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1. Council Minutes - Regular Meeting December 15, 2003A REGULAR MEETING OF THE KALISPELL CITY COUNCIL WAS HELD AT 7.00 P.M. MONDAY, DECEMBER 15, 2003, IN THE COUNCIL CHAMBERS AT CITY HALL IN KALISPELL, MONTANA. MAYOR PAMELA B. KENNEDY PRESIDED. COUNCIL MEMBERS JIM ATKINSON, BOB HAFFERMAN, RANDY KENYON, DUANE LARSON, FRED LEISTIKO, HANK OLSON AND JAYSON PETERS WERE PRESENT. COUNCIL MEMBERS DUANE LARSON AND TED POLER WERE ABSENT. Also present: City Manager Chris Kukulski, City Attorney Charles Harball, City Clerk Theresa White, Police Chief Frank Garner, Fire Chief Randy Brodehl, Public Works Director Jim Hansz, Finance Director Amy Robertson and Tri-City Planning Director Tom Jentz. Mayor Kennedy called the meeting to order and led the Pledge of Allegiance. A. AGENDA APPROVAL Leistiko moved approval of the Agenda. The motion was seconded. There was no discussion. The motion carried unanimously upon vote, B. CONSENT AGENDA APPROVAL Council Minutes — Regular Meeting December 1, 2003 2, Ordinance 1486 —...Spring Prairie/Section 36 Planned Unit Development A eement Amendments — 2nd Reading Goldberg Property, Inc. requested 5 major amendments to the Spring Prairie PUD agreement to accommodate a proposed 29-lot commercial development. 3. Ordinance 1487 — Zone Change —.Kenneth Sol um — 2nd Reading Kenneth Solurn, on behalf of Terry and Marguerite B aker, requested a zone change from R- 3 to R-5 on property located on the southwest corner of Liberty and North Meridian. 4. Ordinance 1488 — Zoning Text Amendments — City.of Kalispell. --- 2nd Reading This is the second reading on a request for a zoning text amendment to allow a PUD overlay within the R-5 zone. It also sets the residential density for an R-5 PUD at 14 dwelling units per acre and the PUD density for R-4 zones at 12 units per acre. Contract Award — Water System. Vulnerability Assessment New regulations require public water systems to determine the vulnerability of facilities to outside threats. Three firms submitted proposals for the assessment, HDR Engineers/Morrison Maierle, Inc., Kadrmas, Lee & Jackson, and Thomas, Dean & Hoskins. Staff is recommending the assessment be awarded to HDR Engineers/Morrison Maierle, Inc. for an amount not to exceed $59,280.00. 6. Contract Approval — D.A.R.E. Program The Police Department asked for authority to enter into a contract with Idaho Entertainment Events, in association with Crime Stoppers, for a celebrity golf tournament that should raise at least $5,000 to help support the D.A.R.E. program. Kalispell City Council Minutes December 15, 2003 Page i Retirement Reca nition ---- Police Lieutenant Greg Burns At the end of December, Lieutenant Greg Burns will be retiring after twenty-six and a half years with the Kalispell Police Department. Kenyon moved approval of the Consent Agenda. The motion was seconded. Peters moved to remove Consent Agenda #2, Ordinance 1486 — Spring Prairie/Section 36 Planned Unit Development Agreement Amendments — 2nd Reading and be placed on the regular Agenda as Item #F/12. The motion was seconded. The motion carried upon vote with Atkinson voting against. The main motion as amended carried unanimously upon roll call vote. C. STUDENT ISSUES None. D. HEAR THE PUBLIC Erica Wirtala, Sands Surveying, spoke in support of Agenda Item #7, Preliminary Plat for Glacier Village Greens Phase 3C. Tom Denham; 167 Ritzman Lane, also spoke in favor of the Glacier Village Greens Preliminary Plat. Laurie Hamill, 1515 Trumble Creek Road, spoke on the meditation practice of Falun Dafa, or Falun Gong. E. PUBLIC HEARING — AMENDING WATER & SEWER UTILITY CONNECTION AND TURN -ON FEES & ESTABLISHING A TAG FEE Mayor Kennedy opened the public hearing. Myrna Terry, 1501 Whalebone Drive, representing the Flathead Building Association, read a letter from the FBA asking for answers on how the system development charges were detennined and suggesting the City consider a water conservation plan. (Letter is attached and by this reference is made a part of the official record) Michael Blend, 14 West Bluegrass, said he understands the importance of planning for the future, but asked for assurance that the fees collected up front will used for the extension of infrastructure and the money from the water and sewer bills be used to maintain the system. He questioned a statement in the system development charges study that maintains "the overall population growth for the study area in the master plan between 1990 and 2000 was approximately 17%". Blend said it seems there is a higher than necessary projected growth rate and if you try to anticipate more growth than is actually necessary you drive housing costs up. Charles Lapp, 3230 Columbia Falls Stage, asked for a clarification of whether developers get reimbursed for the connection costs once the homeowner connects to the system. He said other companies, like phone and gas, charge developers for the initial costs of getting the lines to the lots, but then reimburse the developers once the homeowner signs on. Lapp commented if developers Kalispell City Council Minutes December 15, 2003 Page 2 know they would be receiving some money back from the initial water and sewer costs, they wouldn't have to add those costs to the property. Mayor Kennedy closed the public hearing. F. REPORTS/RECOMMENDATIONS AND SUBSEQUENT COUNCIL ACTION Fl1. RESOLUTION 4855 — RESOLUTION AMENDING THE WATER UTILITY CONNECTION FEES AND FEES FOR SPECIAL SERVICES This resolution amends the water utility connection fees and establishes a $20.00 tag fee for customers delinquent in paying water bills and increases the turn -on fee from $20.00 to $30.00. Kenyon moved Resolution 4855, a resolution to adopt the fees, schedules, rates, charges and classifications imposed on the customers of the City of Kalispell Water Utility. The motion was seconded. Starting with the tag fee, Kukulski said there is currently no late fee when you don't pay your water and sewer bill on time. He said staff first sends a notice informing customers their water will be turned off in two weeks. If the bill still isn't paid, then 24 hours prior to the turn-off an employee is sent to the house and delivers a "tag" notice of impending water shut-off. Kukulski stated approximately 60 to 80 homes a month are tagged and 80 to 90 percent of the accounts are then paid. He said staff hopes that implementing a tag fee will discourage these customers from constantly paying their bill late and establishing a $30.00 turri-on fee will help reimburse the City for the costs of actually having to turn off the water. Concerning the connection fees, Kukulski explained the Kalispell Water, Sewer and Storm Drainage Facility Plan identified thirty million dollars worth of infrastructure improvements that are needed. He said two basic revenue sources exist to pay for those improvements; monthly rates for service and system development charges, or connection fees. Kukulski said following a subsequent rate analysis, the City Council recently took action to set new cost -based monthly rates for utility services to pay for maintenance and replacement of existing infrastructure. The next step is to amend the system development charges to pay the costs related to growth. Kukulski said it has been stated many times that the recommended SDC charges will not be subsidized by current customers; instead they will be used for growth -related costs. Haffer an read a written stater ent concerning the system development charges. (Statement is attached and by this reference is made a part of the official record) Responding to Hafferman's comment that the fee schedule is incorrect, Kukulski explained the 2003 fee schedule listed on the exhibit is not the current one, it's the schedule that was expected to be implemented earlier this year. He said that didn't happen, so the 2004 schedule will actually be the first one to go into effect. Kukulski agreed the increase in the water fee is significant, but noted that the sewer fee is actually decreasing somewhat. Leistiko asked what happens when a developer wants to install a six-inch line, but because there are plans for additional developments in the same area in the future, the City feels a ten -inch line would be better. Kalispell City Council Minutes December 15, 2003 Page 3 Hansz said the developer would be responsible for the costs associated with installing a six inch line and the system development charges would pay the difference. Atkinson commented he was on the Council when the wastewater treatment plant was built and the plan was that the hook-up fees would help pay for the expansion of that plant when necessary. He said it's now time for the expansion and asked if the plan worked. Kukulski answered there are several million dollars in the sewer replacement fund and that's why you don't see the same amount of increase in the sewer fees as you do the water fees. He said the replacement and expansion costs of the sewer system were much better planned for than the water system and that's why you're seeing such a large increase right now on the water side. Atkinson asked Hansz if he feels the growth projections in the rate study were inflated as suggested by Michael Blend. Hansz said the study includes a number of different assumptions and projections. Some deal with costs and others estimate how the community and population will grow. He said those projections were based upon how things have been growing, but the rate consultant's "crystal ball is no better than anyone else's". Kukulski commented census figures show a growth rate between 1990 and 2000 of approximately 25 %. He said if you look at the number of lots platted in 2003, there has been a growth of between 8 to 9% just this year alone. Atkinson remarked that Charles Lapp is on the "far end of a lot of growth" and he's responsible for paying the entire cost of the line to his development. He commented it doesn't seem fair that future developments along that line will be able to hook-up without having had to pay for any of the installation costs. Atkinson asked if the City has any plans to help in that situation. Kukulski stated that's an entirely different debate and it's an issue that needs to be discussed, but the developer, no matter where a project is located, is expected to pay the costs associated with their development. Answering a question from Peters, Kukulski stated there is currently about $750,000.00 in the bank for the water system which isn't very much money when you talk about doing a water main project. He said the sewer fund holds substantially more, approximately five million dollars, and that's why the water fee increase is significantly higher. Hansz said the fee schedule would work just as well if it's set for the same period of time as the rate schedule which is five years. Peters said it appears the problem that's facing the Council is that a rate study wasn't done since 1992 and fees didn't keep up with costs, especially on the water side. He suggested rather than approving a fee schedule for another ten years, a fee schedule be approved for a shorter period of time and the fee schedule reviewed sooner. Peters moved to amend Resolution 4855 by reducing the number of years reflected in Exhibit A from 2003-2006. There was discussion as to how many years the fee schedule should be run. Kalispell City Council ]Minutes December 15, 2003 Page 4 Peters agreed to amend his motion and have Exhibit A run from 2004-2007. The motion was seconded. Kenyon questioned the necessity of amending the Exhibit, asking if there is any reason the Council can't review the fee schedule any time it wishes. Kukulski answered there's nothing preventing the Council from doing that. Leistiko said he agrees with the amendment and hopes the Council goes further and actually looks at the fees and rates every year. Hafferman said he'll vote against it because the amendment doesn't mean anything; the whole resolution needs amending. The amendment carried upon vote with Hafferman and Kenyon voting against. The main motion as amended carried upon roll call vote with Hafferman voting against. F/2. RESOLUTION 4856 — RESOLUTION AMENDING THE SEWER UTILITY CONNECTION FEES This resolution amends the sewer utility connection fees. Leistio moved Resolution 4856, a resolution to adopt the fees, schedules, rates, charges and classifications imposed on the customers of the City of Kalispell Sewer Utility. The motion was seconded. Olson said he's going to support the study and the integrity of the staff and have confidence this is going to be a sound system to protect the citizens. Peters moved to amend Resolution 4856 by reducing the number of years reflected in Exhibit A from 2004-2007. The motion was seconded. The amendment carried upon vote with Hafferman and Kenyon voting against. There was a brief discussion. The motion carried upon roll call vote with Hafferman voting against. 1</3. ORDINANCE 1489 — ORDINANCE RESCINDING ORDINANCE 1316 — 1ST READING Ordinance 1316 established a program to recover utility costs associated with the installation of utilities in connection with the reconstruction of Highway 93 South. With the passage of Resolutions 4855 and 4856, Ordinance 1316 is no longer necessary. Atkinson moved first reading of Ordinance 1489, an ordinance repealing Ordinance 1316 and declaring an effective date. The motion was seconded. Kukulski gave a staff report. Kalispell City Council Minutes December 15, 2003 Page 5 Halferman commented "this was an ill-conceived ordinance for an ill-conceived project. It should be repealed". The motion carried unanimously upon roll call vote. F/4. RESOLUTION 4857 — CONSTRUCTION AGREEMENT FOR US HIGHWAY 93 SOUTH RECONSTRUCTION Three agreements need to be in place prior to the State proceeding with a construction contract for improvements to US Highway 93 South. Resolution 4857 authorizes the Mayor to sign the City Agreement of Federal Aid Project No. NH 5-3(66)109. Kukulski gave a staff report explaining this agreement relates to the Council's commitment to extend utilities south on Highway 93 to Four Corners. He informed the Council that in January the Council will make the decision whether to annex the right-of-way. Kenyon moved Resolution 4857, a resolution authorizing the Mayor of Kalispell to execute the City Agreement of Federal Aid Project No. NH 5-3(66)109 with the State of Montana. The motion was seconded. Kukulski gave a staff report. Peters commented he has never agreed with the funding mechanism of this project, but he does agree this agreement needs to be executed because the Council made a commitment and they need to honor that. He said how it's going to be funded is a different matter. The motion carried unanimously upon roll call vote. F/5. COOPERATIVE AGREEMENT FOR US HIGHWAY 93 SOUTH In order to proceed with the construction contract for improvements to US Highway 93 South, an agreement for the installation of City utilities also needs to be approved. Atkinson moved to approve Cooperative Agreement for FAP NH5-3(66)109F. The motion was seconded. Hansz explained most projects between the City and State normally involve two contracts; the construction agreement and the utility agreement. He said what makes this project unique is the Cooperative Agreement whereas city -owned utilities will be installed in conjunction with the State's highway project. Hansz said the agreement specifies the City will work together with the State and the State will request annexation of the roadway. He said the agreement reflects several years of negotiations and changes and approval is necessary in order for MDOT to move ahead with letting a contract. Hafferman made the following comment: "I have always stated that this is an unnecessary project to be financed by ratepayers through credit card purchasing (obligating our children for past Council mistakes). There is no need for these infrastructure projects financed by ratepayers. First, it is against all our written rules and regulations that require developers to finance development projects. Second, it is not necessary to place City utilities in the highway right-of-way. In fact, due to safety and expense in maintenance, it is a very poor design when other methods are available to get from Kalispell City- Council Minutes December 15, 2003 Page 6 point A to point B such as following city -owned airport property and less traveled Willow Glen and Airport Road. In the bygone era it was logical to follow main roads, but that was before the automobile became king. Third, I can find no budget item for the 16% payment to the MDOT for mobilization and traffic control, 15% payment to MDOT for construction engineering of the storm drainage and $100,000 for "landscape enhancement". Four, as development occurs along this highway the developer will be required to do landscaping as part of the annexat5ion requirement. Why should our taxpayers and ratepayers pay this cost? I don't ever recall hearing this $100,000 discussed at a workshop." Hansz clarified MDOT is actually paying the City $100,000 for landscaping, not the other way around. He added that Hafferman is correct, however, when he stated the mobilization and traffic control costs are not included in the original estimates. Hansz said it wasn't until January, 2000 that the State codified their policy and imposed those costs on all cities. The motion carried upon vote with Hafferman voting against. FI6. UTILITIES AGREEMENT FOR US HIGHWAY 93 SOUTH The Utilities Agreement specifies the costs and establishes the means of payment for water and sewer improvements that are referred to but not defined in the Cooperative Agreement. Leistiko moved to approve Utilities Agreement NU 5-3(71)101F[10121. The motion was seconded. The motion carried upon vote with Hafferman and Peters voting against. F/7. RESOLUTION 4858 — PRELIMINARY PLAT — GLACIER VILLAGE GREENS PHASE 3C Glacier Village Greens Homeowners Association requested preliminary plat approval of Glacier Village Greens, Phase 3C, a 4-lot residential subdivision on 1.3 acres of land east of East Nicklaus Avenue and south of the Ritzman Lane intersection. The property is currently an undeveloped homeowner's park. Leistiko moved Resolution 4858, a resolution conditionally approving the preliminary plat of Glacier Village Greens Phase 3C, more particularly described as a portion of Homeowners Park B in Phase 3A, Glacier Village Greens Subdivision in the W2SE4 of Section 32, Township 29 North, Range 21 West, P.M.M., Flathead County, Montana. The motion was seconded. Jentz explained the Homeowners Association is formally requesting that the City amend the original Phase 3A Plat approved in 1993 by removing the parkland designation for a portion of Homeowners Park B and at the same time approve a 4-lot residential subdivision. He said proceeds from the residential development will be used to develop a year-round homeowner's community center and 76.9% of the lot owners in Village Greens voted in support of the project. He said at the Planning Board meeting, Rich DeJana, an attorney representing 19 property owners, spoke in opposition stating the City does not have grounds to approve this subdivision because all of the homeowners who were a party to the original dedication on the plat have not consented to the amendments, however, City Attorney Charles Harball determined the Council does have the authority. Jentz said the Planning Board discussed the request at length and unanimously recommended approval of the plat with 14 conditions. Kalispell City Council Minutes December 15, 2003 Page 7 Hafferman stated simply because 76.9% of a group is in favor of creating; a housing development out of a homeowner's park is not a cause to change a legal situation. He said it's a matter of property rights and other avenues must be pursued before the Council gets involved. He said: "I do not believe this Council should become involved in a situation that could possibly be settled among homeowners or by settlement through court action". Harball said there's no indication that 100% of the homeowners have to approve. He suggested to the opposing homeowners that if they feel they have a legal argument then they should go to court. Harball said the Council needs to rely upon the certification of the Homeowners Association that the majority of the members want the Council to take action on the request. Leistiko agreed, stating the Council doesn't get involved in enforcing covenants. Peters said he doesn't think the Homeowners Association will ever be able to get 100%. Olson said there are a lot of people that have indicated they would vote differently if the vote was taken again. He said because it would mean putting the City into a lawsuit. Haffennan said it's not up to the Council or anyone else to decide these owner's property rights. Mayor Kennedy commented it's not the City selling the land and the rightful determination should be made in the courts if necessary, She said members shouldn't be worried about setting themselves up for a lawsuit because every time a motion is made there's potential for a lawsuit. The resolution carried upon roll call vote with Hafferman and Olson voting against. FOS. FINAL PLAT —BUFFALO COMMONS PHASES 3 AND 4 This is a request for final plat approval of a 5-lot commercial subdivision in the Buffalo Commons development. This subdivision reconfigures boundaries of three existing lots and creates five smaller lots. Jentz gave a staff report. Atkinson moved to approve the final plat for Buffalo Commons Phases 3 and 4. The motion was seconded. There was no discussion. The motion carried unanimously upon vote. Fl9. FINAL PLAT —GLACIER COMMONS GLACIER MEADOWS SUBDIVISION Schwarz Engineering, on behalf of RIO Arizona Holdings, has requested final plat approval of an 82-lot single-family .residential subdivision on approximately 38 acres on the northwest corner of Granrud Lane and Whitefish Stage Road. Atkinson moved to accept the Subdivision Improvement Agreement and approve the final plat for Glacier Commons. The motion was seconded. Kalispell City Council Minutes Dccember 15, 2003 Page 8 Jentz gave a staff report. Atkinson said at one time the developer was asking to develop Granrud Lane to a rural standard and asked Jentz to comment. Jentz said the Subdivision Improvement Agreement does specify that Granted Lane be developed to city standards. Olson commented he hates the cash -in -lieu of parkland. Jentz said in 2002 the Council agreed to either parkland or cash -in -lieu and the developer opted for the payment. Olson said he hopes this is the last subdivision he sees where money is accepted rather than a park. The motion carried upon vote with Olson voting against. FI10. BOARD APPOINTMENTS — 9-1-1 COMMITTEE The City of Kalispell is responsible for appointing one City Council Member, one Public Safety Chief and an additional Public Safety Chief as an alternate to the 9-1-1 Board. Board appointments take effect January 1, 2004. Mayor Kennedy recommended that Police Chief Frank Garner be appointed as the Public Safety Chief, Fire Chief Randy Brodehl as the public safety alternate, and Duane Larson as the Council representative. Leistiko moved the Council accept the Mayor's recommendation. The motion was seconded. There was no discussion. The motion carried unanimously upon vote. F{11. BOARD APPOINTMENTS — DOWNTOWN BUSINESS IMPROVEMENT DISTRICT Thirteen people have applied for appointment to the seven -member board of directors for the newly created Downtown Business Improvement District. Mayor Kennedy recommended the following appointments to the Downtown Business Improvement District Board of Directors: Robert Schneider for a one year term, Ken Yachechak and Dave Rae to a two year term; Rex Boller and Mark Pirrie a three year term; and Janet Clark and Judy Larson a four year term. Leistiko moved the Council accept the Mayor's recommendations. The motion was seconded. Peters asked if all of these people are qualified to serve under State law. Harball said the statute opens the door fairly wide by stating that a member must be a property owner or the property owner can appoint someone to represent that property. Kalispell City Council Minutes December 15, 2003 Page 9 Peters suggested a Council member be involved with the board. Mayor Kennedy assured him either herself or the City Manager will be attending those meetings. The motion carried unanimously upon vote. F/1.2. ORDINANCE 1486 — SPRING PRAIRIE/SECTION 36 PLANNED UNIT DEVELOPMENT AGREEMENT AMENDMENTS — 2ND READING removed from Consent Agenda) Goldberg Property, Inc. requested 5 major amendments to the Spring Prairie PUD agreement to accommodate a proposed 29-lot commercial development. Peters moved second reading of Ordinance 1486, an ordinance authorizing and adopting an amendment to the Developer's Agreement for the Planned Unit Development for Spring Prairie Center. The motion was seconded. Peters commented the only reason he moved this item from the Consent Agenda was to clarify the casino issue. He said allowing casinos as an incidental use wasn't taken lightly by the Council, but was necessary to encourage restaurants to locate here. The motion carried unanimously upon roll call vote. F. MAYOR/COUNCIL/CITY MANAGER'S REPORTS Leistiko announced this will be his final meeting as he will be out of town on January 5th. He thanked the citizens for allowing him to serve the past four years, stating the Council has made some tough decisions over the past four years and he was proud to be a part of those decisions. Leistiko stated there are still a lot of hard decisions to be made as Kalispell grows and he intends to stay involved in the community. He said he'd like to tell the citizens that Kalispell has some of finest and dedicated staff that any city could hope for and one of the finest City Managers the City could ask for. Kukulski complemented Leistiko for his work on the Council and with the 9-1-1 board. Mayor Kennedy thanked Leistiko for his service and presented him with a plaque. Atkinson announced his grandson Hunter James Boyd was born early this morning. H. ADJOURN The meeting was adjourned at 10:10 p.m. Pamela B. Kennedy Mayor Kalispell City Council Minutes DQeember 15, 2003 Page 10 COUNCIL - December 15, 2003 (Bob Hafferman) 1 and 2. SYSTEM DEVELOPMENT CHARGES This is another way of saying "connection fees" or "impact fees". People building in Kalispell have been paying these fees for a number of years. NOW we are being asked to institute a huge increase - just like the history of any new tax. The Connection Fee Schedules you have before you are incorrect. The 2003 fee for water is $656, not $1,675, an increase of $1,019 (255%).The 2003 fee for sewer is $1,581, not $2,010, an increase of $429 (27%). This error makes it look like there is only a moderate increase. Not only that, but by adoption of this Resolution the fees will increase EVERY YEAR until 2011. I have always been in favor of a "connection fee" for SEWERAGE systems as it is a method that the rate payers are shielded from having to pay for sewerage system enlargement due to growth. In other words, in 1982 we established a connection fee for anyone hooking up to the sewer in order to have sufficient money set aside from connection fees, paid by latecomers, so that the next phase of system enlargement would not have to have a rate increase when the systems near capacities. In addition, developers were required to make whatever changes were necessary in order to meet flow requirements on their water system projects, but connections fees, which were not instituted in 1982, are logical to pay for enlargement as construction occurs SO THE REASONS I AM OPPOSED TO THESE INCREASES ARE: First, CONNECTION FEES HAVEN'T WORKED. Nor do I expect these increases to work unless the Resolution is revised so that others, such as bankers, consultants and bond councilors, cannot convince future staffs and councils that the pool of money can be spent for other than the intended purpose. These are VERY POORLY WRITTEN resolutions. I suspect that as terms expire for some of us on the council that the pool of money generated will cause an itching to tap. Second, I am concerned about a number of projects listed in the rate study that should be installed by developers. The majority of this council recently raised the water and sewer rates over the next five years supposedly to finance not only infrastructure deficiencies but growth related projects. Projects benefitting developers are supposed to be financed by DEVELOPERS - NOT RATEPAYERS. During the rate study workshops a disturbing emphasis was made about BACKBONFNG. Backboning is nothing more than a speculative venture to install water and sewer lines where some may THINK development will occur. THIS IS SPECULATION and does not deserve a place in a well operated utility. IT IS AGAINST OUR GROWTH POLICY. It appears to me that we are simply raising our CONNECTION FEES to get another pool of money. This council needs to review all projects listed in the rate study to determine which should be developer financed. BACKBONING is throwing away many years of an orderly system of development in favor of speculation with ratepayers money. Third, we hear the words AFFORDABLE HOUSING bandied about. Connection fees add significantly to the cost of a lot. The fees are one thing, what the city charges in addition for actually making"the connection is quite another. For example, the city adds on $4/sf for asphalt patching. This is in excess of what private enterprise charges. Before I could ever vote for any rate increases, our rules and regulations, related to development, need to be addressed. A committee, independent of city government, should be impaneled to review all of our rules and regulation and recommend changes, that do not sacrifice quality, in order that we can at least TRY to achieve some measure of affordable housing. Fourth, Schedule F charging $20 for tagging a premise seems excessive and I am concerned about those people who have a hard time meeting everyday expenses. There are sometimes 80 or more tagging notices required per billing period. At S20/ea that's $1600. I question whether this is actual costs. We need actual cost information. I know there are deadbeats, and there should be a fee, but others can suffer more as they balance the cost of food and shelter. THESE INCREASES IN FEES needs further input. 0 m,#y 1 ma .111911RDWE December 15, 2003 City Council Members City of Kalispell K 0. Box 1997 Kalispell, MT 59903 The Flathead Valley has experienced tremendous growth over the past ten years-25% according to the census. Because of the perceived burden this growth is placing on our existing city services, you are proposing to increase the water and sewer connection fees to pay for new capital facilities. We appreciate the city's efforts and understanding of the need to keep the charges connected to growth only. The Flathead Building Association's position on Impact fees -- and System Development Charges are Impact fees --is that we are willing to pay our fair share of the expense of growth based on system improvement costs necessary to serve projected development, but not on the recovery of costs of existing public facilities. We also appreciate the recognition that we need to plan for our future growth. The city's proposed water and sewer connection fee schedules are specifically justified as being needed for expansion of the system. However, in reviewing the draft report of the SDCs for water and sewer, we have questions about some of the numbers and how the costs were determined. For example: • The SDCs are calculated using present day dollars for existing facilities. Why are you asking new home buyers to pay for facilities that are already paid for and because of the life expectancy of these systems, are no longer worth what they originally cost? It appears that the city is trying to recover costs of existing investments that are already paid for. • If this is a cost based calculation, why are you asking for new home construction to "buy in" to the system at replacement costs rather than actual costs? • Are the future DNRC wells going to be paid by the developers of Section 36 under the Extension of Services Plan? If so, these wells should be removed from the calculation or the developers should be reimbursed by the City when new businesses connect. • We believe that the standby power on the Noffsinger Springs, Armory and Depot Park wells are present deficiencies and not related to new growth. 1702-5th Avenue East ® Kalispell MT 59901 a (406) 752-2422 FAX: (406) 752-5122 fbaC buildingflathead.corn - www.buildingflathead.com Affiliated with the National Association of Horne Builders Regarding charges pertaining to extending water and sewer to new developments, are these costs already paid by developers? If so, is the homeowner paying twice for these fees —first in the cost of the lot and second in the connect fees? It is our understanding that the developer is not reimbursed by the city when new home owners connect. We recognize the need for planning for the growth and extending the facilities to future areas, but the City could go to the expense of expanding to an area (such as Hwy 93 to Four Corners), only to see the growth occur somewhere else. • There appears to be no accounting mechanism proposed to ensure that any increase in fees over the next ten years be used only for the expansion of the system, caused by additional units, and not for the benefit of the entire system, including existing customers. As we wrestle with growth issues and their effects, it is important to understand the extent of the economic benefit to communities that can be generated through residential construction. In fact, what has been driving and sustaining the economy in the Valley is the growth and resultant construction. According to studies recently completed by Montana State University, the revenues generated from the positive economic benefits of home construction significantly exceed the public costs of governmental services. The ongoing benefits of hoebuilding can offset the costs of developing and maintaining community infrastructure through growth in local business income, job creation and resultant increases in local tax revenues. NAHB studies indicate that in areas that experience about 2% annual growth, the increase in revenue to the government coffers pays for the growth. New homes = jobs = new tax base. Impact fees negatively affect a community's economy. The proposed SDCs and annual increases will put an unequitable burden on the smaller, affordable homes resulting in price increases to the homebuyer and pricing some people out of the market of homeownership. Eventually, impact fees drive up prices of existing houses further reducing affordable housing. To keep housing affordable, additional costs that must be passed on to the homebuyer should be avoided by local government. The main ,justification for the increase in hook-up fees is to provide for additional capacity to the City's water and sewer systems in anticipation of growth in the next 10 years. Prior to adding several thousand dollars to the cost of constructing a new home, the City should consider a water conservation program on the existing system to delay the need for additional capacity. Many western cites such as Phoenix AZ and San Luis Obispo, CA have faced similar problems and resolved those problems by instituting innovative measures to reduce water use. For example, existing facilities within most homes in Kalispell probably have toilets that use 3.5 to 5 gallons per flush. If those units were replaced with current plumbing code requirements for I gallon per flush, I to 2 additional toilets could be added (with zero net effect) to the existing municipal system with each retrofit. The installation of low -flow shower and tap heads would also significantly reduce the water consumption and save homeowners money on utility costs. Measures similar to this will create additional capacity in the future, utilizing the existing system. If the city is unable to provide for sufficient capacity through retrofitting the existing system, then expansion of the system could be undertaken without raising impact or hook-up fees. The city has proposed building an additional wastewater treatment facility that would process an additional 34 MOD of sewage. This decision should be revisited in light of implementing a water conservation plan. Additionally, should there still be a need to build additional capacity, strategies for time -shifting for sewage processing and building a smaller size facility that is modular in design that offers a low- cost expansion to achieve the 34 MOD capacity should be investigated. As an alternative to impact fees, the national Association of Homebuilders has studied the issue and published a booklet on alternative methods for financing infrastructure improvements. We have forwarded a copy to the City Manager and would be happy to do so for any of you. The community as a whole benefits from the economic growth provided through new home construction. While we must assure that adequate public facilities and services are available to serve new growth and development in Kalispell, we also must assure that those who respond to the growth pay only an equitable share of the cost. for those who think that builders and developers don't pay their fair share —we already are paying for water and sewer extensions to the development, the water and sewer infrastructure within the development, not to mention paving of streets, building sidewalks, planting parks and trees, and installing street signs, street lights, stop signs, and fire hydrants. All of these requirements add to the cost of a home and are passed on to the homebuyer. Until you can clearly demonstrate that these new SDC fees are needed as a result of the additional housing being constructed and not for retrofitting or rehabilitation of deficiencies in the existing system and you can assure us that the fees collected will only be used for expansion, the flathead Building Association, a trade and professional association representing over 230 companies in the construction industry and a local affiliate of National Association of Home Builders, is asking that you do not approve these fee increases at this time. Before making your decision, please be absolutely certain these fees are based on sound input and truly represent the impact of growth. We ask you to consider the potentially harmful economic impact of your decision and the burden the additional fees will place on the homebuyer and how it can only add to the housing affordability crisis. Sincerely,,you`s, Merna Terry, Ron Te Construction, Inc I st Vice President, fQhead Building Assoc.