Impact fees for building in the Gallatin Valley

Impact fees for our booming construction industry have recently seen some significant shifts. In May of 2019 the Belgrade City Council voted 4-1 to change the impact fee schedule that had been in place for 12 years. Impact fees were established to help municipalities absorb the cost of services they provide to their residents and can include water, sewer, parks, fires and road services. The sticker shock for Belgrade builders was intense with a 45% increase, which in turn created a more level playing field when making a decision to do business in Belgrade or Bozeman. The gap between the two had narrowed substantially.

Prior to the fee increase, which took place in July 2019, the impact fee to build a single family home in Belgrade was $7,761. After the new schedule went into effect builders would be responsible for paying $13,440 as well as additional administrative fees, hook-up fees for water and sewer and permit and plan review fees. While some services in the schedule actually decreased slightly there was a dramatic increase in the fee for road services. Belgrade’s growing pains are obvious if you attempt to drive out of or into the city during commuting hours. Long lines on single lane roads, inching forward and waiting two or three turns at a stop light to make it to your destination are normal. With explosive growth already happening and more on its way, traffic mitigation is something that needs attention. These impact fees have been adjusted in an attempt to address those and other issues that are inevitable including significant changes in the sewer treatment system. At the end of the day the goal is to create a community with services that actually meet its resident’s needs.

The City of Bozeman has been in disputes over the impact fees required of contractors and developers within city limits for a long time. The Southwest Montana Building Industry Association has litigated against the fees a number of times in attempts to “hold the city accountable”, according to SWMBIA attorney Art Wittich (Bozeman Daily Chronicle, June 2017). The city provides an estimator tool online, which is good because if you attempt to place a call to the city planning department, you’re met with a recorded message that indicates they are very busy and you’re welcome to leave a message but you should expect a delayed response of 4-6 weeks for an answer of any kind.

Using this estimator tool you can calculate that if you are a builder in Bozeman and you’re planning on building a 2500 square foot single family home the impact fees you can expect to pay will be approximately $14,450. There are additional planning and review fees including administrative costs somewhere in the neighborhood of $1000 that aren’t included in that figure. Some of the growing pains that Belgrade is currently experiencing have already been addressed by the City of Bozeman Planning Department but a deficiency of available building lots and vertical vs sprawl is creating a lack of inventory for those looking for the traditional white picket fence American dream.

For homeowners and home buyers in the Gallatin Valley these fees will impact the cost of the home you choose because they will inevitably trickle down. Educating yourself on how your city has been managing these funds and utilizing their resources is important and something that should be taken into consideration. Working with a real estate professional that understands the municipal culture you may be living in can be quite helpful. Increases in impact fees or fees that are already in place might seem high but could this indicate that services provided in your neighborhood are being maintained or are set to improve. These fees are necessary to provide our community services and safety.