Staff recommends that the City Council conduct a public hearing and approve the proposed resolution adopting Storm System Development Fees.

Public Works recommends that Council conduct a public hearing and adopt the resolution establishing stormwater system development fees (SDFs), effective January 1, 2027. The one-time fees would require new development to contribute its proportionate share of growth-related stormwater infrastructure costs and are projected to generate $800,000 to $950,000 annually for eligible capital improvements. The Impact Fee Advisory Committee recommended adoption, the Council Budget and Finance Committee recommended advancing the proposal, and Council unanimously directed staff to bring it forward for consideration at a regular business meeting.

As a follow-up to previous Council direction, Public Works proposes adoption of a stormwater system development fee (SDF) to help fund the capital infrastructure needed to serve new development. The City currently assesses SDFs for water and wastewater infrastructure but does not assess a stormwater SDF. This one-time fee would allow new development to contribute its proportionate share of growth-related stormwater infrastructure costs.

The City of Billings Stormwater System Development Fee Report (attached to this memo) provides the analysis supporting the proposed fees, including the capital improvement schedule and financial methodology. The proposed fees are intended to fund additional system capacity needed for growth. They would not fund routine operations and maintenance or correction of existing system deficiencies. 

The proposed fee schedule uses the stormwater Equivalent Residential Unit (ERU) of 3,751.22 square feet of impervious area established by Council through Resolution 26-11347 on June 8, 2026. Single-family residential properties would be assigned 1.0 ERU, and duplexes would be assigned 1.5 ERUs. Commercial ERUs would be calculated based on impervious area, with a minimum assignment of 1.0 ERU, subject to limitations for existing development. The proposed base fee is $967 per ERU. Commercial developments would receive service-demand credits resulting in charges of $513 per ERU for developments connected to the City storm sewer system and $329 per ERU for developments not connected to the system.

The Impact Fee Advisory Committee reviewed the proposed stormwater SDF report and fee schedule and recommended adoption. Staff presented the proposal to the Council Budget and Finance Committee on September 16, 2026, which recommended advancing it to the full Council. At the October 5, 2026 work session, Council voted unanimously to bring the proposal forward to a regular business meeting for a public hearing and consideration of adoption.

The public hearing provides an opportunity for interested parties to comment on the proposed fees before Council considers adoption. The resolution establishes the fee schedule, collection and expenditure requirements, refund provisions, an appeal process, and a schedule for updating the supporting report. If adopted, the stormwater SDF would take effect January 1, 2027. Before implementation, staff will conduct outreach to builders and the development community to explain the fee schedule and methodology.

Storm system development fees are anticipated to generate $800,000 to $950,000 of revenue annually, depending on the level and type of development activity.  Revenue will be deposited in a dedicated stormwater SDF fund and used to finance eligible growth-rleated stormwater capital improvements.

City Council must hold a public hearing and then may:

• Approve the recommended resolution,
• Approve an amended resolution, or:
• Not approve the resolution.  If Council does not approve a resolution, storm system development fees will not be implemented.