Special Street Maintenance DistrictCity of Kalispell
Post Office Box 1997 - Kalispell, Montana 59903
Telephone: (406) 758-7701 Fax: (406) 758-7758
Mayor Fisher and members of council,
We will be meeting together on Monday evening, June 271h in a work session for the purpose of
introducing an alternative funding mechanism for Kalispell's special street maintenance district;
what to date has been referred to as a Retail Transaction Fee. Once this has been introduced, my
intent is to begin a community conversation on this alternative which hopefully will culminate in
a more equitable distribution of street maintenance costs to the users of our public infrastructure.
The information included in your packet provides a legal review of the current code authorizing
special street maintenance districts and the methodologies provided in said code. This review is
followed by a summary review of how the current distribution is imbalanced, a proposed
alternative information sheet and a budget summary to indicate how a redistribution of the current
funding mechanism could adequately fund the street maintenance needs.
As you review this information in preparation for Monday evening, I'm sure you'll notice the
majority of the increased budget proposal falls under capital. In this discussion, capital is defined
as a good or service costing more than $5,000 and having a life longer than 5 years. By
definition, this means street repair projects such as reconstruction, milling or re -surfacing would
fall under capital projects as would major equipment replacement such as dump trucks, snow
plows, etc. This distinction is important to understand in our discussions as the city has often
used capital to define growth related projects in the past.
As mentioned, following Monday evening's work session, I would anticipate a process of public
input sessions to work with community members and businesses on reviewing this proposed
funding alternative, after which staff would present council with a subsequent report and
recommendation.
As always, I encourage you to stop in or call should you have any questions.
Thank you for your thoughts and comments as we work together to develop alternative solutions
to our local conditions.
_/Jane
Charles A. Harball Office of City Attorney
City Attorney 201 First Avenue East
P.O. Box 1997
Kalispell, MT 59903-1997
! C; . �I1. l►t
TO: Mayor Tammi Fisher
and Kalispell City Council
FROM: Charles Harball, City Attorney
Tel 406.758.7709
Fax 406.758.7771
charball@kalispell.com
SUBJECT: Discussion of Possible Modifications to the Structure of Street
Maintenance Assessments
MEETING ATE: June 28, 2011— Council Workshop
ISSUE: There has been some discussion about the adequacy of the City's current
formula for assessing the costs of street maintenance. Generally speaking, there seems
to be consensus that the formula we currently use is found wanting in a couple of
aspects. First, it fails to raise the revenue necessary to pay the costs for adequate
maintenance and operations of the city's transportation system. Second, it fails to obtain
any contribution from the users of the city's transportation system that do not own
property in the city, leaving the city resident and property owner to bear all of the costs
of street maintenance.
State law for assessment of the costs of street maintenance. Montana state law at MCA 7-
12-4422 gives the city the authority to assess the costs of street maintenance by five
different methods which may be used individually or in combination. The rationale and
analysis behind these methods is the effort to charge the property an assessment that is
proportional to the benefit that it (the owner) receives from the maintenance and
operations of the city transportation system.
1. The first method of assessment, and the method utilized by the city, is based upon
the area size of the property in proportion to the area of the entire district (the
City, less streets, alleys and public places). The assumption here is that the larger
the parcel, the more benefit received from street maintenance.
2. The second method of assessment is based upon the property's linear feet of
abutting street in proportion to the total linear feet of city streets. This
assumption is that a property receives more benefit from street maintenance when
its access to city streets is greater.
Street Maintenance Assessment Methods Memorandum
June 22, 2011
Page - 2
3. The third method of assessment is simply a flat fee assessed equally across the
properties assuming equal benefit from street maintenance is received by all of the
properties in the city.
4. The fourth method of assessment is based upon the taxable value of a property in
proportion to the total taxable value of property within the city. The assumption
here is that properties of higher value receive more benefit from street
maintenance than properties of lesser value.
5. The fifth method of assessment, and the most recent legislative alternative to be
provided, is essentially based upon reasonably estimated vehicle trips generated
for a property proportional to all vehicle trips generated throughout the city. This
method is based upon the assumption that a property that has many vehicles
traveling to and from the property receives more benefit from street maintenance
than a property that has fewer vehicles traveling to and from it.
It should be apparent that not one of these methods of assessment is a perfect
analysis of benefit received and costs shared fairly. Probably for this reason, local
governments are allowed to use a combination of these methods as is deemed
appropriate to reasonably spread the costs in an equitable manner that reflects the
p 3portion of benefits received from the maintenance and operation of the
transportation system.
Basic Proposal of Assessment. Given the permissible structure of analysis set forth
above, the staff has constructed a basic outline of an assessment methodology to
consider and for further discussion. It can be simply broken down as follows:
1. The current method of assessment utilized by the city is based solely upon the size
of the property with a cap on vacant land at 2 acres, on residential land at 1/2 acre
and with a distinction on commercial property based upon coverage of property by
improvements and impermeable surface. Staff is recommending that this method
of assessment may not be the best method of reasonably assessing the properties
based upon benefit received and should therefore be reconsidered.
2. Staff would like to consider using more than one method of assessment based upon
the assumption that no one method works equitably across all property uses. For
instance, the residential use of property is fairly consistent in its demand upon the
transportation system. Size, street frontage and value of the property probably
have little to do with the level of benefit that the property receives from street
maintenance and it might be fair to say that all residences receive roughly the
same benefit. Therefore it is worth considering applying a flat rate of assessment
for all residential properties. (That is not to say that single family residences
shouldn't have a different flat rate from an apartment complex.)
Office of City Attorney
City of Kalispell
Street Maintenance Assessment Methods Memorandum
June 22, 2011
Page - 3
3. It may further be a reasonable gross calculation to make the same assumption
about many other commercial properties e.g. offices providing services. We can
intuitively presume that the benefit received by these properties is greater than a
property used as a residence because more vehicles travel to and from the property
across the city's transportation system. However, a flat fee, greater than the flat
fee assessed to the residential property, may well be appropriately applied.
4. Staff is suggesting that retail establishments customarily rely heavily upon the
city's transportation system. The city streets bring customers to and from the
property to transact business. Because of the necessity of these many face to face
transactions, properties used for retail businesses generally benefit the most from
street maintenance. The assessment method based upon reasonably estimated
vehicle trips may be the most appropriate approach to gauge the benefit that retail
properties receive from street maintenance.
A Closer Analysis of Property Trip Generation. The analysis that takes into account
traffic volume that is driven by particular property uses was scrutinized by the City in
the establishment of the transportation impact fee system. Traffic studies indicate and
can show that traffic patterns and volume are directly affected by property uses. A
method, therefore, that can reasonably establish a proportion of street usage to a
particular land use can be utilized to calculate a street assessment. This has been
generally accepted by the courts around the country that have examined it and it became
a part of Montana street maintenance assessment law in 2005.
The most accurate method of determining the traffic volume produced by a particular
land use (e.g. a grocery store) is to conduct a traffic study for that use. However, the cost
of conducting a traffic study for each property is excessive and unwieldy in practice.
Manuals are published that compile and digest the many traffic studies conducted and
produce averages that may be used for any given use. This method does produce gross
estimates that are legally acceptable but must be tempered to allow the land owner to
obtain a more accurate number if desired. This is the method used by the City in its
transportation impact fee system. Another practical method and the method
recommended for consideration here by the staff, is to measure traffic generation based
upon transactions conducted at the property. It is suggested that this method be applied
to property used for retail sales because transactions are, in the course of retail business,
a matter of record and easily analyzed. We believe that this will provide a closer
estimate than the manual references and will more accurately reflect the actual revenue
cycles experienced by the businesses.
Office of City Attorney
City of Kalispell
Street Maintenance Assessment Methods Memorandum
June 22, 2011
Page - 4
Property Trip Generation Assessment in Practice. Owners of property used for retail
purposes certainly want to know how this will look in practice. First and foremost it
should be understood that this is not a tax upon the consumer but rather an assessment
against the property. The assessment would be billed on the property tax statement
issued by the county and paid twice yearly just as the assessments are currently billed
and paid. Nor is this a tax against the retail business but rather attaches to the real
property on which the business is located.
Given these facts, further questions will be raised regarding if and how the landowner
recaptures the assessment costs from the business or the consumers. A very brief
answer is that it may be recaptured in the same fashion as the other property taxes are
currently being recaptured.
The transaction rules between the landowner and the tenant business owner is governed
by the terms of the lease agreement between them. A standard triple net lease requires
the tenant business owner to pay the value of the property taxes to the landlord as a part
of the lease costs. The street maintenance assessments are a property tax and will
continue to be a property tax subject to the terms of the lease.
When a consumer makes a transaction to purchase goods, the price that he pays for those
goods is based, at least partially, upon the various costs the retailer must pay to provide
those goods. Included within those costs are its lease costs and/or property taxes. The
retailer may choose to embed the street maintenance assessment costs into the price of
the goods in any fashion it chooses. One choice would be to simply place a transaction fee
on every transaction receipt. Or, if this seems unreasonable on small ticket items to
concentrate the charges on the higher cost goods. The City does not have the authority
in this situation to dictate to the retailer how it charges for its products.
The City staff would appreciate any input offered by landowners and retailers to assist
further in this analysis. It is not the intent to overburden either party with unfair
assessments or unwieldy processes. Suggestions and comments from the public will be
extremely valuable in coming to a final methodology.
Respectfully submitted,
Charles Harball, City Attorney
Office of City Attorney
City of Kalispell
ACi
Total Street
Percent of Total
Total Trip Ends
Percent of Total
Structure TI]2e
# Parcels
Assessment
Assessments
Per Dal
Trig Ends
Residential
7,337
$838,598
46.9%
84,485
21.7%
Non -Retail
541
$318,905
17.9%
62,128
16.0%
Commercial
Retail Commercial
329
$315,420
17.7%
242,055
62.3%
City of Kalispell
Post Office Box 1997 - Kalispell, Montana 59903
Telephone: (406) 758-7701 Fax: (406) 758-7758
PROPOSED RETAIL TRANSACTION FEE
INFORMATION SHEET
May 12, 2011
What:
Currently all Kalispell street maintenance costs are paid by owners of property within the City. All
other users who benefit from use of the Kalispell streets do not currently pay into the system. The
proposed change in assessments for street maintenance aims to redistribute the cost burden to more
equitably have all users of the infrastructure pay their fair share. The proposed method would
introduce fees for retail transactions and is designed to reduce the burden on the property owners. A
transaction fee is a small fixed fee for every transaction conducted regardless of the transaction size.
Where:
The current street maintenance district is defined by the corporate limits of the City of Kalispell.
This district would remain the same.
Who:
Almost all property owners will see a decrease in their street maintenance assessment.
Anyone conducting a retail transaction in the City would pay a small transaction fee.
1v,'/_TtA
The proposal to redesign our street maintenance funding program is proposed to initiate the
transaction fees on January 1, 2012. The change to the street maintenance assessment on the
property tax bills is proposed to take effect with the tax bills beginning in the fall of 2012.
Why:
The street maintenance fund is responsible for maintaining local street infrastructure, sidewalks, leaf
collection, snow removal operations and capital needs of Kalispell's public ways. The current
method of funding requires assessments to be placed on property owners tax bills for these costs. As
a commerce center and tourist destination point, Kalispell's public infrastructure supports close to
80,000 to 100,000 people per day yet the entire funding burden is assumed by the 9,654 property
owners in the city. The proposed method of including transactions in the assessment process will
provide a more equitable funding solution and lift some of the burden off the property owners while
at the same time providing an increased revenue stream to more adequately address Kalispell's street
infrastructure and capital needs.
To analyze how your street maintenance assessment may be modified with the proposed
assessment/transaction redistribution, follow these simple steps:
1. Refer to your property tax bill and identify what your present street maintenance assessment
is. This information can also be accessed through the internet at
http://flathead.mt.gov/lipublic/ under the "TAX BILL" tab with the heading "KAL SPEC
MAINT DIST1".
2. Use the following formula to determine the proposed assessment:
a. For a single family dwelling unit, the base fee will be $50.00 per unit.
b. For non-residential properties, the base assessment fee will be a multiple of the single
family dwelling unit based on square footage. The average square feet for a
residential dwelling unit is approximately 1,000 square feet. Therefore, using your
square footage, simply divide it by this average to get the equivalent residential units
(eru's) and multiply by the base fee of $50.00.
Retail establishments will be responsible for collection of a $.09 transaction fee on all
transactions.
Example Calculations:
Single family residential property
Base fee = $50.00
2. Apartment building (6 units)
Base fee = $50.00 x 6 = $300.00
Professional office with a building area of 10,000 square feet
Base fee = 10,000 sq. ft. / 1,000 sq. ft. = 10 x $50 = $500.00
4. Retail Store with a building area of 60,000 square feet
Base fee = 60,000 sq. ft. / 1,000 sq. ft. = 60 x $50 = $3,000
Transaction fee = $.09 x # of transactions = $
CURRENT
PROPOSED
Revenue
$2,341,604
$4,860,000
Expenditures
(12.35 FTEs)
(14.35 FTEs)*
Personnel
$ 991,685
$1,108,700
Materials/Operations
$1,161,859
$1,276,859
Debt
$ 35,485
$ 55,500
Capital
$ 871,100
$2,000,000
Startup (1 time costs)
$ 200,000
$3,060,029
$4,641,059
*includes one new FTE and 50% of two current employees being transferred with reassigned job
duties.
Exa mp I tm for p. rop as ed. St re et, Mai me n an ce Ass ess m ents
6{24{2tl11
NON -RETAIL ptAMPLES"
asessar
structure
bldgsq fE
narn
riew.assessttent($53per1000
old assessrm'-nt
#"
tV Pe
alft bldg)
difference
M91176
7290Bank
Val leeBank
$3645o SS3200
($16750)
Goo8328
'G I
'6'ice'bldg
42'BruyerWay?
'S3 60 55826G
(523406)
0426180
49410
Office.bldg
Kfvt bl
52,4700,50 $665.00
57,30S,Stl
0976975
52791,0'
iceibld '
NationralFlood Qtrpordte;dr
2;639.85, "54�02,36 �
(57.962,51)
,
0391275 4412
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reuvass{ srrerd-*s**r oldas.x�rner¢
diffeteme,
S02836 131S32
EEDlscouht De a tco-6ALISPEGOL. 577.24 0:09 . 27 1 045 236 620 5111295.8.4 S6'S76.60
CosLL
(SMITHS
$117£s7 -.44 $1tl Oq0 64
5107791d0
,
07600 52b53¢Supermarket
FOOD & DRU 102.24 0.09 1,964 84 884,19E 579;577.79 52;632:65
S62,210.44 51 42a 00..
80,785:44
9829905 2685
Past Flo' od Wendys MULBERRY 496.12 0.09 486;210 212;795 519,691.51 5134,25T
�$19 25.7b �Stl464
519,321:12
511,16950
0230600 1'6556
Retail Muhl C Cenex EWITYSUPPLY 44.32 0.09 267�52 120,520 510,046.84 5827.80
$11,674,64 50484
S9 3461,4
0230451 14550
Oe` artment S :WALGREEN CO 4432 0.OS , 235372 105 91S S9 532.93 5727.50
$10 260.0 5913.94
'ExamPleforassesser#05
02886=57.24°'-131:532'365=2;743;045,annuaftripends.. Thiskis:theestimated -number oftripsgenerated bythis :prop ertyuseaccordingtothelTEtrip
,manuals::
0 ° Exa mp l e fo �:as'ess o r'#0502886 =( 2, 748, 045 {;2) a:9=� t t ra n; acti ore
This is: the estimated number of retail t rans acti o ns,b m edan trips.
t°0 E<amplefor;assessor'--0502Z6=1,336,620°A9-$111295.80 est. a nn ual transact ion fees Thh'is;the estimated annual tram action portion ofthe proposedstreet maintenance assessment..
Exa mp I e fu r ass ess a r# 050288 6 l a1 S 32 • 50 - S 6576.60 t as a assess me m IThis,is, th e b m. e. ass essm ent wh i dt equal $50 p e r 1000 s q ft of bldg.
tY° yExampieforassessar#OS0288 $6576.60+i5111,295.84 5117872.44tataimsessmenf Th's�isthecombinedbaseandretailwhichmakesthetotalstreetassessment:
PASS -BY
ITE AVG. TRIP ADJUST.
Code NAME DESCRIPTION UNIT TRIPS FACTOR AVTs
Typically less than 500 employees, free standing and
single use. Examples: printing plants, material testing
INDUSTRIAL
110
General Light Industrial
laboratories, data processing and equipment assembly.
1000 SF GFA
6.97
1
6.97
Industrial park areas that contain a number of industrial
and/or related facilities. A mix of manufacturing, service
130
Industrial Park
and warehouse
1000 SF GFA
6.96
1
6.96
Facilities that convert raw materials or parts into finished
products. Typically have related office, warehouse,
140
Manufacturing
research and associated functions.
1000 SF GFA
3.82
1
3.82
Facilities devoted to storage of goods and materials.
150
Warehouse
Includes offices and maintenance facilities
1000 SF GFA
4.96
1
4.96
151
Mini -Warehouse
Storage units or vaults rented for storage of goods
1000 SF GFA
2.5
1
2.5
Lodging facility that may include restaurants, lounges,
LODGING
310
Hotel
meeting rooms and/or convention facilities
ROOM
8.17
1
8.17
Sleeping accommodations and often restaurants. Free
320
Motel
on -site parking and little or no meeting spaces.
ROOM
5.63
1
5.63
Municipal owned parks, varying widely as to location,
RECREATIONAL
412
Local Park
type and number of facilities.
ACRES
2.28
1
2.28
Regional park authority owned parks, varying widely as
417
Regional Park
to location, type and number of facilities.
ACRES
4.57
1
4.57
Municipal and private golf courses. May or may not have
430
Golf Course
a driving range and clubhouse.
ACRES
35.74
1
35.74
Multi -purpose recreational facilities containing two or
more of the following uses at one site: mini -golf, batting
cages, video arcade, bumper boats, go-carts and driving
435
Multipurpose Recreation Facility
ranges.
ACRES
90.38
1
90.38
Privately owned with weightlifting and other facilities
often including swimming pools, hot tubs, saunas,
493
Athletic Club
racquetball, squash and handball courts.
1000 SF GFA
43
1
43
Page 1
PASS -BY
ITE AVG. TRIP ADJUST.
Code NAME DESCRIPTION UNIT TRIPS FACTOR AVTs
Recreational facilities similar to and including YMCAs,
often including classes, day care, meeting rooms,
swimming pools, tennis, racquetball, handball,
495
Recreational Community Center
weightlifting, locker rooms and food service.
1000 SF GFA
22.88
1
22.88
Recreational facilities with bowling lanes which may
437
Bowling Alley
include a small lounge, restaurant or snack bar.
LANE
33.331
1
33.33
Serves students attending kindergarten through 5th or
INSTITUTIONAL
520
Elementary School
6th grade. Public or private.
1000 SF GFA
14.49
1
14.49
Public. Serves students that have completed elementary
522
Middle School
and not yet in high school.
1000 SF GFA
13.78
1
13.78
530
High School
Public. Typically serving 9 to 12th Grades
1000 SF GFA
12.89
1
12.89
540
Junior / Community Collage
Two-year junior or community colleges
1000 SF GFA
27.49
1
27.49
Contains worship area. May include meeting rooms,
560
Church
classrooms, dining area and facilities
1000 SF GFA
9.11
1
9.11
Facility for pre-school children care primarily during the
daytime hours. May include classrooms, meeting area
565
Day Care
and playground
1000 SF GFA
79.26
0.1
7.93
Public or Private. Contains shelved books, reading
590
Library
rooms and sometimes meeting rooms
1000 SF GFA
54
1
54
550
University / College
Four-year and graduate institutions
STUDENT
2.38
1
2.38
Includes a clubhouse with dining and drinking facilities,
recreational and entertainment areas and meeting
591
Lodge / Fraternal Organization
rooms
MEMBER
0.29
1
0.29
Page 2
PASS -BY
ITE AVG. TRIP ADJUST.
Code NAME DESCRIPTION UNIT TRIPS FACTOR AVTs
Medical and/or surgical care facility with overnight
accommodations for ambulatory and non- ambulatory
MEDICAL
610
Hospitals
patients.
1000 SF GFA
17.57
1
17.57
A facility whose primary function is to care for persons
620
Nursing Home
who are unable to care for themselves
BEDS
2.37
1
2.37
Usually contains offices, meeting rooms, file storage
areas, restaurants or cafeteria and other service
OFFICE
715
Single Tenant Office Building
functions
1000 SF GFA
11.57
1
11.57
Provides diagnosis and outpatient care. Typically
720
Medical -Dental Office
operated by private physicians or dentists.
1000 SF GFA
36.131
1
36.13
Park or campus -like planned unit development that
contains office buildings, banks, restaurants and service
750
Office Park
stations.
1000 SF GFA
11.42
1
11.42
Single building or complex of buildings devoted to
Research and Development
research and development. May contain light fabrication
760
Center
facilities.
1000 SF GFA
8.11
1
8.11
Group of flex -type or incubator 1-2 story building served
by a common road system. Typically includes a mix of
offices, retail and wholesale stores, restaurants,
recreational areas, warehousing, manufacturing, light
industrial or research. The average mix is 20% to 30%
office / commercial and 70% to 80% industrial /
770
Business Park
warehouse.
1000 SF GFA
12.761
1
12.76
Small free standing building that sells hardware, building
materials and lumber. May include yard storage and
sheded storage areas which are not included in the unit
RETAIL
812
Building Materials and Lumber
calculation.
1000 SF GFA
45.16
0.82
37.03
A free-standing discount store that also contains a full
813
Discount Super Store
service grocery department under the same roof.
1000 SF GFA
49.21
0.821
40.35
Small strip shopping centers containing a variety of retail
shops that typically specialize in apparel, hair goods,
services such a real estate, investment, dance studios,
814
Specialty Retail
florists and small restaurants.
1000 SF GFA
44.32
0.82
36.34
Free-standing store that offers a variety of customer
services, centralized cashiering and a wide range of
8151
Discount Store
products.
11000 SF GFA
56.021
O.821
45.94
Page 3
PASS -BY
ITE AVG. TRIP ADJUST.
Code NAME DESCRIPTION UNIT TRIPS FACTOR AVTs
Typically free-standing buildings with parking that sell
816
Hardware / Paint Store
hardware and paints.
1000 SF GFA
51.29
0.82
42.06
Free-standing building with yard containing planting and
landscape stock. Unit calculation only applies to building
817
Nursery / Garden Center
and not yard and storage.
1000 SF GFA
36.08
0.82
29.59
A shopping center that primarily houses factory outlet
823
Factory Outlet
stores.
1000 SF GFA
26.59
0.52
13.83
Integrated group of commercial establishments that is
planned, developed and managed as a unit. Provides
THIS IS DEVELOPED BY
enough on -site parking to serve its own demand. May
A COMPOSITE OF ALL
include office buildings, theatres, restaurants, post
PROPOSED USES
820
Shopping Center
office, health club and recreation.
1000 SF GLA
WITHIN THE CENTER
New and used car dealership with sales, service and
841
Car Dealership
parts.
1000 SF GFA
33.34
0.82
27.34
848
Tire Store
Primary business is selling and repair of tires.
1000 SF GFA
24.87
0.82
20.39
Free-standing grocery store. May also contain ATMs,
850
Supermarket
photo center, pharmacies and video rental.
1000 SF GFA
102.24
0.64
65.43
Sells convenience foods, newspapers, magazines and
851
Convenience Market - 24 hours
often beer and wine. Open 24 hours per day.
1000 SF GFA
737.99
0.39
287.82
Convenience Market - 15 to 16
Sells convenience foods, newspapers, magazines and
852
hours
often beer and wine. Open 15 to 16 hours per day.
1000 SF GFA
500.37
0.39
195.15
Discount store / warehouse where shoppers pay a fee to
get wholesale prices. May have a wide variety of goods.
861
Discount Club
Many items are sold in bulk or large quantities.
1000 SF GFA
41.8
0.52
21.74
Pharmacy without drive thru
Facilities filling medical prescriptions without a drive thru
880
window
window.
1000 SF GFA
90.06
0.47
42.33
Pharmacy with drive thru
Facilities filling medical prescriptions with a drive thru
881
window
window.
1000 SF GFA
86.16
0.51
43.94
Page 4
PASS -BY
ITE AVG. TRIP ADJUST.
Code NAME DESCRIPTION UNIT TRIPR FACTOR AVT.
Sells furniture, accessories and often carpet / floor
890
Furniture Store
covering.
1000 SF GFA
5.06
0.47
2.38
Usually a free-standing building with a parking lot
SERVICES
911
Walk -In Bank
offering banking services. May have ATMs
1000 SF GFA
156.48
0.53
82.93
Usually a free-standing building with a parking lot
Walk -In Bank with Drive Thru
offering banking services. Has a drive thru window. May
912
Window
have ATMs
1000 SF GFA
246.49
0.53
130.64
High quality eating establishment with turnover rates
931
Quality Restaurant
greater than 1 hour
1000 SF GFA
89.591
0.56
50.17
High Turnover Sit -Down
Sit down eating establishment with turnover rates of less
932
Restaurant
than 1 hour.
1000 SF GFA
127.15
0.56
71.2
933
Fast Food without Drive- Thru
Fast food without a drive through window.
1000 SF GFA
716
0.5
358
934
Fast Food With Drive-Thru
Fast food with a drive through window.
1000 SF GFA
496.12
0.5
248.06
Sells gasoline and may also provide vehicle service and
944
Gas Station
repair.
FUELING POSITIONS
168.56
0.58
97.76
Gas Station with Convenience
Sells gasoline and may also provide vehicle service and
945
Market
repair. Also contains a convenience market.
FUELING POSITIONS
162.78
0.44
71.62
Sells gasoline and may also provide vehicle service and
Gas Station with Convenience
repair. Also contains a convenience market and car
946
Market and Car Wash
wash.
FUELING POSITIONS
152.84
0.44
67.25
Allows self cleaning of cars by providing stalls for
947
Self -Service Car Wash
drivers.
WASH STALLS
108
0.44
47.52
Page 5
Y
fratber fCornierce
Providing Economic, Community, and Workforce Development Services
www.kalispelichamber.com
DATE: June 23, 2011
TO: The Honorable Mayor Tammi Fisher and embers of Kalispell City Council
FROM: Joe Unterreiner, President and CEO
RE: Membership Survey Results: Retail ra saction Fee Proposal
I would like to transmit the results of the survey of our member attitudes and opinions on the City of
Kalispell's proposed Retail Transaction Fee. The survey was conducted during the period of June 8-21,
2011 and resulted in 116 responses. We consider the results to be representative of the thinking of the
overall membership at this point in time. Some of the highlights and major themes include:
• The respondents were uncomfortable with the proposal at this point in time. Sixty-four percent
felt that the fee should be opposed or strongly opposed.
• There is confusion about which transactions may or may not be included in this ordinance.
There was also confusion about how non-payment by a retailer might affect the underlying
landlord. That is, could a property owner have their property encumbered because of non-
payment by their tenant?
• Some alternatives were offered for consideration by policy -makers, including: use existing
authority for a local option gas tax; seek authority from the legislature for a local option sales
tax, and others.
• Importantly, half of the respondents offered written comments — some in great detail. I think
this indicates the seriousness with which businesses are taking this important topic.
Please feel free to contact me if you should have any questions about these survey results.
OFFICE 406.758.2800. 406.758.2805 FAX • 15 Depot Park, Kalispell, MT 59901
Retail Transaction Fee Survey SurveyMonxey
1. Business dame:
Response
Count
Agriculture, Forestry, Fishing and
1.7%
2
Hunting
Mining
0.0%
0
Utilities
[
1.7%
2
Construction
0.0%
0
Manufacturing
[
5.2%
6
Wholesale Trade
0.9%
1
Retail Trade. ,
_
20.7%
24
'Transportation and Warehousing
1.7%
2
Information
El
3.4%
4
Finance and Insurance
ten.
12.9%
15
Real Estate and Rental and Leasing
min,
13.8%
16
Professional, Scientific, and
8.6°J°
10
Technical Services -
Management of Companies and
0.0%
0
Enterprises
Administrative and Support and
Waste Management and
0.0
0
Remediation Services
Educational Services
3.40//0
4
Health Care and Social Assistance
6.9%
8
Arts, Entertainment, and Recreation
2.6%
3
Accommodation and Food Services '
6.9%
8
Other Services (except Public
Administration)
7.8°o
Public Administration
0.0%
0
Not sure
1.7%
2
Other (please specify)
19
answered question
116
skipped question
0
. Number of Employees:
Response
Count
116
answered question 116
skipped question
5. My Business would like to see the Chamber take the following action on the retail fee:
Strongly
Strongly Rating
Resi
Support Neutral Oppose
Undecided
support
oppose average
Cc
14.6% 6.8% 15.5%
48.5%
Please choose one
7.8% (8}
6.8% (7) 2.04
(15) (7) (16)
(50)
answered question
skipped question
6. Hoerr will the retail fee affect your business costs?
Response Response
Percent Count
Lower costs
7.8%
8
Unchanged
20.4%
21
Increase costs
. •
37.9%
39
Unknown
34.0%
35
answered question
103
skipped question
13
7. If lower, by how much?
Response
Count
9
answered question 9
skipped question 107
8.:If higher, how much?
Response
Count
30
answered question 30
skipped question 66
9. Comments:
Response
Count
62
answered question 62
skipped question 54
Page 2, Q5, Comments:
It's thinking outside the box, which is good, but a tax is a tax, why not impose a Jun 20, 2011 5:34 PM1
sales tax? What about Sykes and ten cent coffee? We probably wouldn't pass
the cost on to our customer, but instead absorb it which decreases the bottom
line.
Added accounting costs and equipment
3 Seems Unfair.
4 Now would collection take place?
Jun 20, 2011 4:08 PM
Jun 20, 2011 3:50 PM
Jun 20, 2011 3:30 PM
5 We support the concept of user fees which the proposed transaction fee is. Jun 20, 2011 11:51 AM
Business owners and private property owners in Kalispell shoulder infrastucture
cost that benefit significant numbers of people that use but don't pay for the
benefit.
6 My position is that while I understand the logic for spreading the street Jun 20, 2011 9:44 AM
maintenance cost, 9% is an excessive tax on retail sales. This would make my
business non-competitive to businesses outside of Kalispell and for nation-wide
internet sales. 2-3% might be more acceptable.
7 1 believe that the current proposal is not equitable as it imposed a $.09 fee on the Jun 20. 2011 9:37 AM
purchase of a pack of gum as well as a S.09 fee on the purchase of luxury items
like visual art, computers, or vehicles. I believe a sales, with exemptions for
food, etc., would be more equitable in terms of being more porpotional to the
purchase... those who can afford more high-priced items pay more than those
who are buying less. Also, you could raise more money to address the real
needs of our growing community.
8 Small business already has too much paperwork to file with all levels of Jun 18, 2011 10:35 PM
government hierarchy. This would be a significant impact from the accounting
aspect.
To pass this on to the business community places us in the business of Jun 18, 2011 3:20 PM
collecting taxes. It raises the cost of doing busines and, therefore, these "costs"
will be passed along to the consumer in the form of higher prices (disguised
taxes). The end result is the loss of business to other markets and the loss of
jobs as a result.
10 Any time a "tax" is added, it is never taken away. In fact it will be raised next Jun 17, 2011 5:15 PM
year -- either it is so "painless" or so much money was generated that we need
to increase the "tax" and use it for other necessities. It would be preferable to
look at the budget to see what can be eliminated until more revenue comes in.
Most households that are responsible have to eliminate items from their usual
spending when there is not money available for them.
11 another way to tax the people..... Let's think of ways to add value rather than Jun 17, 2011 4:12 PM
use the business community to collect taxes for a city.
12 1 don't like the idea of charging 9 cents per transaction when we sell to walk in Jun 17, 201 1 2:06 PM
customers some items for .10 cents for a single copy. That just doubled the cost
to our customers. I Would move my business to outside city limits.
13 It feels to me like a back door sales tax. Jun 17, 2011 1:49 PM
Page 2, Q5. Comments:
14 when we had the Whitefish resort tax implemented in our Whitefish store we saw
a decrease in sales of 15 to 20% and it continues to be a reason to not shop in
Whitefish for some people. The tax as presented is not fair in my opinion and
has not been presented in a thoughtful manner and solicited enough comment
by the businesses that will be affected. This would seem to be the worst time to
consider this when the economy and the unemployment is the way it is in the
Flathead.
15 1 have had comments from customers that will not shop in Kalispell if this
passes. Thanks
16 the costs of tracking it might outweigh the money collected.
17 1 am ONLY in favor of this IF property taxes are reduced by a substantial amount
in regard to the road maintenence portion of the tax bill.
18 don't want to be forced to collect taxes and then have a new city department
police me
Jun 17, 2011 1:37 PM
Jun 17, 2011 12:46 PM
Jun 17, 2011 12:32 PM
Jun 17, 2011 12:31 PM
Jun 17, 2011 12:24 PM
19 Our revenue has gone to 50%-60% of what is was pre -recession and we are Jun 16, 2011 7:09 PM
taking action to do more with less. I cannot pass along my volume problem to
anyone else. The city needs to do the same thing ---figure it out --multi skill, multi
task folks to do more. I'm already stuck with a large allocation of the cost of the
new Evergreen fire hall via property tax. they now have the nicest facility in
town. Smaller governemt is the answer.
20 We have on average of 1500-2000 classified ads per week and many are place Jun 16, 2011 1:52 PM
a week at a time. At $5 per ad a 90 'fee' would have a huge and I feel unfair
impact! The bookkeeping to keep track would also add to our costs.
21 It will increase labor and bookkeeping costs to facilitate collecting the fee and Jun 16, 2011 1:19 PM
paying it to the City. You do the math ... salary, ui tax, work comp ins, health ins.,
payroll tax, etc.
22 Our ads are kept reasonable for common folk to use--$5 for 15 words. This fee Jun 15, 2011 11:24 PM
would be very obtrusive to deal with the number of customers we have on our
deadline day! A flat rate would be more fair,
23 Finally! Jun 15, 2011 10:29 AM
24 Am unsure what the definition of "retail transactions" is. Is providing services for Jun 15, 2011 10:00 AM
fees considered "retail".
25 Add to the gas tax. system already in place
Jun 14, 2011 2:10 PM
26 The city streets are in poor shape, and I agree that a solution is needed, but Jun 14, 2011 12:18 PM
respectfully, this is NOT the answer. It is not equitable, logical, fair, or well
thought out. Difficult to administer, and impossible to explain with a straight face.
27 how are bank transactions covered?
Jun 14, 2011 11:19 AM
28 1 haven't had time to see what I have paid on my property taxes. I am interested Jun 14, 2011 11:16 AM
in more info. My transaction dollar amounts may be larger than a retailer that
sells alot of little items. So if it is based on the # of transactions it would be
better for me than it may be for a "gift shop" I need more info. jane olson
Page 2, Q5. Comments:
29 1 believe a fee is just another word for tax and we don't need another tax we Jun 14, 2011 9:18 AM
need to look at where we can cut back before we look into increased spending.
Retail businesses in the city will suffer because customers will be looking into
purchasing outside of the city limits and businesses will (to survive) move out of
the city limits.away from imposed fees/taxes.
30 This is a tax not unlike the resort tax in Whitefish which has been very beneficial Jun 14, 2011 9:11 AM
in upgrading the road infrastructure within the city limits.
31 Not clear if this fee would apply to our billing to Medicaid and patients throughout
the state - various counties?
32 This fee is inherently unfair to businesses with large numbers of low dollar
transactions and is impossible to administer as proposed. If 3 members of a
family come to the theatre in one car and Dad buys all three tickets, there is 1
transaction and one 9 cent fee. If three friends come to the theatre in one car
and each buys a ticket, the fee is 27 cents. Once in the theatre, the same
analysis holds for concession sales. This is unworkableand leads to an unfair
burden on this kind of business.Next, this is essentially a second traffic impact
fee. Saying that the fee is not on the landowner, but on the retailer is nothing
less than form over substance.lf I own the building on which I paid a traffic
impact fee and olso own the business operation, I am paying an impact fee
twice. Finally, if the bulsiness and land owner are different, then this is nothing
more than a poorly disguised Sales tax. In Montana, Sales taxes are not legal
unless they meet certain criteria. Those criteria are not met here.
33 There is a large difference between what both my commercial buildings pay for
the maintenance fee. It makes no sense. I rent out one building. Would they
have to pay the transaction fee? In the restaurant, if it is 9 cents per ticket and
was passed down to the customer it would not change the price enough to stop
business. Would it be per person? I guess I would like more information. I figured
the fee based on tickets and even with that I can see that the city would make
more. That would lower my monthly tax less than $100 a month but anything will
help with the economy there!
Jun 14, 2011 9:08 AM
Jun 14, 2011 9:05 AM
Jun 14, 2011 8:41 AM
34 Proposal is vague as to what a retail transaction is. I believe the authors Jun 14, 2011 8:39 AM
envisioned transactions at traditional retail establishments ie restaurants, shops,
gas stations, clothing stores etc but there is no definition of what transactions are
inclueded. Does it include or exclued financial transactions such as deposits,
withdrawals or ATM useage? What about payments for insurance policies,
utility payments or rents -are they transactions for this purpose?
35 It is a great idea as long if the reporting does not cause to much burden on Jun 14, 2011 8:31 AM
retailers
36 This proposal would increase our tax bill. Details of the transaction fee and too Jun 13, 2011 12:55 PM
vague. I assume insurance would not fall under the retail definition. More
information is needed. We need to generate income for the city from residents
and businesses of the county but I don't think this is the correct avenue.
37 1 respect the out -of -the -box thinking and the concept of getting more money from Jun 13, 2011 12:31 PM
the users rather than property tax payers. However the implementation and
execution leave significant room for improvement.
Page 2, Q5. Comments:
38 Unclear how it will apply to law firm & legal services (or any professional
services firm). Per client, per service charged (a flat rate project of $3,000 is a
single transaction as is a .2 hour phone call ???). How will it apply to medical
doctors and KRMC -- lotsa transactions (they do flat fee for specific service) and
revenue there ! Poor idea as cost of tracking and admninistration of "per
transaction" will cause private firms to incur cost to comply & potential
compliance audit cost. Better idea is sales tax or a tax based on % of gross
revenue to firm. I support the need to raise revenue for this purpose and agree
with the fairness concept, but question the proposed method for the reasons
stated above. Thank you, Jim Cossitt
39 This is a creative way to raise needed funds for roads. What we really need is a
sales tax, both City and County, to fund much needed services.
40 Adding paperwork will take me away from the emphasis of my business
41 We pay substantial property taxes to support municipal services. If this tax
reduces those fees (and re -distributes it to other users), we're for it.
42 1 NEED MORE INFORMATION. HOW DOES IT AFFECT LANDLORDS FOR
COMMERCIAL RETAIL PROPERTY?
Jun 10, 2011 '10:46 AM
Jun 10, 2011 8:13 AM
Jun 9, 2011 5:43 PM
Jun 9, 2011 4:38 PM
Jun 9, 2011 1:44 PM
43 The retail tray �sactio fee- is not the best method of fix the problem of our streets, Jun 9, 201.1 1 Al PM
but the Only one available.
44 1 agree that people that come from other areas should foot some of the bill for Jun 9, 2011 1:08 PM
the maintenance of our city, but I also think there should be some protection for
people who live in the area, and do business on a constant basis in the city, from
basically an increase in what they pay. There should be some tax relief for
people who live and shop here year around - whether in the form of so many
"free" transactions, or a reduction on their taxes when they are due. Thank you,
45 HIDDEN CHARGES ARE THE $50 FOR BUSINESSES THAT ARE NON- Jun 9, 2011 12:22 PM
RETAIL, THAT WOULD BE A BUSINESS LICENSE FEE? OR ARE THEY
GOING TO ADD THAT ON LATER! CAN'T REDUCE PROPERTY TAXES $50
AND THEN ADD IT TO THE BUSINESSES. THANKS
46 1 simply do not have enough information as to how it might or might not affect my Jun 9, 2011 11:25 AM
business much less those whom actually have to track, report and pay the retail
transaction fee.
47 How high would the transaction fee have to be to eliminate the parking Jun 9, 2011 11:01 AM
commission and those fees?
48 we are a nonprofit 501c3 Jun 9, 2011 10:41 AM
49 We support the retail fee in an effort to lower property taxes and increase the Jun 9, 2011 10:20 AM
standard of City streets, etc.
50 While I understand the need to raise taxes for street repairs, the method for Jun 9, 2011 10:17 AM
collection is not reasonable. Specifically, PER TRANSACTION is simply not
equitable. It will cause customer dissatisfaction, challenges by customers at the
point of sale stations, and unnecessary administrative work. In addition,
although there may be exemptions from the tax, there are just too many
Rage 2; Q5. Comments:
51 We sell mostly small ticket items and have a small margin to work with. Any Jun 9, 2011 9:16 .AM
increase would be harmful to our business and may drive clients to the bigger
box stores.
52 Such a fee means retail businesses must become tax collectors and foot the bill Jun 9, 2011 8:40 AM
for administering that. They then become subject to any penalties or
punishments associated with conducting collection improperly. The burden is
thus shifted from the $9000+ residents to even fewer business owners and does
not necessarily exempt or reduce what residents pay. Furthermore, the main
retail center of Kalispell is not even within the city limits so the ability to generate
revenue from retail sale fees is greatly diluted.
53 Unless the Transaction impact Fee is repealed before this is added, it is just Jun 9, 2011 8:22 AM
another burden on commercial business.
54 An unknown for our company is the service work/sales that we do inside the City Jun 9, 2011 7:59 AM
and whether that will fall under this program.
55 The current proposed Retail Transaction Fee does not include a repeal of the Jun 9, 2011 7:55 AM
Transportation Impact Fee which had been part of the initial discussions
regarding this new fee. Repeal of the Transportation Impact Fee is a crucial
component of the proposal. It is a major impediment to business expansion and
growth. Current impact fees impose significant additional upfront costs to
property owners and developers. The Retail Transaction Fee was a way to
upgrade and maintain our infrastructure, but also spread the costs to business
over time while providing property tax relief. As proposed, the majority of
property tax reductions would benefit residential property owners with minimal
impact on commercial. As proposed, this new fee would make Kalispell less
business -friendly by increasing operating costs and imposing additional
bureacracy. We encourage the Chamber to support the original proposal
including a repeal of the Transportation Impact Fee and offsetting reduction in all
property taxes.
56
The direct costs to our business would be the implementation of this change and
Jun 9, 2011 7:46 AM
the ongoing admin costs associated with tracking it.
57
Small taxes grow in to large ones. No new taxes. Look for places to cut costs
Jun 8, 2011 5:55 PM
and start at the City Hall administrative offices. Maybe the City should not try to
annex so much land that needs to be maintained.
58
1 think a % fee would make more sense rather than the same fee regardless of
Jun 8, 2011 5:52 PM
the value of the transaction
59
Since all (99%) of our business transactions are out of the area this --we sell
Jun 8, 2011 5:24 PM
educational training materials to mostly out of state districts --I'm not sure how
this will impact me as a business owner. Our business dealings are over the
phone --no walk in or drive in customers --do we still have to pay??? Also, who is
enforcing this, collecting $$, processing, doing paperwork? Hmmm .. .
60
Rather than a flat fee of 9 cents per purchase, I believe they should make it a
Jun 8, 2011 5:18 PM
percent tax like Whitefish. Maybe 1 % or higher if needed to maintain road repair
cost?
61 Mostly buy a lot in a few transactions. It will increase my business costs less Jun 8, 2011 5:02 PM
than it will save in personal property taxes as a Kalispell resident.