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Call for commitment to honor the guiding principle of ‘local control’

by Mayor John M. Muhlfeld and City Council
| March 8, 2023 1:00 AM

To the citizens of Whitefish, State Legislature, and the public at large:

Impact fees are a complicated topic, and there is a lot being said about them at the State Legislature and here locally, some of which is misguided. Impact fees are a matter of fundamental fairness: If new development and new residents join our municipality, that growth necessarily requires more infrastructure and public facilities to be built such as added sewer capacity, water plants, larger roads, and the list goes on. This impact fee is implemented for new development to contribute a portion of the cost of infrastructure upgrades required at the time the development is built-in other words, to pay for its impact. The alternative is to have existing citizens, who did not ask for this growth, carry the full cost burden of infrastructure expansions through higher utility fees, taxes, or other assessments, and that is simply not fair. Here in Whitefish, where growth seems to happen faster than anyone is comfortable with, impact fees are a necessary funding source to address the costs of growth in an equitable way.

The City of Whitefish has established a fair and transparent process to calculate impact fees. An outside consultant who specializes in impact fees is hired at least every five years to assess our needed capital investment and determine those costs related to new development. This process, and the supporting math, is published in a report and adopted through a public process with input from anyone who wishes to participate. This is consistent with many municipalities in the state and complies with state law. Impact Fees are never wasted – every dollar that is paid goes into a dedicated fund that pays for needed infrastructure expansion driven by new development. Every dollar that isn't paid for by impact fees is a dollar that must be paid for by existing residents. Any attempt to frame this debate as a "high or unfair tax in Whitefish" is simply false: The City of Whitefish has impact fees in line with and often lower than comparable municipalities, including Kalispell and Columbia Falls. This City Council reiterates its commitment to keeping taxes low, balancing the budget, and equitably funding the critical services our citizens demand.

As has been reported in the news there is a class action lawsuit, pending class certification, pertaining to impact fees in Whitefish. Prior to the lawsuit being filed, the City of Whitefish acknowledged a clerical error that occurred with respect to impact fees for stand-alone showers, notified the public of the mistake, and commenced an audit to determine the nature and extent of refunds owed. The total estimated amount of refunds is minimal and is expected to be less than 6% of impact fees collected during that period (January 1, 2019 to July 31, 2021). Additional allegations are also raised in the lawsuit regarding the City's calculation of impact fees. While factual disputes exist on the topic, the City of Whitefish believes the fees themselves have been properly calculated, and we look forward to resolving the matter. It is unfortunate that ratepayers are stuck funding litigation which in reality benefits no one.

There are efforts underway in the legislature to add conditions limiting the use of impact fees in the name of "oversight", and those who seek to limit their use through the legal system through all manner of technicalities. These efforts are misguided and miss the bigger picture: Impact fees are already calculated by the folks that are experts on the topic (outside fee consultants) and adopted in a public, transparent, and thorough manner by those who are best equipped to know the local needs (City Councils). As any citizen here knows, excessive growth is already straining our infrastructure. We shouldn't be going backwards in the already limited avenues we have to equitably support that growth.

How much we pay in taxes and fees and who pays them is a battle as old as time, and that battle should be fought in one place: the democratically elected chambers of those representatives most accountable to the citizens. Not by far away politicians, or lawyers with questionable financial motivation. To the legislature, we call for a commitment to honor the guiding principle of "local control" and allow the citizens of municipalities across Montana to have a say in the growth of their town, and not be forced to waste scarce resources on more red tape.

Sincerely, Whitefish Mayor John M. Muhlfeld, and City Councilors Frank Sweeney, Andy Feury, Rebecca Norton, Ben Davis, Steve Qunell and Giuseppe Caltabiano.