Public Hearing - Proposed Water Hook-Up Fees CommentsIncorporated 1892
Telephone (406) 758-7700
FAX (406) 758-77 58
Post Office Box 1997
Kalispell, Montana
Zip 59903-1997
Date: June 3, 1996
To: Al Thelen, Interim City Manager
From: John Wilson, Assistant City Engineer _1�4J
Re: Indexed Water Connection Fees
This memorandum is written with respect to the proposed 5% annual adjustment to
water connection fees. I believe we all understand the intent of indexing fees is to
place the carrying cost of excess capacity on the late coming customers. However,
there has been some discussion as to the appropriateness of the 5% figure.
This method and this value were first suggested to us in the American Planning
Association's manual on Development of Impact Fees. In preparing our connection
fee formula, we used. their indexing value of 5% as a starting point for discussion.
Considering the 18 year term of our fee schedule and the history of inflation rates
over a similar period of time, we settled on 5% as a reasonable number.
We have spoken with the cities of Billings and Bozeman, as well as the Public Service
Commission (PSC). Representatives from both cities have said their fees are
reviewed and increased on a regular basis, rather than following an indexed multi -year
schedule. Their practice is to use the Consumer Price Index (CPI) for adjustments
because the value can be more easily justified in the event of a dispute. The
representative of the Public Service Commission did not take exception to our use of
a multi -year indexed fee schedule, but he did recommend some correlation to the CPI.
A review of the CPI for all urban consumers, considering all commodities and
services, shows an average annual price increase of 3.5% over the last 10 years and
2.8% over the last 5 years. If the Council should prefer to index fees with respect to
the CPI, staff recommends that fees be adjusted annually at the set rate of 3%. The
advantage would be that a definite long term schedule could be published. This
would give some predictability to connection for the coming years and we would
avoid the administrative chore of annual adjustments. In the event of a dispute, the
3% rate could be shown to be representative of the CPI at the time when the fee
schedule was established.
Douglas Rauthe
Mayor
Al Thelen
Interim City Manager
City Council
Members:
Gary W. Nystul
Ward I
Cliff Collins
Ward I
Norbert F. Donahue
Ward II
Dale Haarr
Ward II
Jim Atkinson
Ward III
Lauren Granmo
Ward III
Pamela B. Kennedy
Ward IV
M. Duane Larson
Ward IV
MEIREDITnHi
CONSTRUCTION
COMPANY
May 31, 1996
City Council of Kalispell
c/o City Clerk
Kalispell, MT
Re: Notice of Proposed Rate Increase
Water Connection Fees
Dear Council:
Although we in the construction industry consider the water
connection fee increase another set back to potential project;4 we
also understand the need for improvements to the infrastructure.
Meredith Construction Company requests that the Council demands
that the connection fees be earmarked specifically for water/sewer
improvements and not be transferred to the General Fund for other
purposes.
We are sure you are aware that as these and other fees are
increased or added to the already burdensome City of Kalispell
system, development will continue to move outside the city limits.
Sincerely,
David'P. geiFe�di-t"h
Manager
DPM: j p
P.O. Box 7128 2564 Highway 2 East Kalispell, Montana 59904-0128 (406) 752-4200