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Senate committee debates capping local impact fees to lower housing costs
Summary
SB 133, a housing-task-force recommendation from Sen. Greg Hertz, would remove administrative add-ons to impact fees and cap increases at the rate of inflation. Housing advocates supported the move; municipal officials warned a CPI cap could undercount construction costs and undermine infrastructure funding.
Senator Greg Hertz opened the committee hearing on Senate Bill 133 by describing the bill as a housing task force recommendation aimed at reining in impact fees that can increase housing costs. "The recommendations were to put some limits on impact fees," Hertz said, summarizing provisions that would remove a separate administration charge and prohibit fee increases faster than the rate of inflation.
Proponents told the committee the measure would make homeownership more attainable. Ashley Martinez said SB 133 "takes meaningful steps to make homeownership more accessible, fair and affordable for all," arguing removing administrative fees and capping increases at inflation would help first-time buyers during a housing crisis. Jake Brown of Shelter Whitefish urged the committee to pass the bill, saying impact fees, while useful, have at times been used in ways that drive up housing costs.
Opponents from cities and municipal associations warned that impact fees fund large system upgrades and that a CPI cap would not track actual construction costs. "Impact fees already in Montana have to adhere to the Impact Fee Act that was adopted in 2005," Kelly Lynch, executive director of the Montana League of Cities and Towns, told senators. Lynch said impact fees must be carefully calculated, tied to a service area report, and may be reviewed every five years so fees reflect actual infrastructure costs; she argued tying increases to CPI could undercount construction-cost inflation and shift costs to existing taxpayers.
Officials cited local projects as evidence. Russ Nelson, mayor of Belgrade, described recent investments including a $46,000,000 wastewater upgrade where impact fees contributed about $3,500,000, and other water and road projects that relied on impact fees. City of Bozeman representative Danny Hess and Billings representative Brad Longcake said caps tied to CPI would threaten predictable funding for large projects like lift stations, treatment plants, and major road links.
Committee members pressed witnesses on implementation details: whether waiving impact fees for affordable units is permitted (witnesses said waivers are voluntary and used as incentives), whether fees can be applied mid-review (most agreed fees must be in place when an application is deemed complete), and whether CPI is the right metric versus a construction-cost index.
Senator Hertz said the bill is not intended to eliminate impact fees but to limit excesses and that he will consider amendments, including exploring an alternate metric tied to construction costs and examining overlapping fee jurisdictions. The hearing closed with no committee action taken.
