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Missoula County exploring 'Smart Growth Fees' to fund infrastructure costs

Housing Growth
Posted at 1:36 PM, Oct 19, 2022
and last updated 2022-10-19 15:36:48-04

MISSOULA — It doesn't take a longtime Missoula resident to understand the growth taking place south and west of the city, with new subdivisions filling in and road networks expanding.

Estimates suggest that over the next decade, Missoula will absorb another 12,000 residents who will need 4,500 homes. They'll also require the creation of 15,000 new jobs requiring more than 16 million square feet of new commercial space. That doesn't include the city's bedroom communities including Lolo, Frenchtown and Bonner.

To address the growth, Missoula County has begun to analyze the creation of smart growth fees, or impact fees, to pay for the infrastructure required by new development. That new infrastructure carries an estimated cost of $17 million, and many believe new development should pay for it.

“The county is recognizing that there are levels of service that people expect in some really important areas,” said Hatton Littman, a consultant with Leadership Montana. “We're talking about infrastructure, not about employees, supplies and operational costs. We're talking about physical infrastructure.”

Of the estimated $17 million in infrastructure needed to support future growth over the next 10 years, the Missoula County Sheriff's Department accounts for around 32% of it, or $5.6 million, while emergency management accounts for 16%, or $2 million.

Other costs include $3 million for parks, $3 million for growth in general government, $1.7 million for Frenchtown fire, and $1.5 million for paths and trails.

“Those are the costs Missoula County is trying to solve for,” Littman said. “The county anticipates that over 10 years, they could generate $16.6 million from new fees and $1 million from new property taxes. It's a way to buffer current residents and current property-tax payers, renters and business owners, from the costs to expand necessitated by these 12,000 new people.”

Buffering current residents from the costs of future growth lies at the center of what impact fees are intended to achieve. They represent a one-time cost placed upon new development, both commercial and residential, to fund the public infrastructure such projects require.

Without such fees, taxpayers across the city would have to pay more to cover the cost of growth, Littman said. The fees are leveraged in specific locations and can only be spent for approved uses in those locations.

But while some contend that new development should pay its share for the increase in services and infrastructure it requires, others contend that the fees only drive up the cost of housing and business. Some suggest it's not fair to place the costs on the backs of new residents, or residents who move to a newly constructed property where such fees are applied.

“The cost, that $17 million, is just the increase in the level of service and infrastructure needed by the new growth,” Littman said. “It's not like we're trying to charge our newcomers for everything the county general fund is funding.”

As currently proposed, county fees applied to new residential construction in one of the five new zones would range from just under $1,000 to just over $3,000, based upon size. Commercial fees would be higher and are also based on size.