2. Wastewater Impact Fees201 Ist Avenue East
PO Box 1997
Kalispell, MT 59903
Phone: 406-758-7720
Fax: 406-758-7831
www.kalispell.com Ipublic—works
MEMOFANDUM
To: Doug Russell, City Manager
From: Susie Turner, P.E. Public Works Director/City Engineer
Date: 1/21/2014
Re: 2013 Wastewater Impact Fee Report Workshop Presentation
The Impact Fee Advisory Committee has completed its review of the 2013 Impact Fees for
Wastewater System Report and has recommended it be forwarded to City Council for final
review and consideration. Public Works will be presenting a summary of the 2013 Impact Fees
for Wastewater System Report to Council at the January 27 workshop. Enclosed for handouts to
Council are the recommendation letter from the Committee Chairperson and the 2013 Impact
Fees for Wastewater System Final Report.
City of Kalispell
Post Office Box 1997 - Kalispell, Montana 59903
Telephone: (406) 758-7701 Fax: (406) 758-7758
December 30, 2013
City Council
City of Kalispell
201 1" Avenue East
Kalispell, MT 59901
Subject: Impact Fee Advisory Committee Recommendation — 2013 Wastewater
Impact Fee Report
Morrison & Maierle, Inc. was retained by the City of Kalispell (City) to update the wastewater
impact fee for new development. A Wastewater Impact Fee Report was prepared and reviewed
with the Impact Fee Advisory Committee (IFAC), as required under Montana law.
The IFAC conducted an extensive review of the report's methodology and updated planning
documents; including the current annexation boundary, updated growth projections, current and
projected wastewater flows, capital improvement projects, and extension projects included in the
report. The committee all agreed with the findings of the report and with the accuracy of the
calculated cost per equivalent residential unit (ERU). On December 17, 2013 the committee
voted to recommend approval of the wastewater impact fee report with a split vote of three (3) to
two (2).
The two dissenting votes agreed with the necessity of the listed capital improvement projects
needed for capacity, but do not believe the entire burden of the increase in the cost per ERU fee
should be paid solely through new development impact fees. For this reason, they recommend
the council look at supplementing a significant portion of the impact fee increase with other
funding mechanisms as approved by council.
All of the IFAC members, including those who voted to recommend the report, agreed council
should consider how an increase in the wastewater impact fee could have a negative impact on
development in the City.
The IFAC is available to answer questions and looks forward to finalizing the updated
wastewater impact fees.
Sincerely,
Chad Chairperson
Impact Fee Advisory Committee
2013
Impact Fees for Wastewater System
Draft Final Report
City of Kalispell
12/13/2013
Contents
ExecutiveSummary.......................................................................................................................................4
Introduction..............................................................................................................................................4
Financial Objective of Impact Fees...........................................................................................................4
ImpactFee Criteria....................................................................................................................................4
TheNeed for This Eludy............................................................................................................................
5
Development and Simmary of the Wastewater Impact Fee...................................................................6
/ anti lj�mo Fbcommendations...............................................................................................................
8
Impact Fee Advisory Committee(IFAC)....................................................................................................8
Conclusion.................................................................................................................................................
8
SBction 1: Introduction and Overview..........................................................................................................
9
1.1 Introduction........................................................................................................................................9
1.2 Overview of the Fbport.....................................................................................................................10
1.3 Disclaimer..........................................................................................................................................11
1.4 Simmary...........................................................................................................................................11
SBction 2: Overview of Impact Fees and Generally Aooepted Industry Practices.......................................13
2.1 Introduction......................................................................................................................................13
2.2 Defining Impact Fees.........................................................................................................................13
2.3 Historical Perspective........................................................................................................................13
2.4Impact Fees and r0s■s'r�! I'I's. r-6 , actices.............................................................................14
2.5 Financial Objectivesof Impact Fees..................................................................................................17
2.6 Fblationship of Impact Fees and New Construction Activities.........................................................18
2.7 Simmary...........................................................................................................................................19
3.0 Overview of Impact Fee Methodologies...............................................................................................20
3.1 Introduction......................................................................................................................................20
3.2 Impact Fee Criteria ............................................................................................................................
20
3.3 Growth, Fisk and New Connections..................................................................................................
21
3.4Overview of the Impact Fee Methodology.......................................................................................21
3.5 Simmary...........................................................................................................................................
23
4.0 Legal Consideration in Establishing Impact Fees for the City...............................................................24
4.1 Introduction......................................................................................................................................24
4.2 R-,quirements Under Montana Law..................................................................................................
24
2
4.3 Summary ...........................................................................................................................................
24
5.0 Determination of the / -of Wastewater Impact Fees..........................................................................25
5.1 Introduction......................................................................................................................................25
5.2 Overview of the / -"f Wastewater Sjstem......................................................................................
25
5.3 Overview of the / JOf Wastewater Facility Ran..............................................................................
25
5.4 Present Impact Fees..........................................................................................................................
25
5.5 Calculation of the / -of Impact Fees................................................................................................
26
5.5.1 Sjstem Planning.........................................................................................................................26
5.5.2 Calculation of Equivalent Fbsidential Units...............................................................................27
5.5.3 Calculations of the Impact Fee for the Major Sjstem Components..........................................27
5.5.4 Administrative Charge...............................................................................................................
32
5.5.5 Debt Service Credits...................................................................................................................
32
5.6 Net Allowable Wastewater Impact Fees...........................................................................................
33
5.7 Key Financial Assumptions................................................................................................................
33
5.8 Implementation of the Impact Fees.................................................................................................
33
5.9 Summary ...........................................................................................................................................
34
R-,ferences..................................................................................................................................................
35
Appendix A: Growth Calculationsand ERU Projections..............................................................................36
Appendix B: Sewer Capital Improvement Ran...........................................................................................
38
Appendix G Montana Code Annotated 2011.............................................................................................43
Appendix D: Wastewater R-,coupment......................................................................................................
51
Appendix Debt Credit Calculations.........................................................................................................53
Appendix F. Existing Collection Sjstem Recoupment List..........................................................................
56
Appendix G: Extension to Existing Sjstem..................................................................................................
61
AppendixH: ERU Srhedule..........................................................................................................................
63
N
Executive Summary
I ntroduction
Impact fees are a one-time assessment against new development to pay for the cost of infrastructure
required to provide service. Impact fees provide the means of balancing the cost requirements for new
utility infrastructure between existing customers and new customers connecting to the / -Of
wastewater systems. The portion of existing and future wastewater treatment plant and collection
system projectsthat will provide service (capacity) to new customers is included in the impact fees.
The current wastewater impact fee is based on the 2006 Impact Fee Final R-,port and on an inflation
adjustment to the fees by City CAUncil Fasolution No. 5273 in April 2008.
Morrison Maierle, Inc (M M I) was retained by the City of Kalispell, Montana to update the current cost -
based impact feesfor the / Jof wastewater systemsto include compliance with Montana code,
incorporation of the facility plan adopted by the City, the change in annexation boundary, current
conditions, newly projected growth rates and an updated Capital Improvement Ran (ap). M M I
completed the {s. L's'nsiss i k(!0Pa'n :A,Cas OjiAa {j §@AriFand presented the results and
recommendation to City staff and the Impact Fee Advisory Committee.
This final report incorporates the Impact Fee Advisory Committee approved {§J3 L's'ns4ss
i k(!0P!'n :A' Ca§ U.i P! {j 1111Aff, developed by M M 1, and provides details of the development
of cost -based impact fees for the/ -of wastewater systems.
Financial Objective of Impact Fees
New development creates a demand and need for new or expanded facilities. As a result, without
payment of impact fees, the utility would have insufficient funds to provide the facilities, and therefore,
the community is unable to accommodate new development. While on the surface it may appear as
simply a means to extract revenue from new development, the reality is far more complicated. Impact
fees help utilities achieve a number of different financial objectives. These objectives tend to lean more
towards financial equity between customers, and the ability to accommodate new development as
opposed to simply producing revenue.
Impact Fee Criteria
In the determination and establishment of the impact fees, a number of different criteria are often
utilized. The criteria often used by utilities to establish impact fees areas follows:
Customer understanding
Sjstem planning criteria
Financing criteria
Elat e/ I ocal laws
The use of system planning criteria is one of the more important aspects in the determination of impact
fees. Sjstem planning criteria provides the dn�06�m■ssj V66ibetween the amount of infrastructure
necessary to provide service and the charge to the customer. The rational nexus test requires that there
be a connection (nexus) established between new development and the existing or expanded facilities
required to accommodate new development; and appropriate apportionment of the cost to the new
development in relation to benefits reasonably received.
4
An important consideration in establishing impact fees is any legal requirements at the state or local
level. The legal requirements often establish the methodology around which the impact fees must be
calculated or how the funds must be used. The Montana law enabling legislation for impact feeswas
enacted in 2005 via Sanate Bill 185. The legal basis for the enactment of impact fees is found in Title 7,
Chapter 6, and Part 1601 to 1604 of the Montana Code.
The Need for This Study
The current wastewater impact fee is based on the 2006 Impact Fee Final Peport and on an inflation
adjustment to the fees by City Council Pesolution No. 5273 in April 2008. The City Council has directed
staff to update the existing cost -based wastewater impact fee based on current conditions and
according to 2011 Montana Code Annotated.
This report updates the information provided in the August 2006 impact fee report with the following
information:
1) Changeto the Kalispell Growth Policy: On March 7, 2011, City Council adopted an annexation
policy that significantly revised the previous annexation policy boundary. This report accounts
for the projected wastewater improvements within the current annexation boundary. Figure 1:
2011 Annexation Boundary delineates the current annexation boundary and provides
comparison to the pre-2011 annexation boundary (original 2006 study area boundary). Figure
1: 2011 Annexation Boundary is attached to this report at the end of Saction 1.
2) Current Wastewater Demands: This report uses measured historical wastewater production
volumes between 2006 and 2011 as a baseline volume, and projects future volumes based on a
growth rate currently applied by the Kalispell Planning Department.
3) Projected Population Growth Rate: This report uses a population growth rate of 2%as projected
by the 2011 Kalispell Growth Policy Update. The reduced 2011 annexation boundary also
generates a lower projected population to be served by City utilities. For reference, historic
population growth rates are listed below. The ERU growth calculation is shown in Appendix A.
• 1990 to 2000 1.78%
• 2000 to 2010 3.43%
• 1990 to 2010 2.60%
• 1960 to 2010 1.36%
4) Updated Capital Improvement Plan: The Kalispell Public Works Department has updated the
Capital Improvement Plan to reflect the current projected capital needs for treatment and
collection. The 2012/2013 Capital Improvement Plan shows projects to be completed over the
next five years and future projects to be completed in approximately ten years. The updated
Capital Improvement Plan is included in Appendix B.
5) Key Financial Assumptions: In developing the impact fee for the / JOf wastewater system,
several key assumptions were used. These include the following:
• The / JOf asset recordswere used to determine the existing assets and the value of
those assets.
5
• The interest rate used for calculating interest on existing assets is the 10-year treasury
note rate as reported by the USDepartment of the Treasury at dosing on November
30t h of each year.
• Up to fifteen years of interest is included in the cost of the existing improvements. The
fifteen -year average interest rate is currently 4.250/a
6) Council Direction on Administrative Fees: 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. The City
Council guided staff to use the allowable administrative charge of 5%in the impact fee analysis
and is followed for this report. The administrative charge of 5%was utilized for the recently
adopted 2012 water impact fee.
Development and Summary of the Wastewater Impact Fee
The Qty currently provides wastewater collection and treatment services for a population of
approximately 21,000 Kalispell customers and treatment services to Evergreen Sawer District. The/ -Of
wastewater system consists of a collection system and pumps that deliver wastewater to the / JOf
treatment plant. The City has a wastewater treatment plant with a current design capacity of 5.4 M GD.
The / JOf capital improvement plan calls for construction of numerous upgrades to the collection
system and sewer extensions. This report uses a population growth rate of 2%as projected by the 2011
Kalispell Growth Policy Update.
The calculation of the wastewater impact fee was based on the / JOf fixed asset records, future capital
improvements as identified in the aty's2012 Capital Improvement Ran, developed from the planning
criteria for capital improvements from the master plan entitled, r-V Hof Kalispell Wastewater Facilities
Ran 09 Pa'oB,>dated March 2008 prepared by HDREngineering (the ci M!0)6a'nFacility t ljm�500n
March 7, 2011 the City Council adopted an annexation policy that significantly revised the previous
annexation boundary. This report usesthe annexation policy boundary for the planning boundary and
adjusted Capital Improvement Projectsto meet the infrastructure needs in the annexation boundary
service area.
Anumber of key steps in the calculation of the wastewater impact fees included the following
Use of S/stem Ranning Criteria: The number of equivalent residential units (ERUs) was determined
based on the planning criteria from the 2011 Kalispell Growth Policy which uses a projected growth rate
of 20/a This planning criterion incorporated with wastewater usage data from Kalispell wastewater
system establishesthe average day flow for an ERU.
Calculation of Equivalent Fbsidential Ur,,,,,. The planning horizon for the study was 2012 112035. The
number of future (additional) wastewater ERUs was determined within this step by using the projected
growth rate of 2%.
Calculation of the Impact Fee For the Major Wastewater S/stem Components: Each of the major
functional components of the wastewater system (e.g. collection, treatment, etc.) are reviewed to
consider the existing plant assets, along with planned future capital improvements. This provides the
basis for the value of capacity and when divided by the appropriate ERUs produce a cost per ERU for
each major system component. When the cost per ERU for each major component is added together, it
produces a a4bg Eogilmpact fee. Major components for this report include the Treatment Rant and
Collection Sjstem. The major components are further broken into sub -components as listed below.
It
• Treatment
o Rant Expansion
o Fbcoupment
• Collection
o Fbcoupment
o Capital Improvement Project (ap) within the existing system
o Future Extension
Future Extensions. In determining the wastewater impact fees, the City also considered significant
future extension improvements to the wastewater collection system. The City of Kalispell Public Works
Department has projected the need for capital improvements as extensions to the existing collection
system. These improvements are necessary to provide collection system infrastructure for growth in
recently annexed areas. These are substantial projects that comprise a large share of the wastewater
impact fee.
The cq Cy'rs ssC!■f-6nV6gJOOsts may be included in or excluded from the impact fee analysis. The
extension projects and costs were provided in the summary report for discussion by the Impact Fee
Advisory Committee. The IFACreviewed the o0-ULfuture ssf!■f-6nV6geosts and voted to recommended
three committed future extensions be included in the collection portion cost for the 2013 wastewater
impact fee.
1. Stillwater Fbad Interceptor
2. Three Mile Drive Interceptor
3. Spring Creek Interceptor
Debt �rvice Uedits. If impact fees are insufficient to pay growth -related debt service, then a debt
service credit is provided against the f'6gJ wastewater impact fees. The debt service credit is
designed to avoid the potential 4 of L'li:A s■mBof debt service (i.e. once through the payment of the
impact fee and again through rates). Wastewater Treatment Rant debt service credits are necessary in
this current impact fee analysis.
Determination or the r-b§0 mOkllm�'odWastewater Impact Fee: Based upon the steps noted above, a
r■sC.4mlOA 4ogmpact fee was developed. Shown in Table ES1 is a summary of the net allowable 2012
impact fee by major component for one (1) ERU, and is compared to the existing impact fee.
Wastewater impact fee for other business types are based on the type of business and number of units
(i.e. seats in a restaurant, water closets, sinks) as shown in Appendix H. The Oty, as a matter of policy,
may charge any amount up to the allowable wastewater 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.
7
Description
Current Total Total 2012
Wastewater Treatment Plant
$1,404
$2,155
Wastewater Collection System
$1,013
$3,571
Debt Credit
($37)
($243)
Administrative Cost at 5%
$119
$274
Total Wastewater Cost per ERU
$2,499
$5,757
It should be noted that in the 2006 impact fee study, the calculated wastewater impact fee was
$2,432.55. The 2006 fee was adjusted in 2008 to reflect cost of inflation for construction to $2,499.
Therefore, the recommended calculated fee of $5,757within thisreport is$3,258 more than the current
fee.
#Mtp-WAY? Recommendations
Based on the a a Q review and analysis of the / -of wastewater system, they recommend the
following:
The City should implement impact fees for new hookups to the wastewater system that are no
greater than the impact fees as set forth in this report. Using the current philosophy in place, the
wastewater impact fee would be $5,757/ EPU.
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 impact fees every two
yearsas required by Montana law.
Impact Fee Advisory Committee (IFAC)
The Montana Annotated Code requires the establishment of an Impact Fee Advisory CAmmittee (IFAC),
which serves in an advisory capacity to the governing body of the City of Kalispell. The
i kf!C)Pa'n :A'Cas U.iPa {j 1111Aff was reviewed and discussed with the IFACat various meetings
since November 2012. At the December 17, 2013 meeting the proposed methodology and impact fee as
outlined in the Oil Aa{j 1111Aff was motioned and approved bythe committee memberswithavote of
3 for and 2 opposed. This final report incorporates components of the {s.3!L's'ns4ss i P2f 0AIn
.IAta§ U.i Pl {j 1111Aff, developed by M M I, and approved by the Impact Fee Advisory CAmmittee.
Conclusion
This concludes the executive summary of the development of the wastewater impact fee study. A more
detailed discussion of the various steps associated with the development of this fee can be found in the
following Sactions of this report and the appendices.
0
Section 1: Introduction and Overview
1.1 Introduction
Morrison Maierle, Inc (M M I) was retained by the City of Kalispell; Montana (City) to update the current
cost -based impact fees for the / JOf wastewater systems that comply with Montana Code 7-6-1601 to
7-6-1604. The update was based on the Facility Ran adopted by the City, the change in annexation
boundary, current conditions, newly projected growth rates and an updated 2012/2013 Capital
Improvement Ran (ap). MMI completed the {§JZ L's'n9i99 i k(!0A(!'n :A'Ca§ U.iA(!
{j 111JAriFand presented the results and recommendationsto Oty Elaff and the Impact Fee Advisory
Committee. This final report incorporatesthe Impact Fee Advisory Committee approved {s. L's'n
9$99 i k(!0 (!'n :A'Cas Oil A! {j 111JArT, and provides details of the development of cost -based
impact fees for the / -of wastewater systems.
The current wastewater impact fee is based on the 2006 Impact Fee Final R-,port and on an inflation
adjustment to the fees by City Council R-,solution No. 5273 in April 2008. The City Council has directed
staff to update the existing cost -based wastewater impact fee based on current conditions and
according to the 2011 Montana Code Annotated 7-6-16.
This report updates the information provided in the August 2006 Impact Fee R-,port with the following
information:
1) Change to the Kalispell Growth Policy: On March 7, 2011, City Council adopted an annexation
policy that significantly revised the previous annexation policy boundary. This report accounts
for the projected wastewater improvements within the current annexation boundary. The
current annexation boundary is attached to this report and provides a comparison to the pre-
2011 annexation boundary (original study area boundary). Sae Figure 1: 2011 Annexation
Boundary, at the end of Saction 1.
2) Current Wastewater Demands: This report uses measured historical wastewater production
volumes between 2006 and 2011 as a baseline volume, and projects future volumes based on a
growth rate currently applied by the Kalispell Planning Department.
3) Projected Population Growth Rate: This report uses a population growth rate of 2%as projected
by the 2011 Kalispell Growth Policy Update. The reduced 2011 annexation boundary also
generates a lower projected population to be served by City utilities. For reference, historic
population growth rates are listed below. The ERU growth calculation is shown in Appendix A.
• 1990 to 2000 1.78%
• 2000 to 2010 3.43%
• 1990 to 2010 2.60%
• 1960 to 2010 1.36%
4) Updated Capital Improvement Ran: The Kalispell Public Works Department has updated the
Capital Improvement Ran to reflect the current projected capital needs for treatment and
collection. The 2012/2013 Capital Improvement Ran shows projects to be completed over the
IAJ
next five years and future projects to be completed in approximately ten years. The updated
Capital Improvement Ran is included in Appendix B.
5) Key Financial Assumptions: In developing the impact fee for the / -of wastewater system,
several key assumptions were used. These include the following:
• The / -of asset recordswere used to determine the existing assets and the value of
those assets.
• The interest rate used for calculating interest on existing assets is the 10-year treasury
note rate as reported by the USDepartment of the Treasury at dosing on November
30t h of each year.
• Up to fifteen years of interest is included in the cost of the existing improvements. The
fifteen -year average interest rate is currently 4.250/a
6) Council Direction on Administrative Fees: 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. The City
Council guided staff to use the allowable administrative charge of 5%in the impact fee analysis
and is followed for this report. The administrative charge of 5%was utilized for the recently
adopted 2012 water impact fee.
Impact feesare a one-time assessment on new development to pay for the cost of infrastructure
required to provide service. Impact fees provide the means of balancing the cost requirements for new
utility infrastructure between existing customers and new customers connecting to the / JOf
wastewater systems. The portion of existing facilities and future
capital improvements that will provide service (capacity) to new "The objective of this
customers is included in the impact fees. In contrast to this, the Qty report is to properly place
has future capital improvement projects that are related to renewal in context the purpose of
and replacement of existing facilities in service. These infrastructure impact fees, and to
costsare typically included within the rates charged to the/ -Of determine cost -based
customers, and are not included within the impact fee. impact fees for the
wastewater systems that
1.2 Overview of the Report comply with
The development of cost -based wastewater impact fees requires Montana law."
detailed analyses of each utility. To better understand the approach
and methodology used, along with the development of the / -of impact fees, this report has been
divided into a number of sections (chapters). This report is organized in the following manner:
• Saction 9Am(Q rj 1'66■ and Overview
• Saction 2 ❑F;bview of a4m§'n64Af I's.1r-6Vractices related to impact fees
• Saction 3 []Overview of the criteria and methodologies used to establish the impact fees
• Saction 4 ❑Summary of the legal requirements for enactment of impact fees under Montana
law
• Saction 5 ❑R-,view of the development of the cost -based wastewater impact fees
Q17
1.3 Disclaimer
Morrison Maierle, Inc, in its determination of impact fees presented in the i MIOPa'n
O.i Pa {jAnT, has relied upon data and information provided by the City. At the same
time, Morrison Maierle, Inc used }s■s'r Pl'I's. r—engineering, accounting, and ratemaking
principles in the development of these cost -based impact fees. This should not be construed as legal
opinion with respect to Montana law.
1.4 Summary
This section of the report has provided an overview of the Wastewater Impact Fee R-,port developed by
the City in coordination with Morrison Maierle, Inc. This report provides the basis for the establishment
of cost -based impact fees by the City.
The next section of the report will discuss the }s■s'rPl'I's.r'6B6tility industry practices as they
relate to impact fees.
11
aura 10- 2D I'I AnnAvation i�inune
INN
3
Legend-
Iw ,
..OMN
Annexation Boundary
Growth Boundary
City Limits a 1 --'0 3,=:° 7.200
10.800 14.400
Feel
12
Section 2: Overview of Impact Fees and Generally Accepted
Industry Practices
2.1 Introduction
An important starting point in discussing the / -of continued implementation of wastewater impact
fees is an understanding of the purpose and concept of impact fees and the financial objective of those
fees. This section of the report will discuss the concept of impact fees and the }s■s'r Pl'I's. r1_B�l
practices of the industry.
2.2 Defining Impact Fees
One must first define an .I*C�sKEbefore beginning an assessment and review of the fees. Impact
fees are also often called system development charges (SD03), capacity charges, buy -in fees, facility
expansion charges, plant investment fees, etc. Fagardlessof the name applied to the fee, the concept is
still the same. 9mply stated, impact fees are capital recovery fees that are generally established as one-
time charges assessed on developers or new wastewater customers as a way to recover apart or all of
the cost of system capacity constructed for their use. Their application has generally occurred in areas
that are experiencing extensive new residential and/or commercial development.' The main objective
of an impact fee isto assessthe benefiting party, their proportionate share of the cost of infrastructure
required to provide them service. Elated another way, impact fees imply that new development creates
new or additional costson the system, and the impact fee assessesthat cost in an equitable manner to
those customers creating the additional cost.
2.3 Historical Perspective
Historically, the finand ng of infrastructure was typically paid for via long-term debt and a:ATasyou
rates. However, over the last twenty years, the use of impact fees as a method of financing growth and
infrastructure has risen sharply. To the best of our knowledge, no dear surveys or data exists to show
this change, however, there area number of examples within the literature that point out this
phenomena. Asan example, a survey of 67 Rorida communities was undertaken in 1986 and 1989. The
number of communities in 1986 using impact feeswas 15. By 1989, the number of communities using
impact fees had more than doubled to 32.2 Asthisfunding mechanism gained popularity, legislatures
acrossthe U.S were developing legislation to provide utilities with the authority to impose impact fees.
Typical legislation generally provides the approach to be used to develop the fees and requires that the
fees be used only for growth -related needs and not for current O&M requirements. At thistime, the
Elate of Montana hasvery specific legislation related to impact fees. This specific legislation regarding
the fees provides the City with the authority to establish and collect impact fees. Thisauthority is
provided in Montana CAde Saction 7-6-1601 to 7-6-1604.
1 George A. Raftelis, 2nd Edition, Comprehensive Guide to Water and Wastewater Finance and Pricing (Boca
Raton: Lewis Publishers, 1993), p. 73.
2 James C. Nicholas, Arthur C. Nelson and Julian C. Juergensmeyer, A Practitioner's Guide to Development
Impact Fees (Chicago: Planners Press, 1991) p. 3.
13
While many utility managers viewed impact fees as an important and alternative source of funding for
new capital construction, these fees were also being rationalized from an umber of different
perspectives. Among these were the following:3
1. To shift the fiscal burdens from existing development to new development.
2. To synchronize the construction of new or expanded facility capacity with the arrival of new
development.
3. To subject new development decisionsto pricing discipline.
Each of these different perspectives is discussed in more detail below
Historically, existing development was often subsidized by federal or state resources. Asan example, in
the early 1970s, many wastewater treatment plants in the U.S were 90%grant funded by the
Environmental Protection Agency (EPA). Today, grants are nearly extinct, often replaced instead by low
interest state revolving fund (,9:;F) loans. Therefore, as existing customers were being impacted by the
cost of growth, local communities searched for methods to help minimize rates and the impacts of the
cost of growth.
Unchecked growth and sprawling expansion is very costly on a per unit basis. In response to this
dilemma, many legislative bodies created urban growth boundaries. At the same time, utilities moved
towards impact fee and extension policiesthat assist in managing system growth in an orderly and
coordinated manner. Asa result, improved planning and cost -based fees have helped utilities manage
the costs of growth, while stabilizing rates to existing customers.
Establishing the price of a commodity equal to its cost is a basic economic and market principle. In
theory, consumers of a service will make cuJa4donsumption decisions when the price of the
commodity is set equal to its price. By establishing cost -based impact fees, developers should be in a
position to make better and more rational decisions concerning new development. At the sametime,
proper pricing of impact fees also encouragesrirtf facilities to serve new development. In
other words, given the proper price signal, the developer will properly size their service facilities to meet
their needs, e.g., installing a3/¢inch meter versus as`647neter.
In summary, the use of impact fees hasevolved over time, as historical funding sources such asgrants
have been reduced or eliminated. In response, many communities have moved towards adoption of
cost -based impact fees, particularly in areasof high growth.
2.4 Impact Fees and -E •�E <_° . ££• -* §-HPract ices
Impact fees are one input into the rate setting process. Therefore, it is important to understand how,
within the context ofindustry practices, impact fees maybe used. In
conducting a comprehensive wastewater rate study, three interrelated analyses are typically conducted.
They area revenue requirement analysis, cost of service analysis and rate design analysis. Figure 2-1
provides an overview of each of these analyses.
3 Adapted from: Arthur C. Nelson, System Development Charges for Water, Wastewater and Stormwater
Facilities (Boca Raton: Lewis Publishers, 1995) p. 6-7.
14
Figure 2-1
Overview of the Three -Interrelated Analyses to Review Rates
Revenue Requirement Analysis
1
Cost of Service Analysis
1
Rate Design Analysis
Compares the sources of funds (revenues) to
the expenses of the utility to determine the
overall adjustment to rates
Allocates the total revenue requirements to
the various customer classes of service in a
"fair and equitable" manner
Considers both the level and the structure of
the rate design to collect the appropriate
and targeted level of revenue
Impact fees are taken into account within the revenue requirement analysis. The revenue requirement
analysisdeterminesthe overall funding needs of the utility, while considering prudent financial planning
criteria, e.g., adequate reserves, meeting debt service coverage requirements, etc. For most municipal
utilities, the methodology used to establish their revenue requirements is referred to asthe 4k LLL,44`66�'
approach. Figure 2-2, provides an overview of the key components of the 4k LLLk4-6B6pproach to
developing revenue requirements.
15
Figure 2-2
Overview of the "Cash -Basis" Approach
* Oper0on and Maintanance Fxpensss
+ Taxe61 TransfeK Peyments
+ Debt ServIce Net of Applied Imp arr Fees)
+ Ceuital I'mprovernsffla Furrde+d Rom Mas
Total Revenue Requ I rernents
I#UM -MisroPie nj�ous R-avenues
= Total Aequired From Rates
Total Capital I Fn prevernant Projects
Less; Outside Funding Sources
- Capital Regerveo
I mpaet Fees
Grants
- Long -Term Debt
- Other Capital Funding Sources
= Total Capital Improvements Funded From Rates
Ascan be seen in Figure 2-2, there are two elementsto establishing the cck LLk4-r6Brevenue
requirements. The top or blue box shows the four basic cost components that are included within the
c9'APr-evenue requirements. In contrast, the bottom or yellow box illustrates the various
methods used to fund capital infrastructure projects.
It should be noted in Figure 2-2 that impact fees may be used (applied) in two different ways, each
having a different impact upon the WE revenue requirements and, ultimately, thej WE rates. The
first possible use of impact fees is shown in the bottom or yellow box. In that particular case, the impact
fees are applied directly to growth or expansion related capital projects. The effect of using the funds in
this manner is it helps minimize long-term borrowing. For each dollar of impact fees applied in this
manner, one lessdollar of long-term borrowing is required. Typically, total capital improvements
funded from rates isestablished and fixed in the financial planning process. Therefore, applying impact
feesto capital projects typically will not have a significant impact upon the amount of capital
improvements funded from rates.
The other potential use of impact fees isto apply the feestoward growth -related debt service. As
shown in Figure 2-2, debt service is shown as net of any impact fees. In contrast to applying impact fees
directly toward the capital project, in this particular case, for every dollar applied in this manner, there is
16
a corresponding dollar decrease in revenue requirements and the resulting rates. This is a very effective
method to help minimize rates, but even better at matching the cost of growth to the gradual way in
which customer growth occurs overtime. In other words, a utility may build or expand a facility with
sufficient capacity to handle growth over the next ten to twenty years. That growth r osf�Coccur in the
first year, but rather trickles in over a number of years. Therefore, applying the impact fees against the
debt service associated with the project creates abetter matching of the cost incurrence (debt
payments) to the actual customer growth.
2.5 Financial Objectives of Impact Fees
An impact fee is a regulation and not a user fee or revenue raising
device. To understand this perspective, one must view new
development as creating the need for new or expanded facilities.
Asa result, without payment of impact fees, the utility would have
insufficient funds to provide the facilities, and therefore the
community is unable to accommodate new development. With this
"An impact fee is a
regulation and not a user
fee or revenue raising
device. To understand this
perspective, one must
view new development as
said, impact fees do have certain financial objectives associated creating the need for new
with them. While on the surface it may appear as simply a means or expanded facilities."
to extract revenue from new development, the reality is far more
complex. Impact fees help utilities achieve a number of different financial objectives. These objectives
tend to lean more towards financial equity between customers, as opposed to simply producing
revenue.
One key financial/ rate objective that is achieved from impact fees is equity. Equity is achieved in two
different ways. First, an impact fee establishes equity between existing (old) customers and new
customers. For example, assume that a wastewater treatment plant is expanded by 5 million gallons per
day (M GD) to accommodate growth and the facility is financed over a 20-year period. Without an
impact fee, new customers connect to the system and pay for the debt service on the facility via their
rates. The customer that connects to the system in year one will contribute to the cost of that facility
for 20 years. In contrast, the person who connects in year 10 will only pay for debt service on the facility
for ten years, even though the co�s���f the capacity was the same for the person connecting in year 1
or year 10. Impact fees create equity within the system by addressing the issue of timing and the
c6�6s-'oEbf the assetsand the c6�6s-oEbf the capacity.
The second way in which impact fees help to create equity is after
an impact fee is also a
a facility is paid for. Continuing with the example above, after the
form of a financial
debt service is fully paid off in year 20, and assuming that some
reimbursement to existing
ratepayers who paid for
capacity is still available, a new customer connecting to the system
those facilities in advance
would aJi NdrTmY�eceive their capacity at zero cost, because the
of the new customer
debt service is paid in full. Al the existing customers connected to
connecting to the system."
the system, over the past twenty years, paid for that I'j f M s'6f
capacity. Therefore, an impact fee is also a form of a financial
reimbursement to existing ratepayerswho paid for those facilities in advance of the new customer
connecting to the system.
17
Most commonly, impact fees
Based upon the above example, impact fees also have an equity
are adopted in high growth
perspective associated with the rate setting process. That is,
areas where infrastructure
impact fees are a form of rCR (III buy--i '66�A properly
expansion has strained
established impact fee implies that a new customer connecting
existing financial resources.
to the system has bought into the system at its current cost.
Philosophically, many utilities
Therefore, from a rate setting perspective the utility does not
desire to have a policy of
need to have rates for �6�nd■sOOeaustomers. Again,
"growth paying for growth."
existing customers have been equitably reimbursed for their
past investments.
Even with the above discussion, not all communities have impact fees. Most commonly, impact fees are
adopted in high growth areas where infrastructure expansion has strained existing financial resources.
Philosophically, many utilities desire to have a policy of a4raOGLpaying for+130C,-ogilmpact fees
comport with that philosophy, and it is achieved by applying the impact feeseither directly against the
capital cost of the expansion facilities or against the debt service associated with it.
2.6 Relationship of Impact Fees and New Construction Activities
There area number of myths surrounding impact fees. Ina very broad sense, some may argue that
impact fees are bad for economic development. These arguments center around two issues. These are
as fol lows:
• Development will occur on those parcelswith lower or non-existent impact fees.
• Impact feesraisethe cost of doing businessand hinder development.
Of the research conducted on these topics, just the opposite has been found. Provided below is a brief
explanation of each.
Developers look at many factors before a parcel is developed. One myth concernsthe selection of
parcels for development and whether impact fees are applied to the land.
"The argument goes that if a developer is choosing between two parcels of land on which to
build —where the first parcel is inside a city where SDCs (impact fees) are charged and the
second is just outside where lower or no SDCs (impact fees) are charged —the developer will
choose the second parcel.
The trouble is this means that the owner of the first parcel does not make a sale. The
landowner must lower the land price to offset the fee in order to make a sale. However, if the
landowner does not lower the price, this indicates that the value of future development may be
higher on that parcel. Thus, be wary of developers who claim they will choose the second
parcel. Chances are they would not have chosen the first parcel anyway. In the meantime, the
land market will be holding the first parcel available for higher value development. In effect
what might look like a loss in the shoe` term may be a much higher level of development in the
long-term. 11
4
4 Nelson. "System Development Charges for Water, Wastewater and Stormwater Facilities" P. 55.
18
The other argument and myth that one commonly hears about impact fees is that they are bad for
economic development. The argument against this position is as follows:
"The argument goes that because SDCs (impact fees) raise the price of doing business, they
frustrate economic development. However, just the opposite is really true. First, remember
that SDCs (impact fees) will be offset by reduced land prices and by enabling the community to
more easily expand the supply of buildable land relative to demand.
Now, consider what economic development really looks for: skilled labor, access to markets,
and land with adequate infrastructure. Competitiveness for economic development will be
stimulated by the new or expanded infrastructure paid in part by SDCs (impact fees). In the
competition for certain kinds of development, it will be able to show developers the dollar
value of SDCs (impact fees) waived as a solid demonstration of the local government's
commitment to such development. "5
As can be seen, at least in the opinion of Nelson, SDCs (impact fees) do not hinder growth, but in fact
may help to spur growth. It must be remembered that an important concept associated with impact
fees isthat the feesare required to develop infrastructure in advance of
"As can be seen, at
the actual development.
least in the opinion of
From the y s6sd.�§'6f perspective, absent impact fees (i.e. a moratorium
Nelson, SDCs (impact
fees) do not hinder
on new connections) no new development can occur. Therefore,
growth, but in fact may
developers are generally supportive of cost -based impact fees,
help to spur growth."
particularly when it provides available capacity and opportunities for
development.
2.7 Summary
This section of the report has provided an overview of the financial objectives associated with impact
fees and some of the issues surrounding them. This section should have provided abasic understanding
of the fees such that when the City is ready to have a policy discussion concerning the continued
implementation of impact feesand the imposition of new impact fees, they can be placed in proper
perspective. The next section of the report will provide an overview of methodologies for the
application of impact fees.
Nelson, "System Development Charges for Water, Wastewater and Stormwater Facilities" P. 56.
19
3.0 Overview of Impact Fee Methodologies
3.1 Introduction
An important starting point in establishing impact fees is to have a basic understanding of the purpose
of these charges, along with criteria and general methodology that is used to establish cost -based
impact fees. Presented in the section of the report is an overview of impact fee criteria and the
a4m§rrmjPf I's.1r'6Bnethodologiesthat are used to develop cost -based impact fees.
3.2 Impact Fee Criteria
In the determination and establishment of the impact fees, a number of different criteria are often
utilized. The criteria often used by utilities to establish impact fees areas follows:
• O.istomer understanding
• Sjstem planning criteria
• Financing criteria, and
• Elate/local laws
The component of customer understanding implies that the charge is easy to understand. Thiscriterion
has implications on the way that the fee is implemented, administered and assessed to the customer.
Generally, for a wastewater system, the charge can be based on the type of dwelling or business type
being assessed. For example, a school could be assessed based on a per student basis corresponding to
the sanitary sewer flow per student. The other implication of this criterion is that the methodology is
dear and concise in its determination of the amount of infrastructure necessary to provide service.
The use of system planning criteria is one of the more important
aspects in the determination of impact fees. Sjstem planning
criteria providesthe dn�iAi■4impssj VKEbetween the amount of
infrastructure necessary to provide service and the charge to the
customer. The rational nexustest requiresthat there be a
connection (nexus) established between new development and
the existing or expanded facilities required to accommodate new
development; and appropriate apportionment of the cost to the
new development in relation to benefits reasonably received. An
example of using system -planning criteria isthe determination
"The use of system planning
criteria is one of the more
important aspects in the
determination of the impact
fees. System planning criteria
provides the "rational nexus"
between the amount of
infrastructure necessary to
provide service and the charge
to the customer."
that a single-family residential customer generates265 gallons of wastewater discharge per day. The
impact fee methodology then charges the customer for daily treatment and collection capacity of 265
gallons per day.
One of the driving forces behind establishing cost -based impact fees is that a- mOGLpays for +rnOC�-66;
Therefore, impact fees are typically established as means of having new customers pay an equitable
share of the cost of their required capacity (infrastructure). The financing criteria for establishing impact
fees relates to the method used to finance growth -related infrastructure of the system and assures that
customers are not paying twice for growth -related infrastructure []once through impact fees and again
we]
through rates. The double payment can come in through the imposition of impact fees and then the
requirement to pay debt service within a I'j f M §6f rates. The financing criteria also reviewsthe basis
under which main line and collection line extensions were provided and addresses the issue such that
customers are not charged for infrastructure that was provided (contributed) by developers.
Many states and local communities have enacted laws which govern the calculation and imposition of
impact fees. These laws must be followed in the determination of the impact fees. Most statutes
require a drskamA 4'rsjj�6■f U.:oEbetween the fee charged and the cost associated with providing
service (capacity) to the customer. The charges do not need to be mathematically exact, but must bear
a reasonable relationship to the cost burden imposed. As discussed above, the utilization of the
planning criteria and the actual costsof construction and the planned costsof construction provide the
nexus for the reasonable relationship requirement.
3.3 Growth, Risk and New Connections
One of the common phrases associated with impact fees is a4aOGLpaying for 4raOC,-ogjWhile this is a
simple and convenient phrase to convey the concept and purpose of impact fees, the reality of the
transaction is far more complicated. Asthe recent downturn in the economy has demonstrated,
customer growth is not assured or to be taken for granted. At the same time, it must be kept in mind
that it is the existing customersthat bear the risk of growth -related facilities that are built. If growth -
related facilities are built in anticipation of future growth, and little or no connections occur, it will be
the existing ratepayersthat will bear the burden of any financial responsibility (e.g. long-term debt)
associated with those growth -related facilities. Absent some form of an impact fee, existing ratepayers
would likely be hesitant to fully support undertaking such risk.
3.4 Overview of the Impact Fee Methodology
There are }s■s'r Al'I's. r'64nethodologiesthat are used to establish impact fees. Within the
}s■s'rAl'I's.rEVmpact fee methodologies, there are a number of different steps undertaken.
These steps areas follows:
• Determination of system planning criteria.
• Determination of equivalent residential units(ERUs).
• Calculation of system component costs.
• Determination of any credits.
The first step in establishing impact fees is the determination of the system planning criteria. This
implies calculating the amount of wastewater required to serve a single-family residential customer.
Generally for a wastewater system, average daily demand per EHU is most often used, since this total
flow represents the flow, imposed by the customer.
Once the system planning criteria is determined, the number of EHUscan be determined. For the
wastewater system, the number of EHUs is determined by dividing the average daily metered flow by
the average daily flow per EHU. This is a very important calculation since it provides the linkage
between the amounts of infrastructure necessary to provide service to a set number of customers. This
21
implies that if the system is designed to provide service to demands up tothe year 2035, then the
infrastructure costs are divided by the ERUsin 2035to determine the cost per ERU.
Once the number of ERUs has been determined, a component by component analysis is undertaken to
determine the component impact fee in dollars per ERU. Individual facility components are analyzed
separately for the wastewater systems given that the planning criteria for the design of the various
system components differ. The calculation of the component impact fee includes both historical assets
and planned future assets. Historical assets can be valued in a number of different ways. Theseinclude
original cost plus interest, replacement cost and depredated replacement costs.
1. The original cost plus interest method includes original cost plus fifteen (15) yearsworth of
interest. This calculation is done to reflect the fact that existing customers have provided for
excess capacity in the system and hence need to be reimbursed for not only their initial
investment, but also the 4AftT4+I'ofmtn that investment. The reimbursement to existing
customers is accomplished by the fact that without an impact fee, rateswould otherwise be
higher than they would be without impact fees.
2. The replacement cost method values existing assets based on the cost to replace the assets in
G;r Ajf dollars. This is done by escalating the original cost by the Engineering News R-,cord
Construction Cost (B:N) index. The theory behind the use of replacement cost isthat customers
are indifferent since they would have to pay replacement cost if the infrastructure was built
today to serve t heir needs.
3. The use of depredated replacement cost reflectsthe fact that the assets have been used and
hence their value to the new customer is less than the replacement cost. Caution needs to be
exercised in the use of depredated replacement cost, since the book or accounting lives used by
many utilities are not reflective of the actual life of the asset and may result in the assets being
undervalued. An example is using a useful life for a storage reservoir of 40 years, when in
reality, with maintenance, the actual life may be between 60 to 80 years.
9nce the adoption of the 2006 impact fees, the City has utilized the original cost with interest method,
which will reflect the actual cost of the / JQf system. The original cost with interest method is used to
calculate the impact fee in this report. The / JQf system is developed to serve future development
through existing capacity and planned future capacity additions. This has been accomplished by the City
bu i I d i ng excess capaci ty and usi ng borrowi ng t o fi nance t h i s capacit y. Therefore, t he use of t he ori gi nal
cost with interest method will reflect the actual cost sthat have been incurred or will be incurred bythe
City in providing capacity to new development. This is also the most commonly used method to value
capacity in wastewater systems. This method also appears to comply with the requirements under
Montana law wherein the actual cost of infrastructure is required.
Once the total cost of the capital infrastructure is determined, it is then divided by the appropriate
number of equivalent residential unitsthe infrastructure will serve to develop the cost per ERU for the
specific facility component.
22
After each plant component is analyzed and a cost per ERU is determined, the cost per ERU for each of
the facility components is added together to determine the f impact 2§sT-6BjThe f impact 2§§66�'
is calculated before any credits for debt service.
The last step in the calculation of the impact fee is the determination of any debt credits. This is
generally a calculation to assure that customers are not paying twice -once through impact fees and
again through debt service included within the wastewater rates. Acrediting mechanism is also utilized
if general obligation or tax revenue has been used to finance the infrastructure.
The final cost -based impact fee is determined by taking the f impact 2§sKB6nd subtractingany
credits. This results in aca§Ompact 2§s6B9tated in dollar per ERU. The general basis of this calculation
for a wastewater system is the assumption that an ERU is equivalent to a single family residential
customer.
3.5 Summary
This section has provided adiscussion of the criteria typically used in the determination of impact fees.
In addition, an overview of the a4m§'rAmiA'I's:J�.'r-660nethodology used in the calculation of the
wastewater impact fees has been provided. Given this background, the next section of the report
discusses any specific legal criteria that must be used by the City in the establishment of its impact fees.
23
4.0 Legal Consideration in Establishing Impact Fees for the City
4.1 Introduction
An important consideration in establishing impact fees is any legal requirements at the state or local
level. The legal requirements often establish the methodology around which the impact fees must be
calculated or how the funds must be used. Given that, it is important for the Cityto understand these
legal requirements. This section of the report provides an overview of the legal requirements for
establishing impact fees under Montana law.
The discussion within this section of the report is intended to be a summary of our understanding of the
relevant Montana law asit relatesto establishing impact fee. It in noway constitutesalegal
interpretation of Montana law.
4.2 Requirements Under Montana Law
In establishing impact fees, an important requirement is they be developed and implemented in
conformance with local laws. In particular, many states have established "The laws for the
specific laws regarding the establishment, calculation, and enactment of impact
implementation of capacity fees. The main objective of most state laws is fees in Montana are
to assure that these chargesare established in such a manner that they found in 7-6-1601 to
are fair, equitable, and cost -based. In other cases, state legislation may 7-6-1604 of the
have been needed to providethe legislative powersto the utility to Montana Code.
establish the charges.
The Montana law enabling legislation for impact feeswas enacted in 2005 via Sanate Bill 185. Thiswas
comprehensive legislation allowing public entities in the Elate of Montana to enact impact fees for
various services. The legal basis for the enactment of impact fees is found in Title 7, Chapter 6, and Part
1601 to 1604 of the Montana Code. Acopy of the code is summarized in Appendix G
4.3 Summary
This section of the report has reviewed the legal basis for establishing impact fees in Montana. MMI
concludes that the City has the authority to establish cost -based impact fees and the proposed
methodology to be used within this study, in the opinion of M M I and the City, meetsthe requirements
of Montana law.
24
5.0 Determination of the #Ckr">_ Wastewater Impact Fees
5.1 Introduction
This section of the report presents the development of the / JOf 2013 wastewater impact fee. The
calculations of the wastewater impact fee presented in this section are based on:
1. The / JOf fixed asset records
2. Future capital improvements as identified in the aty's2012/2013 Capital Improvement Ran
(Appendix B)
3. Planning criteria projected by the 2011 Kalispell Growth Fblicy
5.2 Overview of the #Okr">_ Wastewater System
The aty currently provides wastewater collection and treatment services for a population of
approximately 21,000 Kalispell customers and treatment servicesto Evergreen 9?wer District. The / JOf
wastewater system consists of a collection system and pumps that deliver wastewater to the / JOf
treatment plant. The City has a wastewater treatment plant with acurrent design capacity of 5.4 MGD.
The / JOf Capital Improvement Ran calls for construction of numerous upgrades to the collection
system and sewer extensions. This report uses a population growth rate of 2%as projected by the 2011
Kalispell Growth Fblicy Update.
5.3 Overview of the #@k">_ Wastewater Facility Plan
The original / JUa2Y4jZmi Pa'o {sO§o Prr {Cd 54� {-R(111 clad Jim, wascompleted in
July 2002. 9nce completion of the 2002 report, the Oty hascontinued to experience population growth
and the expansion of infrastructure; therefore, in 2008 the City updated their facility plan to analyze
potential growth and effectively plan for growth while protecting water, wastewater, stormwater and
environmental resources. In 2008, the city adopted an updated master plan titled r-V Hof Kalispell
Wastewater Facilities Plan 09)6 c��bated March 2008.
The area studied in the 2008 Wastewater Facility Ran Update is represented in 9?ction 1, Figure 1: 2011
Annexation Boundary. The basis of planning was to determine the requirements for the next 50 years in
areasthat the City will have to provide wastewater service as growth continues.
On March 7, 2011 the City CAUncil adopted an annexation policy that significantly revised the previous
annexation boundary. This report usesthe 2011 annexation policy boundary for the planning boundary
and adjusted Capital Improvement Projectsto meet the infrastructure needsasdefined in the
annexation boundary service area. Fbpulation growth, since the adoption of the Facility Ran Update,
has not been as healthy as was projected in the report. Decreased and slowing population growth also
delaysthe need to implement identified capital projects.
5.4 Present Impact Fees
The City currently assesses an impact fee for connection to the wastewater system. The current
wastewater impact fees are shown in Table 5-1.
25
Current Wastewater
Description
ImpactTable 5-1
-
Treatment Collection If.
Wastewater Treatment Plant
$1,404
$0
$1,404
Wastewater Collection System
$0
$1,013
$1,013
Debt Credit
($37)
$0
($37)
Administrative Cost at 5%
$68
$51
$119
Total Wastewater Cost per ERU
$1,435
$1,064
$2,499
5.5 Calculation of the #Ckr">_ Impact Fees
The process of calculating impact fees is based upon a four -step process. In summary form, these steps
are as fol lows:
• Determination of system planning criteria
• Determination of equivalent residential units (ERU)
• Calculation of the impact fee for system component costs
• Determination of any impact fee debt credits
Each of these areas is discussed in more detail below.
5.5.1 System Plana
The number of equivalent residential units(ERUs) was determined based on the planning criteria from
the 2008 Wastewater Facility Ran Update, and the 2011 Kalispell Growth Fblicy which uses projected
growth rate of 20/ The facility plan calculates wastewater average flow usage of 106 gallons per capita
per day. An assumption of 2.5 persons per household or ERU was utilized to determine average day
flows of 265 gallons per day per ERU. A summary of the ERU conversion factors is presented below in
Table 5-2.
26
The system planning criteria shown in Table 5-2 will be used for different facility components to
determine the cost per EHU for that specific facility component.
5.2 Calculation of Eauivalent Residential Units
The planning horizon of this study was 2012 112035. Other impact fee components were based on the
number of EHUs in 2035 or additional EHUs from 2012 to 2035.
Asa part of this study, a projection of the number of new/additional EHUs per year must be determined,
along with the total number of ERUsat 2035 for the treatment and collection system. The/ Jof total
number of residential EHUs for each year was determined by dividing the average day usage factor per
EHU into the / JOf total metered average flow at the treatment plant. Collection EHUssubtract out
Evergreen Sawer District flows. The number of B:�Usadded during each year of the study period was
based on a 2%growth rate. The detailed EHU calculation in correspondence with the 2%growth rate for
treatment and collection is located in Appendix A. Asummary of 2012 ERUs, 2035 ERUs, and total
additional EHUs between 2012 and 2035 are presented in Table 5-3.
Slent ERUs
Collection ERUs
Equivalent Residential Units - 2012
11,405
9,584
Equivalent Residential - 2035
17,984
15,113
Total Additional 2012 to 2035
6,579
5,529
Given the development of the total wastewater EHUsfor each year of the planning period, the focus can
shift to the calculation of the impact fee for each facility component. This aspect of the analysis is
discussed in detail below.
5.3 Calculations of the Imoact Fee for the Maior 9/stem Comoonents
The next step of the analysis isto review each major functional component of facility in service and
determine the cost per EHU for that component. In calculating the wastewater impact fee for the City,
both existing facility assets, along with planned future Capital Improvement Projects (CIP) were included
within the calculation. The major componentsof the / -of wastewater system that were reviewed for
purposes of calculating impact fee are as fol lows:
• Wastewater Treatment Rant
• Wastewater Collection Sjstem
A brief discussion of the impact fee calculated for each of the functional plant components is discussed
in the following sections.
27
5. 5.3.1 Msra ATm TREATM ENT RAN)
The City of Kalispell completed an expansion to the Kalispell Wastewater Treatment Rant (V\AN P) in
2009. This expansion increased the capacity of the WWTPfrom 3.0 million gallons per day (M GD) to 5.4
M GD. This expansion was driven by two factors: 1) the average daily flows for the years Ieadi ng up to
the WVVTP expansi on were approaching the capadty of the plant, and 2) the City had annexed several
large tracts of land that would potentially be served by the WVVTP. For the impact fee analysis and
calculation, the wastewater treatment is divided into two components; expansion and recoupment. A
description of each component is provided below, with the analysis and calculation for the cost per ERU.
Treatment Expansion
The expansion component of the WVV Pimpact fee isthe portion of costs related to system
improvements that are constructed to accommodate new development. For example, the expansion to
the WVVTPwas completed to serve recently -annexed land and additional development, which could not
be served by the 3.0 MGD WVVTP. The cost of creating the additional capacity is included in the
expansion component of the impact fee.
The former WVVTP had a treatment capacity of 3.0 M GD. This capacity was essentially consumed by
existing residents and growth that occurred up until 2006; any subsequent growth would require
additional capacity in the form of a plant expansion. The City Council provided direction in 2006 to
proceed with the expansion, which became operational in 2009. While the plant expansion
accommodated future growth, the construction update of the plant was not allocated entirely to new
growth. A portion of the plant expansion addressed replacement needs, which costswere not
attributable to growth. At the time of the WVVTPconstruction, the City determined 22%of the
construction improvements were allocated to replacement or upgradesof existing systems. The
remaining 78%of the expansion improvements were allocated to growth, as shown below.
ITEM 2012 = % I M PACT FEE I M PACT FEE
WWTPExpansion $23,945,848 78% $18,677,761
The 2012 WVVTP Expansi on cost is derived by bri ngi ng t he on gi nal 2009 cost of $22,107,133 to current
2012 dollars. The 10-year Treasury note rate (dosing rate on Nov. 30 of each year, as reported by the
USDepartment of the Treasury) is used for bringing all historic coststo current costs. The 2009, 2010
and 2011 rates used for this projection are 3.210/6, 2.81%and 2.08% respectively. These interest rates
bring the 2009 WWTP Expansion cost to a current 2012 cost of $23,945,848. The current expanded
WWTPhas the capacity to serve an additional 8,850 ERUs, regardless of development patterns.
Total Impact Fee R-,lated to Expansion Costs: $18,677,761
Total New Capacity of Rant Expansion in ERUs: 8,850
Impact Fee (WWTP Expansion) per ERU: $ 2,110
Treatment Recoupment
The recoupment component of theWVVTPimpact fee isthe portion of costsrelated to excesscapacity in
existing facilities, which have been built in anticipation of the needsof new development. An example
of thistype of facility would be the sludge handling equipment that was purchased prior to the
28
expansion. This equipment was oversized with the anticipation of serving additional development not
extant at the time of purchase. This recoupment component of the wastewater impact fee has been
included from the inception of Yq ;:I§� impact fee policy and is specifically allowed by 2011 Montana
Code Annotated 7-6-1603(3).
The additional 2.4 M GD (5.4 M GD minus 3.0 M GD) capacity added to the WWTPallowed the City to
begin serving growth that would create flows above the then -current 3.0 MGD capacity. The
proportional share of the current plant that is dedicated to future growth is2.4 MGD or 44%of the total
5.4 M GD capacity. The remaining 3.0 M GD or 56%of capacity is used by existing residents. The
calculation of these proportional shares is necessary for determining the recoupment component of the
wastewater impact fee.
Using the sludge handling equipment as an example: the equipment served 100%of the prior 3.0 MGD
WWTP. When the 5.4 MGDVWVTPbecame operational, the same sludge handling equipment served
100%of the new plant, or 44%of the expansion and 56%of the prior plant. Depredating this
equipment between the expansion plant and the prior plant removes proportional share of the
equipment cost from the current ratepayers. Otherwise, the current ratepayers are saddled with the
entire cost of equipment that is also reserved for future growth.
Facoupment allows for the equitable distribution of costs for equipment that is necessary in its present
capacity, but that is currently under-utilized. An example was given earlier of the sludge handling
equipment. This equipment was in use prior to the expansion of the WWTP, but was under-utilized.
This under -utilization is not a result of incorrect planning, but rather, is the result of purchasing
discretely quantified equipment; a sludge truck or gas monitor must be purchased as a single discrete
unit of a specific capacity, e.g., a fraction of a truck cannot be purchased to meet exactly the current
demand.
The 2012 cost for the items included in the Facoupment calculation are presented in Appendix D and
total $295, 527.
Total Impact Fee Falated to Facoupment Costs: $ 295,527
Total Projected New ERUs2012 through 2035: 6,579
Impact Fee (WWTP Recoupment) per ERU: $ 45
29
Treatment Plant Total Cost per ERU - 2035 Planning Horizon
Description 1P 2013 Cost ERU
Cost / ERU
Treatment Expansions
$18,677,761 8,850
$2,110
Treatment Recoupment
$295,527 6,5792
$45
Total Wastewater Treatment Cost per ERU
$2,155
1) Total New Opacity of Rant Expansion in 9RUs
2) Total Projected New 9EUs2012 through 2035
5.5.3.2 WASTEWATER (DLLEC it ON 9(sp
For the impact fee analysis and calculation, the wastewater collection system is divided into three
components: recoupment, capital improvement projects within the existing system, and committed
future extensions. Adescription of each component is provided below, with the analysis and calculation
for the per-ERU cost.
Collection System Recoupment
The recoupment component of the impact fee is the portion of costs related to excess capacity in
existing facilities, which have been built in anticipation of the needs of new development. An example
of thistype of facility would be the trunk lines, mains and lift stationsthat were constructed with excess
capacity at the time of installation
The excesscapacity varies throughout the collection system. The 2006 Impact Fee Final R-,port
established the excesscapacity asthe proportion of the additional ERUsdivided by the total future ERUs
at a specific planning horizon. This report usesthe 2035 planning horizon and establishesthe excess
capacity in the collection system asthe proportion of the additional ERUs (between 2012 and 2035)
divided by the total future ERUsat that 2035 planning horizon. This calculation develops a composite
cost proportion of the demands from new growth on the existing collection system.
The total number of new collection system ERUs projected to 2035 period is 5,529. These numbers only
include additional ERUs to the Kalispell collections system, and do not include additional flows
contributed directly from the Evergreen collection system. The items included in the collection system
recoupment calculation are presented in Appendix F and total $4,712,497. A summary of those
calculations is shown below.
Collection Sjstem R-,coupment Costs $4,712,497
Total Projected New ERUs2012 through 2035: 5,529
Cost (Collection Recoupment) per ERU: $ 852
ME
Capital Projectswithin the Existing System
The Qty of Kalispell Public Works Department has projected the need for future demand capital
improvements within the existing collection system. These improvements are necessary to provide
capacity for additional flowsMLIW the existing system. Two examples of recently completed projects in
this category are the Fairway Boulevard Force Main Improvement Project and the Grandview Lift Elation
Improvement Project, completed in 2007 and 2010, respectively. These necessary Capital Improvement
Projects developed additional capacity within the existing collection system for growth.
The items included in the Capital Improvement Projects within the Existing System calculation are
presented in Appendix Band total $1,502,649. Asummary of those calculations is shown below.
The total number of new collection system ERUs projected during the 2012 to 2035 period is 5,529.
These numbers only include additional ERUs to the Kalispell collections system, and do not include
additional flows contributed directly from the Evergreen Sawer District collection system.
aPwithin Existing System Costs: $ 1,502,649
Total Projected New ERUs2012 through 2035: 5,529
Cost (CIPin Bdstingsystem) per ERU: $ 272
Extensionsto the Existing System
The Qty of Kalispell Public Works Department has projected the need for capital improvements as
extensions to the existing collection system. These improvements are necessary to provide collection
system infrastructure for growth in recently annexed areas. These are substantial projects that
comprise a large share of the wastewater impact fee.
This current report includes portions of these projects that are necessary to provide service to the
annexation boundary in the 2011 Kalispell Growth Policy Update. The revision in annexation boundary
decreases the necessary extension improvements, it also decreases the number of future ERUs over
which to distribute the cost of the improvements.
The projects included in the Future Extensions calculation are presented below. The 2013 cost, shown
below, includesthe cost of the project necessarytoservewithinthe 2011 annexation policy boundary.
Elillwater Fbad Interceptor $ 6,125,328
Three Mile Drive Interceptor $ 1,942,784
Soring week Interceptor $ 5,462,899
Total Impact Fee Falated Committed Future Extension Costs $13,531,011
Total Impact Fee Falated to Future Extensions: $ 13,531,011
Total Projected New ERUs2012 through 2035: 5,529
Cost (Bdension to Bdsting System) per ERU: $ 2,447
31
Collection Total Cost per ERU - 2035 Planning Horizon
Summary Collection
Description
Table 5-5
System Cost per ERU
2013 Cost R
Cost /ERU
Collection Recoupment
$4,712,497
5,529'
$852
Collection CIP within Existing System
$1,502,649
5,529'
$272
Collection Extension CIPs
$13,531,011
5,529'
$2,447
Total Wastewater Collection Cost per ERU
$3,571
1) Total Projected New ERJs 2012 through 2035
5.5.4 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. The City CAUncil guided staff to use the allowable administrative
charge of 5%in the impact fee analysis and is followed for this report. Therefore, the wastewater
administrative charge of $274 per ERU equal to 5%is induded as a part of the collected wastewater
impact fee.
5.5.5 Debt Service Credits
The final step in calculating the wastewater impact feeswasto determine if there is a credit for
payment on debt service for the / JOf outstanding bonds. The City currently has a number of
outstanding wastewater revenue bonds for the collection system and wastewater treatment plant
expansion.
In the determination of the debt service credit, it is assumed that impact fee funds would be used to pay
for the growth related portion of the debt service. The remaining debt service, non -growth related,
would be paid for through rates. However, due to a slowdown in growth there are sub adequate impact
fee funds generated to cover the new growth portion of debt on an annual basis. This debt service that
is not covered by growth was then divided by the total number of ERUs in each year to determine the
debt service credit per ERU.
Based on the annual debt service cost and number of ERUsfor each year for which debt service payment
will be made, the credit for debt service payment is $243 per ERU for Treatment Rant and zero (0) per
ERU for Collection System. Details of the debt service credit calculations are show in Appendix E
32
5.6 Net Allowable Wastewater Impact Fees
Based on the sum of the component costs calculated above, the net allowable wastewater impact fee
can be determined. xb§O6j-efersto the f-'6 Impact fee, net of any debt service credits. 0 abk4m�
refersto concept that the calculated impact fee asshown in Table 5-6 isthe / -of 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 wastewater impact fee for the
City is shown in the Table 5-6.
Mr�Allow�ablle Wastewater
cription
C
ImpactV Table 5-65
reatment
mr
-
Collection
�10
Total
Wastewater Treatment Plant
$2,155
$0
$2,155
Wastewater Collection System
$0
$3,571
$3,571
Debt Credit
($243)
$0
($243)
Administrative Cost at 5%
$96
$178
$274
Total Wastewater Cost per ERU
$2,008
$3,749
$5,757
The calculated capacity charge for Wastewater Treatment is $2,008 per ERU and for Wastewater
Collection is$3,749 per ERU. Wastewater impact fees for industrial and business types are based on the
type of business use and number of units (i.e. seats in a restaurant, water closets, sinks) as shown in
Appendix H.
5.1 Key Financial Assumptions
In the development of the impact fees for the/ JQf wastewater system, a number of key assumptions
were utilized. These areas follows:
• The / -of asset recordswere used to determine the existing assets and the value of those
assets.
• The interest rate used for calculating interest on existing assets is the 10-year Treasury Note
Rate as reported by the USDepartment of the Treasury at dosing on November 30th of each
year.
• Up to fifteen years of interest is included in the cost of the existing improvements. The fifteen -
year average interest rate is currently 4.250/a
5.8 Implementation of the Impact Fees
HE
The methodology used to calculate the impact fees takes into account the cost of money or interest
charges and inflation. Therefore, consultants recommend 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 ENRindex which tracks changes in construction costs for municipal utility
projects. This method of escalating the / -of 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 or capital improvement plan.
5.9 Summary
The wastewater impact fees developed and presented in this report are based on the engineering
design criteria of the / -of wastewater system, the value of the existing assets, future capital
improvementsand}s■s'rPl'I's.r atemaking 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 / -of wastewater system.
34
References
1. Saptember 2012 Wastewater Impact Fee Summary
2. Impact Fees for Water and Wastewater Sjstem August 2010 (non -adopted impact fee report)
3. City of Kalispell 2011 Growth Fblicy Update
35
Appendix A: Growth Calculations and ERU Projections
4161
Wastewater Rant
Collection System
Average
Average
Day Row
Total
Additional
Day Row
Total
Additional
Year
(M GD)
9RUs
9RUs per Year
(M GD)
9RUs
ERUs per Year
2005
2006
2.84
2.96
2.38
2.48
8,966
9,365
2007
2.79
2.31
8,715
2008
2.77
2.31
2.18
8,716
8,231
2009
2.62
2010
2.61
2.17
8,207
2011
2.96
11,181
2.49
9,396
2012
3.02
11,405
224
2.54
9,584
188
2013
3.08
11,633
228
2.59
9,776
192
2014
3.14
11,866
233
2.64
9,971
196
2015
3.21
12,103
237
2.70
10,171
199
2016
3.27
12,345
242
2.75
10,374
203
2017
3.34
12,592
247
2.80
10,582
207
2018
3.40
12,844
252
2.86
10,793
212
2019
3.47
13,100
257
2.92
11,009
216
2020
3.54
13,362
262
2.98
11,229
220
2021
3.61
13,630
267
3.04
11,454
225
2022
3.68
13,902
273
3.10
11,683
229
2023
3.76
14,180
278
3.16
11,917
234
2024
3.83
14,464
284
3.22
12,155
238
2025
3.91
14,753
289
3.29
12,398
243
2026
3.99
15,048
295
3.35
12,646
248
2027
4.07
15,349
301
3.42
12,899
253
2028
4.15
15,656
307
3.49
13,157
258
2029
4.23
15,969
313
3.56
13,420
263
2030
4.32
16,289
319
3.63
13,689
268
2031
4.40
16,615
326
3.70
13,962
274
2032
4.49
16,947
332
3.77
14,242
279
2033
4.58
17,286
339
3.85
14,526
285
2034
4.67
17,632
346
3.93
14,817
291
2035
4.77
17,984
353
4.01
15,113
2036
4.86
18,344
360
4.09
15,416
302
2037
4.96
18,711
367
4.17
15,724
308
2038
5.06
19,085
374
4.25
16,038
314
2039
5.16
19,467
382
4.34
16,359
321
2040
5.26
19,856
389
4.42
16,686
327
2041
5.37
20,253
397
4.51
17,020
334
1) IndudesEvergreen Rows
2) 2005through 2011 Actual Rows, 2012through 2041 are projected flows based on growth rate below
2.00%growth Fate from Kalispell Ranning Department (Growth Fblicy Update 05/2612011)
265 gallons per day per ERJ (from 2.5 personsper dwelling unit X 106 gallonspp/day)
37
Appendix B: Sewer Capital Improvement Plan
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Impact Fee CollectionaPDescriptions
Future Existing Collection System CIP
Percent Impact
Cost Impact Fee Fee
2012 Related Flinihle
'�EW31
SE1/4 fiction 36 Lift Sation (100%Growth)
$ 351,095
100%
$ 351,095
SEW45
Whitefish Sage Finad Rpe Upsize (44%growth)
38,672
44%
17,016
SEW46
Fairway Ramping SUpgrade (48%Growth)
186,408
°
0ation
89,476
SEW 47
1 1st Alley East North Rpe Upsize0ze (66%Growth)
308,615
°
203,686
Misc mower contract main upsze and Facility Enlargements (lift
100%
stations)
650,000
650,000
—SEW52
�EW64
Three Mile Drive unitary mower Enlargement
289,964
66%
191,376
Total Future CIP Collection System $ 1,824,754 $ 1,502,649
New ERUs 2012 to 2035 5,529
Future Collection CIP Plant Impact Fee per ERU $ 272
SB/V 31: SE'/4Section 36 Lift Station (100%Growth). The construction of this lift station is contingent on
development in the Saction 35/36 area and the Northwest Kalispell area. The existing lift station at Elillwater
Ewer and Hwy 93 will be the first lift station in the west side sewer interceptor system (W8); MN-31 lift station
will likely be the next regional station that connectsto the west side sewer interceptor. Rows from the lift
station at 93 & Elillwater will be redirected toward lift station 31 and removed from the lift station at Grandview.
MN-31 may need to be built prior to WJ to support development in Saction 35/36, but sized asa regional to
accept flows from the north eventually. This project is 100%growth related. Implement when Grandview Lift
Elation is at 85%capacity, portion of the west side interceptor (M).
• Grandview Lift Elation ( ERU estimations)
0 847 ERU remaining allocated (final plat)
0 321 EH.Jsbeyond allocations (new growth)
SBN 45: Whitefish Stage Road Pipe Upsize (44%Growth). This project replaces-41 o2existing ss'6B-s'ewer main
with asjio�ewer main. Thissewer main is identified as Line D in the FPU. Qlrrent excesscapacity at infill of Line
Dwit h the ssrCsl' 66■ is 1.03 MGD (1,273 ERU). When the section of pipe is upsized to a s c�-aLine DwiII have
excess capacity at 2.06 M GD (2,559 ERU).
SBN46: Fairway Pumping Station Upgrade (48%Growth). This project replaces the existing pumps to increase
capacity and support new growth in the northeast areasof Kalispell along Whitefish Elage Fbad. The total
capacity of the LSis 253 GPM (451 ERU), the current existing flow usage is 223 GPM (398 ERU). The pump upsize
project will increase the total LSCapacityto 1,685 GPM (944 ERUs).
40
SBIV 47:1' Alley East North Pipe Upsize (66%Growth). This project replaces 1,110 ft of � -6Bgravity sewer main
with ass-6�ewer main from ENevadaa to EWashington. The pipe increasewill eliminate the current
surcharging and main backage created from upstream §6§dJV§mO increased flow to the down gradient sewer
conveyance system. The existing 8" gravity sewer main is downstream of the large sewage flow basin associated
with the Buffalo Hill Lift Station (LS9). The force main from LS9 was upsized from an 8" to a 10" diameter pipe in
2007. The force main upsize allows more wastewater flow when the pumps are running. The force main outlets
into the gravity conveyance system approximately 4 blocks north of the beginning of 1st Ave EAlley Swwer
Faplacement project. The project cost will be paid for by sewer rates and impact fees. The new 12"
pipe enables 66% more wastewater flow through the upsized conveyance section. This sewer main project is
identified as section of Line Ein the FRI The upsize will provide an additional 1.86 MGD (2312 ERU) for Line E
SBN 52: MiscSewer Contract Main upsize and Fadlity Enlargement (100%Growth). Miscellaneous sewer
contract main upsize and or facility enlargements. As defined in the City of Kalispell Extension of Sarvices Ran;
Omr §nPs'r5,61' l'j lit NYAJ.ZmJ-tFi ofj
■ssr sr G; AI' I' c@II& A! 4 C,nrs sosds■C$ N ArsAA.r C�O"-6 Cis I' ofCMof r O-ULN
j .2 -Carf N f-Rf :t-�
SBN 64: Three M ile Drive Sanitary Sewer Enlargement (66%Growth). This project replaces an existing 1,700
feet of overcapacity 8" gravity sewer main with a 12" sewer main. The existing pipe was constructed in 2004
and was sized to serve three subdivision developments; Empire Estates, Blue Heron, and Cottonwood
Estates. Slnce 2004 new development hasoccurred on Three Mile Drive with the addition of three new
subdivisions; Mountain Vista Estates, Triple Creek Estates, and Spring Creek Estates. The new development
increased the wastewater conveyed through the existing 8" gravity main and is causing surcharging and service
backups into residential houses. The capacity increase from an � rokto a 66%and would handle a new flow
capacity of 1,466 G M , wit h an excess capacity of 452 GRM (807 ERUs) if all lift stations operated at the same
time.
41
42
Appendix C: Montana Code Annotated 2011
43
7-6-1 I . Dcfinitlonk ,
Page 1 of 2
Montana Code Annotated 201 1
PM -Jam 5CQM*Ms Pat GaNafts Swch Mp Nmd Sachet
7-6-1601. DefiniIif) ni. As used in this part the following definitions apply:
(1) (a) "Capital improvements'p meats irnprovenem, land, and equipment with a useful life
of 10 years or more that incrtaSe or improve, the servicc capacity of public facility,
(b) The term does not include consumable, supplies.
( ) 'ConAeciion charge" means the actual cost of connecting a ptoperty to a, public utility
systern and is limited to the Iabor, materials, and overhead involved in making cone tions and
iroallin'? meters,
(3) "Devclupment" meaiis cons -trust ion, renovation, or installation of building or structure,
a change in use of building or structure. or a change in the use of land when the Construction,
installation, or tither action creatcs additional demand f'or public facititics,
(4) "Govemmental entity" means a county, oily, sown, or coin%olidated government.
(5) (a) "Impact fee" means any charge imposed upon development by a goVernmcntaI qmtity
as part of the &-velopment approval process to fund the additional service capacity required by
the development fi-om -which it is coIIecled. An impact fee may include a fee for the
Mai inistrwiart of the impact fee nca to exceed 5%oaf the total impact fee collected.
jb) The term doe-s not include:
(i) a charge or fee to prey for administration. pian review, or inspection coils associated with
a permit required for development;
(ii) a connection charge;
(iii) any other foe aulharizcd by law, including but not limited to usr fees, special
itnp [o 'err ent district atiseSsttmCl s, fees autharized under Title 7 for county, municipal, and
consolidated government scwcr-and tea r di!slricts and systems, and cow of ong-Ding
tztaiatenance; or
(iv) onsite or offsite improvcments necessary for new- developmwnt to meet the safety, I l
of smice, and other minimum dewlvpmera standards that have, been adopted by the
governmental entity.
(6) `' nipcirtio=c sharp:" means Oat portion of the cost of capital ,,ymem improwemenaq that
reasorlahly relates to the service demands and nee& of the M*1_ A proportionate share must
take ineo account the timitalimw providcd in 7-6� 160,
(7) "public facilities" inems:
(a) a water supply production, treatment, storage, or distribution facility;
(b) a wastewater collection, treatment, at disposal facility;
(c) a transportation facility. including roads, streets, bridges, rights -of -way, traffic 51ls,
and landscaping;
(d) a storm wafer w1lection, retention, detention. trealrnent, or disposal facility or a flood
control facility;
(el a pal ice, emergency nwdicat rescue, or fire,.~ protection facility; and
(f) other facilitics for which docummatiun is prepared as pruvided in 7-6-1002 that hav
7-6-1601, Definitions.
Page 2 of 2
been approved as pare of an impact fee ordinance or resolution by.
(i) a two-thirds majority of the governing body ofan incorporated city, town. or consolidated
local government; or
0i) a unanimous vote of The boerd of county cornmissioners of county government.
.Mtory: Em. Sec, 1, Ch. 299, L. M5,
45
7-6-1602. Calculation of impact fees -- documentation required ordinance or re... Page 1 of 2
Montana Code Annotated 2011 �
Previous Saciion MGA Cwto is Part Conteds Search Help Next section
7-6-1602. Calculation of impact fees -- documentation required -- ordinance or
resolution -- requirements for impact fees. (1) For each public facility for which an impact
fee is imposed, the governmental entity shall prepare and approve a service area report.
(2) The service area report is a written analysis that must:
(a) describe existing conditions of the facility;
(b) establish level -of -service standards;
(c) forecast future additional needs for scrvicc for a defined period of time;
(d) identify capital improvements necessary to meet future needs for service;
(e) identify these capital improvements needed for continued operation and maintenance of
the facility;
(f) make a determination as to whether one service area or more than one service area is
necessary to establish a correlation between impact fees and benefits;
(g) make a determination as to whether one service area or more than one service area for
transportation facilities is needed to establish a correlation between impact fees and benefits;
(h) establish the methodology and time period over which the governmental entity will
assign the proportionate share of capital costs for expansion of the facility to provide service to
new development within each service area;
(i) establish the methodology that the governmental entity will use to exclude operations and
maintenance costs and correction of existing deficiencies from the impact fee;
0) establish the amount of the impact fee that will be imposed for each unit of increased
service dernand; and
(k) have a component of the budget of the governmental entity that:
(i) schedules construction of public facility capital improvements to serve projected growth;
(ii) projects costs of the capital improvements;
(iii) allocates collected impact fees for construction of the capital improvements; and
(iv) covers at least a 5-year period and is reviewed and updated at least every 2 years.
(3) The service area report is a written analysis that must contain documentation of sources
and methodology used for purposes of subsection (2) and must document how each impact fee
meets the requirements of subsection (7)_
(4) The service area report that supports adoption and calculation of an impact fee must be
available to the public upon request.
(5) The amount of each impact fee imposed must be based upon the actual cost of public
facility expansion or improvements or reasonable estimates of the cost to be incurred by the
governmental entity as a result of new devclopment. The calculation of each impact fee must be
in accordance with generally accepted accounting principles.
(6) The ordinance or resolution adopting the impact fee must include a time schedule for
periodically updating the documentation required under subsection (2).
(7) An impact fee must meet the following requirements:
LIFO
7-6-1602. Calculation of impact fees -- documentation required -- ordinance or re... Page 2 of 2
(a) The amount of the impact fee must be reasonably related to and reasonably attributable to
the development's share ofthe cost o F i n frast ru ct u re improvements made necessary by the new
development.
(b) The impact fees imposed may not exceed a proportionate share of the costs incurred or to
be incurred by the governmental entity in accommodating the development. The following
factors must be considered in determining a proportionate share of public facilities capital
improvements costs:
(i) the need for public facilities capital improvements required to serve new development;
and
(ii) consideration of payments for system improvements reasonably anticipated to be made
by or as a result of the development in the form of user fees, debt service payments, taxes, and
other available sources of funding the system improvements.
(c) Costs for correction of existing deficiencies in a public facility may not be included in the
impact fee.
(d) New development may not be held to a higher level of service than existing users unless
there is a mechanism in place for the existing users to make improvements to the existing
system to match the higher level of service.
(e) Impact fees may not include expenses for operations and maintenance of the facility.
History: En. Sec;. 2, Ch. 299, L. 2005; amd, Sec:. 1, Ch. 359, L. 2009.
Awded by Moptana LeVslal" Sewices
47
7-6-1603. Collection and expenditure of impact fees -- refunds or credits mech... Page L of 2
Montana Code Annotated 2011
Previous Sestlon MCA Conterd$ Part CcnteNs Search Help Next Swim
7-6-1603. Collection and expenditure of impact fees -- refunds or credits -- mechattism
for appeal required. (1) The collection and expenditure of impact fees must comply with this
part. The collection and expenditure of impact fees must be reasonably related to the benefits
accruing to the development paying the impact fees. The ordinance or resolution adopted by the
governmental entity must include the following requirements:
(a) Upon collection, impact fees must be deposited in a special proprietary fund, which must
be invested with all interest accruing to the fund.
(b) A governmental entity may impose impact fees on beha]fof local districts.
(c) If the impact fees arc not collected or spent in accordance with the impact fee ordinance
or resolution or in accordance with 7-6-1602, any impact fees that were collected must be
refunded to the person who awned the property at the time that the refund was due.
(2) All impact fees imposed pursuant to the authority granted in this part must be paid no
earlier than the date of issuance of a building permit if a building permit is requi red for the
development or no earl ier than the time of wastewatcr or welter service connection or well or
septic permitting.
(3) A governmental entity may recoup costs of excess capacity in existing capital facilities,
when the excess capacity has been provided in anticipation of the needs of new development,
by requiring impact fees for that portion of the facilities constructed for future users, The need
to recoup costs for excess capacity must have been documented pursuant to 7-6-1 b02 in a
manner that demonstrates the need for the excess capacity. This part does not prevent a
governmental entity from continuing to assess an impact fee that recoups casts for excess
capacity in an existing facility. The impact fees imposed to recoup the casts to provide the
excess capacity must be based on the governmental entity's actual cost of acquiring,
constructing, or upgrading the facility and must be no more than a proportionate share of the
costs to provide the excess capacity.
(4) Governmental entities may accept the dedication of land or the construction of public
facilities in lieu of payment of impact fees if.
(a) the need for the dedication or construction is clearly documented pursuant to 7-6-1 G02;
(b) the land proposed for dedication for the public facilities to be constructed is determined
to be appropriate for the proposed use by the governmental entity;
(c) formulas or procedures for determining the worth of proposed dedications or
constructions are established as part of the impact fee ordinance or resolution; and
(d) a means to establish credits against future impact fee revenue has been created as part of
the adopting ordinance or resolution if the dedication of land or construction of public facilities
is of worth in excess of the impact fee due from an individual development.
(5) Impact fees may not be imposed for remodeling, rehabilitation, or other improvements to
an existing structure or for rebuilding a dainaged structure unless there is an increase in units
that increase service demand as described in 7-6-1602(2)0). if impact fees are imposed for
HV
7-6-1603. Collection and expenditure of impact fees --refunds or credits -- mech... Page 2 of 2
remodeling, rehabilitation, or other improvements to an existing structure or use, only the net
increase between the old and new demand may be imposed.
(6) This part does not prevent a governmental entity from granting refunds or credits:
(a) that it considers appropriate and that are consistent with the provisions of7-6-1602 and
this chapter; or
(b) in accordance with a voluntary agreement, consistent with the provisions of 7-6-1602 and
this chapter, between the governmental entity and the individual or entity being assessed the
impact fees.
(7) An impact fee represents a fee for service payable by all users creating additional
demand on the facility.
(8) An impact fee ordinance or resolution must include a mechanism whereby a person
charged an impact fee may appeal the charge if the person believes an error has been made.
History: En. Sec, 3, Ch. 299, L. 2005, bond. See. 2, Ch. 358, L. 2009.
Provided by ftntana Lapslobw Samk s
Mel
7-6-1604. Impact fee advisory committee.
Montana Code Annotated 2011
Pre�ous Section MCA Oontml5 Part Consents Search Hop Next Section
Page 1 of 1
7-6-1604. Impact fee advisory cnrnmiffee. (l) A governmental entity that intends to
propose an impact fee ordinance or resolution shall establish an impact fee advisory committee.
(2) Aa impact fee advisory committee must include at least one representative of the
development community and one certified public accountant. The committee shall review and
monitor the process of calculating, assessing, and spending impact fees.
(3) The impact fee advisory committee shall serve in an advisory capacity to the governing
body of the governmental entity.
History: En. Sec. 4, Ch. 249, L. 2005.
f1mvided by 1No»ta»a Legjgat v* Ser xcs
691
Appendix D: Wastewater Recoupment
51
Wastewater Treatment Fbcoupment
The following items are existing components of the WVV Pthat have reserve capacity to serve future
growth at the WWTP The equipment served 100%of the prior 3.0 mgd WWTP. When the 5.4 mgd
WWTPbecame operational, the same equipment served 100%of the new plant, or 44%of the
expansion and 56%of the prior plant. Depredating this equipment between the expansion plant and
the prior plant removes a proportional share of the equipment cost from the current ratepayers.
I TBVI 2012 COST
% I M PACT FEE
I M PACT FEE
9udgeTruck 1 $150,847
44%
$ 67,043
9udge Truck 2 $169,270
44%
$ 75,231
9udge Truck 3 $154,010
44%
$ 68,449
Gas Monitor/ Generator $ 28,304
44%
$ 12,579
WWTPExpan§on PER $162,507
44%
$ 72,225
Total Impact Fee R-,lated Fbcoupment Costs
$295,527
Total Impact Fee Pelated to R-,coupment Costs:
$ 295,527
Total Projected New ERUs2012 through 2035:
6,579
Impact Fee (WWTP Recoupment) per 9RJ:
$ 45
52
Appendix E: Debt Credit Calculations
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m ti ti ti ti ti ti ti ti ti ti ti ti ti ti
6r} 6r} 6r} 6r} 6r} 6r} 6r} 6r} 6r} 6r} 6r} 6r} 6r} 6r} 6r}
M CO M r O 0 I--LO O O CO CO O Lo qtt
N O N O M O r 00 r 0 00 00
(O r r r r r r r r r r r r r r
r O O O O O O O O O O O O O O
r r r r r r r r r r r r r r r
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Lo
Collection Debt Service Credit
A B C
D E
F
G
H
I
C=B`0.37
E=D`2,155
G=C-E
H=G/F
1=H`1.70%
37%
Collection'
Total
Collection
Collection
Collection
Collection Collection
Additional Impact Fee
Collection
Debt Service
Debt Service
Debt Service
Year Debt Service Debt Service
Collection ERUs Revenue
ERUs
Credit Total
Credit per ERU
Total Credit per ERU
2013
$
92,566
$
33,865
192 $
2014
$
96,610
$
35,344
196 $
2015
$
96,889
$
35,446
199 $
2016
$
96,134
$
35,170
203 $
2017
$
96,346
$
35,248
207 $
2018
$
96,511
$
35,308
212 $
2019
$
96,633
$
35,353
216 $
2020
$
96,709
$
35,380
220 $
2021
$
96,741
$
35,392
225 $
2022
$
96,726
$
35,387
229 $
2023
$
95,668
$
35,000
234 $
2024
$
95,587
$
34,970
238 $
2025
243 $
2026
248 $
2027
253 $
1 - Assumes Collection Impact Fee at $ 3,571
2- Present dollars
4.25% interest (15-yr avg. 1997 to 2011)
2.55% inflation (20-vr ava. 1992 to 20111
1.70 % net interest
55
684,500
9,776
0.00
$
698,190
9,971
0.00
$
712,154
10,171
0.00
$
726,397
10,374
0.00
$
740,925
10,582
0.00
$
755,743
10,793
0.00
$
770,858
11,009
0.00
$
786,275
11,229
0.00
$
802,001
11,454
0.00
$
818,041
11,683
0.00
$
834,402
11,917
0.00
$
851,090
12,155
0.00
$
868,112
12,398
0.00
$
885,474
12,646
0.00
$
903,183
12,899
0.00
$
Total Debt Sarvice credit per EHU $
0.00 $ 0.00
Appendix F: Existing Collection System Recoupment List
761
Percent'
Impact 2
Cost $
Impact Fee
Fee
Year
Equipment List
2012
Related
Eligible $
1940
1400 27 inch
$ 6,376
0%
$ 0
1952
20,160 6 inch
135,498
0%
0
1952
121030 8 inch
976,153
0%
0
1952
20350 10 inch
184,647
0%
0
1962
15970 12 inch
182,711
0%
0
1962
11870 15 inch
157,023
0%
0
1967
20240 18 inch
348,245
0%
0
1974
680 Cke Backhoe
32,719
37%
11,970
1978
SID 326
32,536
0%
0
1979
Sewer Line Additions
13,797
37%
5,048
1979
Sewer Line Grout
17,854
37%
6,532
1979
Sewer Line Grout
364,462
37%
133,336
1981
Sid 328
112,691
0%
0
1982
Anodes and Cable for Lift Station
1,772
37%
648
1982
Grouting
21,065
37%
7,707
1983
S-1900 Vactor E-350 Camera
158,694
37%
58,057
1984
N Main Extensions
49,029
37%
17,937
1984
SID 333
60,690
0%
0
1984
Kinshella Street
1,186
37%
434
1984
Monk Project - City
42,052
37%
15,384
1984
Joe Radiator
5,011
37%
1,833
1984
Lift Station Meters
2,489
37%
910
1985
Fence - Lift Station No 4
2,856
37%
1,045
1985
6 inch Sludge Line
11,480
37%
4,200
1986
Meadows
182,535
2%
3,339
1986
1608 24 inch
420,764
37%
153,934
1986
South Meadows
33,085
37%
12,104
1987
Woodland Park
206,806
9%
18,915
1987
386 24 inch RCP CL II I
50,728
37%
18,558
57
Percent'
Impact 2
Cost $
Impact Fee
Fee
Year
Equipment List
2012
Related
Eligible $
1987
554 30 inch RCP CL III
83,654
37%
30,604
1987
966 30 inch RCP CL IV
162,097
37%
59,302
1987
12 30 inch Duct Iron
991
37%
363
1987
1601 36 inch RCP Cl III
295,503
37%
108,108
1987
2701 36 inch RCP Cl IV
566,511
37%
207,255
1987
125 4 inch
7,690
37%
2,813
1987
122 6 inch
6,831
37%
2,499
1987
336 8 inch
27,794
37%
10,168
1987
74 30 inch
16,655
37%
6,093
1987
1 - Includes Evergreen Sewer District
5,969
37%
2,184
1987
1766 30 RCP Cl III
350,332
37%
128,167
1987
3364 24 inch RCP Cl III
554,190
18%
101,374
1987
50 18 inch RCP Cl III
7,770
37%
2,843
1987
SID 337
404,650
0%
0
1988
Scoreboard
31,489
37%
11,520
1989
(1) - Includes Flathead County Water and Sewer
District #1 Evergreen
4,031
37%
1,475
1991
Purdy/Remick
137,029
37%
50,131
1991
E-350 Camera Trk
186,695
37%
68,301
1992
Greenacres
102,445
37%
37,479
1992
Generator Lift No 2 and 3
91,850
37%
33,603
1993
Lift Station 1 bypass
87,851
37%
32,140
1993
2nd St East
33,225
37%
12,155
1993
18th St E and 5th Ave
140,009
7%
10,244
1994
Evergreen Truck - City
80,448
37%
29,432
1994
18th St E
11,435
37%
4,184
1994
Heritage Park
10,455
37%
3,825
1994
International Vac -Con
278,172
37%
101,767
1995
Courtyard A is
14,731
37%
5,389
1995
Sli line Project
184,169
37%
67,377
58
Percent'
Impact 2
Cost $
Impact Fee
Fee
Year
Equipment List
2012
Related
Eligible $
1995
5th Ave SID 341
242,424
0%
0
1997
Lift Station Dialog Dialers
16,013
37%
5,858
1997
Sreco Sewer Camera
18,773
37%
6,868
1997
Elks Lift Station No. 2
547,764
37%
200,396
1997
Manhole 2nd St E between 4th and 5th
23,477
37%
8,589
1997
Greenacres Sewer Engineering
13,728
37%
5,022
1997
6th Alley NW
166,272
37%
60,830
1997
20kw fuel Generator
65,335
37%
23,903
1998
Hilltop Ave/Salish Court
62,681
37%
22,931
1999
City Wide Sewer Improvements
643,795
2%
12,483
1999
146C Backhoe
94,507
37%
34,575
2000
Woodland Park
29,142
37%
10,661
2000
JD Loader
56,822
37%
20,788
2000
2nd Alley E Sewer
202,561
37%
74,106
2001
Multi Angle Camera
23,946
37%
8,760
2001
2 Hydraulic By-pass um s and power plants
23,045
37%
8,431
2002
Lift Station #4 Replacement
183,233
37%
67,035
2002
Main St. MH Corrosion Repair
12,721
37%
4,654
2002
Building Addition
109,167
37%
39,938
2002
Building Remodel
10,614
37%
3,883
2003
Inspection Camera & Transporter
19,634
37%
7,183
2003
Manhole Rehabilitation
33,029
0%
0
2004
Vac Con Sewer Truck
244,919
37%
89,602
2004
Highway 93 South Improvements - Ashley Creek
to Kalispell
1,967,064
33%
647,675
2005
Golf Course Bridge Force Main
30,110
37%
11,016
2005
US Highway 93 South Utilities
1,835,735
37%
671,593
2005
Liberty Street Lift Station
172,430
0%
0
2005
Compactor
16,709
37%
6,113
2006
Buffalo Golf Course Bride Footing
28,638
37%
10,477
0
Percent'
Impact 2
Cost $
Impact Fee
Fee
Year
Equipment List
2012
Related
Eligible $
2006
Bowser Creek Lift Station U size
170,539
37%
62,391
2007
Meridian Rd Sewer Main
185,779
37%
67,966
2007
Slip Line Manhole Covers
46,955
0%
0
2007
Grandview Lift Station Force Main
398,389
37%
145,748
2007
Fairway Boulevard Lift Station Number 9 &
Force Main
755,360
37%
276,344
2007
Wyoming Street
185,778
37%
67,966
2008
Generator Lift #9, #10, & #16
158,648
37%
58,041
2008
12 10 inch & Manhole
17,729
37%
6,486
2008
60 6 inch & Manhole 5th Ave E.
27,699
37%
10,134
2008
Spring Prairie U size
58,075
37%
21,246
2008
Reserve Loop Extension
11,250
37%
4,116
2009
Mobile Pipeline Inspection Unit
138,170
37%
50,549
2009
Bobcat
12,218
37%
4,470
2010
US 93 Bypass
77,544
37%
28,369
2011
Grandview Sewage Pump Station & Parkway Dr
Main Upgrade
663,171
37%
242,617
Total
17,501,219
4,712,497
Total Existing Collection Plant
New ERUs 2012 to 2035
Existing Collection Plant Impact Fee
$ 4,712,497
5,529
$ 852
1) Allocation for existing projects (%impact fee related) based on ERUsfrom 2012 to 2035 divided by
total ERUs in 2035. 5,529 B:U/ 15,113 EU = 37%
2) Some plant cost components are excluded or reduced based on the amount of contributions from
developer, grants, and or the amount which was for replacement.
10101
Appendix G: Extension to Existing System
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02
Appendix H: ERU Schedule
mol
1.
TYPE OF
Single Family Residence
I
Multiple Family Residence
0.75
3.
Mobile Home Space in Mobile Home Park (Common building at
additional commercial rate and laundry areas at laundry rate.)
0.65
4.
Recreational Vehicle Waste Dumping Station
0.65
5.
Schools (per student capacity)
0.030
6.
Churches (School and commercial uses at addition fixture count and per
student capacity rate)
0.64
7.
Hospitals — General
I per bed
8.
Convalescent Hospitals
M
0.50 per bed
00�� i
9.
Residential Care/Boarding Facilities
0.25 per bed
10.
Hotels and Motels (additional charges for restaurant or tavern at
restaurant or tavern rate, laundry areas at laundry rates, and meeting
room areas with fixtures at commercial rate.)
0.25 per unit
11.
Food preparation and/or Serving Areas
0.15 per 100 sq. ft.
12.
Vehicle Wash
Self -Service Vehicle Wash
1.17 per bay
Full -Service Vehicle Wash
15.66 per bay
All Other Vehicle Washes
See Wet Industrial
13.
Laundries & Laundromats
0.30 per 100 sq. ft.
Industrial Laundries
See Wet Industrial
14.
Commercial, Office and Dry Industrial
Charge for each plumbing
fixture to be installed.
Bath tub w/or w/o shower
0.13
Dental unit or cuspidor
010
Dishwasher
0.10
Disposal
0.10
Drinking Fountain
0.05
ME
TYPE OF
Floor Drain
0.013
Fountain/Backwash
0.10
Kitchen Sink
0.08
Laundry Tray
0.08
Lavatory
0.05
Service Sink
0.08
Shower (each head)
0.13
Swimming Pool/Backwash
0.10
Urinal
0.17
Urinal Trough (for each 2 foot section)
0.17
Wash Sink (for each set of faucets)
0.08
Washing Machine
0.07
Water Closet
0.33
In case of a remodel in types 5-13 which results in no increase in the
units on which the charge for a new building is calculated, the ERU for
the remodel will be calculated on the basis of the fixtures added using
the amounts in Item 14.
15. Wet Industrial
To be determined on an
individual basis by the
City.
16. Undefined Building and Sewer Use
To be determined on an
individual basis by the
City
17. Additional Loading or Change of Use
Determined on basis of
new use for entire facility
less credit for former use.
No refunds if new use is
less than former use.
The following are the definitions of the classifications used in establishing the ERUs.
A single family residence shall be defined as a building containing one kitchen, designed and/or
used to house not more than one family, including all necessary employees of such family, such
building having a single sewer service connection. Mobile homes occupying a separate lot and
providing permanent housing with a separate sewer connected shall be classified as a single-
family residence.
2. A multiple family residence shall be defined as a building or a group of buildings housing two or
more families, living independently of each other, a family being defined as one or more persons
living as a single housekeeping unit or household with sewer service being provided through not
more than one sewer connection. Common buildings in an apartment house complex requiring
sewer service shall be charged as commercial buildings and that portion of buildings housing
common laundry facilities shall be charged as Laundries and Laundromats.
A Mobile Home Park, including travel trailer parks, is defined as any area or tract of land having
a sewer connection, and where sewage collection pipes are extended to two or more spaces
occupied by, or intended to be occupied by a mobile home, travel trailer or motor home which
are defined as a vehicle with or without motive power which is designed, used or intended for
use as a place of human habitation, or as eating, sleeping or living quarters or any combination
thereof. A mobile home space is defined as the individual location having a sewer hookup for
each such vehicle. For purposes of determining impact fees for mobile home parks' common
buildings such as recreation halls, etc., shall be charged as commercial buildings. Buildings
housing laundry facilities shall be charged as Laundries and Laundromats and food or drink
service buildings shall be charged as food preparation and/or serving.
4. Recreation Vehicle Dumping Stations are defined as buildings or structures used for the
dumping of sanitary sewer wastes from recreational vehicle holding tanks. This includes gray
water from sinks and showers. (This excludes an individual collector installed by a homeowner
for his/her own use.)
Schools are defined as any building or group of buildings used for school purposes more than 12
hours per week, involving assemblage for instruction, education or recreation. Schools may be
public or private.
6. Churches shall be defined as a building or structure whose principal use is for worship and in
which the incidental use for office space, school, or recreational purposes is less than 12 hours per
week. Church buildings used in excess of 12 hours per week for office and/or school purposes
shall be charged as a commercial building and/or the SDC per student capacity in addition to the
charge per 100 seats as a church.
7. General hospitals shall be defined as a building or structure used for the temporary housing of ill
or injured persons and containing facilities for medical and surgical treatment of such persons.
No additional charge shall be made for laundry and food and drink preparation and serving
facilities included in hospitals.
8. Convalescent hospitals or rest homes are defined as a building or structure used for housing of
persons convalescing from illness or injury or persons requiring close personal care. No
[iYe
additional charge shall be made for laundry or food and drink preparation and serving facilities
included in the convalescent hospitals.
9. Residential Care/Boarding Facilities is defined as a residential building or structure used for
housing of persons requiring either long-term supervision and general care, or any type of
dependency recovery. No additional charge shall be made for laundry or food and drink
preparation and serving facilities included in the Residential Care/Boarding Facilities.
10. Hotels and motels are defined as a building or group of buildings used for temporary housing of
persons containing rooms or units intended for the use of transient persons. Those areas within
hotels and motels to be used for commercial preparation of and serving of food and drink shall
be charged at the rate for food preparation and/or serving. Commercial areas within hotels and
motels, including convention facilities and other such common areas other than lobby areas,
shall be charged at the rate for commercial and dry industrial areas. Areas used for laundry
facilities in hotels and motels shall be charged at the rate for laundries and laundromats. Such
additional charges for food and drink, commercial areas and laundry shall be in addition to the
charge per room or motel unit.
11. Food preparation and serving areas are defined as including sink and countertop space that may
have grills, food storage counters, or other portable cooking equipment. Food preparation and
serving areas may be located in restaurants, taverns, delicatessens and wholesale and retail
bakeries, but does not include canneries, dairies, cheese factories, packing houses and similar
facilities, which shall be classified as "Wet Industrial' under Item 15 of definitions.
12. Vehicle washes are defined as commercial buildings or structures used for washing vehicles.
Self-service vehicle washes are coin -operated facilities serving the general public that require
the customer to wash the vehicle. Full -service vehicle washes are facilities serving the general
public, wherein the vehicle is washed for the customer, either automatically or by attendants.
All other vehicle and parts washing or steam cleaning facilities that discharge to the sanitary
sewer will be reviewed on a case -by -case basis.
13. Laundries and Laundromats are defined as commercial buildings and structures, or parts of
commercial buildings and structures used for housing and operating laundry equipment by the
general public to wash clothes and linens for personal use.
Industrial laundries are defined as buildings or structures or parts of buildings and structures used
for housing and operating laundry equipment for the large scale washing of uniforms, towels,
linens, etc. The anticipated volume and strength of the sewage to be generated from an industrial
laundry would be considerably more than that from a commercial laundry or laundromat.
Industrial laundries shall be classified as "Wet Industrial' under Item 15.
14. Commercial buildings are defined as all buildings used for conducting of wholesale or retail
trade. Dry industrial buildings or structures are those buildings or structures housing light
industrial activities where use of water and subsequent discharge of sewer does not occur in
connection with the industrial process. Warehouses and other storage buildings with sewer
connections are classified as dry industrial buildings.
1%
15. Wet industrial buildings are defined as those buildings and structures housing industrial activities
where the use of water and subsequent discharge to the sewer occurs in connection with an
industrial process. Facilities with a discharge of 10,000 gallons per day or greater are considered
wet industrial. Other facilities that discharge less than 10,000 gallons per day, and whose
anticipated strength of the sewage to be generated from the facility is greater than domestic
sewage strengths may also be considered wet industrial. Those facilities will be reviewed on a
case -by -case basis. The anticipated volume and strength of sewage from an average single-family
residence shall be considered when calculating Impact Fees.
The Impact Fee for wet industrial shall be determined on an individual basis utilizing the formula listed
below:
Impact Fee Charge Calculation
Impact Fee = GPD x SRFc + GPD x SFRt f (F 1 + F2 + F3 + 174) — 31
246 246
GPD = Anticipated sewer discharge in gallons per day
SFRt = Current single family Impact Fee for treatment
SFRc= Current single family Impact Fee for collection
F1, F2, F3, F4 = Extra strength factors, whole number multipliers derived for each of the
following components or fractions thereof:
F1, each 215 ppm of biochemical oxygen demand,
F2, each 260 ppm of total suspended solids,
F3, each 25 ppm of total nitrogen,
F4, each 4.5 ppm of total Phosphorous
Example for BOD
Factor Range
1 0-215 ppm
2 216-430 ppm
3 431-645 ppm
(continues for each 215 ppm increment)
16. Undefined buildings and sewer use are those not defined above.
17. Additional loading or change of use is defined as an increased demand for wastewater treatment
from an existing wet industrial building or structure. The additional loading may be the result of
replacement or addition to an existing structure or facility, a change in use, or a fifteen percent
(15%) or greater increase above the permitted volume or character of the wastewater constituents
being discharged.
RISV