Setting development fees gets tricky when growth grinds to a halt with a $22 million sewage treatment plant expansion to pay for. It’s a trick Kalispell so far has been unable to work out.

A $1 million-a-year debt payment for that expansion is one thing driving proposals to significantly increase the sewer impact fees that Kalispell charges new construction.

Kalispell has not adjusted its sewer impact fees in five years. Some people say a hefty increase now on the table would only stifle the little growth that is occurring and make it even harder to collect fees to pay off the plant expansion.

Kalispell’s advisory Impact Fee Committee has seemed unwilling to support the $2,499 to $4,257 minimum sewer impact fee increase recommended by a Morrison-Maierle study.

But the study says that level of fee is needed if projected growth is going to pay for its share of the treatment plant expansion — about 78 percent — and about $8 million of other sewer system enlargements that are expected to be needed for more growth to occur.

Kalispell already has increased the rates sewer customers pay, in part to help cover that treatment plant debt payment because insufficient sewer impact fees are being collected.

Some members of the Impact Fee Committee have suggested pushing more growth-related costs onto sewer customers as one way to hold down or even get rid of sewer impact fees and help the development community recover.

Public works staffers at a meeting on March 26 estimated sewer rates would have to grow by about 9 percent to raise as much money each year as the proposed sewer impact fee increase.

Rates would have to grow by about 22 percent if Kalispell wanted to eliminate sewer impact fees and collect the same amount of money — almost $900,000 a year — to pay for growth-driven sewer improvements.

That preliminary analysis was done at the Impact Fee Committee’s request to hazard a guess at how much sewer rates that normally pay only for operations and maintenance would have to increase to also cover the capital improvements normally paid for by impact fees.

For a third straight meeting, the Impact Fee Committee stopped short of voting on a recommended course of action for the Kalispell City Council. But at least one of its members seemed to favor a combination of sewer impact fee and sewer rate increases.

“I think there should be balance,” committee member Larry Sartain said about the larger sewer impact fee increase that developers potentially face compared to the smaller amount sewer rates would have to increase to offset it.

But deliberately foisting infrastructure costs needed to accommodate growth onto existing sewer customers would be a major change in Kalispell’s mantra that “growth should pay for growth.”

Meeting for one hour once a month, the Impact Fee Committee will continue its sewer impact fee deliberations in April and possibly even in May. Those talks may grow to include a hunt for some other funding source yet to be identified.

“What I’m trying to do is come up with a way this money can be collected other than impact fees,” said Chad Graham, the committee’s chairman. “It may not be rates. It could be something else. We have to look for different ways to do it instead of just continually saying, ‘Growth, you pay for it.’ Because it’s not there. You’re coming to an empty ATM.”

SOME IMPACT FEE Committee members at the March 26 meeting briefly questioned whether they are overstepping their advisory role by exploring funding and policy options they have no power to enact.

Jeff Zauner, a member of the committee and the Kalispell City Council, said the committee should fully consider whatever recommendation is made.

If committee members want to recommend things such as getting rid of sewer impact fees or alternative funding mechanisms, they should at least try to tell the city council what that could look like, City Attorney Charlie Harball said.

“I don’t want to discourage creative thinking. If folks out there have good ideas that every rate payer out there also has to buy a lottery ticket, we can [consider] that,” Harball joked at the meeting. “But any ideas that come in, we’ve got to look at them and make sure it’s going to be consistent with the impact fee law.”

Impact Fee Committee members have finished reviewing Kalispell’s water impact fee and supported increasing the minimum fee from $2,213 to $2,567 as recommended by a Morrison-Maierle analysis.

The water impact fee has not been adjusted for five years and that recommendation goes before the city council for action later this month.

Kalispell charges impact fees for sewer, water, police, fire and stormwater services. As set, the fees total $6,357 for construction of a single family home. They can total tens and hundreds of thousands of dollars or more for larger developments.

Reporter Tom Lotshaw may be reached at 758-4483 or by email at tlotshaw@dailyinterlake.com.