Impact Fees 101

1. Impact Fees 101 Impact Fee Advisory Committee April 7, 2016

2. Impact Fee Advisory Committee (IFAC) • New Members Appointed • P&Z Commissioners • ETJ – Kirk Joseph • HBA – Randy French • Comm – Don Hellriegel • Water / Wastewater IFAC • ETJ • Roadway IFAC

3. What are Impact Fees? “A charge or assessment imposed by a political subdivision against a new development in order to generate revenue for funding or recouping the cost of capital improvements or facility expansions necessitated by and attributable to the new development.” Texas Local Government Code, Section 395.001

4. History of Impact Fees • Nationally - 1920s • Texas, Local Gov Code 395 – 1987 • Since 1987 numerous Texas Cities • College Station, Ch 15 – 1992 • 4 Sewer Impact Fee Small Areas • 1 Water Impact Fee Small Areas

6. Current City Effort • Council Direction • Citywide Impact Fees • Water • Sewer • Roadways* • Engaged Engineering Studies • Public Hearings • IFAC & Council Consideration

7. Common to ALLImpact Fees

8. Impact Fees in General • Shiftsattributable capital growth costs from alltax payers to the new growth • Standardizes and limits fee calculation • Proportional to development impact • Required credit reduction for each development’s city revenue generation • Limited to water, sewer, roads, and drainage (State Law) • Doesn’t replace the need to issue all debt, but it can help pay off some debts

9. State and Local Regs • Texas Law has defined it to make it equitable to development • Requires: • Planning and Engineering analysis • Public Hearings • Impact Fee Advisory Committee Action • Council Adoption

10. Assessment / Collection • Assessment (Setting the fee amount) is at the Plat Recordation • Collection is at Issuance of Building Permits

11. Fee Calculation • Land Use Assumptions for projected 10-year growth • I.F. CIP Plan • Service Areas • Service Unit, Living Unit Equivalent • Maximum Assessable Fee per Service Unit

12. Maximum Assessable Fee per Service Unit • Based on: • “Service Unit ” • 50% Creditor Detailed Credit of amount of costs to be recovered to account for anticipated ad valorem (property) tax and revenues to City from the development. • Council can adopt Max Fee or Lesser Fee

13. Impact Fees can Include: • City costs in Proposed Improvements in next 10 years for 10 year anticipated build-out development • City costs in all Existing Improvements that have availablecapacity for 10 year anticipated build-out development

14. …Impact Fees can Include: • Construction Contract Price • Surveying and Engineering Costs • Land Acquisition Costs • Impact Fee Consultant Costs • Project Interest Fees

15. Impact Fees cannot Include: • Improvements needed for development growth beyond 10 years • Expansions not in Impact Fee Plan • Expansions to “better” service or “stricter” Regulations • Operation and Maintenance costs • More than the calculated “Maximum Assessable Fee Per Service Unit”

16. Unique to UtilityImpact Fees

17. Utility Impact Fees • Within City Limits and ETJ • Fees based on: • Area served (can be “citywide”) • Water meter size (water & sanitary)

18. Unique to RoadwayImpact Fees

19. Roadway Funding • Why is this important for growth? • Infrastructure costs greatly exceed traditional tax and fee collection rates in fast-growing cities • New York City Example: 1% vs. 10% Growth • Federal / State funding no longer keeps up with need • Proportionality and Impact Fees are relatively new • Texas law does not allow for growth management or concurrency (Oregon and Florida examples) • Funding mechanisms for infrastructure (especially transportation) are limited in Texas • ‘Growth should pay for Growth’ is logical & reasonable

20. Theoretical Scenarios 2 Lane Asphalt (ultimate 6-lane section) 3 1,300’ 2,000’ 300’ 50 Homes 100 Homes 2 250 Homes 50,000 ft2 Retail 4 1,700’ 5 50 Homes 4 Lane Divided (ultimate) Proposed 4 Lane Section 6 1 3,500’ 1,200’ 250 Homes 50,000 ft2 Retail 550 Homes 75,000 ft2 Retail

21. Roadway Impact Fees • Within City Limits ONLY • Roadway “benefit zone” • Roadway improvements must be assessed, collected and spent within the development’s Service Area • Areas maximum of 6 mile diameter • C.S. would have 4 Areas

22. Roadway Service Areas

23. City Policy Decisions • Is there a better way to do this? • Develop a system that is: • Predictable; for the development community and City • Equitable; equal development should pay an equal fee • Flexible; funds collected need to be used to add capacity to the system, not sit in a bank or in a location where they aren’t needed • Legal; compliant with proportionality rules • Consistent with the City’s overall goals and objectives for growth – perhaps even encourage development where infrastructure already exists

24. Impact Fee Schedule

25. Summary

26. Other Cities • 2012 Duncan National I.F. Study • 28 States with Impact Fees, 271 jurisdictions • 2012 National Averages per Single Family • Roads $3,228 • Water $3,863 • Sanitary $3,725 • 8 Texas Cities averages lower than National • 2014 KHA Metroplex Survey • 35 Metroplex Cities with Roadway Impact Fees • Average Roadway IF per Single Family ~$2,200

27. Prior CS Impact Fee Studies • 2010 Roadway Impact Fees • Based on Average $3,000 per SF House • If adopted in 2012, fees ~ $7.0 M • 2011 Citywide Utility Impact Fees • Based on Water $1,480 per SF House • Based on Sanitary $1,578 per SF House • If adopted in 2012, fees ~ $7.7 M

28. Discussion