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High impact fees



Missoula County Commissioner Barbara Evans doesn’t like impact fees. And she says she’s not alone. Citing the writings of U.S. Supreme Court Justice William Rehnquist and a Montana State University-Billings economist as support, Evans says imposing impact fees will counter the efforts of smart growth and affordable housing advocates, and believes the fees are just another way to squeeze money from the taxpayers.

“I firmly believe that government looks at this as a nice new revenue source,” she says. “But there’s a Supreme Court decision that says you can’t use [impact fees], and these are my words, as a nice new revenue source.”

Mayor Mike Kadas says he’s well aware of the Supreme Court ruling and the legal and philosophical issues surrounding the fees, but he still thinks they’ll work.

“Essentially we are talking about new construction paying its fair share,” says Kadas. “I don’t think that’s a difficult concept for most citizens to understand. The other side of this is that if we don’t collect those fees we either pay for that infrastructure with dollars from all the other citizens with increased taxes, or we accept a lower level of service.”

If the fees on new home and business construction were put in place, the city and county could raise about $2 million a year for infrastructure within the areas of new development, according to Tischler and Associates, which did the study for the city. Kadas and many city council members argue more money is needed because Montana’s property tax laws don’t allow the county and city to raise enough to keep up with the growing demands of new development.

Tischler’s company has calculated over 500 impact fees for American and Canadian municipalities, none of which has been legally challenged in the wake of the Supreme Court ruling. But even if the fees can be written so as to avoid legal snares, Evans says they’re going to wreak havoc on Missoula’s already low rate of homeownership—about 50 percent of Missoula residents own their homes, compared to about 70 percent statewide.

“You add another $1,500 or so on to the price of the house and it’s going to price people out of the ability to buy,” she says. “And we don’t want to do that.”

Kadas says that national census data conflicts with Evans’ logic. From 1990 to 2000 the price of a house has gone up about $7,000 a year, he says. During that same decade, the rate of home ownership has remained steady.

“It’s import to understand the historical context of what’s happened to housing,” says Kadas. “Even with the $7,000 annual increase, people are still buying houses. There isn’t a house in Missoula that gets built that doesn’t get sold.”

The mayor also disagrees with Evans’ theory that impact fees will force people to “pay twice” if they move from one home to another. He argues that what a homeowner pays for with her first house is the infrastructure that goes with that house. When the homeowner sells the house, she’ll receive a premium in the price of that house for that infrastructure. Then she’ll have to reinvest in a new infrastructure in a new neighborhood.

Later this month, Tischler will draft impact fee ordinances for the city, county and citizens—via public comment period—to tinker with. Evans, who claims two city council members on her side, will still have ten more, two commissioners and the public to convince if she’s to mount a successful campaign against the fees.

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