City sees bump in impact fee collections

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A house under construction in Whitefish. (Heidi Desch/Whitefish Pilot)

The city of Whitefish collected about $120,000 more in impact fees in fiscal year 2018 than the previous year.

In FY18 the city collected almost $770,000 in impact fees, while in FY 17 it collected about $650,000.

Impact fees are one-time charges for new development that increases the demand for city services. The city collects fees in seven areas that make up the total impact fee.

Assistant City Manager and Finance Director Dana Smith said impact fee collections spiked at just over $1 million in FY16 as a result of two hotels and the new City Hall and parking structure project along with residential development. FY16 was the strongest years in the past five, she noted.

“Whitefish has continued to see strong building and growth over the past few years, which has continued into FY19,” Smith said. “Impact fee revenues exceeded budgeted expectations in FY18 and were up 21 percent from FY17.”

FY18 runs from July 1, 2017 to June 30, 2018.

An upward trend appears to be continuing in impact fee collections, Smith notes.

“Currently all impact fee revenues are trending significantly higher in the first half of FY19, with some already exceeding the anticipated revenue to be collected,” Smith said. “This is a great forecast of strong building permits and continued growth in the city during the year.”

Impact fees are one-time charges for new development that increases the demand for city services. It applies to new units in subdivisions as well as new homes built on single lots and some remodeling. The city can spend the fees for public improvements, including planning, site improvements, land acquisition, construction or engineering.

For FY18, the paved trail impact fee continued to be used for expansion of the city’s trail system. Impact fees for the Emergency Services Center were used to expand storage needed primarily by the Police Department and Municipal Court.

The FY18 budget for water impact fees included water main replacements throughout various parts of the city, and the sewer impact fee money was used on various sewer projects in the city.

The new wastewater treatment plant that is in the planning stages will be eligible for partial funding from the wastewater impact fees.

City Council in November voted to increase the city’s impact fee by about $1,300 following a rate study of the fees. The total impact fee for a new single-family home as of Jan. 1 is $7,972.

The city’s impact fees for new construction first went into effect in November of 2007 following a growth spurt in the town when it was difficult for the city to keep up with infrastructure needs.

Since then Whitefish has collected more than $5.4 million in total impact fees, and it has collected an additional roughly $276,000 in related administrative fees.

Administrative expenses incurred when collecting the impact fees are charged at a rate of 5 percent in addition to the impact fee rates.

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