The city manager and members of the Whitefish city council have responded to allegations that the city has “systematically overcharged” developers and homeowners on water and sewer impact fees, which are helping to cover the cost. cost of extending pipes and expanding treatment facilities to service new buildings.
At a Monday night council meeting, City Manager Dana Smith admitted that city staff made a mistake that likely resulted in small additional charges for installing showerheads in new developments. Smith said staff would conduct an internal review of water impact fees billed between January 2019 and July this year, when the error was corrected, and that the city will reimburse any developers who were overcharged. .
“We found an error in our program calculator, which is an Excel spreadsheet, in which we count the number of fixtures per building,” Smith told the board. “We are aware of this problem. It hasn’t been in effect for all this time, so it’s a very limited window that we’ll have to look at, which is around two years. And we’ll go back and we examine the impact this will have on buildings that applied during this period and whether refunds were required. “
Smith pointed out that she found no indication of “malicious or fraudulent intent” behind the error, which attributed too many “fixture units” to the shower heads on the matrix used to calculate the impact charge. on the water. A city employee will review old building permits and determine how many refunds are warranted if time permits, she said.
“It’s going to take a lot of staff time,” Smith told the Daily Inter Lake. “Hopefully we can do something in the next three months, but with other urban projects going on, it’s just going to take a while to do it.”
THE MISTAKE was revealed after Whitefish residents Paul Gillman and Bill Burg raised a litany of concerns about the city’s impact charges and the formulas used to calculate them.
Burg is an accountant and a former member of the Flathead City-County Health Board. Gillman has a computer background and started digging into impact fees after asking for a home addition to be built last summer. Gillman said the shower head error could have cost him several hundred dollars if he hadn’t caught it, and he wants the problem fixed for anyone who may have been affected.
Gillman and Burg also argue that the shower head error is just the tip of an iceberg, alleging the city has overcharged builders by hundreds of thousands, if not millions of dollars in recent years. The pair collected tons of city documents and performed their own calculations, which Gillman compiled into a 20-plus-page report.
“Impact fees are governed by Montana Law 7-6-16 which places strict limits on the types of projects that can be included, how fees are calculated, and the maximum fees that can be collected,” wrote Gillman in a letter to the board. “The Town of Whitefish appears to be violating all of these restrictions.”
But city officials say Gillman and Burg’s analysis is flawed, and they have pushed back the pair’s request for an independent audit of the impact fee program.
“There are numbers thrown in [Gillman’s] report that I cannot confirm whether they are correct or not, ”Smith told the council on Monday.
“I know that both Mr. Gillman and Mr. Burg would like an independent audit of our impact costs,” she said. “I’m not opposed to it. But I also question the use of taxpayer dollars to audit something that has been the subject of an important public process.”
After correcting the shower head error and speaking with FCS Group, the consulting firm that helped revise the city’s impact fee in 2018, she said: “I think we are properly assessing the costs of the showerhead. ‘impact.”
She also noted that Whitefish is subject to annual state audits.
IMPACT FEES are an integral part of the approval process for new developments, and many cities use them to meet the demand for services. Whitefish has seven categories of impact charges, the largest of which is billed for water and sewer services.
“When a new house or a new commercial building is hooked up to the water supply system, there is an additional demand for the flow, and therefore we must be able to produce more water to meet those demands,” Smith said.
While some cities charge water and sewer impact fees at flat rates, Whitefish uses a complex formula that starts with a base charge and then adds costs for various types of plumbing fixtures. Toilets, sink faucets, shower heads and hose nozzles are each assigned a specific number of “fixture units”, which are then added together to determine the final charge amount.
Smith said it was a fairer approach that ensures small and large developments are charged a proportional fee. In the case of shower heads, she said, there seemed to be some confusion between stand-alone showers and tubs that also have shower heads.
State law requires cities to review their impact fees every five years to align with development trends and cities’ own financial needs. Whitefish significantly increased its water and sewer charges in 2018 to pay for improvements to its water and wastewater treatment plants.
But Gillman and Burg allege the city relied on an outdated table as the basis for its calculations, failed to distinguish between different sizes of water meters, and inappropriately considered some projects. improvement of fixed assets, in particular a solar panel proposed several years ago at the treatment plant but never built.
SMITH, WHO met with Gillman and Burg, said none of the claims are accurate.
It is true that the city has more than tripled its perceptions of water and sewer impact charges, from around $ 488,000 in 2018 to nearly $ 1.6 million in 2020. This is in partly because of the higher fees, but also because the number of building permits issued by the city has increased considerably.
Smith said the city issued 200 permits for residential, commercial and renovation work in 2018. As of last year, that number was 354.
On Monday, two board members expressed confidence in Smith’s leadership on the issue.
“I just want to reassure the public, when we have people accusing us of something, we do research, of course. But she also knows what she’s talking about,” Board member Rebecca Norton said of Smith.
Board member Andy Feury added he was “comfortable not having an external audit”.
“I think Dana caught the imperfections in our spreadsheets, and that’s fine with me,” Feury said, before criticizing Gillman’s report. “Frankly, the way this letter is written, I can also find a lot of flaws in it.”
Gillman said Tuesday that he and Burg had hired a lawyer to review the impact charges and filed a complaint with the Montana Department of Labor and Industry, which oversees plumbing codes.
Associate Editor Chad Sokol can be reached at 406-758-4439 or [email protected]