2025-062 - Water Impact Fee ISR July 25, 2025 Report No. 2025-062
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Supplemental information requested by City Council during Work Session ID 25-1139,presented
on July 15th, 2025.
BACKGROUND:
During the presentation to City Council on July 15th, 2025, for ID 25-1139, questions were asked
on the following topics:
- Comparison between City of Denton Water Utility Rates and other DFW municipalities,
including those member and customer cities of the North Texas Municipal Water District
(NTMWD).
- Cost of Water and Wastewater Impact Fees for each combination of service areas instead
of just the maximum and minimum combinations or an averaged amount.
- Overall cost of development for each combination of service areas, including other impact
fees and development costs
- A comparison between the current development costs and proposed development costs
- Details on the observed growth trends since the Water and Wastewater Impact Fee update
in 2018
- Impact Fee implementation timeline including details on when fees are assessed and when
they are collected
DISCUSSION:
Due to the technical and comparative nature of many of the questions, an assembly of PowerPoint
slides was created to provide clarity.
Key information from the attached slide presentation:
Cost of Development and Water/Wastewater Impact Fees (Slides 1-2):
These slides provide a detailed breakdown of current and proposed development costs and
Water/Wastewater(W/WW) Impact Fees for various service areas at a 75% fee level.
CURRENT SERVICE AREAS
Service Areas W/WW Fees Other fees' Total Cost
lA/Wastewater $8,285 $10,457 $18,742
1 B /Wastewater $10,068 $10,457 $20,525
2 /Wastewater $12,354 $10,457 $22,811
July 25, 2025 Report No. 2025-062
PROPOSED SERVICE AREAS
Service Areas W/WW Fees Other fees' Total Cost Difference
from Current
lA/Pecan $10,076 $10,457 $20,533 $1,791
lA/Hickory $10,958 $10,457 $21,415 $2,673
113 /Pecan $16,770 $10,457 $27,227 $6,702
113 /Clear $21,469 $10,457 $31,953 $11,428
1 B /Hickory $17,652 $10,457 $28,109 $7,584
2 /Pecan $18,697 $10,457 $29,154 $6,343
2 /Hickory $22,541 $10,457 $32,998 $10,187
Notes:
'Other development fees, totaling $10,457, include Roadway ($3,673), Park Development ($2,515), Park
Dedication($435),Development Fees($341),Building Permit($2,527),and Public Works Inspection($966).
Observed Growth Trends Since 2018 Water and Wastewater Impact Fee Update
(Slides 3-5):
Both water and wastewater have exceeded the growth projections from the 2018 study24.
• Water is 56% higher than projected (2.3% projected growth vs. 3.6% observed, $80.4
million collected).
• Wastewater is 78%higher than projected(2.3%projected growth vs. 4.1%observed, $55.3
million collected).
• Both show a linear trendline with a slowdown during Covid, followed by consistent
increases.
Growth rates vary by Service Area(SA):
• SA 1A: 65% below projections, with a gap of $12.4 million in collected amount. This
indicates infill is occurring slower than expected.
• SA 1B: 185%above projections,with an excess of$45.5 million in collected amount. This
area has seen consistent growth, nearly tripling the expected rate around the city's core.
• SA 2: 14% above projections, with an excess of$0.4 million in collected amount. Growth
in this area started slow and below projected rates but has accelerated in the last two years,
exceeding the rate and expected to continue increasing with new developments.
• Aggressive and consistent growth trends are observed through 2024 and into 2025.
Comparison of Water Utility Rates with other DFW`Municipalities (Slides 6-8):
These slides include comparisons of residential and commercial Water/Wastewater/Drainage
rates between the City of Denton, other DFW municipalities and comparable cities across the
State, including NTMWD member cities. NTMWD consists of 13 member cities, 34 customer
city districts, and water supply corporations. The NTMWD member city rates are not available
publicly; information provided in this ISR is publicly available. Since NTMWD customer cities
are not responsible for covering the district's debt, these cities are excluded from slides 6 and7.
July 25, 2025 Report No. 2025-062
The water supply corporations and districts served by NTMWD are not included because they do
not appear to be comparable, due to their varying levels of service.
The NTMWD Customer Cities represented on slide 8 are provided as an additional
comparison. Charts and tables presented illustrate average residential and commercial utility
bills for various cities where rates could be acquired.
For residential utility bills,NTMWD member cities like Mesquite ($141), McKinney ($134), and
Allen($129)have total average bills ranging from $113 to $141.
For commercial utility bills, NTMWD member cities like Plano ($934), Richardson ($838), and
Frisco ($829)have total average bills ranging from $437 to $934.
Impact Fee Implementation Timeline (Slide 9):
As per Chapter 395.016.d. of the Texas Local Government Code, once an impact fee is adopted
and made effective, impact fees are assessed at or before the time the final plat is recorded. Impact
fees are collected when the building permit is issued. Therefore, if a final plat is recorded before
January 1, 2026 (the a„effective date of the new impact fees), the units recorded in that
final plat will be assessed under the existing impact fee structure.
CONCLUSION:
Staff believes that all the questions asked by City Council on July 151h, 2025,have been answered
in the attachment.
ATTACHMENTS:
1. Informational Slide Deck
STAFF CONTACT:
Stephen Gay
General Manager of Water Utilities and Street Operations
Stephen.Gay@cityofdenton.com
(940) 349-8086
REQUESTOR: Multiple
STAFF TIME TO COMPLETE REPORT: 12 hours
PARTICIPATING DEPARTMENTS: Water Utilities, Finance, Legal, Development Services