Don Nicholson Wants $65,000 from You

by Rebecca Schmitz

Impact fees and SIDs are technically different things, but their purpose is the same: to help fund the necessary infrastructure that specific neighborhoods and the city as a whole requires. You know, like sidewalks, bike lanes, road construction and repair, and the widening (or narrowing) of the same. Either you, as a potential property owner, will pay upfront as part of the purchase price when costs are lower and the work can be easily completed, or you’ll pay far more years down the line, when streets and private property–yours now–has to be torn up to get the job done. Who’s against impact fees? No surprise there, the Missoula Chamber of Commerce:

Opponents say the proposed cost is exorbitant and unfair, though they don’t dispute the need to find ways to pay for roads. “It’s a complex problem and we are happy to work with the city to look at alternatives,” said Gary Bakke, with the Missoula Chamber of Commerce.

And who thinks the Chamber should play a role in city planning? Ward Two City Council incumbent Don Nicholson.

Ward 2’s Nicholson said Missoula is not friendly as a whole to business. Involving the Chamber of Commerce in planning would help, and paying attention to zoning could as well.

Let’s ignore for the moment the tired old argument that Missoula isn’t “friendly to business”. Really, if you look out your window you can practically see the city moving by the nanosecond towards Frenchtown in one direction and Clinton in the other. If Missoula didn’t like business, somebody then needs to explain why the entire city is debating the direction of sprawl, infill and growth. Like suburbia or not, those are the three best indicators of a healthy economy. No, let’s think about a City Council candidate who thinks the input of a specific special interest group is more important than average citizens–the same citizens who will have to pay the eventual SID taxes just a few years from now, when Missoula moves past their neighborhood on the march towards the future.

Whether or not the final Hillview Way assessment is correct, I’m sure Dr. Linda Frey can tell you all about the consequences of shortsighted planning. Depending on the size of their property, Ward Two voters need to ask themselves if the Chamber and Don Nicholson will be there to help them pay that possible SID tax of up to $65,000 when it’s their turn to write a check for road reconstruction.

  1. noodly appendage

    …”the same citizens who will have to pay the eventual SID taxes just a few years from now…”

    Which citizens should be exempt from paying for collectors and arterial construction? Homebuyers in new development usually pay, see below, but doesn’t everyone in the city use collectors and arterials?

    Sids and impact fees have another similarity and one that works against your point. Impact fees are collected now, and used to pay for infrastructure improvements LATER.

    Cities can require “waivers of protest” when approving subdivisions, so that SIDs can be implemented once an area is sufficiently built out.

    Large developments by large developers can develop as you say, and they cover a large enough area to build a road, or their half a road, but small builders and private landowners usually can’t put significant improvments in when developing five to ten acres.

    So waivers so that SIDS can be imposed later, and impact fees that are collected and spent later, are used to make infrastructure improvements in areas that develop slowly and piecemeal.

    Big developers and big developments are actually much better for urban planning, infrastructure, and parks and trails.

    The small landowner and small homebuilder is at a serious disadvantage, though, with your pay as you go scenario.

  2. Larry Kralj, Environmental Rangers!

    Chamber of Commerce. HA,AHAHAHHAHAAA! What a joke. I used to refer to them as the Chamber of Cancer!, for you see, they have ALWAYS endorsed the most horrific polluting schemes in the name of “economic development”. But they never did understand that economic development must make economic sense! They were behind heapleach goldmining in a BIG way. They even blasted me one time in an KUFM guest editorial. (I forgot the bozo’s name) Which was great, because it simply gave me the opportunity to kick their asses in a rebuttal! They are a joke, and should be treated as such.

  3. So, if developers had paid impact fees 30 years ago when the Hillview Way area was starting to develop, there would be no need for an SID to improve it now?

  4. I’m assuming that is a hypothetical carol, as there were no impact fees 30 years ago?

    noodly – you make a good point with the question as to whom is to pay when it comes to arterials and collectors.

    A few weeks back there was a debate on a new major arterial which took traffic off of Reserve. This upset the fairly new subdivision, as they were being faced with an SID that they had no right to protest. BUT, this problem was two-fold – first, they bought and didn’t know that the arterial was part of the approval process for the subdivision they were moving in to and second – perhaps the subdivider should have had to pay for it in the first place and not been able to pass it off to unsophisticated buyers some years later.

    But alas, another illustration of the City bowing to the almighty developer at the peril of the individual.

    In the case of Hillview Way, I’ve pondered the same yet admittedly not gone to go look at the SID map. As an arterial and collector I’ve wondered if everyone that is using that road “every morning and every afternoon on their way to and from work” (as the testimony went that night) was being assessed some amount, even if exponentially larger or smaller, based on the total distance (perhaps) that they drove? intensity of use? I guess what I’m trying to say is that if the SID was spread out over a larger area to capture as many people that would likely be utilizing the roadway, perhaps that is fairer. Again, admittedly though, I’ve not gone to look at the proposed SID area.

    It is, actually, the method of assessment that people are objecting to – most people.

    Now as for involving the Chamber as some stakeholder in City decisions, well, that is the worse idea so broadly cast out that I’ve heard in a long long time.

    What stakehold does the Chamber have on the Hillview Way SID? Is there areas zoned for business uses up there that I’m not aware of?

    And the Chamber, in this town, does not speak for all the businesses. There is also the Missoula Downtown Association. Should we bring them in to? And then perhaps Denny Washington – he employs a ton of people and makes a ton of money. What about St. Patrick’s? They’re another large employer.

    I know – let’s let our employers decide what is best for the taxpayers! That should work out well!

  5. Ayn Rand

    A toll booth perhaps!!!

  6. or even better – EZPass!

  7. Of course it was a hypothetical. And I think if they had paid appropriate impact fees 30 years ago, we’d still be looking at an SID today.

  8. I was thinking the same, so that’s why I was wondering.

    I’m also pondering at what point do ‘taxes’ kick in as the entity that picks up the tab – i.e., the whole darn community shares in infrastructure costs.

    Especially these main roads.

    I live near 3rd – a whole hell of a lot of the people who live in Missoula drive that road pretty frequently – so how are those improvements going to be assessed?

  9. All citizens should pay, Noodly, even real estate developers. Missoula is moving past the days of “small builders”. We’ve been discovered, and discovered by development companies who like to put big fancy signs by the entry to their subdivisions. To exempt them from the consequences of their activity–by opposing impact fees–doesn’t seem right.

    Thirty years ago, I’m not sure if anyone in city government accurately predicted the areas above Hillview Way and beyond (all the way to the opposite side of the river from Lolo and to the top of Mount Dean Stone) were going to be the target of intense, focused development. Since none of us are geniuses and haven’t invented a time machine, we can’t go back and protect everyone on and above Hillview Way from higher taxes. What we can do, though, is learn from that naiveté. Right now, we can see the city is expanding past the airport. Yeah, people buying property out there now will have to be a part of a SID area someday. But why not help those future private property owners by requiring developer impact fees now? Why would a member of City Council, let alone other government officials, take an important and necessary tool off the development table at the behest of one or two special interest groups?

    Jhwygirl, it’s my understanding that those who live higher up Hillview Way have a higher SID tax simply because they’re using more of the road than those living closer to 39th, but I could be wrong.

    And Larry, your favorite bozo’s name is Webb Brown.

    And speaking of developers, anyone else read the article in the Missoulian today about the Whitefish City Council taking a stand against unregulated lobbying? A developer tried to unethically influence the outcome of zoning and planning regulations. Is that something we can expect to happen in our town someday, when our City Council tries to encourage responsible growth?

  10. noodly appendage

    Well, I’m glad we got this discussion fired up. Generally, Carol, SIDs and exactions are required, and impact fees blunt the cost of the SID.

    It doesn’t change the question of who should pay. A local gas tax to pay for commuting routes sounds fairly close to a toll booth, Ayn, and it certainly fits my philosophy of using the market place to fix the problem (unlike my liberal friends here).

    With such a gas tax, you could extend arterials and collectors at city standards out into the county, so that they’d be ready for annexation.

    As for Missoula being discovered, well, you might check US News & World report for the best place to retire.

    This town has had impact fees for a decade:

  11. Here’s what Noodly is talking about:

    Bozeman has been selected by U.S. News and World Report as one of the best places to retire.

    What do retirees bring to a city’s economy? Shouldn’t Montana be trying to attract 20-, 30-, and 40-somethings, you know, the people creating and owning businesses?

  12. And I’m glad to see that we’re your friends here, Noodly.

  13. noodly appendage

    Actually, Rebecca, we are. We didn’t “try” to be on the US News & World Report list, we just are.

    Gallatin’s the youngest area outside the reservations. We are building a new elementary, a new middle and adding tens of millions to the high school, with a new high school going in at Big Sky.

    Bozeman Deaconess blew all the old records away for births last year. We are in a baby boom in Bozeman.

    But you are right about this; it wouldn’t be happening without a robust economy.

  14. Ayn Rand

    Re: 65,000. As Kendall-Jenkins explains in Missoulaoplis, suck it up!!! Of course she has decided not to stand for election, so now can spit in the face of voters and taxpayers. Nice huh?

  15. noodly appendage

    The law doesn’t allow for a lot of methods, or a combination of methods for assessing SIDs or RIDs. This can result in big inequities due to lot sizes, or due to per house billing on large lots that later, even sooner get subdivided post assessment.

    I couldn’t figure out how, with the payments from each lot calculated to pay the SID annual bond payment, some homeowners could skate by without paying. Would the city be loaning the annual payment?

    Anybody get to the bottom of that “deferred assessment” yet?

    Also, the introduction of bike lanes, curb bulbs, raised median, boulevards, areas of refuge between turning lanes and straight lanes, etc, raises the costs of city streets per mile considerably.

    But if you want that stuff, you’re gonna have to pay for it, and I don’t mean just a few homeowners on a hill, either. Of course, there is a contingent here who thinks it should just be paid by “the other guy”, but certainly not by those whom benefit by it the most.

  16. So what is it? Is there too much business in Missoula or not enough good paying jobs?

    And why is this titled “Don Nicholson Wants $65,000” from you? Nicholson just wants to city to pay more out of already gathered taxes. A great idea when you consider that ~65%+ of our city dollars goes to pay salaries, not to fill pot holes or build new infrastructure. After that, he wants those that benefit from increased property values to pay for improvements. Sound fair to me.

    Whether the money comes from impact fees or tax dollars, it all comes from the consumer. The developer just passes on impact fee’s to future homeowners and business owners that buy into the development.

    So what is it, do you want affordable housing or really high impact fees on developers? You can’t easily have both.

  17. petetalbot

    I love it when someone like Don Nicholson says Missoula isn’t business friendly. Hasn’t he driven down Reserve Street this decade? We have nearly every big box store, franchise and chain store America has to offer. I don’t see many businesses being chased out of Missoula.

  18. So many questions there, Scoop.

    First off, are you suggesting that if we didn’t have impact fees we would automatically have more affordable housing in Missoula?

    Secondly, I didn’t address the issue of good paying jobs, but most of the businesses opening in Missoula are based in the service sector. As we all know, that can range anywhere from a waitress at Johnny Carino’s to a cardiac specialist at the International Heart Institute. Thanks to the latter, our average income level is rising.

    Thirdly, I did say impact fees are passed on by the developer to private property owners. However, if (like Don Nicholson) we’re going to follow the Chamber of Commerce’s suggestion and not assess any impact fees, won’t that lead to higher SID taxes down the line?

    Finally, why is this titled “Don Nicholson Wants $65,000 from You”? Hmmm…I think you missed a point. $65,000 is the disputed amount Professor Linda Frey has been (potentially) charged for the Hillview Way SID. Let’s do the math:

    If the Chamber of Commerce is against impact fees (no impact fees = higher SID taxes), and Don Nicholson = Chamber of Commerce, then Don Nicholson = higher SID taxes.

    Also, she who writes the post gets to frame the debate. You should know this. After all, you’re the guy who claims no one likes Jag, Governor Schweitzer’s dog.

  19. noodly appendage

    Assessments, I take it then, are by sq ft, and Perfesser Linda Frey has a lot of sq feets?

    Seems that a per unit assessment might have treated her better but it would have spread her 65k around to her neighbors, not onto anyone else. Does she oppose improvements to the road? Impact fees can only address future impacts. Linda and all her neighbors are already on the hook for any improvements that are needed right now. New developments could pay their incremental impacts, but they aren’t going to pay for the Perfesser’s .

    Impact fees are coming, if for no other reason than we don’t have a sales tax and property taxes carry a huge burden for schools and local governments and impact fees reduce capital costs to property taxpayers.

    People who oppose impact fees actually, and accidentally, support “building moratoriums”.

    In Bozeman, we’ve got a leash law and the Governor flouts the law every time he visits. Law breaking elected officials don’t impress me much.

  20. Assessments are determined by the size of the lot and the location along the road in question.

    One of the last times Brian visited Missoula someone reported him and Jag to the police for violating leash laws here. Given the level of rancor between Schweitzer and Bob Keenan (primarily on Bob’s side), maybe we should check Keenan’s day planner to see if he was in the area on that date.

  21. edchilders

    All kinds of answers, most of which are probably correct. :)
    I believe the Governor has been given special dispensation by the Mayor to have Jag off-leash. I wouldn’t be surprised to find out that there’s a piece of paper to that effect and everything.
    SID’s can be assessed in a variety of ways. The most interestingly assessed SID of which I am aware had the following methods: property value, number of business-provided parking spaces, distance from a “centroid point.” There might have been an area assessment as well, I don’t remember.
    As I recall, area, front footage, and assessed property value are the most commonly used assessment methods in Missoula; mostly it’s area or front (lineal) footage.
    Ms. Frey has about 10 acres.
    The proposed deferral for the Hillview Way SID is for all but $6,000 regardless of assessment. Of a $65,000 assessment, a person would have to pay $6,000 now (or in installments plus interest for the next 15 or 20 years, depending on the bond sale); the rest, plus interest, would be due when/if the property is developed. There are doubtless other subtleties.
    Our proposed impact fees are a balance between the total impact (as determined by a consultant so it must be accurate, eh?) of new construction, and the perceived benefit of new construction to the existing community. For instance, if the new-infrastructure impact of a new business is $100,000, and they’re charged an impact fee of $50,000, the existing community (residents and businesses) pay $50,000 for the perceived benefit the new business provides to the community of. The “perceived benefit” is, I think, not easily quantified; so it’s a political decision that’s likely to vary over time.

  22. noodly appendage

    The Governor has no such special dispensation from the Bozeman Mayor, I’m absolutely certain.

    Ed, who pays the bondholders if certain assessed properties don’t have to pay their assessment?

  23. Ed Childers

    What! Bozeman doesn’t love Jag??
    There’s about a 2 million dollar revolving SID revolving fund. If Owners don’t pay taxes and SIDs, property is sold for the tax/sid amount owing. In the early ’80’s there were some big new subdivisions whose infrastructure was paid with SID bonds. The housing market tanked. The owners defaulted. The City ended up with lots of lots, among them Prospect, Mountain Shadows, Fellowship Heights. The City (Missoulians through the sid revolving fund plus general fund money) made bondholders good and there was no default. The lots got sold at firesale prices so the city could get out from under the sid bills.
    If we’d held the property for a few more years we could have sold them for big bucks, but the mantra as I remember it was “the city is not in the land business.”

  24. noodly appendage

    Thanks Ed, that clears it up.

    If you can’t expect the Governor to obey the law, how could you expect it of anyone else?

    In essence, Missoula treats the deferred properties as automatic defaults and pays their share out of the revolving fund. Bozeman did NOT put the money from the sale of lots into a revolving fund, it was put in a “special projects fund” and spent on other stuff. I’d guess the revolving fund has some excess, but nothing to provide that kind of program.

    The eighties had SID and RID defaults statewide. BTW, jhwygirl, it’s why you can’t load too much debt for infrastructure onto bare lots. Sometimes it has to wait for the houses to get built before the underlying value’s high enough for the underwriter.

    If you want to get back into the real estate biz, Bozeman’s got a rundown old fraternity house they’d like to sell ya, Ed.

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