Wednesday, October 29, 2014

Bellevue defends Strahorn fee

City lacks comprehensive capital improvement plan as it faces major annexation

Express Staff Writer

The proposed Eccles annexation would bring a vast expanse of agricultural land north of Bellevue into the city. Photo by Roland Lane

    The city of Bellevue’s Planning Department is working on an annexation agreement with the Eccles family that could nearly double the size of the town, causing a philosophical divide among residents as to how the city should expand and plan for the future.
    As the fall election approaches, some Bellevue residents have criticized the way the city appears to be overly accommodating to developers. Is the city missing opportunities to reduce rates for city services to existing residents, even as it prepares to expand its boundaries?
    About eight years ago, during the real estate boom years, Bellevue residents had reason to believe their town was set to grow. Three major annexation applications were working their way through the public process. City service impact studies were started, public meetings were held and a $32 million capital improvement plan was established for the next 10 years.
    A capital improvement plan involves evaluation of the city’s infrastructure, a prioritized list of projects and a schedule for the projects’ completion as well as cost estimates. The improvements can be funded by a city’s regular revenue or through bonds.

All I have to go on with my analysis [of the Eccles annexation fee] is what the city has spent in the last five years.”
Richard Caplan
Planning consultant

    Two of those expected annexations, led by John Sherer and Harry Rinker, were dropped. Developer Jeff Pfaeffle continued his application, succeeding in 2008 with annexation of about 100 acres of undeveloped land in Slaughterhouse Canyon, northeast of downtown. About half those acres, plus additional property in the city limits, is planned for a residential development called the Strahorn Canyon Ranch. The development is expected to bring 150 homes into the city.
    Pfaeffle agreed to pay the city $5.1 million in cash, property and city infrastructure improvements, mainly in exchange for hooking up to city services and being able to develop under city zoning codes.
    Under the proposed agreement, Pfaeffle would give the city $500,000 in five years, or when he began Phase 1 of the development. He would then pay the city $250,000 every five years, or at whatever time he begins each of the consecutive three phases.
    “If the market does not warrant development, the city of Bellevue will still receive benefits under this agreement,” Pfaeffle said in 2008.
    Then the housing crisis intensified.
    Three years later, the nation was firmly in the grip of a recession. A legal dispute between the city of Hailey and Old Cutters subdivision developer John Campbell ended with a court ruling that stated Hailey had overcharged the developer for annexation fees and was prohibited from collecting $2.5 million in remaining fees.
    In December 2013, Bellevue Planning Director Craig Eckles said he forgot that Pfaeffle’s annexation fee check for $500,000 was due. The City Council voted to extend the payment period. Soon thereafter, a new annexation fee analysis study was commissioned to determine a new Strahorn fee, based on greatly reduced growth rates, property values and, most importantly, the elimination of the city’s capital improvement plan.
    “This factor has the most significant impact on the financial participation allocated to the Strahorn development,” wrote planning consultant Richard Caplan in a six-page analysis completed on April 30, 2014, that recommended reduction of the Strahorn fee by $3.5 million, to a total of $1.6 million.
    Mayor Chris Koch said at that time that the city could have used the outstanding annexation fee balance to reduce the city’s sewer fees, which have risen from $45 to $75 since 2008, largely to pay for a new wastewater system built in 2007. Koch said the money could also have been used to repair city streets.
    The city determined that Pfeaffle had already given the city $2 million in assets, and that he would not be required to pay more.
    Two weeks ago, Koch published a letter in the Idaho Mountain Express stating that the reason the Strahorn fee was reduced was due to exposure to lawsuits, based on the Old Cutters decision in Hailey, and the “enormously overstated” capital improvement plan written in 2008.
    “The city had little justification to collect more impact fees than it already had and was rightfully entitled to,” Koch wrote.
    This month, Caplan is at work on a $6,000 study to determine the annexation fee, or “cost” of impacts for bringing in 227 acres of the Eccles Flying Hat Ranch north of town. The fee will assess the annexation’s impacts to city police, fire, transportation and parks and trails. Will the agreement guarantee that the Eccles’ development pays for itself?
    “Six years ago, the city had a 10-year $30 million capital improvement plan. Today, the city does not have a plan at all,” said Richard Caplan in an interview. “It is good planning practice to have a capital improvement plan, but since the city does not have a development impact fee ordinance, the city is not required to have one. All I have to go on with my analysis [of the Eccles annexation fee] is what the city has spent in the last five years.”
    During the past five years, the city has struggled to make ends meet. According to Caplan’s updated Strahorn fee study, completed on April 30, the city has spent an average of only $11,000 per year on capital improvements over the last five years.
    Mayor Koch said in an interview that the city has a plan for its “highest valued improvements,” the water and sewer system.
    “New development is assessed capitalization fees per adopted ordinances and they are collected at the time of development,” he said. “These fees are monitored by the departments and engineers to make sure the fees cover applicable costs of maintenance and future replacement. The largest remaining cost for the city is law enforcement, which is contracted out [to Hailey].
    “Our Street Department went through an engineered study to prioritize the status of our streets, their condition and a priority list of future improvements.  Department heads are discussing their future needs, costs and capital projections, and will be updating the council as to how to formalize a capital plan.”
    It is unclear whether the capital improvement plan will be completed before the annexation agreement is complete. Caplan said he is awaiting final zoning details from the Eccles group before completing his analysis, which will be used by city staff to determine the annexation fee.
    Koch said he did not know when the Eccles annexation agreement will be presented at a public meeting.
    “When all required information including annexation fees are submitted to the council from the consultants,” he said. “At such time it will then be placed on an agenda and noticed according to Idaho code.”
Tony Evans:

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