Steamboat Springs developer thinks he overpaid for Elk River Road intersection project
June 7, 2017
The city of Steamboat Springs is consulting with its attorney after a developer recently demanded a sizable refund and claimed he overpaid for an impact fee that went toward a local road improvement project.
Captain Jack West subdivision developer Michael Kortas wants the city to give him back $18,355 of the $24,500 he paid into the Elk River Road intersection improvement project in 2015.
Developers are required to pay impact fees to the city based on a formula that takes into account the additional amount of traffic their project is expected to generate, and the estimated cost of a nearby road improvement project that would help accommodate that extra traffic.
In Kortas' case, he was assessed an impact fee based on an estimate that the Elk River Road intersection improvements would cost $3.5 million.
The city's actual bill for the project totaled $877,000 after the Colorado Department of Transportation pitched in $3.6 million for the intersection improvements, which are currently under construction.
So Kortas thinks he overpaid the city because its actual bill was far less than $3.5 million. However, city officials think Kortas actually ended up getting a discount on the impact fee.
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That's because with the CDOT and city costs added together, the total project clocked in at $4.5 million, about $1 million more than the estimate they used in 2015.
Public Works Director Jon Snyder said Wednesday when the city estimates the cost of an infrastructure project for the purpose of assessing an impact fee to a developer, it does not take into account how much revenue it might get from the state or any other government entity for the project.
"It's designed to lessen the burden on the taxpayer, whether it's a city taxpayer or a state taxpayer," Snyder said of the impact fee. "There's no distinction between what hat the taxpayer is wearing.
"The tough part is we don't ever know what the funding mix is going to be when we're planning these projects 15 years in advance," Snyder added.
Kortas sees it differently.
"Why would I pay the city for the state funding?" Kortas asked Wednesday.
Kortas took his case to the Steamboat Springs City Council Tuesday and said he looked forward to getting his refund.
Another developer, Stan Wagoner, said he thinks the fee is only for city costs and shouldn’t include what the state might contribute. He predicted other developers would be seeking refunds too.
Some City Council members appeared concerned by the refund request and suggested the discrepancy might be an issue for the city.
Council President Walter Magill wanted the city to address the issue.
City Manager Gary Suiter referred the matter to City Attorney Dan Foote.
Suiter said he thought it would be a bad precedent to start refunding impact fees even if the estimates the city uses for infrastructure projects came in low.
"When we're exacting impact from developers, it's going to be rare that you're going to come up with an impact fee that's to the penny," Suiter said. "If we start putting refunds to developers and setting precedents that our estimation was over or under, it could apply both ways. I don't think we want to do that."
By the city’s logic, records obtained by Steamboat Today show only one party, Snow Country Construction, paid an impact fee based on an estimate for the intersection improvements that was higher than the actual cost of the project.
In that case, Snow Country paid $11,858 to build airport hangars based on an estimate the Elk River project would total $5.39 million.
Since 2003, the city has been collecting impact fees from developers for the Elk River Road intersection improvement project, which just started.
The impact fee account totaled $146,542 before the project started.
Records show developers have been paying amounts based on wildly different cost estimates for the project.
For example, Routt County paid an impact fee for the construction of the Justice Center that was based on an estimate that the intersection improvements would cost $505,000 back in 2007.
The estimate for the intersection improvements had gone up to $5.39 million by 2014, meaning a developer who paid that year paid a significantly higher rate for their traffic impact in the area.
Records show the cost estimate for the intersection improvements went down to $3.5 million in 2015.
Snyder said it’s common for infrastructure project cost estimates to be refined over the years.
Some developers who started their projects in the area will not have to pay the impact fee now that the intersection project is underway.
For example, Snyder said the developers of the Sunlight subdivision will not have to pay an impact fee for the intersection improvements.
Records show the developers would have had to pay $83,550 toward the intersection had the Elk River Road project not started before the developers got a final plat.