On a narrow 5-4 vote Monday night, the Kalispell City Council approved a sharp increase in wastewater impact fees after hearing diverse input from the public.

Fees on new development will increase from $2,499 per equivalent residential unit to $5,757 for every new household. The $3,258 increase will not apply to any development that is already permitted.

Voting for the increase were council members Kari Gabriel, Sandy Carlson, Wayne Saverud, Jim Atkinson and Randy Kenyon. Voting against were Mayor Mark Johnson, Tim Kluesner, Phil Guiffrida and Chad Graham.

The vote followed a public hearing and a lengthy council discussion about the potential effect the fee increase could have on new development as well as the need to pay for wastewater infrastructure improvements. Those improvements are needed to ensure that development can continue with a sewer system that is running at near capacity on the north and west sides of the city.

Most of the fee increase — nearly $2,500 — will be dedicated for three line extension projects that are collectively called the West Side Interceptor. The three projects, expected to cost a total of about $13.5 million, would expand wastewater transmission capacity on the west side of town and allow for future development in that area.

Mayor Johnson, a former developer himself, had some of the most concise arguments in support of the fee increase — but then he voted against it.

While those seeking building permits must pay the fee up front, Johnson noted that “the developers never pay impact fees ... the end user pays those impact fees.”

He bluntly described the choice before the council: “We can put [the cost of wastewater improvements] on rates, or we can put it on fees.”

And he said he doesn’t like the idea of asking wastewater ratepayers to take on development costs.

Contacted on Tuesday, Johnson said he voted against the increase because he believes more could be done to balance the burden of development costs. He said current wastewater rate revenue has the city “breaking even” without ratepayers covering the cost of capital improvements.

“That implies that everything in terms of capital investments are paid for by growth and that’s just not so. I’m not sure that the study does 100 percent of what it should,” he said, referring to a consultant’s study from which the rate increases were derived.

Jim Cossitt, a Kalispell attorney who recently was appointed to the city’s Impact Fee Advisory Committee, criticized the city for not firmly pursuing an impact-fee policy after using two consulting firms over the last few years.

Noting that he was speaking as a citizen and not a committee member, he said the city has been in a “stop-start policy process” ever since an impact-fee ordinance was adopted in 2006. Whether or not the fee increase was approved, he urged the council to “quit throwing money at consultants.”

Some council members later expressed agreement with those remarks.

Kalispell attorney and longtime property owner Bruce Measure strongly urged the city to put the cost burden of new development on the building community.

Over the years, he said, ratepayers have “provided the backbone” of the city’s wastewater infrastructure, and they shouldn’t be asked to subsidize future expansions of the system for the benefit of developers.

Several builders and a representative of the Northwest Montana Association of Realtors called for a more balanced way to spread the burden of new infrastructure costs among ratepayers and the development community.

Ed Mahlum said he has had difficulty selling lots he owns for development in the Leisure Drive area and higher impact fees will only make it harder. Others had similar comments.

“We just feel this is the wrong time to dump more impact fees on us,” said Lee Elders, who is involved with the Northland subdivision project.

Kalispell resident Sharon DeMeester said her water and sewer bills have been increasing the last few years and “I don’t know how I can keep paying more in fees and taxes.”

A portion of the wastewater impact fee increase, or about $545, is mostly dedicated to help pay for a 2009 expansion of the city’s wastewater treatment plant.

City officials say sewer customers currently are paying about 78 percent of the bond burden for that project, and additional revenue from the impact fee increase will lower that percentage.

Council member Phil Guiffrida pointed out that the plant was “overbuilt” and current impact fees did not alleviate the cost burden on ratepayers. Guiffrida expressed concern that if impact-fee revenue does not materialize as expected, ratepayers could be in a similar situation with regards to the costs of building the West Side Interceptor projects.

The most vocal opponent of the impact-fee increases was council member Chad Graham, who is a builder.

Graham said he has encountered a certain hostility toward growth that has created an “us versus them mentality” between some residents and the development community.

He said he has calculated that the development north of Flathead Valley Community College alone contributes $711,000 to the city and $1.32 million to local schools annually.

That development also has provided jobs and consumer choices that benefit the community, said Graham, who added that the fee increases have the potential to inhibit growth and development.

“I would say Kalispell benefits greatly from growth,” Graham said.

While the impact fee increase establishes a revenue source for the West Side Interceptor, planning for those projects will involve an entirely new process, Mayor Johnson said.

He also pointed out that state law requires the city to review its fees every two years and he hopes that future impact fee revenues and other possible revenue sources may allow the city to reduce impact fees.

The higher impact fees take effect April 1.

Reporter Jim Mann may be reached at 758-4407 or by email at jmann@dailyinterlake.com.