City Commissioners were asked during their Aug. 1 meeting to set three public hearings for Aug. 15 on proposed fee increases related to land development.
Instead they set the public hearings for Sept. 5.
City staff told commissioners last summer during the budget process that they needed to look at adjusting those fees and during the budget process this summer, commissioners asked staff to look at adjusting fees to recover their costs for services.
The land development fees haven’t changed since 2014, which City Manager Greg Doyon said has had a “significant” financial impact.
There was a time the city’s development review process wasn’t good, Doyon said, and there was a hesitancy to increase fees for cost recovery for fear of being perceived as not business friendly.
It’s becoming unfriendly to taxpayers not to do cost recovery, Doyon said.
City considering increasing variety of development review fees
“The taxpayer is proving payment for services that are being rendered,” to the development community, Doyon said.
In some instances, that cost could be passed on to residents through utility rates, he said, without adjusting the development fees.
The city moved engineers from public works to the planning department for plan review, but that concept didn’t work as planned so they’re moving the engineers back to public works, he said.
Staff is trying to alleviate pressure on the general fund, which are the primary dollars funding the city’s public safety departments, and using those dollars to subsidize other functions takes away that capacity, Doyon said.
He said he understands the development community won’t like increased fees, but the review process and inspections are needed due to various regulations and to ensure the city is accepting good public infrastructure rather than paying to fix it later.
Chris Gaub, city public works director, said that staff is working to have inhouse engineering review and their hourly review rates are lower than the city’s third party consultant, but that they’ll retain the consultant in case of staff shortages or spikes in development applications.
Brad Talcott, a local developer, said that he understood the need to increase the fees and supported it, but wanted to ensure there was predictability with the fees. He said the bills from the third party consultant were higher and variable.
Sherrie Arey, NeighborWorks Great Falls director, said she commends staff’s work to improve the development process.
She asked commissioners to delay the public hearing on the planned fee increases to give the development community more time to digest the information and have discussions with city staff.
Arey said it would be better to wait until the new planning director, Brock Cherry, started on Aug. 7 to involve him in the conversation.
She said some of the fee increases seem “chilling” to development but wanted to walk through issues and concerns with staff and then commissioners could make a decision with more information.
Katie Hanning, Home Builders Association of Great Falls director, also asked commissioners for more time to review the proposed fees and have conversations with city staff.
Gaub said staff sent notice of the fee increase proposal to the development community and scheduled an open house for Aug. 11.
Doyon told commissioners that the new budget included the proposed fee increases. Commissioners approved that budget during their July 18 meeting.
“You’re asking us to basically negotiate with folks on these fees,” he said.
Doyon said it’s difficult to get developers, builders, realtors and others in the development community to agree on development fees.
Mayor Bob Kelly said it was worthwhile to delay the public hearing to show that they’re willing to listen but that they have a job to do.
“I’m not up for negotiating what you guys have come up with,” he said.
Commissioner Rick Tryon said pushing the public hearings two weeks would allow more time to provide information to the development community but agreed with Kelly that it wasn’t a negotiation.
Commissioner Susan Wolff said she wanted the new planning director on board before making the decision.
Doyon said it was beyond the new planning director due to budgetary needs and strongly encouraged commissioners to participate in the meetings with the development community.
The first public hearing pertains to engineering reviews of building and parking lot permit applications.
The engineering division of the city’s public works department reviews those applications to ensure proposed improvements within the adjacent right-of-way and water/sewer/storm utility connections adhere to the city’s standards for design and construction and the city code.
The engineering division also reviews plans and design documents for privately owned and maintained stormwater systems, when required, for compliance with the city’s storm drainage design manual and city code.
The reviews require staff time, equipment and materials.
To recoup those costs, engineering staff collaborated with planning staff to develop a review fee proposal.
Commissioners review city budget, revenues trending down [2022]
The review fee was calculated based on the estimated time that it will take for an engineer to review the submitted data multiplied by the commission approved hourly rate, which is less than the rate currently being charged by Sanderson and Stewart, the city’s third party consultant.
The planning department will collect and administer these fees with a processing fee and a required 3 percent credit card convenience fee, according to staff. The proposal also allows pass through of the fees the city incurs when review assistance is provided by third party consulting engineers, according to staff.
The city transferred development plan review, construction oversight and project management duties from the public works engineering division to the planning department in 2019. As part of that transfer, a different funding strategy and budget was developed the finance the full time employee positions and related operational costs, according to staff.
Commissioners adopted that fee structure in September 2021, and subsequently adopted a modification allowing staff to directly pass along costs the city incurs from third party engineering consultants to the project applicant or developer.
City adjusts engineering fees for development process [2021]
With engineering position vacancies in the planning department since that transition, staff has determined it’s best to move engineering development plan review, construction oversight and construction management duties back to the public works engineering division.
The planning department will continue to function as the intake and facilitator of development applications, according to the staff report.
The proposed fees are an “upfront, predictable fee structure” that will replace hourly billing for development review, according to the staff report.
The proposed new fee structure is due to a shortfall in the planning department budget, portions of which are funded by associated fees for services.
City hosting development process town hall meeting July 14 [2021]
Even if the commission approves the increased fees, the planning department budget still needs $376,932 from the genera fund, according to staff. During the budget process this summer, commissioners discussed the need to increase user fees to alleviate pressure on the general fund.
The planning budget is also losing revenue this year due to state law changes that prohibit local governments from requiring business licenses when such licenses are required by the state. Staff is working with the city legal department to determine which licenses can no longer be required, but are estimated a revenue loss of about $70,000.
City approves budget, intent to raise taxes
Staff is also proposing to increase land development application fees. Commissioners will be asked to set a public hearing on that proposal for Aug. 15.
Those fees haven’t been increased since 2014, according to staff.
“It is always advisable for local governments that charge user fees to evaluate them almost every year for both fairness and cost recovery. To prepare the revised land development fee schedule, staff went through a lengthy analysis process focused on two areas: 1) the true cost of total staff time spent on representative land development proposals, and 2) comparisons with development fee schedules from other Montana municipalities,” according to staff.
In comparing Great Falls land development fees to other Montana communities, staff found that other cities have more recent fee structures and that Great Falls’ fees are “far less” than Missoula and Bozeman and generally lower than Billings.
“It was important for staff to focus on identifying the correct fee amounts rather than more comprehensively
adding new fees to the development process,” according to the staff report.
City planning office closed May 3, effort to revamp development review process continuing [2019]
“While it is always hard to perfectly track staff time spent on land development projects, staff also did an analysis of staff time spent on representative annexations, subdivisions, conditional use requests, rezoning projects, and more administrative processes. What staff discovered is that the current fees did not accurately match the number of hours spent on typical projects. This is another reason why fees are proposed to be increased,” according to the staff report.
To illustrate the analysis for commissioners, staff used the recent zoning and annexation request for the 432-unit apartment project that will eventually be constructed at the northeast corner of 38th Street and 2nd Avenue North.
Under the current fee structure, the developers paid a flat $2,000 fee to annex and zone the property, according to staff.
During the four months of staff time needed to get the project through the development process, and ultimately approved by the commission, staff conservatively estimated that six employees worked on the project for about 90 hours of staff time and that almost $9,000 worth of staff salaries were spent on the project review.
Staff is proposing the new annexation fees be based on property size and if the new fees were in place for this project, the application fee would be $5,400.
The new fee wouldn’t cover total staff costs, but would be better cost recovery, according to staff.
If approved, the new fees would increase application revenue from $40,000 to $50,000 annually, based on the last two fiscal years, to about $110,000 to $140,000, according to staff, but the department would still need general fund support.
Commissioners will also be asked to set a public hearing for Aug. 15 on a proposal to increase building division fees by 8 percent, due to budget shortfalls, many of the reasons detailed above, and several additional factors.
During the development review process changes, a staff planner was assigned to each project to oversee its progress through the full process. That required planners to be become more fluent in what all departments need in the review process and increase their involvement with the building division.
Because of that, the recently city adopted city budget allocates that each planner is paid 10 percent from the city’s building division fund, which is fee driven, creating a need to create more predictable revenue in that fund, according to staff.
The last fee increase was in 2014 and in 2018, the department decreased fees.
With a similar volume of activity, staff estimates the fee increase will generate about $100,000 to $200,000 in additional revenue.
