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Resort tax board amends agreement with water and sewer district  

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Local government entities provide updates on interlocal agreements

By Bella Butler MANAGING EDITOR

BIG SKY – As supply chain woes and high building costs maintain a chokehold on construction in the U.S., the Big Sky Resort Area District Board on Feb. 9 unanimously approved changes to its interlocal agreement with the Big Sky County Water and Sewer District to free up more funding opportunities for new infrastructure.  

The amendment will allow the water and sewer district to apply for funding from the 3 percent resort tax collections in addition to their 1 percent for infrastructure resort tax collections awarded in 2020. Other amendments to the interlocal agreement made technical changes to conditions requiring the water and sewer district to pledge service contributions to affordable housing in exchange for funding to go toward its wastewater resource recovery facility.

The resort tax district entered an interlocal agreement with the water and sewer district in February 2020, an arrangement that awarded water and sewer $27 million from an additional 1 percent of resort tax approved by voters in May of 2020. The agreement also set forth conditions of the award.

One of the conditions barred the water and sewer district from applying for traditional resort tax funding outside of the interlocal agreement. Ron Edwards, general manager of the water and sewer district, said he requested ahead of the Feb. 9 meeting that this condition be lifted in order to allow the district to seek additional funds as project costs climb.

As the water and sewer district looks to fund additional concrete work for the new wastewater plant, which is intended to increase the district’s service capacity, Edwards said that money from the 3 percent resort tax would be one of the best potential options for partial funding. The initial bid for the additional work was $4.9 million.

The resort tax board agreed. Board Vice Chair Ciara Wolfe and Board Secretary and Treasurer Steve Johnson suggested it would be in the board’s best interest to help advance current community capital building projects toward the soonest possible completion as national construction rates continue to rise.

“I think any of our construction projects that we have in progress now, we need to finish them out,” Wolfe said during board discussion. “The construction environment is so challenging for everybody in it to have any idea what those end-result costs are going to be.”

Board Chair Sarah Blechta clarified that while lifting the condition allows the water and sewer district to apply for additional funding, the board’s vote does not guarantee that it will grant the funding. Edwards said the water and sewer district doesn’t intend to apply for funds this year.

Edwards added that in addition to the construction climate, other costs have contributed to a growing need for additional funding.

“I’m spending money in other places that could be used for [the plant upgrade],” he told EBS after the meeting.

One expenditure is related to a lawsuit brought to the district in July 2020 alleging violations to the Clean Water Act. According to Edwards, the district’s legal fees and other costs are at approximately $850,000 and are expected to increase as a trial date approaches this spring. The costs are depleting the water and sewer district’s general reserves, Edwards said.

An amendment to another condition of the agreement approved at the Feb. 9 meeting increased the number of single family equivalents the water and sewer district must allocate to workforce housing from 500 to 600 upon completion of the new infrastructure. The amendment was made to ensure the water and sewer district’s service commitment remained the same after the district established standard sfe allocation for employee housing based on unit square footage in December of 2021.

The interlocal agreement was also amended to include definitions for workforce housing, affordable housing and deed-restricted housing.

Laura Seyfang, executive director of the Big Sky Community Housing Trust, assisted members of the BSRAD board and staff in drafting these new definitions and believes they will help all stakeholders operate under the same parameters.

“As we’re excited to see more developers wanting to actually create some workforce housing, we felt we really had to clarify what does it mean to make something workforce housing?” Seyfang told EBS after the meeting. “What does it mean for it to be affordable?”

The amended interlocal agreement defines workforce housing as “housing properties and housing projects that are restricted to tenants or owners who demonstrate full-time employment (annual average of 30 hours per week) with a business entity registered and operating within the [resort area district],” and affordable housing as “housing properties that are made available to qualified occupants (tenant or owner) at a rate for housing (mortgage or rent, plus taxes, and insurance) that is less than or equal to 33% of adjusted [area median income].”

Starting last year, BSRAD also entered into interlocal agreements with what it calls government entities and include the Big Sky Fire District; the Big Sky Transportation District; the Gallatin Canyon Water and Sewer District; and the Gallatin County Sheriff’s Office. These agreements allow the agencies to apply for resort tax funding for operational costs on a three-year basis as opposed to a one-year basis like other applicants are required to do.

All entities except the sheriff’s office provided annual updates and disclosed any changes to their three-year contract and requested funding. The canyon water and sewer district, who’s three-year contract awards them $74,000 in resort tax funding per year, indicated a need for additional funding. No entities requested additional funding at the meeting.

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