Recession Echoes in Flathead’s Low Subdivision Lot Numbers

By Beacon Staff

The Flathead County Planning and Zoning Department released its year-end count of lots created and proposed in the valley during fiscal year 2010, which showed a considerable drop in activity from the previous year and forecasted financial reductions for the department.

The report consists of development numbers from July 1, 2009, to June 30, 2010.

One of the report’s most telling statistics is the difference in lots approved by final plat in fiscal year 2010 compared to the previous year. When a project reaches final plat, it means the lots officially exist and can be sold, Assistant Planning Director BJ Grieve said.

This differs from preliminary plat status, which instead gives an idea of how many more lots could hit the market if the project reaches final plat, Grieve said.

In fiscal year 2009, the county approved 422 lots by final plat. In fiscal year 2010, there were only 64 lots approved by final plat.

Preliminary plat numbers also presented a bleak picture for development activity. The county approved 53 total lots for both major and minor subdivision projects in fiscal year 2010, whereas 384 preliminary plat lots approved for major subdivision projects alone in 2009.

While subdivision lot numbers reflect the recession’s nosedive-effect on the Flathead’s construction and contracting industries, they are also directly linked to planning department funding.

The county relies on application fees, property taxes and money from the county’s state entitlement share payments to pay department costs. When a resident proposes a subdivision project, they must pay a fee to help cover processing costs, which can vary depending on the time and energy spent on each individual project, Grieve said.

“Some (application fees) don’t even come close to covering what we’re expending on it,” Grieve said.

Application fees have steadily declined since fiscal year 2006, when they hit a high of about $470,000. The department was going “gangbusters” at that point, Grieve said, and every planner on staff was busy processing applications.

In 2007, the number dropped to roughly $342,000. By fiscal year 2008, fee revenue was down to $257,000.

In fiscal year 2009, the planning department brought in about $162,000 in fee revenue. Last fiscal year, that revenue stream dropped to a little over $114,000. Grieve said the department is already anticipating further decline in 2011, forecasting only $100,000.

With fewer applications coming in, the county plans to cut the department’s other revenue streams to account for a lighter workload. According to County Administrator Mike Pence, the planning department received $369,876 in state entitlement share funds last year.

Those funds are expected to drop to $100,000 when the county approves its budget for fiscal year 2011, Pence said. The department’s share of property taxes is expected to decrease from $273,582 to about $255,000, he said.

While the decreases in revenue and development activity may be significant, they are not unexpected. Grieve said the planning department had already taken preparatory steps to reduce staffing – its single highest expenditure – when the downward trend began in 2008.

At that point, the planning department had 11.5 full-time employees, Grieve said. By 2009, one full-time position had been eliminated; in 2010, three and a half more positions were gone.

“The layoffs which occurred in fiscal year 2010 were a reaction to anticipated further reduction in revenue,” Grieve said.

With one more full-time position eliminated this year when Planning Director Jeff Harris’ contract expires in September, the planning department will have 6.5 full-time employees on staff.

Flathead County Commissioner Jim Dupont said he was not surprised by the planning department’s year-end numbers, and the county will continue its hiring freeze to compensate for similar revenue losses in other departments as well.

“Right now, we’ve made some significant cuts already and we’ve frozen everything,” Dupont said. “Our planning department really has taken a pretty big hit.”

Dupont noted, however, that the county is wary of reducing planning staff too much. If application numbers and activity begin to increase, an understaffed department could be a bottleneck for progress, he said.

“You’ve got to be careful when you’ve got a pretty good staff,” Dupont said.