Montana Builders Reach $5 Million Impact Fee Settlement
Montana builders, who have been fighting the city of Bozeman over excessive impact fees for six years, recently won a $5 million settlement that also included an immediate 10% reduction in the city’s current impact fees and a voice in determining an appropriate fee structure for all future impact fees.
Under the settlement agreement, the $5 million will be returned to more than 600 builders and remodelers.
The builders filed suit against the city in 1999. At that time and during the following six years, they have been responsible for paying 90% of the city’s water, wastewater and street impact fees. The suit was filed by Southwest Montana Building Industry Association and the Montana Building Industry Association with support and grants from the NAHB Legal Action Fund.
Bozeman first began assessing impact fees for streets, fire protection, wastewater and public sewer services in 1996. Two years later, in April 1998, the city increased the percentages builders paid. Three months later, the city again increased builders’ fees, prompting the builders to take action.
In response to the increases, the builders brought suit against the city, challenging the legality of the fees. After years of litigation, District Court Judge Ted Mizner ordered a settlement conference between the builders and Bozeman city officials. The court-ordered mediation took place on Jan. 26 and lasted 12 hours. The resulting agreement went into effect on April 15.
Since the lawsuit was filed, the city assessed about $7,000 per new home, depending on when it was built, and collected millions of dollars in impact fees.
In addition to the refund and reduced fees, the settlement stipulated that building industry representatives be able to participate in the advisory panel that sets the city’s impact fees. Through the panel, builders would help recommend the methods used to make impact fees assessments and, ultimately, the rates selected by the city.
Prior to the mediation agreement, the judge upheld the city’s authority to charge impact fees.
NAHB supported the litigation through Legal Action Fund grants totaling $25,000. Because the builders were awarded attorneys fees as part of the settlement, they returned those funds to NAHB during a ceremony at the NAHB Board of Directors meeting in Reno, Nev. last month.
For more information about the lawsuit or the Legal Action Fund, e-mail Mary Lynn Pickel at NAHB, or call her at 800-368-5242 x8485.