption and calculation of the
impact fee.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
KALISPELL AS FOLLOWS:
SECTION I That the fees, schedules, charges and classifications applicable to the use
of the City of Kalispell Stormwater Utility and other services performed
by said utility as set forth in Exhibit "A", attached hereto and by this
reference made a part hereof, are found to be just and are hereby
established and adopted to be imposed for stormwater utility services to
the inhabitants of the City of Kalispell and those other persons served by
its stormwater utility service and effective November lst, 2006.
SECTION II. This decision is final ten (10) days after filing of this Resolution with the
City Finance Director.
SECTION III. That the fees, schedules, charges and classifications applicable to the use
of the City of Kalispell Stormwater Utility and other services performed
by said utility shall be reviewed no later than two years after the effective
date of this resolution.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR
THIS 2ND DAY OF OCTOBER, 2006.
9�22� -7,v- 1
Pamela B. Kennedy
Mayor
ATTEST:
Zip, -�-
Theresa White
City Clerk
EXHIBIT A
Resolution 5151
Storm Water Impact Fee
Administrative Charge at 5%
5 1,040.02
52.00
Storm Water Impact F per ERU $ _ 11092.02
7.1 Introduction
The calculation of storm water impact fee presented in this section are based on the City's fixed
asset records, future capital improvements as identified in the City's 2006-2010 Capital
Improvement Plan, and planning criteria from the master plan entitled, City of Kalispell Water,
Sewer and Storm Drainage Facilities Plan, dated July 2002 prepared by HDR Engineering.
To the extent that the cost and timing of future capital improvements change, then the impact fee
presented in this section should be updated to reflect the cost of these adjustments.
7.2 Overview of the City's Storm Water System
The City's storm water system consists of numerous pipes and culverts to convey storm water.
The City's capital improvement plan calls for a number of improvements to the storm water
drainage system to service new development.
7.3 Present Storm Water Impact Fees
The City currently does not assess an impact fee (currently called system development charges)
for connection to the storm water system.
7.4 Calculation of the City's Storm Water Impact Fees
As was discussed in Section 3, the process of calculating impact fees is based upon a four -step
process. In summary form, these steps were as follows:
■ Determination of equivalent residential units (ERUs).
■ Calculation of the impact fee for system component costs.
■ Determination of any impact fee credits.
Each of these areas is discussed in more detail below.
7.4.1 Calculation of Equivalent Residential Units
The development of the number of equivalent units (ERUs) involved a multi -step process based
on the planning criteria as used in the Master Plan and the amount of land provided within the
drainage area of the City. The first part of the analysis reviewed the planned land use
classifications and runoff coefficients as utilized in the planning criteria for the Master Plan.
FM weer Determination of the City's Storm Water Impact Fees 7-1
City of Kalispell, Montana
These runoff coefficients were subsequently adjusted downward to reflect the fact that they also
include streets, which will not be used in the calculation and assessment of the impact fees
against these properties. The subsequent runoff coefficients were then weighted based on the
percent of total land, by land use type.
The next phase of the determination of ERUs then analyzed the total number of acres within each
drainage basin and adjusted this downward by the percent of those drainage basins not within the.
City and hence while contributing to storm water runoff, would not be able to be assessed an Rhea b
impact fee. This amount of acreage was subsequently multiplied by the ERU runoff coefficient'Q
to develop the total number of ERU acres within the planning area of the City.
The total number of acres was then divided by the definition of an ERU in terms of impervious
square feet area. This subsequently results in the total number of ERU's that can be assessed
system development charges within City's planning area A summary of the ERUs for 2020 are
presented in Table 7-1. Details of the determination of ERUs are provided in Exhibit C-1 of the
Technical Appendix.
Equivalent Residential Units — 2020 11,793
Given the development of the total storm water ERUs for each year of the planning period, the
focus can shift to the calculation of the impact fee for each plant component. This aspect of the
analysis is discussed in detail below.
7.4.2 Calculation of the Impact Fee for the Storm Water System
The next step of the analysis is to review each major functional component of plant in service
and determine the impact fee for that component. In calculating the impact fee for the City, both
existing plant assets, along with planned future improvements were included within the
calculation. For the storm water system, all assets were included in a single group.
To determine the storm water impact fee, an examination of the City's fixed assets was
undertaken. These assets were subsequently increased from their original cost to include interest
Lip to a maximum term of fifteen years. This amount was reduced by the percent that was
contributed by developers or grants. Those storm water improvements that were funded through
TIF and SIDS were also excluded from the analysis. The next phase of the analysis reviewed the
future capital improvements that were identified by the City as being eligible for impact fees.
These were adjusted upward from 2002 based on the changes in the ERN. An item -by -item
review was undertaken for future capital improvements to determine the percentage that would
serve new development. The sum of the existing and future capital improvements was then
divided by the total number of ERU's to develop the storm water impact fee. Based on the cost
of existing storm water facilities and future capital improvements, an impact fee for storm water
FM !i(Ehes Determination of the City's Storm Water Impact Fees 7-2
City of Kalispell, Montana
of $1040.02 per ERU was calculated. Details of the impact fee calculation are provided in
Exhibit C-2 of the Technical Appendix.
ADMINISTRATIVE CHARGE — Under Montana statute, an impact fee may include a fee for the
administration of the impact not to exceed 5% of the impact fee collected. Exhibit C-3 details
what the City's actual storm water administrative costs are for 2006. The actual cost is $77 per
ERU which is 7.4% of the impact fee. Therefore, the City has included a water administrative
charge of $52.00 per ERU equal to 5% of the impact fee collected.
7.4.3 Debt Service Credits
The final step in calculating the storm water impact fee was to determine if a credit for payment
on debt service for the City's outstanding bonds. The City currently has a no outstanding bonds
for the storm water system and does not plan to issue new bonds. Therefore, the debt service
credit is zero.
7.5 Net Allowable Storm Water Impact Fees
Based on the sum of the component costs calculated above, the net allowable storm water impact
fee can be determined. "Net" refers to the "gross" impact fee, net of any debt service credits.
"Allowable" refers to concept that the calculated impact fee shown in the following tables is the
City's cost -based impact fee. The City, as a matter of policy, may charge any amount up to the
allowable impact fee, but not over that amount. Charging an amount greater than the allowable
impact fee would not meet the nexus test of a cost -based impact fee. A summary of the
calculated net allowable storm water impact fees for the City is shown in the Table 7-2.
Storm Water Plant $1,040.02 per ERU
Administrate Charge 52.00 per ERU
Storm Water Impact Fee $1,092.02 per ERU
For ease of administration, the recommended charge for storm water impact fee is $1,092 per
ERU.
An ERU is defined as 2,400 square feet of impervious area or fraction thereof. Details of the
analysis are provided in Exhibit C-2. For commercial developments, wherein the City requires
that the development provide for onsite detention, it is recommended that the ERUs charged be
based on number of acres. This would be based on 5 to 7 ERUs per acre, which is representative
of a residential development. The reason for this recommendation is due to the fact that the
developments would not impose high volumes of flow into the storm water system even if the
entire area were converted to impervious area due to the fact that the storm water detention
facility would regulate flows into the storm water system.
FM Rim Determination of the City's Storm Water Impact Fees 7-3
City of Kalispell, Montana
7.6 Key Assumptions
In the development of the impact fees for the City's storm water system a number of key
assumptions were utilized. These are as follows:
III The City's asset records were used to determine the existing plant assets.
The interest rate used for calculating interest on existing investments was 6.0%.
15 years worth of interest were included in the cost of existing plant.
7.7 Implementations
The methodology used to calculate the impact fees takes into account the cost of money or
interest charges and inflation. Therefore, HDR/EES would recommend that the City adjust the
impact fees each year by an escalation factor to reflect the cost of interest and inflation. The
most frequently used source to escalate impact fees is the ENR index which tracks changes in
construction costs for municipal utility projects. This method of escalating the City's impact fee
should be used for no more than a two-year period. After this time period, as required by
Montana law, the City should update the charges based on the actual cost of infrastructure and
any new planned facilities that would be contained in an updated master plan, capital
improvement plan or rate study.
Based on our review and analysis of the City storm water impact fees, HDR/EES makes the
following recommendations:
• The City should implement impact fees for new hookups to the storm water system that are
no greater than the impact fees as set forth in this report.
• The City should update the actual calculations for the impact fees based on the methodology
as approved by the resolution or ordinance setting forth the methodology for capacity charges
every two years as required by Montana law.
7.9 Summary
The storm water impact fees determined and presented in this section of the report are based on
the engineering design criteria of the City's storm water system, the value of the existing assets,
future capital improvements and "generally accepted" ratemaking principles. Adoption of the
proposed impact fees will provide multiple benefits to the City and create equitable and cost -
based charges for new customers connecting to the City's storm water system.
(,LeesDetermination of the City's Storm Water impact Fees 7-4
City of Kalispell, Montana