City water impact fees set to double

The City of Whitefish’s water impact fee for new housing is set to nearly double this fall in response to the required expansion of its water treatment plant.

City Council last week approved increasing the water portion of its impact fee to $4,119. The fee had previously been set at $2,241.

The city in November 2018 approved changes to the seven different impact fees charged by the city, setting the total for impact fees at $7,972 for an average single-family residence. Beginning in September the new impact fees total will be $9,944.

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.

The Montana Department of Environmental Quality is prohibiting any additional water extensions or subdivisions because the city can’t meet its capacity requirements for water service. As a result, the city is currently planning for a water treatment plant expansion and related projects.

Assistant City Manager and Finance Director Dana Smith said the increase was proposed as a way to equitably share the capital costs of the expansion project. The estimated cost for the group of projects necessary to increase the source and treatment capacity is $10 to $12 million.

“While a portion of the [water treatment plant] expansion is needed due to demand from current users, the remaining capacity available for new development can be funded through impact fees,” she said.

The city has been working on a request to DEQ for a deviation that would essentially note that the city wants to continue hooking up new users, and is putting together a plan to increase its capacity.

Once the change to the impact fees goes into effect, Whitefish will have the highest impact fees in the Flathead Valley. A new single-family residence in Kalispell would be charged an impact fee of $9,466. Columbia Falls does not charge impact fees, but does charge a connection fee.

Smith recommended that the increase not take effect until Sept. 1 to limit the impact on projects currently in progress during the peak construction season.

During public comment, Erica Wirtala, with the Northwest Montana Association of Realtors, asked Council to consider not increasing the fee because of the detrimental effect it could have on affordable housing in the city.

“Any impact fee on new housing will be passed onto the new homeowner,” she said. “That could affect affordability.”

Councilor Andy Feury said while he understands Wirtala’s concern, the city has little choice but to make increases somewhere.

“You’re correct that this gets passed on, but if this isn’t paid in impact fees it’s going to be in monthly fees,” he said. “We already have extremely high utility rates.”

City Manager Adam Hammatt said the city is looking at ways it might assist in offsetting impact fees for affordable housing.