Montana Administrative Register Notice 17-295 No. 24   12/24/2009    
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In the matter of the amendment of ARM 17.36.802 and 17.36.805 pertaining to fee schedules and changes in subdivision








            TO:  All Concerned Persons


            1.  On October 15, 2009, the Department of Environmental Quality published MAR Notice No. 17-295 regarding a notice of public hearing on the proposed amendment of the above-stated rules at page 1725, 2009 Montana Administrative Register, issue number 19.


            2.  The department has amended the rules exactly as proposed.


            3.  The following comments were received and appear with the department's responses:


            COMMENT NO. 1:  The building industry and Association of Realtors are concerned about the impact that increased DEQ fees, on top of other increasing fees and costs, will have on the future of housing affordability in Montana.  The Montana housing market is facing the largest decline in state history.  Adding extra fees to subdivision development is counterproductive and may compound the problems facing the industry as well as the problems facing the subdivision bureau.  The commentor requests that the department seek other means to solve its current budget troubles.

            RESPONSE:  By statute, the department's subdivision review program is required to be funded entirely by application fees.  Section 76-4-105, MCA.  The statute requires that fees be set at a level sufficient to recover department costs, and the costs of local reviewing authorities, for reviewing subdivision applications, conducting inspections, and conducting enforcement activities.  Without legislative change, alternative funding mechanisms are not an option.  The department has recently reduced staff based on the drop in applications received in recent years.  Current staff is at the minimum level necessary to conduct essential functions, but current fees are not sufficient to fund those functions.  The department recognizes that the proposed fee increases are significant, but the increases should not in themselves deter subdivision development if the market economy improves.


            COMMENT NO. 2:  An engineering firm commented in opposition to the proposed fee increases.  Many of their clients are struggling financially, and higher fees would impose an undue hardship.  One client is elderly and wants to create an additional lot for her daughter.  The existing fee of approximately $250 is already a burden for her.  Fees are increasing not just by 40% but by up to 67%.  Since we are in the middle of a recession, fees should be lowered or eliminated.  The commentor would support supplementing department funding through the state general fund.

            RESPONSE:  The review fee for the commentor's example of a single-lot subdivision with an on-site well and septic system will increase by $40 or about 15%.  Fees for larger subdivisions will increase by a larger percentage.  The department recognizes that fee increases adversely affect family transfers because they may not be able to pass review costs along to home purchasers.  However, without the proposed fee increases, the department will be unable to continue its essential functions for reviewing subdivisions.  Department review is important to ensure that sanitation facilities in subdivisions are protective of public health and the environment.  Support from the state general fund is not available absent legislative change.  See Response to Comment No. 1.


            COMMENT NO. 3:  Higher fees may lead developers to forego engineering services, resulting in potential harm to the environment and increased enforcement.

            RESPONSE:  If a developer's application is not professionally prepared, the department reviewers will identify any deficiencies and prevent installation of noncompliant facilities.


            COMMENT NO. 4:  The 60-day review period for subdivisions is unreasonably long.  A 30-day review period is more reasonable.  Additional department personnel would be needed to implement this, but it could be funded through tax revenues.

            RESPONSE:  The 60-day review period is established in statute at 76-4-125(1)(b), MCA.  As the commentor notes, the department would need additional staff to accomplish review in a shorter period.  As stated in the Response to Comment No. 1, revenue from application fees has dropped significantly in recent years, and, even with the fee increase, revenue will not be sufficient to increase staff levels.  Absent legislative changes, tax revenue is not available to support the department subdivision review program.


            COMMENT NO. 5:  The people of this state can not afford any more fee increases.  If the department wants to save money, it could drop some of its high-paid staff.

            RESPONSE:  See Response to Comment No. 1.  The department has already reduced its subdivision review staff to reflect the lower volume of applications in recent years.  The department cannot further reduce staff and still maintain essential review functions.


            COMMENT NO. 6:  A local health department requests that the department consider costs to county programs, not just the state program, when deciding on fee increases.  Local costs have gone up significantly since 2002, when the fees were last increased.  The local share of the department's subdivision lot fee is only $25, as set by ARM 17.36.804(2)(a).  Because that rule is not being amended in this rulemaking, the commentor requests that the lot fee be raised from $75 to $125 rather than $100, or that a new site visit fee be established at $25 per lot, payable to local reviewers.

            RESPONSE:  The department recognizes that costs for local reviewing authorities also have risen.  In order to increase fees beyond what was proposed in this rulemaking, a new rule notice would need to be published and an additional opportunity for public comment provided.  The department will work with local agencies to assess ways to address local funding shortages through amendments to state or local rules.


            COMMENT NO. 7:  A local health department notes that, for multiuser water systems and new pressure-dosed drainfield systems, the base review fee is not increasing but the hourly review fee is increasing.  It is difficult to track review time in this manner, and it is preferable to have as many charges known and paid up front.  This fee structure could also lengthen the time to approve a subdivision, if the reviewer has to wait for payment of additional review fees.  The base review fees for these systems should be increased.

            RESPONSE:  The proposed fees cannot be increased further without initiating a new proposed rule notice and providing an additional opportunity for public comment.  See Response to Comment No. 6.  The department will work with local agencies to assess ways to make the subdivision review fee structure more efficient.


            COMMENT NO. 8:  A local health department notes that the department currently does not charge a lot fee for lots in subdivisions that are exempted from review.  Local reviewers often need to evaluate exempt lots to determine whether a claimed exemption is appropriate.  Applicants should either pay the lot fee for exempt lots, or a new exempt lot fee should be established.  However it is done, local reviewers should be reimbursed $50 per lot for this review.

            RESPONSE:  Creation of a new exempt lot fee, or amending ARM 17.36.804(2)(a) to raise the local reimbursement rate, is outside the scope of this rulemaking.  See Response to Comment No. 6.  The department will work with local agencies to assess ways to address local funding shortages through amendments to state or local rules.


Reviewed by:                                     DEPARTMENT OF ENVIRONMENTAL





/s/ David Rusoff                                    By:  /s/ Richard H. Opper                        

DAVID RUSOFF                                           RICHARD H. OPPER, DIRECTOR

Rule Reviewer


            Certified to the Secretary of State, December 14, 2009.


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