Beyond the Budget, Impact Fee Debate Looms

By Beacon Staff

While Kalispell officials struggle to balance the city budget, another overriding debate that could prove a key piece in the puzzle to solve the city’s revenue problems is not going away: transportation impact fees. Last week the Chamber of Commerce invited Mayor Pam Kennedy and City Manager Jim Patrick to their second meeting with Kalispell’s most prominent developers, top loan officers and executives of some of the area’s biggest employers to discuss problems the business community has with the proposed transportation impact fees in their current state. Kalispell plans to implement transportation impact fees on new developments to pay for the infrastructure and road improvements necessary to handle the increased traffic that will result from the growth.

Over the course of the two-hour meeting, developers criticized the proposed transportation impact fees for unfairly charging commercial developers for city road improvements needed far from where new commercial development is happening. They also blasted the funding mechanism that would determine how much a commercial development should pay, and the traffic engineer hired by the city for being difficult to work with and uncommunicative. And they stressed that development is stagnating while Kalispell deliberates over the impact fees, because developers, loan officers and investors can’t accurately predict the cost of new projects until the fees are in place.

“We’re basically having that conversation on every project we’re looking at now: ‘Is the project still going to pencil with the impact fees in place?’” Dennis Beams, executive vice president and chief credit officer of Glacier Bank, said. “Right now, we don’t know what the costs are, so it’s very difficult to consider the financing.”

Semitool executives said the implementation of the transportation impact fees would weigh heavily on any decisions by the company to grow in Kalispell.

“If we were looking at building a facility in the city, this could be a showstopper,” said Steven Thompson Jr., a sales executive at Semitool and grandson of the company’s founder. “If these were enacted, as proposed today, I don’t think the city would see any revenue from it.”

The developers also questioned whether those who had already begun their projects should be grandfathered in and not have to pay the new impact fees, or whether there should be a “phase-in” period over several years that charges a gradual build-up to the fee.

“It is totally inappropriate to charge any new impact fee when it was not even on the books to be discussed when the project was conceived,” Phil Harris, developer of the Hutton Ranch Plaza, said.

Answering the concern, Kennedy noted that many of the developments had build out periods of decades, like the Glacier Town Center and Old School Station. “Are you saying ‘It’s not fair for us to pay transportation impact fees on these projects over 20 years’?” Kennedy asked. Many in the room nodded affirmatively.

Kalispell’s legal language implementing the impact fee is also vague and could easily be challenged in court, Chad Wolford, developer of Glacier Town Center and his attorney, Ken Kalvig, said. They urged the city not to rush through the implementation of the fee just to make sure that developments slated to go up in the coming year must pay.

“It’s pretty obvious that the reason this thing has to get done so fast is so that we don’t get in under the bell,” Wolford, who has delayed breaking ground on his project until the spring, said. “I think we have to slow down and try to work this out the proper way.”

After which Kennedy noted that the city has been working on the impact fees for two years, and in that time it has missed the opportunity to assess the fees at the peak of the city’s rampant growth. “How much longer are we going to delay this?” Kennedy said. “As every year goes by, as every month goes by, we fall further and further behind.”

Kennedy agreed to review the idea of phasing in the transportation impact fees, as well as a payment schedule, and said she would also look at the need for more explicit legal language enacting the fees. Assessing the fairness of which road improvements the fees paid for was also up for reconsideration, she added, and agreed to meet again before the city council takes up transportation impact fees again in October.

At the end of the meeting, Mayre Flowers, executive director of Citizens for a Better Flathead, questioned whether residential taxpayers and other Kalispell citizens would have the same opportunity developers had to discuss impact fees with city officials. Kennedy assured her they would, through the public process.

“I just want to make sure we’re having more of a public balance,” Flowers said.