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House panel hears bill to narrow impact-fee uses, cap increases to an inflation index
Summary
Senate Bill 133 would remove a 5% administrative allowance, strike broad "other facilities" language and tie impact-fee growth to an inflation index. Municipal officials warned the changes could reduce local capacity to fund infrastructure and shift costs to taxpayers.
Senator Greg Hertz told the House Local Government Committee SB 133 is intended to tighten how local governments use impact fees and to limit annual increases to a stated inflation measure. "There's nothing in the bill that basically says you cannot do impact fees," Hertz said, adding the bill removes permissive language that he said had allowed fees to be used for a wide range of items.
Proponents, including Ashley Martinez of the Montana Building Industry Association, said indexing fees to an inflation metric and clarifying allowable uses provides predictability for builders and reduces regulatory uncertainty. "Limiting the impact fees to the rate of inflation provides more predictability for home builders," Martinez said.
Opponents told the committee the bill would constrain municipalities' ability to deliver infrastructure. Kelly Lynch, executive director of the Montana League of Cities and Towns, said the impact-fee law adopted in 2005 requires a service-area report and proportionality analysis that often relies on consultants. "If these impact-fee costs are reduced . . . those costs . . . will shift to the existing residents," Lynch warned.
Chris Saunders, community development manager for the City of Bozeman, described the local revenue consequences: the city averaged about $12,800,000 a year in impact-fee revenues and said replacing that stream with property-tax revenue would be significant. "The equivalent in mills to raise that same revenue would be 64 additional mills," Saunders said in testimony.
Committee members questioned choice of index (the sponsor proposed the Producer Price Index by commodity), the effect of removing an administrative fee, and whether the bill inadvertently excludes emerging needs such as broadband. The sponsor said he would work on amendment language, including a possible adjustment to address emergency-response or 9-1-1 facilities.
The hearing closed without a committee vote; the committee did not take executive action on SB 133 during this session. The sponsor said he would consider wording changes and amendments and remain available for follow-up questions.
