HomeMy WebLinkAbout1989
y
{j
r
INSTRUCT10HS,
11
00 NOT FILM THIS SHEET
I
HLAD.THIS _ FILM-
i
,r
f;
s
>N4W
l
Impact Fees In Texas After SD 336;
A Legal and a Practical P~orspeotive
by
Terry D. Morgan, Esq.*
and
r
j Gerry N. Hiebert, Alop
JJi
1
I
*Terry Morgan is a former Assistant City Attorney for the City of
Austin and presently maintains a private law practice i
~ rnexas, era has in A
p icing raunioipal law. He is of counsel to the Kansas !
E City, Mo. firm of Freilich, Leitner, Carlisle and Shortlidge." t
**Terry Hiebert is the Director of Development Services for the
City of Riob&rdson.
I
i
I '
~ i
j
r
r
i
I
1
Part I
SB 336, enacted by the 70th Legiglature and effective June 10,
enables general law and charter cities to adopt "impact fses,pi
which are defined as charges or assessments against new
e!,evelopment "in order to generate revenue for funding or
recouping the costs of capital Improvements pr facility
expansions necessitated by and attributable to such new
development.„ The intent of the statute is to standardize the
methods and the procedures by which municipalities adopt fees to
i
fund new off-site capital facilities designed to serve nmw
growth.
i
i
The new Texas law is the first comprehensive enabling statute-in
the. United states expressly authorizing the use of impact fees.
As sushi it has important ramifioationu for munioipa1 practices
of exacting goes and other contributions from ~ II developers
as q,
condition of development approval. This article examines the
provisions of the statute, and identities some key issues which
must be taken into account by municipalities wishing,that aro,how
1
using or intend to use impact fees to finance development
infrastructure.
Use o in-Tau
Cities in Texas have long had the authority to require
subdividers and land developers to provide adequate public
a.
facilities, streets and utilities, within the proposed
development site.l -Most Texas cities have incorporated Minimum
standardA for installation of these "on-site" laollities within
subdivision rregulationsi However, "on-site" :!streets and
utilities comprise only a part of the total municipal
j Lifrastruoture costs ;neoessary'-~to serve new development,
consequently, many.,uitiesihave devised methods oP,requiring.:new-
_ development, to.,pay for the -additio~Aal costsof ."off-site"; capital .
l !
1 I improvement.owhioh are Attributable to the development project,
? The charges against new .ovelopment to pay f or off-sits
1 capital improvements ere known by a variety of names, such as
"tap charges,."'.:"oapitai recovery Pees," and "pro rata,-.Oharges -s",
i
Most,..suoh ass's are imposed.-,to finance sewer and Water collection
ii and),distribut,iop lines, water storage - :facilities or :treatment.
I t'aoilities, ' . These ` charges may be , levied. in'., addition,,, to,
subdivision.rregulations requiring, thq,developer ,to donstruot"or.
pay Por,!off+-,sits ,transmisdion,.taoilVAes needed to bring service
to);the ;development site.
some municipalities also impose fees "in lieu" of the dedication
of land for certain types of facilities, usually parks, which are
f 4asigned to serve an area greater than, tho devalop)PkPt,sita and
which will be constructed off-site, This practice is of
relatively,) rgodnt origin in ~Texasj , and, is usually, tied,, to the
snbdiyision process, i
1
I
i
g.
Y1e/t` WAtlb'6
t1~YjY►1
nxve
3
Judicial history of deveiq m} ant fees in T@x&a
Recent surveys indicate that the uee of impact fees by
muricipalities is rapidly increasing in many areas of the
country, 2 Impact foes have evolved as a refinement of other
types of charges for new capital facilities, prim6rily fees in
lieu of subdivision dedication requirements (Ilin lieu 11 fees).
Impact fees in general are more flexible because they' are not
1 limited to the subdivision
process and they can be used to
i
finance area or community-wide facilities,
In Texas there are no cases directly involving impact foam. The
i
Texas Supreme Court, however, upheld the Oity of College
I
stationts parkland dedication and in lieu fee ordinance as"a
11 proper exercise of home rule authority in city of college atat+oh
v. Turtle Rook Corn, 3 In so ruling, the court dietinquished a
previous decision,by the Court of Civil Appeals holding`that''iho
exaction of '
park land or lase as =a d'ondition ° of devslo mend' i
approval was beyond municipal authority, 4 The Court affirmed ~
that charter cities have "full power of self-government" and
"look to the acts of the legislature'not for'grtnts of power",',`
but only for limitations on their powers." 8
The Court also adopted a modified version of the rational nexus'
test as the. proper standard for determining Whethst 'a too
I
I
yy
1
4
4 ordinance complies with state and federal constitutional
i
guarantees, statingi
!Both need and benefit must be considered, Without a
E
i determination of need, a city could exact land or money-to
i
i provide a park that was needed long before. the developer
subdivided his land, similarly, unless the court considers
the benefit, a city could, with monetary exactions, place 'a
par:c so far from the particular subdivision that the .I
residents received no benefit,...
This type of 'reasonable
connection" analysis will ensure that the subdivision
receives relief from a perceived need, and it will
effectively constrain the reach of the a tunioipality,,,;;n 6 S
The College Station ordinance on its face met these criteria, r
because it was based on a needs assessment, contained standards
for determining the amount of, the fee, earmarked foes for.
I expenditurs,on4oighborhogd parks within the vicinity of"lus
.
I
devaoprgent sits, and roquired that tees be expended aithilt 2 ;x
yeare from the date of<collection,
~icnificanas Qt_.im~ao ,fee statutia
Despite increasing litigation, surprisingly few enabling statutes
authorie,ing the use of development fees had been cnaoted prior to
the Texas., logislat4on, Enablingt legir,lation offers a
7
s
6
potentially attractive solution to the problems cities and
developers face in the courtrooms 88 336 resolves questions of
statutory authority by expressly empowering cities to enaot
impact fees for water, sewer, drainage and roadway capital
improvements: »eomuse the statute contains detailed provinions
governing the methodology and the procedures by which impac~, fees
are adopted, it should serve to focus judioial inquiry on
statutory intent rather than on broad constitutional principles
! in the event of future litigation
i i
f s At the, same time, the enabling statute acts as a limitation on
municipal home rule authority to enaot development foes which
fall under the definition of impaot fees. The law *xpressly
applies to existing development charges-as well as to ordinando`s
l
enacted -after its effective dates necessitating riwiew of
existing exactions practices. The remainder of `this article
analyses the key features of the 80 336 and some of the
implications
~j ems anoas t at 7~xd o ohanaa
The approval of 89 36 by the 1987 legislature` changed
dramatically the circumstances in Texas regarding use of impact
fees, In order to understand the structure and intent of the law
as' it now exists, it is important to understand the olimate in
j which the bill was oreated.
-'+»K+'N4rbiWYNXwkitirtl#iwtu N~''~`. r. nsaorre.a
l~`+n\(
fl
4'w'A4W Ceg
Kl6.yay
I`7
6
several real and perceived conditions sparked the creation of 8B
936. The original bill was drafted by the Texas Association of
Builders and filed by senatcx stay Parabse of Wichita Falls
Whether real or imagined, three. principal abuses piayed'a role in
spawning the logislative;.ohange. First of all, several Texas
cities had enacted impact fees after having undertaken only
token,studies to determine the real impact of now development-on
their infrastructure. Without proper analysis of the potential
for future growth, the development community often felt that they
were bsiog,unfairly oharged with the costs of providing,adequate
public facilities.
I Secondly, without some form of, enabling legislation, there was no E
;
i requirement in Texas for public involvement, in the development
and review, of, proposed inpaot fees. Builders. cite, several :cases
i in which impact foe ordinances were literally created, overnight, }
and passed into law without the public's ability to. asseis',,the
proposed ordinances. To further compound the problem in the eyes
{ mrutinity, an ;,imy sot t#e, O;:ddfna»ge in ono city f
of the development o0
would be totally different in substance and procedure from the
I
too, ordinance in, an adjacent city, The TAB clearly saw a need
for,some form of standardization.
The first two problems, gave rise to tho third reason for seeking
a legislative solutions the high oost-in the form of time and
r
r
e ti
a
7
money to individually challenge what were soon as Improper
ordinances around the state.
so as the dust settles from the regular legislative session,
Texas cities will begin to assess the use of impact -fees 'to
finance expansions in their infrastructure.
Part. II
f A. Btatutorv definitions
i
I As with all comprehensive enabling legislation, the definitions
of 8B 396 are important components of the statutory dahema. 'Tha
definitions determine such matters as the scope of thb
legislation, the residual powers municipalities retain to enedt
i
fees under other grants of authority and some of the design
k features which must be inoorporated'into the impact fee soheme.
xmpact _tea. An 'impaot fee is' defined as "a chatge or
assessment imposed by a' political subdivision against, new
'development in order to generate revenue for funding or recouping
the costs of capital- improvements or facility expansions
necessitated by and attributable to such now davelopmantoll The
term includes "amortized charges as well as lump-aum charges and
includes capital reoovery tees, contributions in aid of
construction,. and any other fad which fundtiohi as described' in
•I
M
qq 1{.[rr,r,
g p
this definition.":
This definition is intended to sweep broadly and to limit thereby
I the use•of.development exactions practices which are inconsistent
with the methods and procedures mandated by the Act, it cannot
be understood without reference to the definition of "capital
improvement," which means "water supply, treatment, and
dia.:ribution facilitiesi wastewater collection and treatment
faoilitiesr storm water, drainage, and flood control taoilitisal
E whether or not located within the service area, or roadway
facilities owned and operated by or on behalf of a political
subdivision." By implioation; ,those faoilities, which are
E 1
neither included among capital improvements, nor exoludsd,fror.
the requirements of the Act, cannot be funded through impact
fees,6,
1
IIII~ It, should be noted that impact fees' include the costs of
expanding 2xisting facilities which serve "the same function as
an otherwise necessary new capital improvsmcnt, in,.ordex that the
i existing;,faoility, may serve new development.„, Further, the
costs of oversizing faoilities constructed prior to adoption of
the,impaot tae ordinance may be reagulled through the food, Under
such oirouzetanoes, cities may include ;"interest charges and
i
other,:financa costslt in determiniing the amount of tho,,i,mpaot,fee, s
I
if the impact fees, are "used for the payment, of principal and
j interest, on bonds, notes, or other obligations isqued by,,or on {
c.. ,....w. ,:....w
.111.
A
r
Y
1
' 9!.tiiic 11!!
1
9t+.O J1
r,
3
9
behalf of the (city] to finance the capital improvements
identified in the capital improvements. plate "
instance, however, costs associated with upgrading facilities each
correct existing system deficiencies or upgrade services to
existing development must bs excluded from expansion costs.
EX4~u.sions from deP~nifln,: - t ~
The definition contains a second ,
part, however, which contains
express gxclu~ spa from the definition of impact foes. Cities
~ can continue to emPto
Y practices which are excluded without
compliance with the provisions' of the statute.
exemption is j. or the " The first
dedication of land for public parks or
paymentsln lieu thereof to serve park needs."
The' intent of the
k exclusion is to, preserve, the practices which work authorized for
! park exactione under the Coilece g a {
J ~ case. ConsequAntiy,
°ha. e.. cities may incorporate such regulations within their
subdivision ordinance under the constitutional guideiineg
! eetabl'ished.in that case.
The second exemption is for "dedication of rights-of-way or
eMemento, or 400nstruotion or dedication of on-mite "watar
distribution, wastewater collection or drainage facilities, or
streets, sidewalks, or curbs when such dedications and
construction are required by valid ordinances and ard-
necsssitated by and attributable tso new development."
The
I,.I
1
Sn■ y G
W
~}6MrWfi FStlf/Cl
. iShtiC {
10
intent of this provision is to pre -,.rte murlcipal authority to
require the installation of uits-+S& facilities as a condition of
}
development approval. The exclusion is qualified, in that
E cities may not require the property owner "to construct or
3 dedicate facilities and pay impact fees for the same facilities."
E
By the same token, cities may not require the dedication of
oversized on-site facilities unless, appropriate credit is given +
against impact fees. 9
The third exemption is for "lot or acreage fees to be placed in
51
f trust funds for the purpose of reimbursing devslopdxs for
oversizing or constructing water or sewer mains or lines.i': The
k
exclusion permits cities to require developers, to construct
c 3 oversized sewer and wuter facilities ;(either on-site or off-
a.: : condition ot, deveibptrent approval, with : provisiorn for
re,. sement from other - developers .abenefitting..from the
izppravements~ Theme fees- may! os collected without being
j If construction
established under- the criteria of, so 3369,
requirements pertain to a facility which is identified,in" the
city's capital improvement program, the city must enter into a
oontroot with the developer ,providAng for reiroabur'asment or
i crediting his contributions.'.., ac ainst . impact fess,. due; . on ' the ,I
111 project,
• ,
i
The Act also conilk'ns an omnibus exemption,: providing that "this
Act shall, not b6,;jonstrued to prohibits affaot, or regulate any
}
'.a.1r....aO+v...:.Y.VFfr:Y..ln•Iftk+:)µ' ~'.rt.lM 1.H'W It1. ✓iS VI
ry:a.asw~awanA'au.WrtMN/A yuJUIJ.. u>♦r.a a
f, k r: a
I
~rR~ltcAR
tax, -fee, charge or assessment which is specifically authorized
by state .law." This provision clearly excludes special
assessment practices. Because of its broad wording, it is also
possible that the exclusion applies to sewer and water "user
fees" which authorize charges for capital as well as operating
costs,0 On the other hand, 8B 336 is olearly intended to apply
to charges for such facilities, xt seems likely that a court
called upon to construe the statutes would interpret them to
bring suo4 charges within the provisions of the impact fee
? Qtatute~
IE .
New--.-development, Cities may incorporate the costs of
facilities necessary to serve new development in the impaot fee.
"New development" includes "the subdivision of landf or the
k j construction, reoonstruotion, xedevelopmenti conversion,
struotural alteration, relocation or enlargement of any
struoturoi or any use or extension of the use of land", which
increases) the.demand.lor additional capital lmprovements,
noa way . fa ,lition., Althoughi, roadway facilities fray, be
E funded:th"ugh impact fees, the statute limits suoh.faoili,tiss.to,
'arterial or. collector, streets or-roads .which have .rbeen
designated .on an offioia'lly adopted -readway;plan 644 0 together
j ~
j with all necessary appurtenanpea4.60M The bill excludes
"roadways or associated improvements designated on the federal or
p Texas highway system, The Act also limits the, area in which
1 : < .._.......r .+wr.aMW%rMJY1M.uw rbri..r.-....n......«.....,
t
( r.
y .
r
i
rW 12
road improvements may be constructed with impact too funds to t
areas inside the corporate limits of the city and within 3 miles
from the new developmant,ll
i
F
.ervioa area. The Act requires cities' to establish
"service areas" within which impact fees will be assessed and
i
1 spent. Except for roadway facilities, service areas may'1h6lude
areas both within the corporate limits and within the
extraterritorial jurisdiction of the city. Where appropriate
the service area may be the entire
Y jurisdiction of the city
I (e.g., water treatment facility). The concept of a service
area is imp'ostant in establishing' that impact fees benefit the
property which is subject to the fees#
i Y
service unit6 The Act also requires, that cities define a ,
"service unit„ ; which serves as the basis for = assesszbnty 6f the
J impact feet "service unit" means "a standardised %*&so* of
consumptionp; usey generation, nor `..discharge attributtbla-- U 'an
individual unit of development calculated in accordance with
}
generally::adoopted ..,onginsefing .~or planning standards; for a
particular,.category - of, capital. improvements or:Iabiiity
expansions." The service- unite: concept is ,iesign6d to asaUVO
i
that the need for~nsw capital, facilities•is proportional'to Ut
dotand for new sokVices ginerated by the dsvolopm/nt,..
H Required dtuAias
a
+.?WNMIYp',N lNww4'3tMwvIF~.41tYtvR gI4)asMwNU`ry+xa+.e FwW.rwuu.ns.m..~......... ........w+r
i
"1 "401
13
The Act requires that, prior to adoption of an ordinance
establishing impact fees, a regulatory agency must conduct
several studies to determine the real impact of new development
on the infrastructure. These studies include land use
i
assumptions, establishment of service areas, a capital
improvements plan, and an analysis, relating the costa, of
improvements to individual "service units$'.
Land use assumptions are defined as Itaodesoription of the service
area and projections of changes in land use, densities,
intensities and population therein over at least a ten year
s
period." Note that the actual land use assumptionu may provide
i
f for a period of time greater; than ten years, 1n-preparing land
use assumptions, cities have a least two options with respect to
methodology,
I First, the city may choose to address growthofrom the•psrspsdtivs
SSS
of population ar}d employs snt, : , Census data,, Texas: Employment
commission statistics - and ;local councils of> government are
potential sources of historical data and projected growth rates
for regions, Using these national, state or, regional sources as .a
baseline, a city will be well-founded in extrapolating local
,growth projections frox,observed local conditions.
The second methodology involves a projection of growth by
specific units of measurement, suchl as numbers of_dwalling!;units
t
~'7 w
M
-10
ON!
j
14
I
by various types or employment growth by acreage or building
i
square footage. While better local data may exist for this typo
E
of information, state and regional data to support a service unit
projection may not be as readily available.
{
3 Projecting the' quantitative growth is only a part of the
development of land use 'assumptions. The 'other element is
} assigning the growth to specific locations within the
'f
a
jurisdiction or service area. A oity that has a comprehensive
plan already has the foundation upon which the land use
assumptions can be built. obviously the final land use
i
rsstroptions should be•consistent with the comprehensive plan.
The. second required study is the definition of the' appropriate
G ;
{f sorvioe:;areaa6 (ass-.previous definition), service areas, may
differ greatly in composition depending upon the facility, being
i studiedc,~,ror; instanor,; water; sewer and storm drainage' service
aroas,mpy~ba:based upon the physical characteristics ofithe city,
{
such gas:,, drainage • basins or water pressure aonss 6., . or, the Act
LJ
psrmits.,tha- inclusion Of the ontirat~oity and thr'affbotdd-ZTJ ,
into ono sorwics area.' n
Roadway facilities, -on the other: hand, are more -severely
constrained by the Act. it is envisioned that the service area
for°'roadway faoilitioa.ba defined by the, average "rip, length f6r
the jurisdiction, but. in no event br greater, than Orea miles in
' w4 rolrgnaww.rai:.ww.rerwuc4<naw..vl rwv.us_w.r r+w. .....uasw.w +r+ur...n. .aiuerWlb.~A=
NOV
1B
distance from the new development. Here again, a City has two
principal alternatives in establishing the, zonal structure.
First; the oity may adopt a rigid three mile by three mile, or
grid, structure, While having the advantage of easy
administration and definition, this type of structure tends to
restrict the administrative discretion of the city, as any funds
collected with a zone must also be spent within that same zonek
The second alternative is to Create a system which defines a
"floating,, three mile zone, with each new development
' plotted ,'at
the cantroid of the zone, While technically more difficult to
I aChisvs, goo-based information systems Currently evailable''for
mini-Computers and personal Computers will make this type of
application possible,
" Of all the elements involved in the creation, of an impact tee
program under the Act, the definition of the service area is one
of thw most . important decisions ,to 'be made -:by +-tire - °ci,t
Carefull y
' Y crafted, the structure >of, the zones can assist in
implementing, growth management objectives
devale , mhay Can sna'eUre46
pment in areas of the city where sufficient publ.ie,sarvioau
already-exist; and they ,can discourage • devol-opmfint' in , frin e
areas Where municipal, expenditures may be ths.highest,
The third study required by the Act is the capital improvements
Plan, Detihed aa: !'a plan re '
f quired by the Act which identi;figs
capital. Improvements or facility expansions, putgubnt to which
I
r
p S.
kN
{ 18
impact fees may be assessed", the CIP envisioned in the Act
should be a subset of the overall CIP for the oommunity, Note
i
I
that there should be consistency between the community,$ overall
M and the CIP that is a portion of the impact fee ordinance.
Specifically the CIP required by the Act actresses only those
categories of facilities which are covered by the fee ordinance,
and only
those specific, facilities or port.'01p of specific
facilities whose construction is nemessitatsd by naw development.
~ The CIP .must,:. be prepared b .
Y a registered engineer and. must
inventory existing facilities within the service area.. It must
I i
discount anticipated costs of ameliorating existing deficiencies
II
An the system,, and the costs of meeting needs _no
not generated by t
~ new develcpwent
It must also invento
4 i ry: existing capacity, ti
I j current level of facility usage, and existing commitments for ~
eorvico to users outside the service area,
i
E Cities Must be careful to ensure that those facilities included
within the; CIP and, 'listed as being attributable to hav
development. are, separate and, distinct from faoiliti,as that-will
be built, under normal development policies. The 'Adt is, aiaar
that a,naw development cannot be required to
both construct a
facility as a requirement of
permit approval and be regt,ired to
pay a fee for that same facility.
A significant Ptovision.of the Act is.the exclusion of any state i
i
or federal, highway Improvement from the impact -I CZII Wh11e +
f
i
M 1
17
improvements to arterials or collectors crossing such highways
probably-will be eligible expenditures, the affect on designated
farm-to-market roads is yet unclear.
The final study required by the Act is a "definitive table
establishing the specific level or quantity of use, consumption,
generation or discharge of a service unit for each category of
capital improvements or facility expansions and an equivalency or
I conversion table establishing the ratio of a service unit to
various types of land uses, including but not limited to
residential,, commercial and industrial
~ I This "use matrix"
~ serves the
purpose of relating the land use assumptions to:thb
CIP,
I Certainly they most prudent course in creating the use ma
~ trix:is
to utilize generation or use standards developed by-nationally
recognized organizations, such as the Axerican Public Worker
AQ$.opi4tion (APN4), or the. Institute of_Vransportation Ehgineera
i1o the hot does not ;preclude the 'development,: of
r locally, based: standards, care should be taken .to carefully
document and explain, any local revisions to nationally, or
regionally recognized measurements of use.
The culmination of the required studies is the calculation of the
i
impact fee, Generally, the maximum tee that can be ;charge in
ddtsgi ned by dividing the cost of. all improvements anticipated
i
Y
19
to be needed within ten years in the service area by, the total'
number of service units projected by the land use assumptions to
be built in the service area within the same period of time. The
fee ordinance c&n establish any fee that is less than or equal to
the fee determined by this oAlculation.
i
C. Procedure for adopting and amending fee ordinances
Once regarded by the development community as an area. of
particular confusion and perceived abuse, the procedural
requirements of the new legislation are spacitioc Public
j
involvement in the process is assured :
The Act requires the establishment of an Advisory Committee to
y
assist in ovsrsosing the implementation of an impnct-fle:prngrame
y
The Committee may be solely charged with the duties required bk
y the:Aat, or the responsibilities may be assigned toGthe'City,416h
commission, A• o4ty-would be v-li advised to ot*ats tshs! 11dviiory►
Committee as!~aarly as possible, in the foe d6vAlopm4ht prod&46l
The committee can be a, valuable resource in, organizingIc thi
f
required hearings and disseminating; proper notice ";:of! ,the
ordinance to the community, + :r, 3
The first required stop "In, the adoption ,process is~; the
development of the land use assumptions.. Once this studYehas
s
been completed, the Council must set w date upon which,a publib
'i
I. "
.1~Vn M1MLrYMYa Y{rwrIw:'cw... • .aa...~._..-.....a i... ywti I.Mlh.1X.4ulIg1MM.fy
b
I
r WOW
19
hearing will be held to consider the official adoption of the
assumptions, Notice of the hearing must be mailed by certified
mail to any person who has requested to receive such notice, and
must also be placed in a newspaper of eaeneral circulation in the
community, The newspaper notice has several specific
requirements as to size of the notice and location of the notice
in the paper itself. While a lack of strict compliance in this
detail will not jeopardize the legality of a local ordinance]
cities should be careful to follow these notifioation'proceduro$
as closely as is possible.
i
After holding the public hearing on the land use assumptions, the
Council must approve or reject the assumptions within 30 days
from the date of the hearing. If the assumptions are 'approved,
the next step in the process is tho development of the Capital'
Improvements Plan.
Upon development ,of the CIP in accordance wits) the,,proVisions ,df!
the Act# the ;:proposed ,fee is calculated and an, oi'rfifio" `is
. proposed. Using the same methodology as required in`the a&d tionl
of the land use assumptions, the city gives notice of a hearing
on the CIP and the impact fee ordinance, The Advisory 'Comm'ittee
E is; required to review the proposals, prior'` to the l anrisjgj;'''a~d
file thlir.recommendation not less than five business days before"
the, hearing.
e
,w
i
Arm
ao
After the hearing, the Council again has 30 days in which to.
either approve or reject the capital improvements Plan and the
j ordinance. No ordinance may be adopted as an emergency measuta,
Based upon this schedule, adoption of an impact fee in Texas will
require anywhere from six to ni.na months, depending upon the rata
i
at which the required studies can be completed,
+t
s
The Act requires that any impact fee ordinance be updated ai:
i '
I '
least ovary three years. The update procedures are the same as
those required for the original adoption of an ordinance.
r
D, Operating-an . aot.fas program 1
Ths ultimate,output of the studies and public, procedure's required
a ( by the Act is an ordinance whiuA conforms to the statutory ;
1 intent. The Act also establishes guidelines for the'asraeba►sht
! and collection of fees, the use of the lees and the
admio ati ation of 'the funds Where features z4tt
f
inoorpprated. into the ordinance together with:,the,fo'a rbhbdullt
j and,procedures for amending the fees
j
aoarking,And Accountingo SB.336 requires that "all funds
aolleotod through the adoption of. an impact fae, shall be
deposited ;in interest-bearing accounts clearly identifying they
category of capital improvements or facility expansions within]
the service area for which the tee was adopted." Expenditures,
1
1'
1
Y
21
from the funds must be earmarked "only for the purposes for which
the impact fee was imposed as shown by the capital improvements
plan " This requirement derives from court tests which
mandate that fees be used to benefit the property subject to the
fees
it is important: to note that the Act does u require that a
separate account be established for saoh individual improvement
to be-funded through impact'fees, it is necessary-to,establish
different accounts only for categories of, improvements arid. by
i
f service areas it is thus possible to aggregate funds to
complete certain improvements within the.servias area.
Rotunda, The. Act also.. requires, that impact fees be
refunded to the record owner of the proppert
yt. with intisresty
! ~14n4er two ,circumstances,, r1rst j, fees must bar refundod i'it not
' )spent for eurtmarhod; 1aoilities within 10 years from 'the datq;,of
colleations (Compare the 2i-year periodin the College Statioh
park fee ordinance
s) second, fees. must b* refunded,apon,xequest
7
' ^f the owner of property on which an impact fee has been paid, if
;,serviaos are available and the city denies service, or-rig, the
oity,Wls: to oommence construction of now, faoilitian to .serve
.the development. within 2,years,or fails complete much facilities
r within. -
I years of -the time the fee is coliectad, :finally; 'upon
+ fii completion of; -theocapital improvements for which the fee was
y
e
m'tl1i6FT
V6$ i
22
collected, the city must recalculate the imraot tee based on the
actual project costs. In the event that the•foa based on actual
costs exceeds the fee pai.a by more than lot, the difference suit
be refunded to the property owner.
i
i
ii
i ,
Assessment and-,collecti,on
Q= impact tAas, The Act
distinguishes between the assessment, of an impact fas - and. its
collootion~ and establishes rules for, each. Assessment :is
~ i
dofined as "a determination of the amount of tha impact fee :in
of foot:... and is the maximum remount which can be oharged par
service unit of such development." onca4 an,, impact for-is
assessed, it may not be increased ;,,x the typo of capital
improvement against the tract ►1for any reason, unless the number
of servioa units to be developed on sUoh' tract inoratsoii: N In
this.-event, the city may increase the assessment to fund now
capital:,improvements in an amount "ittributable to,ths additional
service unitW, r Normally, this would ocour? in the event th%t
tho, owner or, . developer; submits a new-, development, propoaal -uhift
increases demand for new serviced.
In general,,.the ;Act , fervors assessment of itapact tees 'at am early
! stage in the development.. process in order to establish 64~tA'f ty
about the costs the developer must bear for 'the projects The }
usual time for assessment is no iator;than the`date.df XtaggdjW
of the. final plat for a subdivision, of.tho.-proportys , ;Howowr,
1
3
j
'y
.
II1
S IM~
GSM"'
23
assessment may occur at ►iany time during the development approval
an& building process" if both the fees were adopted and the land
was platted prior to the effective date of the Act, or, if the
development proposal does not require platting.
The usual time of collecting the impact fee is either {1) the
time of issuance of a building permit; (2) the time of issuance
I:
of a certificate of occupancy; or (3) the time of connOtion of
the development to sewer or water utilities. Fees may be
collected as early as the date of recording of the final plat#,
✓ i I
I
There is an important grandfather clause which must be included
r- f in the ordinance adopting impact fees. 8B 336 provides that
' impact fees may not be collected "on any service unit for which `a
valid building permit is issued within one year subse(Vent to the
t'
=c date of adoption" of an impact fee ordinance enacted alter the
:effeotivs date of the Act, as long as the land was platted prior
III adoption of the fee ordinance.
i Finally, the Act permits the assessment, but, the collection
of;'- impaot fees in areas where services are not currently
available. This provision does not apply to roadway faoilitieso
it is intended to implement one of the cornerstones principles of
j
the-Aot,;that.a new development for which an impaxct,feerhos been
paid, is "entitled to the permanent use and benefit of the
services for, which the fee was exacted and shall be entitled to
~ r
a{
`1
1VC
Y V01
,g
i n
gull
Win
i
i
24
I
receive immediate service from any existing facilities with
actual capacity to serve" the development, subject to oomplianoe
with `other valid regulations.
j A fee may be collected under such oircumstances, however, if' the
city and the developer execute a contract for construction or
financing of necessary facilities, which contains provisions for
i
crediting .ouch contributions against impact fees or, for
r reimbursement from fees paid by other new developments using the
i
facilities. Alternatively, the city may elect to collect., fees
and commence construction of necessary facilities within two n
1 years and provide services in 5 years.
I~ pailure to provide the services Within the statutory :time ..fraale
oay,~result in,-a suit for spsoifio performance for the services
lor~which the:fae was paid.. (A property owner may~•not-campAl f .
construction of, a specific faoility, however, using,i -dpsoifie y
performance.) Cities are thus advised no - to Collect the feaAf
there is not reasonable assurance that facilities can be
{ commenced and. constructed within the statutory time frames, it
is important to understand that any problems associated with this
f restriction arise, only, it cities approve- subdivisions without
corresponding assurances that =the development project. can be
Sk,1 provided --with adequate public facilities, It facilities &to not
presontly.:available and suoh.taoilities are to-be finafice&rin
part through impaot,tees, thatt-it >is in a oity0a best-interest,,to
,
LS
{
{
r
q,
r
t ~
1
y
lpA 26
%too
enter into a development agreement with the project owner as
authorized-by the statute.
s
4onform+na exist~n~r ord~nanq,~s o re~Lirefllenta oP Ao
i
Sg 336 applies to existing development charges which fall within
the definition of an impact fee and which are not otherwise
exempt under the Act. The Act contains two time frames, First,
f existing impact fees must be replaced with an ordinance adopted
i pursuant to the statute within throe years of the effec
f Live date.12
j Both substantive and procedural oompIiance are required,
secoho,o within one year from the effective date, the city must
bripg„its,.fee sohoodule. to. no more ;than lot above the maximum fee
! Which, oould.,,bo.assessed under the Aot, otherwise;; the cif ma
Y y
49, liable
to an owner who has paid an impaotrfeo after one year
for a penalty equal to twice the difference.botwesn "the maximum
} impact fee allowed and the actual impact foe imposed, Plus
reasonable attorney,ls teen and court costs," Because only the
amount; of the, fees are compared, it should not be necessary, ;to
follow the procedures for adopting impact fees under the statute
f
' in order,to-amend an existing, Pee ordinance to avoid the penalty.
MV~ it is advisable, howover, for municipalities to,evaluate existing
fees under the methodology prescribed by the statute as soon as
C~.. possible. ,2`ha first at*
pin the process involves Identification
4,
ok~r i;
7
grr.~nuawl j
i
26
j
of charges which qualify as impact fees under the statutory
1 definition, Prime candidates are '►aoreage" 'or "front footage„
assessments imposed on new development to recoup or fund the
coots of 'extending sewer and water transmission facilities.
Certain "escrow" funds collected for construction of off-site
facilities may a1'so,be classified as imphot`fees",
i
Cities may wish to take' the opportunity-' to' examine all
F. j development exactions praotioes`',ih,cohJunotion,with evaluation of
fee ordinances, Both 'the` Act (a»d constitutioilal pr'o'visi6n6 -9ea
below) mandate that 'municipalities' aVoid "d6uble4oharg1ng
F, I developers for new oapital facilities. Thus the Act expressly
I requires that .„any construction-'of, ;'conteibuti6ns°' too , or i
~dedications of off}site roadway: facilities agreed° to or' xigtiirAd ~
,f' E E I'
SM1` bye [city] as condition of development • approval' effall 'be
s. credited against roadway facilities impact fees otheewise'due
l: from such development," 13,
i In undertaking 'such review, it'is iMportant to keep in mind that
the Act allows oities to charge, the r.13i.1; -costs' of capital
improvements necessitated by and attxibutabla to new.deveiopmeht',
a Thl.to if it becomes necessary for the city, to modify riohtAof-way
dedication requirements, additional costs of right-of-way
' acquisition may be incorporated in the afeunt-of the ispact fee;
{
`i'he` Act also amply provides for developer' 'agreements . ' Thus
I
(f n'.. r,...... I Ne•,:. u.. n w.w'Yt V.L4AllhW.p Ma W.e. ,.4 A. M.e n. v...., _71', nrNrreY+W,~yXrMy ,r~
Ir f~C'y ,
p
.AVM r•
A
T.
. .T
J~
1
I
'I
i
nwr
27 1
'cities are authorized "to enter into an agreement with the owner
of a tract of land for which the plat has been reoorded providing {
for the time and method of 'payment of the impact fees,"
Agreements may also may extend the time for performance of
municipal obligations to provide services if "the owner
voluntarily requests the ...(city) to reserve-capacity to serve
future development, Finally, the city is fully authorized to
enter into participation contracts with developers to provide
necessary facilities in exchange for appropriate credits, 14
F. Miscellaneous Provisions and o
r; ~eid•ratiohs
'
c'udicial review and administra- ve a ears An aggrieved
owner may bring suit for; de novo review, of an.Isoadt fee
ordinance only if ,(1) the action if filed within 00 days -of
adoption, the >ordinance
Arid (2) the aggrieved ~ `panty has
"exhausted all administrative remedies" provided by the city.
As previously noted, the plaintiff may be entitled to, so6difio
performanoe,tor services promised, The successful litigant may
also reaover,attorney's fees and Court coats, The Act'expreeail'y
provides that "an impact fee shall not be held 'invalid because
the public notioe requirements were not complied with if
IR~Ir
"L ;compliahos was substantial and in good faith"
r~i 4 Cities should gain maximum advantage under the statute by S r.
S!S
r.
Sy ~t
j
CAA ^ 2 8
establishing "administrative remedies" in the impact fee
obtain relief from harsh
ordinance bywhich a Property owner may
application of its terms. Some procedures are in, fact required
by the Act. Thus the city must afford a person who has paid,an
impact fee the reasonable opportunity to "present a written
request to the governing body stating the nature Of (an)
unperformed duty and.. requesting that it be psrformad within 6G
~ days of the request.'+ If the governing body concurs, it must
cause commencement of performance within 60 days of the request.
i` This sort of procedure serves as a safety valve for needless
c
lawsuits. Cities may wish to consider a similar procedure for
all development exaction toohniqu*04
~t
I 3
The 1►at
doss Y~ require cities to assess impact, fees against ahl now
~
li dovolop%ent... A city may make reasonable classifications in its
ordinance, inolu¢ing exemption of some classes of users from
impact fee's in order to foster valid regulatory objectives, For
exams le, `a city could choose to create service, areas.selectively
l
throughout the city in order to encourage desirable growth
patterns. Similarly, the city might decide to exempt low -..and
moderate income housing from payment of impact fees ;in,,order,:to
encourage affordable houpingv t nuch,dscisions are subjaoto..-of
course, to constitutional guarantees of due process and equal
protection of ;the-law.
a
q(
r
was
1A .f
}
der'
)M.A.
i
,r
1
i
,
29
Prohibiri
SB 338 forbids cities to
place a moratorium on now development "for the purpose of
awaiting the completion of all or any part of the process
necessary to develop, adopt or update the impact fee.►, fiha
obvious intent of this provision is to prevent cities from
soliciting support from property owners for impact fees by
threatening a greater evil.. This
provision ;should. not be
interpreted as an encroachment on a munioipalitY's police power:
to declare a services moratorium which is reasonably,_relatod to
preservation of the public health and. safety, even if sthe
ultimate result includes a decision to impose impact foes.
k ty E ~ 'dal 4~
:fir 8~strativa agets and aonsu~t.~«., The.sta
tuts contains
prohibitions, an the:. use
of fees to fund certain expohoot,
1 associated with new capital
improvements . T40lie aret (h)
~ re air
; r
p. , operation or maintenance of existing .or:now oopital
} improvements
(2) "administrative and operating, costs" of
the, cityl and (3) the costs of preparing the land us6
assumptions, capital improvements plan and lmpaot,fee ordinance;
if performed by munioipal employees. On the other hand, the Act
permits cities to include in the calculation of the tae ►fte fees
actually. paid or contracted to be
paid to an independent
qualified engineer or. financial consultant preparing or updating
4 the capital improvements plan who is not an employee ; of the
politioal~aubdivision.N Cities should thus.donsider whether to
b
i'
i 4t
yQ
4
Ip
f
t
WIN
s
a 30
use consultants at an early stage in the adoption of the impact
r; fas.
Impact of federal court dgoision. xn Holm v. California
Coastal Comm'n. 16 the United states supreme Court ruled that a
f beach access dedication requirement imposed by the commission as
a condition of permit approval constitutel a taking by regulation
i in violation' of the Just Compensation Clause of the Fifth
r.
i Amendment. in its opinion, the Court emphasized that it would
apply 'a stricter standard in evaluating taking claims than it
does in review of due process and equal protection claiss. Xn
j
i order to pass muster under the Just Compensation Clause, a
development exaction must "substantially advance" a "legitimate I
r 1
state (municipal] interest." The requirexent.of.a nexus between
the exaction and the asserted purpose, of the regulation is
especially impottant "where the,aotual oonveyanoe of property is
made .a Otsndition to the lifting of a, land use restriotion, since
in that context there is heightened risk that the purpose is
j
j avoidance of the compensation requirementtrather than the stated
police power objective," 17
4
i
1 1
This decision'' will require reevaluation of the exactions
1 practices.of many cities. For example, some municipalities
require the :dedioation of right-of-way for road in subdivision
regulations without regard to the impact created by a particular
development projeot. Although such practices may not direotly,
Vol,
w
I
1
r
1
11
PA M
t
31
odgflibt with the holding of the 'NolZ,& oasa,, courts can be
expected to examine challenges based on such policie''s iore
closely. To the extent that standard praotiaes must be revised,
the consequence will be that more public funds will be required
I For acquisition of right-of-way, in turn this may occasion
}
expanded use of impact <fess, which incorporate the costs of
excess right-of-way in the fee structure,
Conclusions
SB 336 is boW an enabling statute which expredsiy,authorizas:tho
~5. use of impact fees and a limitation on municipal home rule
` ! authority. The statute resolves most -questions concerning the
I! authority of cities to use develo ment oha
p rgas to linancs - new
capital fedil4tias. At the same time, the Act e9tabliNhas a
~ complex trasework of mandatory eubrtanui-4e• aWd' procedural
requirements %whirch must be followed' in order to validly' fides ~ t an
t. impact fees
The. Act should serve to refocus judicial'inquiry,bn guestiohil'of
statutory intent rather than on broad constitutional questions,
Because the statute standardizes the methods for adopting impact
k~ fees and includes detailed guidelines for the design of impact
fee ordinances,` it may well avoid muoh future litigation over
development oharges,
,n
t
n
3,
wool
i
r
32
Cities which now use development charges to finance off-rite
capital improvements to serve new growth must conform existing
fee ordinances to the statutory requirements within specified
time periods. The Aot, together with recent court decisions,
should serve as the occasion for cities to reassess all
+ development exactions
practices to assure exactions are both
effective in implementing municipal policies for the provision of
` I public facilities and services and equitable. At the same
k time, preparation of documents- to support impact fees can be
integrated with the cities' overall efforts to develop
comprehensive plans and capital improvement,programr.
YII
1111. . ~ I 1 . . '
It is impossible to anticipate all the ramifications of 8B'336
mtil,,pities have had the opportunity to work with the provisions
Y of, . the gt&tt4ts.., A* with any comprehensive laoi'sl'Ative scheme, f
the , proponentq, and opponents are likely to regroup, for the next
;legis.14tive ;version to modify and adjust the. meohanics of the
Act. Because the statute is the first of its kind i.n ;tho I
country, the experience of Texas cities may wall serve as the
i i model for statutory schemes in other statpo,
t I
r
I
1
y y '
w. I
f•
d.:
1~;
-1
r vote
33
Endnotes
i. xn,part, the authority resides in the states subdivision laws,
Tax-Rov.Civ.Stat.Ann. art. 974&, } 4 (Vernon 1963).
2. Bee e.g., Bauman & Ethier, O+Davelcpment Exactions and Tmpact
Feast A Survey of American praotioes," 39 Land Use L, & Zoning
Dig, no. 7 at 3 (July, 1987).
3. 680 S.W.2d 802 (Tex. 1984).
4. Berg Development Co. v, City of Missouri city, 603 S.W.2d 273
(Tex. Civ. App, 1980).
S. Id, at 807.
{ 6. Id, at 807-808. The mostly widely used standard for
evaluating the constitutionality of development exactions is the
f' "rational nexusll test, under which a development charge will be
` sustained if a dual connection is established, First, 'there
j must be a proportionality between the need• for new capital
4 facilities generated by the development and the amount of the
fee. Second, there must be a-reasonable connection between the
funds collected and the benefits accruing.; to the development,
this is accomplished if the fee is earmarked for expenditure in
an area which benefits the users of the development and is spent
within a reasonable period of time, Florida courts have used
the rational nexus test to sustain impact fees. See, 6.901
Home Builders & contractors Assn v. Palm. Beach,County, 446 So.2d
f 140 (Fla. App, 19831 see also contractors & Builders ssi
An of
Pinellas County v. City of Dunedin, 329 So.2d 314 (Fla, 1976)4
xf the exaction meats the requirements of the test, the measure
also will be classified as a regulatory exercise rather than as a
tax.
7. See Ariz. Rev, Stat. 9.463 08 (general enabling provision) l
Cal.aov t Code, Ob 66477 ark and
recreation (p
(school facilitias)t and 1 66484 fees)t i 6l
N,J.Stat.Ann. ~ (roads and bridges)l
4 40168D 42, A comprehensive bill similar to that
enacted by the Texas legislature was considered but was defeated
by the Florida legislature during the 1987 session. See Fla,
Senate Bill 119$,,
e, There is another possible interpretation. The definition of
"impact feel► applies only to the defined capital improvements.
` Yt is arguable, then, that capital improvements not included in
the Act, such as fire stations, could be funded through fees
without compliance with the Act. This interpretation must be
juxtaposed against the overall intent of SB 336.
411
w.....,.w.w,a•wwuaw hr' FNMtx< Cp +N
n1 4MRW;C l MALGt1aAYiJIMWN/.ui:~.a•a'
i
y M
E.
QS~Wp'Mi . .
■i7 t
i
f ~
yaxxma 3 4
9. These
praptiaea run contrary to the United States Supreme
Courts recent decision in Nnlian California. vCoasta go rn -
-U•8.-- (1987). Bee discussion below.
i
10. Sea e.g, Tex. Water Code ! 26.176.
11. The limitation is actually the lesser of a distance equal to
€ "the average trip length from the new development" or three miles.
12. This is the same time period for updating impact fee
i ordinances.,
13. Because
on-site contributions are exempted from the Act If
reasonable necessitated by and attributable to the development,
cities should not be required to afford credits for these
exactions. s
14. See also HB 1889, which exempts developer participation
contracts in cities- with a population- of over 80,000 from
competitive bidding requirements.
18. Under this exam let the city could not ,reaag,tUre potential
lost revenues by raising the impact fee otherwise due for other
classes of users,
' j 17. Slip op, at 18,
f
'ot
r,
~ I
1
s
j
i
i
r
y
r1
1
r
IYr r
S
1 4
ids.
ALL
~ o
i
M
90
O R O V P
lmpleme+nartarSpettaltsrsfaGorr»rmetual
Plalniing G Eng/thvIng, mid
lcgd nkes
{
f ;
lI ,
i
I
I
I TEXAS SENATE
BILL 338 ~
AEQU ,pTINQ~T r~
FI C Nth' CVITAL ~IMPA GMENTS
, ICU H T1 USE OF I~IIP,ra►~~ P99$11
~ M1 be~~nltlone I
Yf 2. Au . brifatlon For Impaot F j
1'L 3, PrdoedUree For Adoptlon Ot Impact Fee
r ~1se°Cf Prooeade
g, Refunds
S TIG 8, Plan Update
8 TI N 9. AdvfeOro Commktee
S TION 8, Qe6 of Pt4Vlslone
! SIJTI8N 0. Appeals
S TI N 10, Storm Water, Drainage, and Flood Control
SL TIp 11. Exempt Traneadtlnns
$t?CT(Q~ 12, BffeotIva Date ~
r
r 1 i
t rM /01J{~ t Yf of 11Y~~ BIR~~f~pplarsa~eDrrNp~~AOUIWd d f a irgJOs of rHR 61,00, Ppa oltrff~y~ NN hy~~w mMApm/~l~pr O/Ap1~ !!p~ I or rdN11lts I rfyph
hINW
F, ! ' i Ng11p4NR~IOM f Ouf11AI ~ ! InMathilYOtuq 1 , m~lIAN~Ip Iflf10~! byll NJd~1~ k~ lnYlfNl fib 0~ 1a1 aOOpNf Of th1 dill 01 OOfo tow
lI fb1 SNNIbeNl~I n 1np oNlcV W f~ro++ph Year InoMay.
1
88 338 AS FINALLY PASSED AND SIGNED BY THE GOVERNOR
AN A0T M01 owl
" rotating to financing of capital improvements by polllical subdivalons,
BE IT ENAOTEO BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1, DEFINITIONS, In this Act:
(1) '-Oopflal Improvements plan" means a plan requlred by [his Act whloh Idenlilles capital Improvements or facility expansions pursuant
to which Impact fees may be assessed.
(2) '-Cepllal Improvement" means water supply, treatment, and distribution lacllltfes; wastewsler collection and treatment facilities;
q storm water, drainage, and flood control facllllles; whether or not located wlthln the service area, or roadway facllilles, with a life
expeolanoy of three or more years, owned and operated by or on beholl of a political subdivision,
(3) "Facility ►xponoloe" meant the expansion of the capacity of an existing facility whlOh serves the same functions at an otherwise
neaessary new CspllAt Improvement, In order that the existing faolllty may serve new development. "Paolllty expansion" does not
include the repair, maintenance, modernization, or expansion of an exleting Iactllly to bolter serve exleting development.
(4) (A) "Impool fat" means a charge or assessment Imposed by a political subdivision against new development In order to
generate revenue for funding or reoouping the costa of oepllal Improvements or facility expansions nooesell0od by and attribut•
able to such new development, As used In this Act, the term "impact lee" Includes amorilzad oherges as well as lump-turn
cha t##$ and includes capital recovery leas, conhibuffone In aid of construction, and any other lee whloh functions as described
In this definition.
(B) Impact fees do not Include
(q dedication of land for public parka or payment In Ileu thereof to serve park needs;
(11) dedication of rfghte•of•way or esooments, or construction or drainage faollitles, or streets, oldewalke, or curbs when such
dedlcoltons and contt«r^don are required by valid ordinances and are n44046ltated by and attributable to the new
devefopmonl; or
(III) lot or acreage fees to be placed in trust funds lot the purpose of reimbursing developers for overelzing or construoting
water or sewer mains or lines; provided, however, no Item Which Is Included In the capital Improvements plan shall be
required to 66 constructed, except pursuant to Subdlvlelon (2) of Subsection (H) of Seaton 2 of this Act, and no owner shall
be required to construct or dedicate faoilltlee and pay impact rats for the same facilities,
(8) "Land ua oaumpNon6" Included a description of the service area and projections of changes In land uses, densities,
Intensltles, and population therein over at least a 10-year period.
(6) "Now development" means the euWlvteion of land; or the construction, reconstruction, redevelopment, converalon, structural
alteration, refocstlon, or enlargement of any structure; or any use or extension of the use of land; any of which Inoreaae the number
of service units,
(0' "Political sulsifirlsion" moons a city or town, whether operating under general law or under special or hom*tule charter, a
district or authority created under Article III, Section 62 or Article XVI, Section 60 of the Texas Constitution, or, for the purport" sort
forth in Section 10 at this Act, oortaln counties described In Section 10,
(8) "Roadway faeUlllN" means arterlol or collector streets or roads whloh have been designated on an officially adopted roadway
plan of the political subdlvlelon, together with all necessary appurtenances, but dose not include any roadways or associated
Improvements dealgnoted on the federal or Texas highway system,
(a) "Servla area" mssns the area within the corporate boundaries, or exlraterdlorlol Jurisdiction is defined by the Municipal
Annexation Act (Artlofe Ona, Vernon's Texas ONO Statutes) of the political subdivision to be served by the capita) Improvements
or fac(Iitles expansions specified In the capital Improvements plan, except roadway facilities. The $$Nlce arso, for the purposes of
this Act, may include oil or part of the land within the political subdivision oflte extraterritorial jurisdiction, except for roadway
faoliltfas. For roadway facilities, the 6oMa area Is llmlted to an area within the corporate boundaries Of the pollltoal subdlvlofon
and shall not exceed a dletanoe equal to the average trip length from the new development, but In no went more than three miles,
which service area shall W "Ned by the roadway facilities designed In the capital Improvement plan,
(10) "Belles unit" means a standardized measure of oonsumptlon, use, generation, Or discharge attributable to an Indlvtdual
unit of development oalouiotsd in accordance with generally accepted englnatring or plannlAg elAndarde for a particular oa,egory
I of capital Improvements or fad[Ilty expansions,
1 MOTION Z AUTHORIZATION OF IMPAOT FOR.
1 (A) Unlaas ofherwlee apaoffloafly authorized by stale few at this Act, no governmental enflry or pollfloaf subdivision shali enaaf or Impose
on Impact too, polltloal eubdlvlllbns are authorized to enact or Impose Impact late on land Withinthelr corporate boundmlee or
extraterritorial jurledlotlons only by complying with this Aot, except impact fees shall not be enacted or imposed In the Axtre.
territorial jurisdiction for roadway facilities, A municipality may contraot to provide gapHal Improvements, except for roadway
Ioollifla, to an area outside of Its corporate boundaries and extraterillorlal jur(edlollon and may charge an Impact fair pursuant
to the coMfact, but if an impact fee Is charged lhoroln, the munlcipstity must comply with thle Aot,
(B) An Impact lea may be Imposed only to pay the costa of donstruoling'capital Improvements or facility expansions, Inoluding
and limited to the construction contract pride, surveying and engmWifig less, and 64qulsHfons coils (Including land purchases,
court awards and cats, attorney's fees, and expert wllnees ley), and the 1406 actually paid or contracted to be paid to an
Independent qualified engineer or flnanolsl consultant preparing or updaling the Capital Improvements plan who 16 not an employee
of the P01111661 subdivision, Notwltholanding any other provielon of this Act, the Edwards Underground Water District or a river
authority, whloh is authorized elsewhere by state law to charge fees which function at Impact fee as Mimed In this Act, may use
Impact foes to pity a atoll engine it who proparee or updates a capital )ntprov4MM6 plan under this Act, Projected Interest
charges and other finance costs may be Included In determintng the amount of Impact leas only if the Impactfas are used for
the payment of principal and Interest on bonds, notes, or other obligations Issued by of on behalf of the political eubdlvlrilon to
finance the capital Improvements or facility expenalons identified In the capital Improvements plan and are not used to reimburse
bond funds expended for faellltles that ate not Identified in the capital Improvements plan,
(0) Impact laps shell not be adopted or used to pay tot any of the following;
(1) construction, acquisition, or expansoon of public facilities or tobeta other then capital Improvements or fautllly
expansions Idonillec In the capitol Improvements plan;
(2) repair, operation, or malntenanoo at existing or now capital Improvements or faclllty expansions;
(3) upgrading, updaling, expanding, or roplaoing existing capital Improvements to serve existing development In order to meet
stricter safety, efficiency, environmental, or regulatory standards;
(4) upgrading, updating, expanding, of replacing exleting capital improvements to provide ballet service to existing dave opment;
(8) adminislfolfve and operating coete of the political subdivision, except the Edwards Underground Water District or a
river Authority, Which Is authorized elsewhere by elate law to charge fees which funallon as impact lots as defined In this Act,
may expand Impact fees to pay Its administrative and operating costa;
(6) prlnolpal payments and Interest or other finance charges on bonds or other Indebtedress, except as allowed by
Subsection (B) of this section.
(D) (1) The political subdivision shall use qualified professionals to prepare the capital improvements nlan and to calculate the Impoot
lee. The oepllal Improvements plan shall contain apeolftC enumeration of the following Items:
(a) a desoripllon at the exleting capital improvements within the service area and the Costs 10 upgrade, update, Improve, t
a
1
expand, or replace such Improvements to most existing needs and usage and etrlater safety, CffIOIMOy, environmental, 0"]
or regulatory standards, which shall be prepared by a qualified professional englneer licensed to perform such professional
englneedng services In the state of Texas
(b) an analylle of the total capacity, the level of current usage, and commltmsnte lot usage of capacity of the existing
capital Improvements, which shall be prepared by a qualified professional engineer licensed to perform such professional
engineering services In the State of Texas;
(o) a description of all or the portions of the capital Improvements or laotllly expanelona and their costa neceealleted by and
atl(lbulable to new development to the service area baled on the approved land use assumptions, which Shall be prepared
by a qualified professional engineer IlcenSed +o perform such professional snglneering services In the State of Texas;
(d) a deffnltlve table establishing the speollh; level or quantity of use, consumpllon, generation, or discharge of a service
unit for each category of capital Improvemerto or facility expansions and an equivalency or conversion table establishing
the ratio 01 a service unit to various types of land uses, Including but not limited to residential, commercial, and Industrial; ,
~i le) the total number of projected service units necessitated by and attributable to new development within the Service area
based on approved land use assumptlons and calculated In accordance with generally accepted engineering or planning
orlle(W
(h the protected demand for capital Improvements or facility expansions required by new service unite projected over a
reasonable period of time, not to exceed 10 years.
(2) The Impaof /N W Service unit shall not exoced the amount determined by dividing the coats of the capital
Improvemanis daonibO !n Paragraph (cl above o1 this 80oe01100 by the total number of peolutod arvhta units desnrlbod let
Paragraph bj of this subsection, If the number of new Service unite projected over a reasonable period of time is lees
than the total number of new service unite shown by the approved land use ateumpttons at full development of the
'service area, the maximum Impact fee per service unit shall be calculated by dividing the noels of the portion of the
capital Improvements necessitated by and attributable to projected new service unlle described In Paraporeph (f) of this
subsection by the projected now service unite described In that paragraph. The analysis required by Paragraph (0) of this
subsection may bs prepared on a systemwide baste within the service area for each major category of capital improvement
or facility expension for the designated service area.
(6) (1) This subdivision applied only 10 Impaof rue adopted and land platfod prior to the effective date of this Act. For fond
which has been platted In accordance with Chapter 231, Aoto of the 401h Legislature, Regular Session, 1027 (Article 014s,
Vernon's Texas Olvll Statutes), or the subdivision or platting procedures of a political subdivision prior to the effective date of this
Act, or land on which now development occurs or Is proposed without platting, the political subdivision may assess the Impact
fees at any time during the development approval and bullding process and except se provided In Subsection (H) of this 040116n,
may collect the fees at either the lime of recordation of the subdivision plot or connection to the political subdivision's water or
sewer system or at the time the political subdivision issues either the building permit or the certificate of occupancy.
(2) Tills subdivision applies to impact We adopted prior to the etfeOUVe data of title Act and Iand plelfed subsequent to the of.
Morivo dos at this Act. For new development which la plotted in accordance with Chapter 231, Acts of the 40th Legislature,
lilt Regular 846610M, 1927 (Article 074a, Vernon's Texas Civil Statutes), or the subdivision or platting procedures of a political subdlvb
efon allot the effective date of this Act, the political subdivision may assist the Impact fees before or at the time of recordation
and, except at provided In Subsection (H) of this section, may collect the feed at either the time of recordation of the subdivision
plat Or connection to the political subdivision's water or sewer system or of the time the political subdivision Issued either the
bullding permit of the artlfloate of occupancy,
(3) This subdivision applies onlir to Impact lead adopfod subsequent to the N/eotlw dote or this Act. For new development which
III11 is pldlled In A"ordonce with Chapter 231, Acts of the enih L"Ifilaturo, Regular Session, 1027 (Article 074a, Vernon's Texas Civil
I Statute), or the Subdivision or platting procedures of & political subdlvfslon to the adoption
shall be coltoottd on any Service OR for which a valid building parent! Is issued within on* * year r s sub bsean Impact te no impact }sit
quent to the data of adop
f tlon of the impact }ea.
(4) Thl9 subdlvlalon applies to;and which is plotted in accordance with Chapter291, Aola of the 40th Loglalalute, Ifaguler Sir
sloe, 1027 (Alfiola 0710, Ornoe's Texas Civil Statutes), or the subdivision or platting proWurss of a pontlcgl eubdivislon subah
quenl to adopllon at on lntpoot loo which It adopted allot the effective data of this Act. The political subdlvbfno shall assess the
impact food before or it the tlme of recordation of a subdivision plot or other peat pursuant to Chapter 231, Acts of the 40th
L"Ifilaturs, Reguloe Session, 1027 (AHlols 0748, Vernon's Texas Civil Statutes), or the subdivision or platting ordinance or pro.
' i oedures of any political suMSvlalon in the official records of the county oferk of the county In whloh the traotIs located laid, sx•
cept at provided In Subseutton (H) of this Ssotton, may collect the feet at either the time of rooordatton of the subdivision plat or
connection to the political subdivision's water or sewer System or at the time the polltloal subdivision Issues either the building
permit or the certificate of occupancy.
f (6) For land en which new development odours or is proposed to occur without platting, the palliloal dubdlvtelOn may aeslas the
impact toe at any time during the development and bullding process and may collect the food art either the time of recordation of
1 the Subdivision plot ofoonnootioO to the pohlloal subdlvlelon's water or sewer system or at the time the political subdivision
Issues either the bullding permit or the certificate of occupancy,
(6) Assessment means a determination of the amount of the impact !04 in effect on the dare or occurrence provided In this ears.
division and is the maximum amount which Ott) be charged par ##Nice unit of such development, No specific Act by the political
subdlvlslon Is required,
(F) After aeeassment of the Impact fees attributable to the new development or execution of an agreement for payment of Impact f
fees, no additional Impact 1044 or Inoroaaee thereof shall be asseseed against such tract for any region, unless the number of ter.
vlos unite to be developed on such trial Increases. In the event Of the Inereala In the number of eetvice'unlto, the impact feed to be
Imposed Shall be limited to the amount attributable to the additional service unite.
(0) A polltlcal subdlvleion fe authorized to enter Into on agreement with the owner of a tract of fond for Wilton the plat has boon
recorded providing for the time and method of payment of the Impact feed, j
jH) ! available utnf or roadway fSollittee, Impact feed maybe detailed, but shall not be odleoted, In srau when "Moos are not currently
(1) collsodon a made to pay for a capital improvement or facility expansion which has been Identified In the Capital Im• I
r provemente plan Amd the political subdivision commits to, within two years, commenos construction, pursuant to duly awarded
I
and executed contracts or commitments of still time covering Substantially all of the work requlfdd to pioVtft Service, and have
the arvlea avallable within a rthaonable period of time considering the typo of capital Improvement or facility expanelon to be
constructed, Seat in no event longer then five years;
(2) the political subdivision agreed that the owner of a now development may construct or finance the capital improvements or
facility expansions and agrees that the coste Incurred or funds advanced will be aredatod against the Impaof fees olherwteo duo
from the new development or agreed to reimburse the owner for ouch costa from Impact fees paid from other new developments
which will use such capital Imptevemento or facility expanelona, which fees shall be oollected and reimbursed to the owner at the
time the other new development records Ile plat; or
(3) an owner voluntarily requests the political subdivision to reserve capacity to serve future development, end the polltlcal sub-
division and owner enter Into a valid written agreemenl,
pl Any new development for which an impact fee has been paid shall be entitled to the pelmonent use and benefit of the services for
which the fee was exacted and shall be entitled to receive Immadlole service from any existing ladllttles with actual capacity 10 serve
the new esrvloe units, eubjact to Compflence with other valid regulations,
(J) POIN101I Subdivisions lire authorized to expend funds from any other lawful source to pay for all at a portion of the oopltal Im•
provemente or facility expansions to reduce the amount of Impact fees,
(N) Political subdivisions and other governmental entltlss are Authorized to pay Impact fees Irnoosed pursuant to this Act
(1) Any construction ol, contributlons to, or dedltatfons of off4lle roadway IaOflilles agreed to or regUlr6d by a Political SUbdlvl.
efon Se a condition of development approval Shall be credited SCAlnet roadway M011111ee Impact fees othorwlae due from such
2
l t\P I•
development
SEOTiON S. PROOEDURIS FOR ADOPTION OF IMPAOT FEE.
1
(A) Bxcepl to othsrwlse provided In this Act, an Impaol fee as authorized by Section 2 of this Act shall be levied by a political subdivision
only upon complying with the provisions eel forth In this section, i
(B) A potltlosi subdhlelon Intending to impose an Impact fee shall adopt an order, ordinance, or resolution eetabllehlnq a public
hearing date to 00ASIdOr land use assumptions within the designated service ores that will be used to develop tho capital '
Improvements plan.
x \M (0) Not later than the day of adoptlon of such order, the governing body of the pohlloal subdlvlslon shall appolnt an advleory
committee In accordance with SeOtion r of this Act,
(0) On or before the date of the first publication at the notloe, the pohlloal subdlvlelon shall make available to the public its land use
assumptions, the Ilme period of the projeottons, and a description of the general nature of the capital improvements facilities which
may be proposed.
(E) The political subdlvlelon shall provide public notice of the hearing,
(1) At least 30 days before the hearing, the political subdivision shall send a notice of the hearing by certified mall to any person
who hat given written nonce by 0011164 or regletered mall to the city secretary or other designated official of the political
subdlvlelon requesting notice of such hearing within two years preceding the date of adopUCn of the resolution or order setting
the public hearing,
(2) The political subdlvlelon shall publish notice of the hearing once a week for three consecutive weeks, the first notice to appear
at least 30, but not more than 80 days bai mb the dale set for the hoofing, In one or more newspapers with general olroulatlon In
each county In which the political subdlvluion Iles. However, a river authority which Is authorized elsewhere by state law 10 charge
("a which function as Impaol feet at deload In this Act may publish the required newspaper notice Only In each county in which
the service area Iles. The notloe of public hearing shall not be In the part of the paper In which legal notices and classified ads
appear and shall not be smaller than on"uarter pope of a standard-size or tabloid-alto newapaper, and the headline on the notice
must be In 18-point or larger type.
(3) The notice shall contain the following,
(a) a headline to read as follows:
"NOTIOE OF PUBLIO HEARING ON LAND USE ASSUMPTIONS RELATING TO POSSIBLE ADOPTION OF IMPAOT figs"
(b) the time, data, and 1006110n of the hearing;
(a) a statement that the purpose of the hearing Is to consider the land use assumptions that will be used to develop a capital
improvements plan pursuant to which an Impact fee may be imposed;
(d) an easily understandable map of the service ores to which the land use assumptions apply; and
(e) a statement that any member of the public has the right to aproar at the hearing and present evidence for of against the
land use assumptions.
(F) After the publie hearing, the political subdlvlelon shall determine whether 'o adopt or reject an ordinance, order, or resolution
approving the land use assumptions,
1 (0) the political subdivision shall have 30 days from the date of the public heorl j within which to approve or dlsepprove such land
use assumptions.
(H) An ordinance, order, or resolution approvino land use assumptions shall not be adopted see an emergency measure.
(q 11 the governing body adopts an Ordinance, order, or resolution approving the land use assumptions, the political subdivision shall
provide for a capital lmprovements plan to be developed by qualified professionals using generally accepted sngineating sod planning
praolloes In aaoofdance with Sub4atlon ID) of Station 2 of this Act.
(J) Upon completion of the appal Improvements plan, the gLwernlng body shall adopt an order or resolution setting a public hearing
to discuss the adoption of the plan and Imposition of the Impact fit,
(K) A public hearing must be hold by the governing body of the polltiat subdivision to discuss the proposed ordlnsnoe, order, or
i resolution adoptlno a capital Improvements plan and Imposu,g an Impact fie, On or before the date of the first publication of the
notice, the capital Impro"MoOls plan shall be available to the public,
tIi (L) The political subdivision shall provide public notice of the hearing,
` (t) At least 36 days before the hoofing, the political subdivision shall and a notice of tM helnno byoettifled mall to any person
f who hat given written notice by certifled or regletered mall to the City secretary or other designated olliolal of the political
subdlvlelon rsquestlmo notice of such hearing within two years preceding the dole of adoption of the resolution or order
setting the public hearing,
i (2) The poliitoai subdlvlelon shall publish notice of the hearing once a week for three conmutlve weeks, the first notice to
appear at least 30, but not more than 80 days before the data set for the hearing, In one or more newspapers with general
01roulation In each county In whlon the political subdivision list. However, a river authority which Is authorized elsewhere by state
law to charge test which function as Impact foie as defined In this Act may publish the required newspaper notice only In each
county In which the service area Iles. The notloe of public hearing shall not bs in the part of the paper In which legal notidee and
classified ads appeal and shall not be smaller than on"uorter pope of a stsndard-s124 or lobiold•elze nowspaper, and the
1 headline on the notice must be in ill-point of larger type.
(3) The notice shall contain the following;
(a) a headline to read as fouowal
"NOTIOE OF PUBLIO HEARING Oft ADOPTION OF IMPAOT FEES"
(b) the time, date, and loo tlon of the hearing; j
(o) a atatsmMt that the purpose of the hearing Is to consider the adoptlon of an impact fee;
j (d) an easily understandable Map of the service area on whldh the proposed fee will be Ivied;
(e) the amount of the proposed Impact fee per service unit; and ►
IA a statovot that any member of the public has the fight to appear at the hearing and present svldenos for or Agalnat
the plan and proposed fee.
(M) The advisory oommlNee shall ills its written comments on the proposed capital Improvements plan and impact fees not
less than live business days prior to the public hearing,
(N) The political subdlvlelon Mau approve or disapprove the adoption of the ospllal Improvementt plan and Imposition
of an Impact fee wlthln 30 days alter the publlo hearing.
(0) An ortllnance, order, or resolution approving the capital Improvements plan and Imposition Of an Impact lee shall not be
adopted as an emergency measure.
SEOTION e, USK OP PROOBEDB,
(A) The order, ordinance, or resolution levying an Impact Ise shall provide that all funds collected through the adoptlon of an
Impact fee shall be deposited In Inlereel•bearing accounts oloody Identifying the category of oaplist Improvements of facility
expansions within the service area for which the fee was adopted. Interest earned on Impact lees Mau be considered funds of the
account on which It is earned and shall be subject to all reeirtoilons placed on use of Impact less under the provisions of this Act.
Expenditures of Impaol fee funds shall be made only for the purposes for which the Impact Its was Imposed as shown by the
ctpltal improvements plan and as outhorized by thle Act. The rsodrde of the accounts into which Impact 1646 are deposited
shall be open for public Imeptotlon and oepylno during ordlnary business hours.
(B) The governing body shall to responsible for supervising implementation of the capital Improvements plan in a timely manner.
3
e
I ~
MOTION 6. IIEPUNDB t
ftm F 0"I
(A) Upon the request 01 an owner Of the properly on which an Impact fee has been paid, the political subdivision shell refund the
Impact fees If existing facilities are available and service is denied or the p91111061 subdivision here, after collecting to fee
when service wee not available, lalled to commence construction within two years or HMO$ Is not ava11.'bls within a reasonable
perlod of urns considering the type of capital Impfovsmem or facility expansion to be constructed, but in no event later than
five years from the data of payment pursuant to the provisions of Subdivision (1) of Subsection (H) of Section 2 of this Act,
(S) Upon completion of the capital Improvements or facility expansions Identlfled In the capital improvements plan, the poiltloal
subdivision shall recalculate the Impact fee using the actual costa of the capital Improvements or facility expansion, if the impact
fee Calculated based on actual coat le lest than the Impact fee paid, the political subdlvlslon shell refund the difference if the
difference exceeds the Impact fee paid by more than 10 percent. t
(0) The political subdivision shall refund any Impact fee or portion thereof which Is not expended ere authorized by this Act
within 10 years from date of payment,
(D) Any refund shall bear Interest calculated from the date of collection la the data of refund at the statutory rate ere set forth In
Article 1,03, Title 70, Revised Statutes (Article 60891.09, Vermon's Texas Olvll Statutes), or Its successor statute,
(E) All refunds shall be made to the record owner of the properly at the time the refund Is paid; provided, however, If the Impact fees
were paid by anothef politics[ subdivision or governmental entity, payment shall be made to such political subdivision or
governmental entity,
(F) The owner of the properly on which an Impact tee has been paid or another political subdivision or governmental
entity which paid the Impact fee shall have etanding to sue for a refund under the provisions of this section,
8E0TION & PLAN UPDATE,
(A) A polltloal subdivision Imposing an Impact fee shell update the land use assumptions and capital Improvements plan
at least every three years, which thrwyear perlod shall commence from the date of the adoption of the capital Improvements plan,
(6) The political subdlvfalon shall review and evaluate its current land use assumptions and shall cause in update of the capital
improvements plan to be prepared in accordance with Section 2 of this Act.
(0) The governlno body of the political subdivision shall, within 60 days of receiving the update of the land use assumptions and the
capital improvements pion, adopt an order setting a public hearing to discuss and to review the update and shall determine whether
to amend the plan,
order, orbriesolull6m amending land use assumptions body oapltef Improvements plan, or the Impact lee. On proposed
before the date
of the first publication of the notice, the tend use assumptions and the capital Improvements plan, Including the amount of
any proposed amended impact fee per service unit, shell be available to the public,
(E) The political subdivlelon shall provide public notice of the hearing,
(1) At loaet 30 days before the hearing, the political subdivision shall send a notice of Ie hearing by certified mall to any person
! who hu given written notice by certified of registered mall to the city secretary or oter designated official of the
pC1111al subdivision requesting notice of such hearing within two y"ra preceding the date of adoption of to
resolution of order setting the publlo hearing.
f (2) The poiltlal subdivision shall publish notice of the hearing once a week for three oomseeuNve weeks, the first mottos to appear
at fall 30, but not Mors than 80 days b0ore the date am for the haring, In one or more newspapers with general
circulation In soon county In which the political subdivision ties, However, a river authoflty which Is authorised elsewhere
by state law to charge ties which function as Impact fees as defined in this Act may publlsh the required newspaper
moll" only In each'ocunty In which to servla ores Ile. The notice of public hooting shall not be In the part of the
I paper In which legal notice& and classified ads appear and shall not be smaller than on"uarter page of a
standarddlze or tsbfold-sl:e newspaper, and the headline on the notice must be In 18-polnl or larger type,
(3) The notice she!; Contain the following;
(a) a hsadiln• to reed,ls follows, ,
1N0TIO! Of PUSLIO KURINO ON AMONDMENT OF IMPAOT PEES"
' (b) the sibs, data, and location of the hearing;,
(o) a erefsment that the purpose of to hearing le to consider the smendmeni of land use assumptions and a
capital improvements plan and the Imposition of an Impact fee;
J ; (d) an easily undarstandaele description and map of the scrubs area on which the update Is being prepared; and
(e) a statement (hot any mWber of the public his the right to appear at the hearing and present evidence for
of against the update;
'i (F) The advisory committee shall file it', written Comments on the proposed amendments to the land use assumptions,
capital Improvements plan, and impact fso not lees than five business days prior to the public hearing,
(O) The political subdivision ohs'! approve or disapprove the smsildment of the land use assumptione and the Capitol
Improvements plan and modifi;,alfon of an Impact fee within 30 days after the public hoofing,
(H) An ordinance, order, or ,,eeolullon approving the amendment to the land use assumptions, the capital Improvements
plan, and Imposition of an impact lee shall mot be adopted as in emergency measure.
®EOTION 7, ADVISORY COMMITTEE.
(A) A capital Improvements advisory committee, oompotod of not Ills than five msmbWs, tell be appointed by a majority vote of
the governing body of to political subdivision, Not lees than 40 percent of the memberahlp of the advisory bommitte shall be
fool ntstlves of to red "tits, development, or building Industrles who ale not employees or officials of it political subdivision or
JOVOMMMtal entity, If the political eubdlvlelon has a planning and toning commission, the commission may act as the advisory
committee, provided that the commission Imcfudab at least one repfeesntateof the real estate, development, W building Industry
who 16 not an employes or official of a political subdivision or governmental entity, If no such representative is a member of to plain
nine And toning commission, the commission may still Sot at iho advisory committee if at legal one such representative is
advvisory ooomfnthe political ubdivision as an ad l1111". if thetrop cafes It to be applied int ebexlraterelporlal jutisd of on zoning thcommission when It Ac$ as e political
subdivision, sold tmember•
ship shall Include a representative from such area,
(E) The advisory committee sell serve In in advisory capacity and Is established to perform tho following functions;
(1) to advise and assist the political subdivision lei adopting land use assumptions; €
(2) to review the capital Improvements plan and file written comments,
(3) to monitor and evaluate Implementation of the capital improvements pion;
(4) to file semi-annual reports with respect to the progress of the capital improvements plan and to report to the political subdivb
slon any perceived inequities In Implementing the plan at Imposing the Impact lea,, and
(8) to advise the political subdivision of the need to update or revise the tend use assumptions, capital Improvements plan, and
impact fee,
(0) The political subdlvlslon shall make available to the adylsory committee any professional reports with respect to developing and
implementing the capital Improvements plan,
(0) The governing body Of the political subdivision shall adopt prooedural rules for the committee to follow In darrying out Its duties,
4
y* ev
i
SECTION!, GENERAL PROVISIONS,
(A) It the governing body of the political subdivision dote not perform a duty Imposed under Ihls A01 within the prescribed time
period, a person who has paid in impact fee or an owner of land upon which An Impact tee has been paid shalt have the right to pre t
sent o written request to the governing body of the political subdivision elating the nature of the unperformed duty end requesting
that it be performed within 60 days of the request, tl the governing body of the political subdivision lends that the duty Is required
under this Act and Is late In being perlormed, II shall cause the duly to commence within 60 days of the request and continue until
completion.
(0) A record must be made Of any public hearing provided for in this Act. Such record shall be maintained and be made available for
public Inspection by the political subdivision for at least W years after the hearing,
(C) Any state of local restrictions that apply to the Imposition of an Impact lee In a political subdivision where in Impact Its, to pro•
posed will be cumulative with the restrictions In this Act,
(0) An Impact lea which Is In place on the effective dote of this Act must, within three years of sold elleotfve dale, be replaced by an
Impact lee mode pursuant to this Act,, provided, however, any political subdivision having an Impact loo which hee not been replaced
pursuant to this Act within one year of the eNeotlve date of this Act shall be liable to any party who, offer the one-year period, pays
on Impact fee which exceeds the maximum permitted under Subsection fp) of Section 2 of this Act by more then 10 peroent lot on
Amount equal to Iwo limes the dMlerencs belwaen the maximum Impact tee allowed and the actual Impact lee Imposed, plus
rossonoble Affotney's tere and court coats,
(6) This Act shall not be construed to prohibit, alleot, or regulate any tax, fee, charge, or assessment which Is speolllcotiy authorized
by state law,
(F) No moratorium shall be placed on new development for the purpose of awaiting the completion of all or any part of the process
necessary to develop, adopt, or update the Impact W.
860TiON S. APPEALS.
A person who has exhausted all administrative remedies within the political subdivision and who Is aggrleyed by a final decision Is
entitled to trial de novo under this Act, A suit to contest an Impact fee must be filed within 90 days from the dale of adoption of the
ordinanos, order, or resolution establishing the Impact fee. Except for roadway Ioollllles, a person who has paid an impact fee or in
owner of property on whloh an Impact Iee hee been paid shall W entitled to specific performance 01 the servto s by the political
subdivision for which the fes was paid. Nothing In this section shall require oocetruotlon of a specific facility to provide such
servloes. Any suit must be filed In the county In which the major portion of the land area of the political subdivision Is located, A
successful litigant shalt be entitled to recover reaeonable attorney's lase and court costs. An Impact fee shall not be held Invalid
beaus the public mottos requirements were not compiled with If compliance was substantial and In good filth.
SECTION 10. STORM WATER, DRAINAGE, AND FLOOD CONTROL,
(A) Any county with a population of at least 2.2 million, according to the most recent federal anous, or which border a county with
a population of at least 24 million, and any district or authority created under Article XVI, B IWI 0, of the Texas Constitution
within any such county that Is authorized to provide storm water, drainage, and Ilood control faollltlee, Is tuthodimid to impose ift
pact fees to provide storm water, drolnooa, and flood control Improvements neoeeeary to accommodate new dowlopment,
(0) The Impokon of Impact tees authorized by Subsection (A) Of this section Is exempt from the requirements of Section 6, Section
6, sod Subsection (0) of Seotlon 6 of this Act, unless the political subdivision proposes to Increase the impact fee,
(O) Any political subdivision desadbed in Subsection (A) of this section Is authorized to pledge or otherwise contractually obligate all
or pert of the Impact tees to the payment of principal and Intefeet on bonds, notes, or other obligations Issued or Incurred by or on
behalf of such poAllool subdivision and tolhs payment of any other contractual obligations,
ID) An rmpaot lee adopted by a politicalsubdlvlelon pursuant to Subsection A of this !
O eebt on shall not be reduced If
(1) the political subdivision has pledged or otherwise contractually obllgstsd all or part of the Impact loot h the payment of
principal and Interest on bonds, not", of other obligations Issued by or on behalf of euOh political subdlVtasi and
(2) the political subdivision sprees In such pledge or contract not to reduos such im,+aot fast during the term of ouch bonds,
notes, or other contractual obligations,
' SECTION 11, EXEMPT TRANSACTIONS
' (A) This Act dos not apply to impact fees, charges, fees, assessments, or contributions paid by or charged to s district created
udder Article XVI, Section 60, of the Texas Constitutinn to another dtstriot created under Article XVI, Section 69, of the taxes Corn
stltutlog,11, Ih'' Istrlcte are requited by law to obtain approval of their bonds by the Texas Water Commission, `
(19) This Act does ndt'apply7olrnpaat feet, ohargel., less, assessments, or contributions charged which art approved by the Taxes {
Water Commission, Amy district created pursuant to Article XVi, Section 60, or Article I11, Section 62, Of the Texas Constitution, may
petltion the Taxes Water Commission for approval of any such proposed lees, The commission shall adopt rules for reviewing any
such petition end may Ohara$ the petitioner feet whloh are adequate to cover the cost of processing and considering the petition.
The rules shall require notice substanllaliy the some as that required herein for the adoption of impact fees and shall afford oppor,
Wily for all atfeoted peril" to participate.
SECTION 12.
The Importance of this legislation and the crowded condition of the calendars In both houses create an emergency and an Imperative
public neceaalty that the constitutional rule requiring bills to be read on three several day$ In each house be suspended, and this rule
It hereby suspended, and that this Act take effect and be In force from and after Its passage, and it Is to enacted,
r
i
I
j
I Le
i
i
I' r
0000 Is
MrplemenlnNOrt SpetlaNsis for GOrvmmesual Planing e
I' F.rtghtemng, andlegal."ices
i
210 Nulana `.Mlen, Texu 78S44
6
.
Oil
w.
Impact Fees In Texas After SH 336:
A Legal and a Practical Perspective
z
by
merry Do.Morgan, Uq.w
and
Jerry N. Hisbert, AICP
i I {
4 *Terry Morgan is a forMee Assistant city Attorney for th'lo? City of Austin and presently Zointains a private law practice L, Austin, a
MMn+s has airig ? %;j)jdt
law. He is %p coungl,to the Xansas 4
y, Mo. firm of re6ilio , Loitnir,` Carl NJ& and!' BKortXi4 'e+"
**aarry Hiebort is the Director of Development Services for the
City of Riohhrdenn.
..x.rHI41N U,.ae.yJ t.xM...w.M. . 1nwn.:.rN..M.. .v....n ..:a.. a..v. ........r.,x..v.i...4 vo..v . •
}
-Y
V y
`t` eP` f f
f A/
War /
e7
47
F yy~ ~~G/ ~~y~rJ/~J/~, , J, A r ,
! voeS
co 4mudo~
r
. r,.,a~uapWpy
t
t ~
4
k Part I
f
SB 336, enacted by the 70th Legislature and effective June 100
enables goneral law and charter cities to adopt'"itpact foss,u
which are defined as charges or assessments against now
development 'tin order to generate revenue for funding or
recouping the costs of capital improvements or ;,facility
expansions necessitated by and attributable to such new
development." The intent ofthe statute is to standardize the
y ! methods and the procedures by which municipalities adopt seas to
E fund new off-aits capital facilities designed to serve new
growth.
The new Texas law is the first coriprohonsivo,, enabling statute An
s
i the United states expressly authoeizfng:.thw,time of impact fees.
As. such, it has. important ramifications for riunicipai' practices
of exacting gees and. other contributions, from developers ae a
condition of development approval.: Thio article. examines the
provisions of the statute and identilie*,~,somei key`. issues which
must be taken into account by munioipalities wishing that are now
using or intend to use impact fees to finance development
infrastructure.
Use of fleyelonment eXac lons,in Texas r
I
Cities' in Texas have long shad," the, 'authority to ,require
subdividers and land developers to
provide gdetYuatA' public
4
2
facilities, streets and utilities, within the proposed
development site.1 Most Texas cities have incorporated minimum
standards for installation of these 'ton-site",facilities within
subdivision regulations. However, "ion-site" streets and
utilities comprise only a part of the. total municipal
infrastructure costs necessary. to servo new development.
Consequently, many cities' have devised methods of requiring new
development„to.pay for the-additional costs of "off-site" capital,
improvements whioh~are attributabio to the dsve1opmentrproj4ct,
The charges against new development to pay for off~-,eite !
capital improvements are known by a variety of names, such as
s I "tap charges," frcapital recovery foes," and..!+pro, rata charges,":
Most,-such, tees are imposed to finance sewer .;and water collection,
t and.distribution lines
E water.. storage taci,litiies, or treatment
l facilities, ,These charges may be levied in addition to
1 subdivision , regulations requiring the. developer to construct. or
Er
pay for. off-site. tran xisslom-lacilities ns#Aled to bring ggrvioe
to,the development site.
some municipalities also impose fees "in lieu" of the.dedioation
of land for certain types of facilities t usually k
parks, which are
r designed to serve an area {
greeter than the. ;.dev"elapent ;,eite and ~ .
which will be constructed off~aite,
This practice is of
relatively, recent origin, in Texas, and is usually tied to the
a subdivision
j A
i
w
i
atmas, !
3
4
Judio~,hi@.,~Qry_nf deve~onman des in Texas
Recent surveys indicate that the use of impact fees by
municipalities is rapidly increasing in many areas of the
country,. 2
Impact fees have evolved as a refinement of other
types of charges for new capital faoilities, primarily fees in
lieu of subdivision dedication requirements ('#in lieu„ fees),
Impact fees in general are more flexible because they axe not
limited to the subdivision proceed and they can be used to
finance area or community-wide facilities,
R
c + in Texas there are no cases d4reotly involving impact tsei: The
M
f Texas Supreme Court, howeviar, upheld the City of College
I,
Stations parklend, dedication and in lieu `fee ordinance 'as a
proper exercise of home rule authority in City if QOIU . te= h
I
09 3 xn do ruling, the court distin4eVi`dhed i
previous Qacision,by the Court of Civil Appealei holding that the
exaction of,
j park, land or fees as a condition of devgi pmin't'
t ! approval was beyond municipal auth'ority' 4' The Court'mffir*ed
that charter cities have "full power of self-government" and
r + ,
r "look to the acts of the legislature not'for.grants of power ,
but only for limitations on their powers.1+ B
The :Court also adopted a modified. version of the rhtf6hel nakdi
j test as the proper standard for determining whether a fee
e
.v
d11
f
3
4
ordinance complies with state and federal
guarantees, stating, constitution.,
f 'Both need and benefit must be considered..
i Without a
F determination of need, a city could exact land or money to
•Provide a park that was needed. long,before• the developer
subdivided his land.. Similarly, unless the,Qourt considers
the benefit, a city could, with Yaoneta
i'Y,exactions, place a
park so far from the a
particular sub;livision :.that I the
residents
17eoeived no benefit.... Th {
is:typa=o! !reason4bia
connection" analysis_ will
4►tettze : ,that : the Subdivisl6h
receives relief from a Y
perceived need, and it will
eYteatively, constrain the,,reaoh ate the .*un,iaipaldty.;j .;,y ,B
,
The
Collage station ordinance
on ,its face met,. Via" 4
si critenia,K`
because it was based on a needs, assessment; contained, stand r
~ for
d®t.ermining ,the amount of ards
tho 6 l fea►I Ooraparked taas
~ ~iYo~r
expenditure on paighbarhood
parks;, within I the vicinit
dsvalopman sit* y af; •thi+
t And,, required that, tens .'ba'
1 o
> . xpendedwiihin ,a;
Years rom,the: date of, colleation.
Li 7 f~j
Despite increasing litigation, surprisingly
few enabling slat
~
authorizing he nso of $evelopment teed had,,baen,ehaotad utes
the Texas logia,tetion, 7, pi'itfr td"
Enabling legislation; offers a`
.:,:.+44
p
4~
♦ Y:
"Ohl
r
ffi
potentially attractive solution to the problems cities and
developers face in the courtroom,, gB 336 resolves questions of
statutory authority by expressly empowering cities to enact
impact fees for water, sewer, drainage and roadway capital
improvements, Because the statute contains detailed provisions
governing the methodology and the procedures by which impact fees
are adopted, it should serve to focus judicial inquity on
atetutory intent rather than on broad constitutional principles
in the event'of,future litigation,
At, the bums time, the enabling statute acts as a limitatioh on
i
municipal home rule authority to enact development fdos' whidh
fall under the definition of impact fees. The law expressly
applies to existing dove lopmentchargas as well as to oxdihAtodlo
enacted after its effective date, necessitating raviea~ cif
existing exactions pre'ctides, The remainder of this ",AitjA,6
analyzes the key features of the sg 336 and some nf' the
implioat,ionq,
l j
Cirau~~t~~~~~d~~~hange
E
The approval of SB 36 by the 1987 legislature changed
dramatically the circumstances in Takao regarding use of impact
fees, In order to understand the structure and intent of the law
as . At now exists? it is iriportant to understand the, climte' in
which the,bill was oreated.
. ..iMi.M1.PUI'.a. . ....n-, .tee. .....r..n~`
Fo 6
several real and perceived conditions sparked the creation of SB
336. The original bill was dratted by the Texas Association of
Ii Builders and tiled by Senator Ray Farabse of Wichita Fails.
i whether real or imagined, three principal abuses played a role in
s spawning the legislative changed First of all, several Texas
i
cities had enacted impact lees after having undertaken only
token studies to; determine the real impact of new development on
their infrastructure. Without proper analysis of the. potential a
for future growth, the development community often felt that they
were beipg unfairly charged with the costs of providing adequate
Public facilities$
Secondly, without some form of enabling iagisiatia,;%t there was no
i
;equireae,nt in Texas for public involvement in the development
I n4 review of,proposoo_ impact fees. Buil4wrs.cite.several cartes
f
in whiah,;impact lse. ordinancA+a were literally created overnight,
and passed into law without the public's ability to.•assess,the
proposed ordinances. To further compound the problem in the eyes r
of the development community, an,izlpact,fae ordinance in one:city 1
would be totally different in substance and procedure from the
!f fee ordinance in an adjacent city, The TAB clearly saw a need s
1 ~
for some fora of standardization.
The first two probloms gave rise to ,,the third reason for ssekiitg '
a legislative solutions the high cost in tha form of time, and
i
,
M
R
1
7
money to individually challenge what were mean as improper
ordinances around the state.
So, as the dust settles from the regular legislative session,'
Texas cities will begin to assess the use of impact fees to
finance expansions in their infrastructure.
Pert iI
A. Statutory definitions
As with all comprehensive enabling legislation, the definitions
~ r
of S9 336 are important components of the statutory scheme. The
definitions determine such matters as the scope of the
legislation, the residual powers municipalities retain to anaot
fees under other grants of authority and some of the design
features which must be incorporated into the impact fee sehemao
impact fee. An impact tea is defined as ua charge 'or
assessment,' imposed . by a political subdivisift against haw
development in order to generate revenue for funding or recouping
the costs' of capital improvements or, facility, expansions
necessitated by and attributable to subh new developtanttu The
term 'includes "Atortized charges as well as lump sum' charges and
noludaw'l'aapital recovery lams, bonteibutions in aid Of
oonstrubtion,' and any other faa°Whioh fUotio) ad desotibed'in
i
NAM
8
this definition."
i
broadly and to limit thereby
j. This definition is intended to sweep
which are inconsistent
the use of development exaction p the hot'
It cannot ~
I with the methods end procedures. mandated by
of "capital
be understood without reference to the definition
b treatment, and
improvement," which means "water supply, '
wastewater collection and treatment
distribution facilities►
storm water, drainage, and flood control laailitiast
faailitiast or, 'roadway
not located within the service area`' political
x
whether or
k
facilities owned and operated by or on behalf of a p
9y,, implioation, those facilities: which, are
subdivision
capital, improvements, nor excluded-, trot
neither included . among funded t1.rough impact,
{ tha requirements of the Aoti cannot be
` fees.e
" costs ~:of
r it. should, be, noted that impact ,fees iHcludaamo lunation as
facilities which serve "the
expanding pM
new capital improvement, in°ordsr'that the
an othorwiss necessary ent.
Further,,. the
INI~ existing: taoilitY 'RAY' serve new avelopra
riot to adoption of ¢
costs of cvarsieing facilities constructed p under
~
th. impact, !ea ordinance may be raa~I through the fae6, rinterast charges and
tibias may inoLd4_
such airowgstanaas, t~out►t of the,ilrpi~ob tee,
other,finanap 000th"' in determining .t1}R g
I a ant of principal and
, 11
if the ipapaat faes,ar4. "used for the p YA
terest.on bonds, ;rotes,; or, other obligations is by or on
,.t
WWI
a~
9
behalf of the [city] to finance the capital improvements
identified in the capital improvemants plan ....so in each
i
instance, however, costs associated with upgrading facilities to
correct existing system deficiencies or upgrade services to
existing development must be excluded trir-.a expansion costs.
Exclusions from de ins jon~of +mbact tee
The definition contains a second part, however, which contains
express 1XQlugi;= from the definition of impact' fees. Cities
can continue to employ practices- which are excluded ''without
11i compliance with the provisions of the 'statute.- The filet
exemption in for the "dedication of lAnd for public parke`'br
i
payment in lieu 'thereof to serve park needs," 'The into t 'of th'e
E
exclusion is to preserve the practices which were authorized f6k
4 park exactions under the Coll-&&a, tt ion oas6; "fth equentlyi
phittar cities may incorporate such regulations within' their
subdivision ordinance under the constitutional 'guideline
established:in that cans.
The second exemption' is for "dedication of rights-of-why or
easements, or construction or dedication of an-site "water
distribution, wastewater collection or drainage facilities; of
streets, sidewalks, or ourbs when such dedications and
construction Are required -by valid ordinance's' and,` ar'e
necessitated by and attributable to new dev®lopM6nt.'I' Thik
j
~AMIN1l1 r.
{
to
intent of this Provision is to preserve municipal authority to
require the'installation of on-site facilities as a condition of
development approval, The exclusion is -qualified, in that
cities may not require the
f prc,perty owner "to, construct or
dedicate facilities and y
~E pay impact ;Pees tor;the same facilities.."
By the name token, ofties may not require the dedication of
oversized on-site laailitios,uniess.appropriatj credit; is .given
against impact fees. 9
The third exemption is for "lot or:,acreago, sees to-be
trust lundr. for the or
,
purposo, .o~E, rsimburs$ng devolopexu ors placed for
oversixing or constructing: water or. sower mains '
or A insa. " The
f exclusion permits, cities to require: developers to construct
oversized sewer and. water facilities (either, ,onnsits or. offn
f nite),,.ds a Condition of development approval,, with:provision for
y
reimbursement From' other, deve.3opors, :benofittinq,, frorm :the
improvements, These ,fees may be collected :without being
established und.er,tho. criteria of,:$$ 33do it construction f'
requirements pertain to a facility which is identified in the
city's capital improvement program, the city must enter into a
aontrgot with , the
developer providing; lox- reimbursement or
crediting his contributions against impact tees due.°on the
projeot.,
;
The Aot also,contatns an omnibus exemption#,providing that; "this
4ot shall not .ba construed to prohibit, affect-, or regulate any
IB
Ry6
0
1
tax, fee, charge or assessment which is specifically authorized
by state law." This provision clearly excludes special,
assessment practices. Because of its broad wording,,.it is also
possible that the exclusion applies to sewer and waxer "user
feeslt which authorize charges for capital as well as operating
oosts.10 On the other hand, 8H 336 to clearly intended to apply
to charges, for such facilities, It seems likely that a court
called upon to- construe the statutes would interpret that to
r bring such charges within the provisions of the impact fee
statutes
New develo=ent._ Cities may incorporate the ;costs- of
~ i
! facilities necessary to serve now devalopment.in-the impact fes
"New development" includes "the subdivision of lands or the
i
construction, reoonstruotion, redevelopment, oonvetolon,
7 ;
structural alteration,: relocation :or enlargement of any
struoturet' or Any use or extension of the use of land"c~Whlo}i
increases.the demand for additional. capital improvements.
a
gp"way. facilities, Although roadway rfaoili,tias may, be
funded through impact fees; the statute limits suoh°.faoilities,eo
"arterial or collector ,streets or roads which have been i
/
designated on an, officially adopted roadway plan 1.1, , together
i .
with all nooessary.,appurtenances.,sc.!l The bill :oxoludeo,
'$roadways or associated improvements designated on the federal or {
Texas highway syatemo" The Act also limits the area. in which'
i
j
R i
i
12
road improvements may be constructed with impact 'fee funds to
E areas- inside the corporate limits of the city and Within I miles'
from the now development.,,
I
i
Seryioe area. The Act requires cities to establish
f ~
I►service areas" within 'which impact fees will be adaesied and
spent. Exrept for roadway facilities, service areas may'inbluds
i
areas both within the corporate` limits and within, the
extraterritorial jurisdiction of the dity•► Where appropriate
the service area may be the entire jurisdiction of the city
(e.g., water treatment facility). The concept of a service
k
I area is important in establishing th&t impact fees b'snefit the
f property whioh.is subjeot to the fees.
The. Act also requires that cities Wind,*
~ service unit.
~h "service unit„ vrhich serves as the basi.ri 'for assessments d'f' t ha
impact feed "service unit„ means as standardized measUft 'ot
I f
consumption, use,~generation, .or disoharge 'ottributible tb':an i
individual unit of development calculated in accordance with
generally -accepted engineering or planning st+ahdavda,ofor e
particular. category of capital improvements or 'fadili,ty
expansions.„ The service unit-concept is designed to essuri'
that the need for now capital facilities is proportional', to thi,
demand for now services generated by 'the' daVeicptnent, '
8► Reolired Studigs
j ~
{
f
y
v....................adUahuw'.NtbMHkiA1~9/iV~.valnYrywil.~unS. oY.wf1<se.KV
I
13
The Act requires that, prior to, adoption of an ordinance
establishing impact lees, a regulatory agency must conduct
several studies to determine the real impact of new development
on the infrastructure, These studies include land use
assumptions, establishment of service areas, a oapita?.
improvements plan, and an, analysis relating the costs of
improvements to individual "service units",
i ,
I Land use assumptions are defined as "a description o! the service
I area and projections of changes in land use, densities,
i
intensities and ;population .therein over at least a ton year
period." Note that the actual land use assumpticr4 may provide
j I for a period of time greater than ton years, In,preparing land
~I use assumptions, cities have a least two,, options with,respeot>to
methodology.
Firsto the city may dhoose to.address:growth
from the lierspeotive of population ar}d employment,'' Census data, Texas Employment
i commission, statistics and looal oounoils_ col government are
'potential sources of historical. data and projected growth rates
for regions, Using these national, state or,regional sources as a
baseline, a city will be well-founded in extrapolating local
growth projections from.observed local conditions6,
The second methodology involves a projeotion of :4lrowth by ~
specitio units. of ;measurement, such as numbers of dwel ing. units
I ,
I!
rcY.iuwn nsywy'y.;lasNrJbr:KIM.^•' • ,
!nvxaa4n•
d
1
1 i
14
r by various types or employment growth by acreage or building
square footage. While better local data may exist for this type
of information, state and regional data to support a service unit
projection may not be as readily available,
i
Projecting the quantitative ik
growth- is only a part of,.the s
development of land use assumptions, The other - element. is
assigning the
growth to specific locations within the
s
jurisdiction or service urea. A city that has a comprehensive
i j
plan , already has the foundation upon which the land - use
assumptions can be bdilts. Obviously the final land, us*
assumptions should be consistent with the comprehensive plan:
j The second required study is the definition of the appropxriate
s®rvios areas (gee previous :,.dgtinition). ; Service areas :may
i differ greatly in composition depending upon the facilitsy, <ba nI
studied, For, instance
<water,:sewer: and storm, drainage: sexvica
! areas may be based upon the physical oh4r4oteristics,of.. 3
t4e aiby,, f
such -as drainage, basins, or water pressure aones6 Oro other-sot
permits the inclusion of the-entire city and the affected ZTJ
into one service area.
f Roadway facilities, on the other hand, are more ,severely
constrained by the hot, it is envisioned that the service area
,
for roadwar taoilities be defined by the average trip length for
the jurisdiction, but in no event be gx,iater than three 3011es'7in
i
,wV,Arve:dN11C
r .yqa ~ n~n4arr,pyu40NA,fdv.gy.u.w....
i
wpm
1B 1
distance from the new development. Here again, a city has two
principal alternatives in establishing the zonal structure:
First, the city may adopt a rigid three mile by three mile, or
grid, structure. while having the advantage. of easy
administration and definition, this type of structure tends tb
restrict the administrative discretion of the city, as any funds
oolleoted with a zone oust also be spent within that sat* zone.
The second alternative is to create a,system whioh--defines a
"floating" three mile sons, with each now development plotted at
the centroid of the zone, while technically more difficult to
achieve, geo•based information systems currently, a,V4ilable for
mini-oomputers and per;zonal computers will 'make this type of
application possible.
1
Of all the elements involved in the creation of an itpaot foe'
program under-the Act, the definition of the service area is one
I ofi the most +important decisions to be, made by the oityi
carefully craftoo, the structure of the zones can assist in
implementing growth management objectives, They can,. encourage
development in areas of the city where sufficient public services
already exist, and they can discourage development in fringe.
areas where municipal expenditures may be the highertt
The third study required by the Act is the Capital improvements
plan, Defined an na plan required by the Actwhich identifies
capital improvements or facility expansions;, pursuant towhioh
i
i
1 l
1a
impact fees may be assessed", the CIP envisioned in the Aot
should be a subset of the overall CIP for the oommunityi Note
that there should be consistency between the community's overall
CIP and.:tha, CIP. that is a portion of the impact fee ordinance,
specifically the CIP required by the Act &dresses only those
categories of facilities which are covered by the fee ordinance,
and only those specific ,facilities ov portions of specific
faoilities whose construction is necessitated by new,dovolopment.
The CIP must be prepared by a registered engineer and, Wet
inventory existing facilities within the service areao, it must
dtacount,anticipated costs of- ameliorating oxistinq~ deficiencies
in the, system, and the costs of mooting needs, not : generated'" by
j new development. It must also inventory existing 7capacity,
current level of facility usage, and existing commitments for
service to users outsido.the service area.
I
Cities Y►ust be careful to ensure that those facilities i'Aatuded
within the CIP and listed as~ being attributable, to, new
I g
development are separate and distinct frOM facilities,: that will
be built under normal development policies, The '.Act As',clam x
y
that a now development cannot be required to, both construbt'a
facility a$ a requirement of permit approval and; be required, to
pay a fee for that same facility,
A, signifioapt provision of the ;Anti is, the, exclusion? of- any state
ar,<federal highway inprovamant from, the impaot ofee CM Vh le
A
~ nrr
i
I
grllU9W
17
improvements to arterials or collectors crossing such highways
i
probably will be eligible expenditures, the affect on designated
farm-to-market roads in yet unolear.
M f
E The final study required by the Act is a Ildefinitive table
establishing the specific level or quantity of use, consumption,
generation or discharge of a service unit for each category, of
capital improvements or facility expansions and an equivalency or
conversion table establishing the ratio of a
service unit to
various types of land uses, including but not limited to
residential, commercial and industrial .~I This "use matrix"
serves the purpose of relating the land use:assumptions _to the
CIP.
Certainly the most prudent course in creating the use matrix is
to utilize generation or use standards developed by.nationally
recognized ,organisations, such as the American Public Works
Aeaociation (APW4) or the Xnstitute of Transportation Englheers
(XTE)1 While the Act does not prooWds the development of
locally based. standards, oars should be taken to carefully
document and explain any local revisions to nationally or
regionally recognized mewaurements of use,
The culmination of the required studies is the calculation of the
impact fee, Generally, the maximum fee that can ba charge is
j determined by dividing. the cost of all improvements anticipated
i
.+•Yv, 1we.MNfNNnwRlw.F.51Mi4.•:
1
F2 1'1K8.411M
YfM4&IA- YYY
(A`fA65tryi1 't J y '
J
l8
to be needed within ten years in the service area by the total
number of service units projected by the land use assumptions to
be built in the se+.wice area within the same period of times-The
fee ordinance can establish any fee that is less than or equal to
Y'
the fee determined by this calculation.
0. Prooedure fgr adontina and Amsnding.fee orinances
i ~
i
Once regarded by the development community as an area of
5
i particular confusion and perceived abuse, the procedural
requirements of the new legislation are spooities< Polio
involvement in the process is assured.
! t
The Act requires the establishment of an Advisory Committee to
assist in overseeing the implementation of ien impact fee program.
The ,CammitteeJ may be solely ah4rgod with the duties r64111red by
the Aot,< or Cha responsibilities Aay be essigned to,the 0ityoPlan
it Com:aisoion A clay would bs well advised to orbtte the - Adviso
Committee as early as possible in the fee:developmi tt prooeir;
The Committee can ;be a,• valUabla resource in otVoicinj the
required hearings and disseminating prop", notice of 'the
ordinance to the community,
<
A~.
The first required stop in the adoption
p process is the Ii
development of the land uss assumptions.,, once this study.han
been oomplated, the Council must set &-data upoh which 'a public
• a.
J
R
f `
~rvumu
~d 19
searing will be held to consider the official adoption of the
assumptions. Notice of the hearing must be mailed by certified`
mail to any person who has requested to receive such notice, and
must also be placed in a newspaper of general circulation in the
community4 The newspaper notice has several specific
requirements as to size of the notice and location of the notice'
in the paper itself. While a lack of strict compliance in this
detail will not jeopardize the legality of a local ordinance,
1 1 cities should be careful to follow these notification procedures
as closely as is possible.
After holding the public hearing on the land, use assumptions, the
Council must approve or ra9eat the assumptions within 30 days
from the date of the hearing. If the assumptions are approved,
the next stop ~n the process is the development of the Capital.
I Improvements Planb
I
i
Upon development,of the CIP in accordance with,the provisione,of
the Act., , the proposed fee is calculated and an ordinanos is
proposed. Using the same methodology as required in the adoption
of the land use assumptions, the city gives notice of a hearing
on, the C1P and the impact fee ordinance, The Advisory Cofakttee
is roquired to review the proposals prior to the hearinjo and
SO.' Asir recommendation not less than five business day m be'foro'
the hearing
I
I
I
VOW"
A
1
i
t
j
i
zo
After the hearing, the council again has 30, days in which to
either approve or reject the capital Improvements Plan and the
ordinanoe. No.ordinanoe may be adopted as an emergenoy measure,
i
Based upon this, schedule, adoption of an impact fee in Texas will
require,anywhere from six to nine months,, depending upon the rate
at which the required studies can..be completed#
The Act requires that any, impact. tee ordinance be updated at
i least every three ,years, The update procedures are the sams as
f those required for the original adoption dt'an ordinanoes
1
{
E Ds Operating a pact tae program
f
f The ultimate output,of the studies atid public
s required
by the hot is an oedinanoe which conforms to the statutory
intent, The Act also establishes guidelines for the assessmeni
LJ f and collection of fees, the use of the lees and the
administration, of the funds, These fo4tures AUIt! b.'
incorporated into the :ordinance together with the tie schedule }
and procedures -for amending the fees
E ~
f Earmarking And ppcounti -BB 336:requires that Nall funds
collected through the adoption of an- impact fas shell- be
' deposited ;4n interest-bearing accounts clearly identilying the
category of capital improvements or facility expansions within'
the oervice area for which the too was adopted" Mxpondituras w
i
Ake„~°wW.:
iS
r
d
J
21
from the funds must be earmarked "only for the purposes for which
the impact fee was imposed as shown by the capital improvements
plan This requirement derives, from court tests which
mandate that fees be used to benefit the property subject to the
fee,
It is important to note that the Aot does = require that a
separate account be established for each individual improvoment
to be funded through impact fees, It is necessary to establish
different aaoouitts only for catnaorina of improvements and by
service area, it is thus possible to aggroVate funds to
3
complete.certain improvements within the service area,
gerunds, The Act also roqui,Aso that impact foom be
refunded to the record owner of the property, with interest,
under two circumstances, First, fees must berrefundod'if not
spent for earmarked facilities within 10, years fromthe dato 'P
collection (Compare.,tbo 2-year period in the college Station
park fee ordinance,) Aeoond, foes must be refunded upon rbejuebt
of the owner of property on which an impact fee has bean paid, if
services are available and the city denies service, or if the
ii city rails to oommenoo, construction of now facilitios to, serve
E the development within 2 years or fails complete, such facilities
within ;a years of the time the foe is collected's Finally ugon ~
completion of tho capital improvements for which the fo'e Was E
f
10
6ti19
9[:81 C10 /f~
r I
22
collected, the City must recalculate the impact tee based on the
actual project costs, in the event that the too based on actual
costa exceeds the fee paid by more than 10%, the difference must
be refunded to the property owner.
\ a
~~1 k Assessment and collection of imbaat tees. The Act
distinguishes between the assessment -of an impact fee and its
j collection and establishes rules for each, Assessment is f
defined as "a determination of the amount of the impact tee in j
effect and is the maximum amount which can be ohavged per
j
I service unit of such development," Once an impact loo is
assessed, it may not be increased for the type of capital
improvement against the tract "for any reason, unless the number
of service units to be developed on suoh'trsot incrsaseso" xn
this,event$ the city may increase the assessment to fund new
i capital improvements In an amount "attributable to the ad'diti,bnal
service units," Normally, this would occur in the event thdt
the. owner or developer submits a now, development proposal whi'ah
~ yino eases demand for new services ,
in general, the Act favors assessment of impact fees at an eddy
stage in the development process in order to establish dertaifity
about the costs the, developer must bear for the project, The
,usual time for assessment is no later then the date of rID, St
of the final plat fora subdivision of tho propertys However, f
i
~ y
D
I
Y ,
MkM~
M w{~M
~ro~x~;ns
i
23
assessment may ooour at 11any time during the development approval
and building process" if both the lees were adopted.atid the land
was platted prior to the effective date of the Aot, or if the
development proposal does not require platting,
j Thu usual time of collecting the impact fee is either (1) the
time of issuance of a building, permits (2) the time of issuance
of a certificate of ocoupancyj or (3) the time of,conneation of
the development to sewer or water utilities, rasa may be
collected as early as the date of recording of the final plat,,
,
There its an important grandfather clause which must be included
in the ordinance adopting impact fees, 813 336 provides that
{ impact fees may,not be collected "on any service unit for wh ah':a
valid building permit-Is issued within one year sube'equont to,ths
date of adoption" of an impact fas ordinance enacted after the
affective date of the Aot, as long ce the land was plOttadprior
adoption of the fe,+a ordinanoe,
finally, the Act per>dits the' assessment, but n" the oollaotion
j
of impact fees in areas where services are not, currently
available This provision does not apply to roadway facilities,
it is intended, to implement one of the cornerstones principles of
the Act,. that a now dove'.opment,for which an impact fee has been
paid is Mentitled to t%a permanent use and benefit of the
services for, which,ths fee was exacted and shall bs ontitled,to
k
j
' I
I
,
rrai: ail i. .anN,.,.,N.l.tf VJ.frr,n anJ.a V Y.JaJIMMnnnui.raNlnl'W1Y~
. N
MI
oRr^ 7
24
roosive immodia~e service from any sxisting facilities with
actual capacity to servo the development, subject to compliance
with other valid regulations.
A fee may be collected under such circumstances, however, if' the
j
city and the developer execute a contract for construction-br
financing of necessary facilities,: which contains provisions for
crediting such contributions against impaot : fees or for
I raimbursoment from fees paid by other now developments using the f
facilities, Alternatively, the city° may elect to cobloot fees
~ j
and commence construction of necessary facilities within two
years and provida,sorvioss in B y6arsi.,
Failure, to provide the> services within thsi statutory time frame
may .result in, o suit for spocifio~ performance for, the : services
for which the fro was paid, (A rproperty owner-m4y; not compel
I construction
of a apsc_ifia ipcilSt , howev
Y~ ero, wring. specific
performance.) cities are thus advised nc', o agl+eo he ee„if
there is not rearcnabie assurance that facilities can be
a
commenced and oonstructsd within, the statutory time!feemerfs; ft
is important to understand that any problems associated with this
restriction aria* only if cities approve, subdivisions. without
oorrerponding assurancew that the, development project 'can be
provided with'adequate public facilities, if facilities.aro not
prosently available and much jfaoilities vto to be °financed, in {
r
- part through impact foes, then,it is in a city's best inCaveet Co
r
7
I 23
f enter into a development agreement with 'the project owner as
authorized by the statute.
E. gnform~nst ex+s +ng nances to requirements of Act
l~
t
SB 336 applies to existing development charges which fall within
the definition of an impact tee and which are not otherwise
exempt tinder the Mt. The Act contains two time frames. first,
i
j existing 'impact fees must be replaced with an ordinance adopted
pursuant to the statute within three years of the effective de~te.l2
Both substantive and procedural oompliance era required;'
Seoond, within 'one year from the effective date, the city must
f bring its `fee `schedule to no moro than 104 above the maximum fee '
which could be assessed under the rAnt, otherwise, the city may
i be liable to an owner who has paid an impact fee after one year {
for a penalty equal to twice the difference between "the maximum
.impact fee allowed and the actual impact fee imposed, plus
reaionabie attorneyrs fees And court 'coats.`" Because only the
amount of 'the Pees era compares, it should not be' necessary to
follow the proo®dures 'for adopting impact foes under the' statu`6
in order to amend an existing fee ordinance to avoid the penalty,
it is advisable, howavor, for munioipalities to svhluato existing
fees under the methodology prescribed by the statute as soon as
possible.''' First a op in the" process ieivalves' idontifioation
"
fy~~f`~(1~A6HIf Si,3i M rM r...,.l..rr ♦ re :aw rrv.. rrel a.+NAiNnl.,r i iN N
fLe \
a .
Nh> A•
1
MSW1
1 ~
am'SYiW I
26
of olUrges which qualify as impact fees under the statutory
definition, Prime candidates are "acreage" or "front footage"
aasessments imposed on new development to recoup or fund the
costs of extending sewer and water transmission facilities.
Certain "escrow" funds collected for construction of off-site
i
facilities may also be classified as impact fees.
Cities may wish to take the opportunity to examine all
I ;
development exactions practices in conjunction with evaluation of
r fee ordinances. Both the Act (and constitutional provisions--see
f f below) mandate that municipalities avoid double-ohar ig
i
developers for new capital facilities. Thus the Act ek ressl
requires that " p y
f any construction of, contributions to, or
f dedications of off-site roadway faoilitias agreed to or required
f ! by a (city) as a condition of development approval shall be
credited against roadway facilities impact fees otherwise due ~
from such development," 13
In undertaking such review, it is important to keep in mind th t
' the Act allows cities to charge the
t1~, casts
of capital
j improvements neoesditated by and attributable to new development,
Thus if it becomes necessary for the city to modify right-of-way
1
dedication requirements, additional costs of rightwof-way
acquisition may be incorporated i
in th@ amount of the impact fee.
J The Act also am ly pro
vidos for developer egrRements~ Thus
i
wwwr
27
cities are authorized "to enter into an agreement with the owner
of a traot of land for which the plat has been recorded providing
for the 'ti`A,e and method of payment of tha impact fossil
Agreements may also may extend the time for performnnoo of
municipal obligations to provide services if "the owner
voluntarily requests the ~.$Coityj to reserve capacity to 'ciorvo
future development, Finally, the city In fully authorized to
enter into participation contracts with developers to provide
I
necessary facilities in exchange for appropriate credits, 14
i
F. MisaellaneoLS o ~s;ons Lltd (=~fiu~ACN~l1a'
i
f
+i1id3~„~,~?view end adm~ n~ s a ~ ~
tr t y% ~s. An aggrieved
owner may bring suit for de novo review of an impact fee
i
J i ordinance,, only if. (1) the action it filed within 00 days of
i! adoption . of the ordinance A (2) the aggrieved party has
"exhausted all .administrative' remedies" provided by the aityi ~
As, previously, noted, the plaintiff may, be entitled to specifi'o
performance t.or services promiseds The suocesstul iitijaht may
also reoovsr+attornoy►s fees!and court costs$ The'Act expressly
provides.,thrat; "an impact fee shall; not be held invalid because
the public notice requirements were not complied with' It
compliance was, substantial and it good faith:"
Cities should
gain maximum advantage udder the eitat'ute by
1
M
rpm
i+MW
►
~ 4AM
28
establishing "administrative remedies" in the impaot fee
ordinance by which a property owner may obtain relief from harsh
application of its terms, some procedures are in fact required
by the Act, Thus the city must afford a parson who has paid an
impact fee the reasonable opportunity to "present a written
request to the governing body stating the nature of rnn]
unperformed (,:uty And requesting that it be porforrAod %I thin do
days of the request.0 if the governing body'aonaurs, it must
i
cause oommenoement of performance within 60 days of the request,
}
This sort of procedure serves as a safety valve for needless
i
f Iawsuo,Lto Cities may wish to consider a similar procedure for
j
all development exaction techniques, ,
olicyo2l3,idotions _ in agugvi nm ;Mpao . feggi The Act
does, require cities to assess impact fees against all new
devslopmento - 'A city may make reasonable classificatsiong in its z
ordinance, inoludinu-.exe+aption of .some classes 'off, users Troia
F I impact fees in,order to foster valid regulatory,objeotsives►- rot
essmple,; a city could choose to create, service-areas selectively
throughout the city in order to encourage.,desirable growth
patterns# Similarly, the oity might decade -to exempt low, and
moderate incomo'housing from paymenttof impact, fees in,order.to ;
encourage affordt:;)le houring,.18 such deoisions:ar• subject, of
5
course, to constitutional guarantees of due process d►.1 equal
protootien.of the law, z
t
r
.
x1 29 1
~~~,g~yarta n~gretor ge 336 forbids cities to
place a moratorium on now development "for the purpose of
awaiting the completion of. all or any part of the process
i
necesnary to develop, adopt or update the impact fee.", The
obvious intent of this provision is to prevent cities from
soliciting support, from property owners for impact fees by
threatening a greater evil. This provision should not be
interpreted as an encroachment on a municipality's police power.
to declare a services moratorium which is reasonably related to
preservation of the public health and safety, even if the
ultimate result includes a decision to impose impaot-fses.
Administrative poste end Consultants. The statute contains
prohibitions on the use of fees to 'fund certain expenses,
associated ,with. new capital. improvomentso These aces M
`t "repair, operation ox maintenance of existing or new capital,
improvs%*nts ."t (2), "administrative and operating:costs" of.
z
the , dityt and (3) the. costs of preparing the, land;, uss
~ assumptions, capital improvements plan and-ia►paot fee ordinancoo°
if performed by municipal employees. On the other hand, the Act
' permits cities to include in the calculation of -the fee`. "the teem'.,
`t actually;, paid, or contracted to be paid to an independent,
'r cs qualified engineer, oor. financial consultant pvsparing or updating
t,'+ the capital- improvements plan who is not, an employs* df the
politidal subdivision." Cities should thus consider whether td•
r~vi
fa+~ty
• .vl Aatlarlr.. w• , i«.r.......... .aw.. dw ..».r[a VIVV . e.. i.» .na....• ~uuN!fxlNgipINYV1.V1V
e sl11MLOS4JMry.Ridy.`~.''N••r.....wwr. n. ru w+.aw MVY~k'~
1
y t '
r
~t of
i
i
per]
1
r
J!
30
use consultants at an early stage in the adoption of the impact
fee.
Imnaot of fgd_e„ra court decision. In Hollan v. California
CoAs%al Comm'n. 16 the United States Supreme Court ruled that d
beach access dedication requirement imposed by the Commission;as
a condition of permit approval constituted a taking by regulation
in violation of the Just Compensation Clause of the Fifth
Amendment. In its opinion, the court emphasized that it would
I
j apply a stricter standard in evaluating taking claims than, it
I goes in review of due process and equal protection claims.: In
order to pass muster under the Just: Compensation Clause, a
1 development exaction must "substantially advance" a "legitimate
stato [municipal] interest." The requirement of a nexus between
the exaction and the asserted purpose, of the regulation is
i especially important Nwhsre-the actual convsYsnce ofiproperty is,
1 ~ g
made a condition to the lifting of a'land use restriation,sinas'
in that context there -is-heightened risk that the purposs .ir
avoidance of,the compensation requirement,'rather than the stated
j police power objective."„17
i exactions,
This deoision: will require reevaluation of the
! practices of many cities. For example, some ounicipalitiew
r require the dedication of right-of»way for road in subdivision,
regulations without regard to the impact created by a particular ,f
_ . { development project. Although such practices may not diractly
1
t
I '
31
cotlf1iot with the holding of the Noll&n case, courts can be
expected to` axatina challenges based on such "polioieo more
i. j olosaiy. To the extent that standard practices must be revised,
the consequence will be that more public funds will be required
for acquisition of .right-ofWway, In turn this may oooaeion
expanded use of impact fees, which incorporate the costs of
excess right-of-way,in the,fes structure.
Conclusions
r' 1 Sg 335 is both an enabling statute which expressly authorizes the
use of impact fees and a limitation on municipal home rule
authority. The statute resolves most questions concerning the
i ,
authority of cities to use development charges to finance now f
'k capital facilities. At the same time; the Act establishes' a
complex framework of mandatory ",substantive and ~proceduital
roquireAents ;whioh music be followed `in order to validly adopt in
ati" impact fee, a
The Act should aerve to refocuWjudicial inquiry oh''4uestiona,of
statutory intent rather than on broad constitutional tTosstions.
i
Because the statute standardizes the methods for adopting i*paot
fees and includes detailed guidelines for the design of impact
s
i fee ordinances, it may well avoid much future litigation over
development oharges,
1M(
}
JJ
i~' 1 ....+.."ra♦.,.+,w..: .-.r a• ....:..,w...:Nr1. qN0 u.'...fpWi
•wwnlbHM1'IIVA/AIHNN4~M.ia+.»'.....•. Hd~Y1~DP/J~ 1wNpbd/4lla~us~
J
A'
L (Y,
T
A
y~
j
i ,
j
32
Cities which now use development charges to finance of$-site
capital improvements to serve new growth must conform existing
fee ordinances to the statutory requirements within specified
time periods. The Act, together with recent court decisions,
should serve as the occasion for cities to reassess all
j development exactions practices to assure. sxac"ions are both
' effective jn implementing municipal policies for the provision of
~ public facilities and services and a itable.
i ~ ~ At the same i
a time, preparation of documents to support impact fees can be
integrated with the cities' overall efforts to develop
~ comprehensive plans and capital improvement programs...
' F
S
t It is ,impossible to anticipate all the, ramifications of 68 336
f ,I
until c{ties,havs had the opportunity to work with the provisions
t 4 of-the statute. As with. any comprehensive legislative scheme,
thsprpponents j1d opponents are likely to regroup for the next
,i 1 lil . a
lleg Plptive; se n to modify and adjust the ssohxnios tof bhe
1.,
Aetd Ucausa the statute is the first of its kind in,,the
country, the experience of Texas cities may uoll serve as the
x?p4e;, ;for statutory schemes in other states.
Ij1
I 1 A 1 1~ .'iii
011
V
d
it
4 f
I !e 1~
yY•
{ 11
I
ly
\tl1,~
A @
~V.C1nq..aWGbfN~
1k■■pgl
f /
ervrs+
R 33
Endnotes
1~ In part, the aNthorit resides in the states subdivision laws,
Tex, Re v.Civ.Stat.Ann. ar~, 974a, 1 4 (Vernon 1963).
2. See e.g., Bauman & Ethisr, "Development Exactions and impact
xeesr A Survey of American Practices,to 39 Land Use L, & Zoning
Dig. no, 7 at 3 (July, 1987)0
i
3. 680 S,W.2d 802 (Tex, 1984).
4. Berg Development Co, V, City of Missouri city, 603 S`rW.2d 273
X. Civ. App, 1980),
8, id, at 807.
6. Id. at 807-806
The mostly ;widely used standard' for
evaluating the constitutionality of development exactions is the
rational, nexus test, under which a development charge will be
sustained a if a dual connection is established'. First, there
facilities proportionality between the need for now capital
fa generated by the development and the amount of the
Second, there must be a reasonable connection between the
funds collected and. the benefits acoruing to the development,
this is accomplished it tho fee is earmarked for expenditure in
an area which benefits the users of the development and is spent
w
the ithin a reasonable period of time. Florida courts have use f
rational nexus test to sustain impact fees, d
Homo Builders & Contractorsr Assn v. Palm Beaehl.Count fee' e•q,
~ i Y~'446 So,Zd,
I 140 (Fla. ?,pp. 19831 see also Contractors & Builders Assin of
Pinellas County v, City of Dunedin, 329 So,2d 314 (Fla. 1976). . 3
if the exaction -meets the requiroments of thi tests', %JthM' tpeasttfra ,
also will be classified as a regulatory exercise rather than as a
tax.
i
r
7, Seo Ariz. Rev, Stat. 9,463►0B ;
Ca1.dOV+t Code, if 66477 (general enabling ravision)1 1
(school f6cilitios)1 andpajk 6and rea
s and 66970
6484ec roadbD f1
H,J.Stat,Ann, f 40165D-42. A oomprehensivo bill similar t ogthat
enacted by,the Tex4a legislature was considered but,was defeated,
by the Florida legislature during the 1987 sessions See Plk.
Senate Bill 11980
So There is another possible interpretation, "impact fee14 applies only to the defined oap4taThe l imfrovements's~ E
It is erguablo, then, that capital improvements not included in
the Act, such as hire stations, could be funded through lees
without compliance with the Aot. This interpretation must be
Juxtaposed against the overall intent of SB 3360
k
4 N
,
a
,r~aNas J
wovowraa
r
i,
.
f
~yw~xroa
9S~ 34 i
9. These practices run contrary to the United States Supreme
Court's reoent decision in Hollan v.~ California Coastal Comm!n,r
-U.S.-- (1987), See discussion below.
10. See e.g. Tex. Water Code b 28.176,
11, The limitation is aotuelly the lessor of a distance equal to
"the average trip length from the new development" or three miles.
j 12. This is the same time period for updating impact fee
ordinances.
13. Because on-site contributions are exempted from the Act if
reasonable necessitated by and attributable to the development,
cities should not be required to afford credits for these
exactions.
I 14. See also HO 1889, which exempts developer partioipation
I contracts in cities with a population of over 60,000 frob
r. competitive bidding requirements.
I 10. Under this example, the city could not rooanti~ potential
lost revenues by raising the impaot tee otherAose due for other 1
classes of users,
l ~ 16. •~V~S.~~, w-S.Ct.-- {1987).
i7* slip opo at isa
IOU A"
A -4 CL
, P
aarar,q,......
,
PAWA•Wlnkelmainn !1 't
& Aasoclates Inc. Oft$ October 21 1987 -
FOR IMMEDIATE RELEASE TO
City managers Planning Directors
City Attorneys Other Affected Staff
Directors of Public Works
REt CAPITAL IMPACT S EE LEGISLATION - SENATE BILL 3.18
EFFEC77VE DATE - JUNE 20, 1987
Senate Bill 338 passed by the Texas Legislature in signed by
! I the Governor and became effective on the sprln
Ju e D 1987. The bill of 1covers987 Wtho as
aspects of
the flnenoing and In some instances, the construe on, of capital Improvements by cities
In the State of Texas,
The law Is in effect today and must be considerAd and complied with b of our
Its t re decisions relative to t by your city in
` current operations, irrespective of whether! you Of
havehorehaveAnotoprevlous perusal
adopted I
what you consider to be a Capital Impact Fee Ordinance, may likely require some
s ! vom drat do and consideration for ynu to feel comfortable that your city Is i
i P y ng w t t o laws requirements,
The capital Impact fey legislation, as It is generally referred to, Is being widely discussed
and will be one of the major topics reviewed during the annual Texas Municipal League I
conference to be held In Fort worth this week.
The bill Incorporates a Series of reviews, procedures, hearings and detailed analysis
In order to Implement Its requirements and to take advantage of its provision, The"
detailed procedures cell for qualified 'professlonals, namely, engineers, !And plantlere,
flnanoial experts and lawyets to assist In the review and promulgation of the toes,
!tor that reason, our firm, PAWA#WInkolmann do Assoojates, Inc, with its background 1
In engineering, planning a;-id land studies has associated with the municipal finance firm
' - of Reed-Stowe dt Co. and the law firm of Hutchison price Boyle Brooks to offer to
you a comprehensive review and analysis of your current operations, the Impact offer
leglalatlon and to work with ou
the
profesalo~tala involved In the developmental process~toiAUbmlt other * 4111 lo Inns anid
all necessary plans end ordinances to Implement Sonata Bill tail
professionals Is available to work with you to whatever extent you may
330, feel app ote ate, of
One of the first questions asked la whether
, 338 t d v. The ans or la yes,'l, are !s any necessity to be concerned about
It is our collective view that it is very important for ever"v city, regardleslt of the status
of Its current ordinances and future Intentlon, to, at a mft M11m, review all of Its currant
' ordinances that Oolleot fees and charges relative to new
} Judgment decision as to the applicability Of 8.94 338, Why Istlthere p uchtannd make e
LrLmItgul
f ~
No Impadt fees can be oo11eoted unless in compliance with the W. The bin allows
a certain limited time framework for flies alreAd In place.
~peeo car AOAA eiwra goo, oAws Tans too y
V
1IIM'i 4rFa{a.PW,II•IJn 1VN.'w..IIrN':4tn..n.•aWlni/rWirNN.a.uau...•n..
i
h
y I .
'~`f,I
Page 2
October 29 1987
a An Impact fee Is defined as any "charge" or "assessment" against new development
In order to generate revenue for .tun j a or reclag costs of capital Improvements,
This Is a very broad definition and will cover virtually all charges except permit
f3es that you can show, if challenged, do not generate any surplus revenue and
are directly related to the cost of review, Inspection, analysis.
e The definition of Impact fees clearly covers tap fees, tie on fees, pro rata fees,
contributions In aid of construction and all other fees that generate a_U revenue
to pay for all or ;Any portion of the qty's capital Improvements. Nearly every
city In the state has some form of ordinance that collects such fees and therefore
is obligated In exercising prudent judgment to review those ordinances In light
of the bill.
a The bill covers water, sewer drainage and streets, No other impact fee may be
charged.
a The only exceptions to the bill are for (a) parksl (b) on site "construction" (not
on site charges); (c) collections for MITbursemgnt to developers for oversizing
on construction of water and sewer mains (this exception only covers reimbursement
for water and sewer construction to developers and does not cover drainage and
streets nor any funds going directly to the city; (d) those charges authorized
s~eclfically by state law (for example Art, 1106b - paving assessments),
i a All existing capital impact fees must comply with the requirements of the bill
by Juno 20, 1088 In so far as the amount of charges Is concerned (after June 2o,
1988, the existing charges cannot exceed by 10% the amount of the charges that
w would be calculated under the bill) or the city faces the risk of significant penalty,
The June 20, 1988, deadline Is less than nine (9) months away,
Any city that does not analyze its existing ordinances and development charges and
fees In light of the bill Is running the risk of exposing itself to the statutory penalties
and opening Itself up to potonti.l: serious challenges of the city's ordinances, i
F r
f . A summary of the bill's major provisions is snolosed.'
It you have any questions or would like to sit down and divouss this Important legislation
and Its effect on your olty, please contact me at (214) 1181-9406, Keith Reed as (214)
690.0077 or John Boyle at (214) 764-8000, We will contact you further to see how we i
might teller a specific team and a propgsal from out com'olned resources to complement i
your existing staff and professionals to eddress and meet your specific needs. hook i
for us at the TML meeting. I
~ 3inoereIy,
PAWA-Winkelmann do Associates, Inc.
Roy L. Wllshlre, P.E., President
Enclosures
P.S. Please note that effective November 10 1987, PAWA-Winkelmann do Assooiates, i
Inc, will offer servioea as a part of the Klmley-Horn organization.
F ~
t.
+
r
.aw
r
Summary of Senate Sill 336
x• Effective date dune 20, 1987•
II. Defines an impact fee as Lr.'X charge imposed against new
development to generate revenue to pay for or assist in
the paying for necessary capital costs,
IZI, Exempts park land dedioation, dedication of right-of-way
and easements or construction of on-site facilities,
funds placed in trust to cover oversizing of water and
sewer lines, charges ecifioall authorized by state law
(i.e., paving assessmen s ,
1V. Encompasses water and newer faoilities, drainage and
storm water facilities and streets and roads,
' Vs ordinances establishing impact fees after effective data
of the bill 'must comply with the bill.
VI. Covers cities and special law districts oreated pursuant
to Article 16, Section 59 and Article 3, Section 32 of
the Texas Constitution.
VIZ. All entities that have
ordinances, prior to the effectiveCdateaof thepbill may
continue to collect fees under the ordinance without
` complying with all the requirements of the bill until the
and of a three (3) year period from the bill's effective
date. After the three (3) year period, all ordinances
must comply with all aspects of the bill.
3.
VIII' All entities that previously passed a Capital Impact F**
s: ordinance, prior to the effective date of the ordinance,
commencing one (1) year after the effective date of the
bill, shall analyze the ordinance's charges using the
' same tests as required by the bill. If the city's
charges that are colleotsd after the one (1) year period
j elapses exceed the rate ar odloulatsd by using the toots
contained in the bill by more than teas
sooty ie )severely percent (101)► the
(Section CC Y penalized for imposing those charges
f
} IX. As conditions precedent to adoption of an ordinance, the
entity must adopt a land assumption
v improvement plan and a oapital
plan, public hearings are required at each
step and independent qualified engineers or dinanoi4l
'P consultants are required In the adoption of the capital
improvement
of such professionals. the olty desizse to recoup the costs
" X• An advisory committee is required to be a
city council, which committee shall consisttof not less
than five (S) members and contain at least Sort
s Y percent
r ~`r
y i , t
~lt f
qqf)) 'fir I~i~
4
(4b~) membership that represents
development or building induetzi the real
ee. estate,
Xl. Eaohtal
capientiimpr'r mustovementp uf"te its land assumption
an at feast every three (g pion and
) years.
X7i, Appeals from decisions of the city council to
district courts are de novo. the
XSTI. The bill consists of the twenty-nine (29)
procedural and subatnntive requirements are very detailed.
I ~
{ j
i
Y
t c. f l
t~ ! I
! 1 I
, A
h
t r
80140
:
Y
T
-9 F~
t
rA
' x vif 1111
~1; r UUIL'Sf
'T'YPICAL
QUESTIONS AND ANSWERS
REGARDING IMPACT FEES
r 1x WHAT IS AN IMPACT FBI?
An Impact fee is a charge levied against new developments to finance
capital Improvements made necessary by the new developments,
,f
2x WHO 15 SUBJECT TO THE IMPACT FEE ORDINANCE?
Anyone who builds a project that creates an impact on publicly..provlded
capital facilities, such as roads, Is subject to the ordinance, Therefore,
I developers of single-family or multi-famlly residential units, mobile home
parka, hotels and motels, industrial and manufacturing projects, warehouses
and mlnl-warahouses~ hod ltals, and virtually office bullldings, retail projects, restaurants, banks,
Y othe typo of land use are subject to the Impact
fe6.
3, WHEN IS THE PEE DUE?
A project's Impact fee must he paid before the building permit' can be f
Issued. The Department of (locally specified) will determine the amount of
the impact fee due at the time a developer applies for a building permit.
r
VtY. r
' 4x WHAT IS THE IMPACT FEE BASED UPON?
The Impact fee is based primarily on the projected facility demand
generated by the particular land use type.
i
FOR WHAT PURPOSES CAN IMPACT FEES BE USE07
Impact fees will be used for capped Improvements to and expansion of
water supply, treatment, and distribution facilities, wastewater collection
al;, and treatment facilltles, storm water, drainage, And flood control cf
J facilities and roadway facilities which are necessary due to demand j
;t. generated by new development paying the Impact I&*, No funds shall be
used for periodic or ro4tihe maintenance, i
+ 6, WHERE WILL IMPACT FEE FUNDS COLLECTED BY THE COUNTY BE
> < : SPENT?
The ordinance generally establishes Impact fee districts, with a separate
trust fund being set up for each district, Funds must be spent !n the
4;1 60 1 dl3.StLCt.>?r_om y!hl 411aK SVeCa.&4114.4t4.d. -
♦-.""".-.ua. ..M1 1.1 Y_u4wH4i ,
MYINV'AVM1al:rtw.V. SD-~trYMwr.eNw•trwnru+.... t
JL ,
t.
h
f J,
NIIk:JA~
'yxtWJRi .r
JNM1 IAA
J
7. CAN A DEVELOPER RECEIVE CREDITS AGAINST THE IMPACT FEE?
A developer can receive a credit against the Impact fee for non-site
related construction projects which are included In the capital
Improvement plan or for projects related to its implementation,
I
8. ARE THE IMPACT FEE RATES SUBJECT TO CHANCE?
The Administration will review the Impact fee structure and make
recommendations to the County Commission annually. The County
Commission is empowered to change the rates, If needed, as a result of
that review.
,r
9. I HAVE PLANS TO DEVELOP PROPERTY WITH MORE THAN ONE LAND
USE. HOW WILL THE IMPACT PEE BE CALCULA'T'ED? r
The ordinance provides two ways to calculate the Impact fee of a mixed
use project, Fees for the lndivldual land uses can be combined for the total E
f developments Impact fee. i
t
` j The second method requires completion of an Independent fee calculation
study, Anyone submitting such a study Is generally charged a fee for the 1
most appropriate land use category to compensate for administrative costs
F. i associated with the study.
106 I OWN A MOBILE HOME, WILL I HAVE TO PAY AN IMPACT FEE IF I
MOVE IT?
The Impact fee for a mobile home would be paid by the developer of the
mobile home park. If the owner places a mobile home on their own site,
3~ f
#f` then an Impact fee will be chotged to the mobile home owner,
~yM1
II. WHAT IF MY PROJECT DOES NOT HAVE THE SAME DEMAND AS THE
STANDARD LAND USE TYPES? IS THERE AN OPTION TO ACCEPTING
THE ESTASLISHED FEE SCHEDULE?
Any developer who believes that the land development activity for which
he is seeking a building permit will exhibit demand below those used by the
county, and therefore opts not to have the Impact fee detehmined
according to the fee schedule, can prepare and submit an Independent fee
f. calculatlon study, This study must be done by a qualified peotesAlonal
! approved by the County,
Ala„' ! 1
i
k`I
` eUyfi iiVF.wSYY YN4.. r"....... u..w': nOr .wwn«a ..-wlaa'u m.anwwnl.N
fMIlN.VFYN41lWfl WNMn.r n.....,.
1141
4i1
1 Vf
t M;N
y' yy
I
r
i
12. IS THE IMPACT FEE DESIGNED TO CORRECT EXISTING DEFICIENCIES?
The Impact fee Is not based on the need to correct existing deficiencies.
Impact fee revenues may be used on overloaded facilities that would `
become further overloaded without Im; °ovements to offset the demand
generated by new development.
f I
I3. 'WHAT HAPPENS TO IMPACT FEE REVENUES THAT ARE NOT SPENT BY
I THE COUNTY?
Any fees not used by the County within a specified time from the date the
fees were paid will be returned to the feepayor, even if the development
for which the Impact fee was paid has been constructed.
14. HOW DOES THE IMPACT FEE RESPOND TO SENATE BILL 3367
I
The Impact fee was designed In recognition of the legislative guidelines set
forth In Senate Bill 336.
13. WHY If AN IMPACT PEE NEEDED TO PAY FOR NEW ROAD
CONSTRUCTION WHEN GAS TAX REVENUES ARE AVAILABLE? i
There are two main reasons why gas tax revenue Is not 'enough to finance
new road construction. First, gas tax Is levied on each gallon of gasoline
I sold. Because gasoline consumption did not Increase on the aver.tge.from
J 1979*19$y, gas tax revenue did not increase. Second, the need for new
{ roadway construction Is dependent upon population growth: Because the i
population has increased and as consumption has not Increased, a shortfall
In transportation revenues exists. Further, the revenue from the gas tax Is
not high enough to pay for new transportation facilities required by traffic j
generated by new development. The transportation Impact fee Is an
additional source of revenue needed to finance funding shortfalls for
roadway construction.
I
L6. WILL THE IMPACT PEE GENERATE ENOUGH REVENUE TO FINANCE
ALL FUTURE PUBLIC IMPROVEMENTS?
Usually Impact fees will not generate the entire amount of revenues
needed for a public Improvement. A combination of financing techniques,
including the impact fee, is gen~:raily used.
1
....r.. .......o nnay4:yiw .xw\N?14%~.a+rs:...yvr«rnwn.~.nn.-.,e~.«ra we n
i
J
.I 1
MANN { Implp~llenlrulo~tS~rtlalLar~orCGtiplrnnelN~l Plarrnlpg 6 4
'~+1~'v I 8r+grrteerMg, mur raga! 5ervk~s '
i
O a O Y P
lit
July 310 1987
f
Mr, Lloyd Harrell, City Manager
City of Denton rnrr
+ 218 East McKinney St. C1IY
ACCiiS (if Fl
r Denton, Texas 76201
! RE: IMPACT FEES
r Dear Mr. Harrell:
+ Senate Bill 336 is now law in Texas. It was adopted to regulate
the use of Impact Fees ae A means of financing Capital
Improvements or Facility Expansions attributable to "new
developmentop. But it does much more.
materially change the way most cities planSate Bl 36 will
enmanageiland3finance
their develo ment rocedure.
iancial
I i of the law by the end of Mayail re to address the refinancial
risks for all cities in Texas whf 1988 will o choose nototo comply.
~However it also r
i alternate a provides a special opportunity to discover
ti improvementspproaahes to the planning and financing of public
tai I
That is why THE 336 GROUP was formed. It in an association Of
f
implementation specialists in Governmental Planning, Engineering,
r and Legal Services. As our resumes show, we have extensive
` successful experience in all aspects Ok impact fee planning,
management,, and regulatory implementation. I
understand the implications of SB 336 and are prepareditoeoffer 4
timely, cost-effective and practical solutions to your community.
We would like to share our experience and assist you in mee
the challenges ahead. meeting
Senate Bill 336 need not increase dramatically
litigation or l your risk se
complete and rAturnptheino obligation survey aenclosed. It Ialea
the
s first step. to discover haw we can work together to address the {
needs of your community. Let us demonstrate how sB 336 can turn
restilotions into solid, efficient return
sincerely,
THE 336 GROUP
awes E. )Darling,
„F<< Attorney at haw
Enclosures
,
i ' 220 N012M I
McUkn, Teals 78504 f
$12 682.5009
1
i
FF 1 y, y Lvww, ultlYAFWypY.v
I
,fly u . fr.. ire Aw... ne.l Wy14 kil/d41f Yr6Ni A {
k i ).IIe;KKn;AUa~}F~.VN'e/L+Wil.illvi'tUl..'1~NIIwre+i...•
1~ .
{ ~s~.
\ I
1
-10
I;
Err/dcarnatrnrlurr,gxt'ridirl~ for lrrrtvrurtrarrrr!!'lrrrurirrg r~
''~St` F1r~lrxtaGri,~. tort lr?,vd .karr~ i5 ,
' i o■ ou r is
Please lake A few n1111e1e6 to answer'ha following questions.
YES NO MAYBE
DO YOUR BUILDING PERMIT FEE REVENUES EXCEED THE OPERATING COST
OF YOU BUILDING INSPECTION EFFORTS? I I I I ( I r
i
i T OF
METER D0P98 AvLLATION OF WATER METERS^YOUR "OUT OF POCKET" I I f I ( I
{ 'DOES THE COST OF SEWER TAP FEES INCLUDE A PURCHASE OF EOUITY }
1 OR IMPACT FEE TO FUND IMPROVEMENTS? f I ( I !
DOES THE LAND DEVELOPMENT PROCESS IN YOUR CITY REQUIRE
THE DEVELOPEAr u
,r
' To finance oifaita Improvements to water, sewer, drainage
' or street systems? I ! I 1 f !
I To finance Improvements such as lift stations, booster pump
r i stations, ground or elevated storage Janke? I I f 1 f 1
To oversize of water, sewer, drainage or other lines to
I accommodate future growth? I I f 1 ( I
I
~ G
p' To finance drainage Improvements andlor dedicate ROW to serve
other propettles In a watershed? I I I 1 f !
r a " To linsnce In traffic Improvements such to signals
i
`T, I ~ or turning tense? I I ( I ! 1
I + { To conduot Impact studies to determine the effects of a development
on system performance? I I i 1 I I
To purohese of w0r. f rights (2) To seoure additional potable water
I r4~ i 3) To Pay Indebtedness of other governmental
I enllllos supplying raw water?
To pay a Capital recovery fee, lump sum lee, amorllzed'charge,
Syr I or almlfsr fee for drainage, water, or sewer? ( I f I I l
I
To flrtenae facility eKpenefons such So additional fire protection?
tin+` To fund additional parking spaces In downtown area? I I i 1 { I II'
{ to IlnsnOe reimbursements to others lot overefzing of lineal
extra-depth lilies, or (Ile stations? ( I I I I 1
i
%
I
Y j NowtheI was not eo hud.II you answered Y68 or MAYBE Ioany of Ihe4uaslIons above,
I visions Of Senate 0111 A36, 1i (III out the Information below and return thlb questionnaire~so thaw efmay analyze the
fmpsol of this new law on your community. All you need do to told this document In thirds, $taple, alamp and mail, our ad,
dress Is on back aide.
I I+
l I
NAME PHONE
71tLE ADDRESS
,Y I+ CITY
STATE _ ZIP
} l~n~/I? E Do you want us to contact you? Yes
N
r ;1 f
(over)
~n f
y I
f; !
,
*i
r
WNW
-10
E
L
1
{
~ I
SFaJI~ ~ f
J JSi(/ 111 i :
j~ry b b u h
220 Nnkuni
~Y
v w{
.
d.
p,
~lr~, I I
)q~ I) I
"5 ~r1M1 1,'
V
M1
4 ~ _ :itla.o J.. Y.o ..n ~waaaM NSnw i
' +<'tl a +ui11A"pl
i r..:
d,i:'
u M
f!
r
• lArfdimh•+rrulrnrr yk+Ciulr:+la fr,r r~rurairurrrrrrd!'1rnuNn~ c~
IJI{ IthIIln,@ Will k17 ri5
'
i
OKI=
The 33$1 GrOUp la O unique.P4rlnerehlp Ihal brings togothsr the epe mal expertise of prmessl' Cat ling. 11 a was and org4specificall
And Asso. slid
provide la Single source entity o for local govenment o
t aovn
to ercome the burdens end discover the whichspecifica exist within
Senate Bill 336.
Individually, the members of The 336 Group have assisted numerous Texas clues and eounilea In a variety of areas Including:
'PLANNING, DESIGN & ENGINEERING
r,
'Land Development 'Land Us# 'Facilities
'Capital Improvements 'Water, Waste Water
and Drainage
'MANAGEMENT
'Growth Management Pagutaltons 'Impact Fee Analysis
Waist, Waste Management & Drainage 'Pub 110 Utlltty Policy Research
'Fiscal, Risk, and Personnel and Development
The Combined experience ar x proven ability represented In Ths336 Group offer 10041 government not only a working knowledge
of problems And Solutions, but also a record of success In dealing with the urgent problems of modern urban development
MBA AACHIYECTUAe GAOUP
MBA Architecture Group, 19 a Phorr-based architectural, onglnedrlnp, and planning firm. Over the post 23 years, MBA has pro
vlded architeolual design and construction management services for a broad variety of building typos and clients In seven
southern states. In the last flue YYBars MBA has designed more than 100 million dollars of completed oonsiruollon, Included
among these were: public Isoiilllee, schools, offices, warehouses, manufacturing. hotels, resorts, and hr r104 buildings.
MIOhAeI J, Blum, Director of Planning and partner at MBA, has fifteen years Of experiOnas In city management and planning,
I management consulting and economlo development, HIS background Includes experience In munlolppal GGovernment as a Oily
Planner, Director of Community Development and Assistant Oily Manager, He Is oufrentlyaerving as a Trustee of MOAilowo will.
ty Board. Mike's range of expertise Includes businees and governmental consulting In areas of land use planning, growth
j ! management, real estate, feaelblllly Studies, and public, policy research. He is eminently familiar with water rights issues and
related matters, and has testified before the Texas House and Senate Committees regarding water and subdivision issues, HIS
recently Completed CONTROLLING OPTIONS A Studv of the Mensgement And Control of Lond Development in Taxes Counties
(With Spoettl Emphosls on Hldolpo CounyJ 14011 resulted In the adoption of now subdlvlelon toouPotions for HIdalpo County, He
was actively nvolved In thha formulation, Implementation, and management of McAllen's Sewer Plant
Investment Fee regulation. He holds a Bachelor's degree In Political Science and a Master's degree In Urban P1onning from
I Texas A & M.
U. ROCRIOU92 AND ASSOCIATES, INC, l
i( L.L. Rodrloeat and Associates Is a multbdeclplinorydeatgn firm providing services In civil engineering, land planning surveying,
I and construction management. Combined, the principals of LLA have over thirty years of engineering, planning, anadoelgn ox:
f parlance, directing and coordinating over 300 million dollars in construction. Their experience includes not only design of water,
waste water, Solid waste and highway systems, but Also the 0rc141 opefollonal experience so necessary to munlolpal projects,
I The Pregldont Of the elxteen-pereon flrrn IS L,L, godrlguOrJC, P.R. A.P,S„ l ac, podtlgusz has been reeponslble for development
II of a wide vprlOly of prOJedts throughout hit seventeen year consulting oareAr. The major oreae of Lao's expertise Include storm
1 water detention, retention and disposal, wafer and weals water plant design and construdtlon management, And subdivision
design. He holds a Bachelor's degree In Engineerlrig from texas A&M.
Mel Plaollla, P.E. Is Director of Engineering at I.I.A. He holds an englneetlhg degree from Reneeelaer POlylechlnfo lnetltute, Mel i
1109 over fourteen years of oxpSNanoe In Civil antl Uansporllon engineering, and munlolpol adminlslratton, He he$ served so
i Aaetelant Oily Manager and City Enolneer for MoAllen, Director of Public Works ldr the City of Pontiac, Michl an
£ Engineer for the Cis of Troy, New York, He extensive o 9 ,ahdBole In Ih
I knowledge v
of munl
I I I
Implemenlatton and administration of McAllen's Sewer Plant Fes reputation, makebh m a or cial participant in the solution of a
' variety of municipal problems,
LAW OFFICES OF JAMES E. DARLING
James E, Darling, Attorney has been engaged In the praottce of munlolppal low In Texas since hie graduation from Ba or Law
LJ Bohooi In 1077. HIS legal career began as Asslefanl Olfy Attorney for the CII of M y
six months on the job. His sctlvltlee since y aAtien, assuming full
And tBibl s er or
Before establishing his own Him, from which he cluftonlly serves ate legal counsel fo the Oily t of McAllen heworprivate rothe firm j
of Fulbrighl a JAworskl in their public law section.
As an Attornay ,vllh Fulbrighl & Jawoakl, he represented seven municipal uflllly dlstrlots as general counsel in molars relating
to their operalron, to Approval of 00nalrucllon facilities before the Water commission, and to the financing of bond Issues, He '
also acted as development counsel In water and sewer issues for Hanle County, rho City of Houston, and the City of Sherman.
He has represenled the Gilles Of McAllen, Phorr, Alamo and La Joys Wafer Suppty Corporation In a number of Important
onpaullles including Issues before the Public Utitllyy Cemmlablon and Texan Water Commission, He Is currently gsnotat counsel
1 to the Hidalgo County litigation District N16 on wetor and waist rights Issues, and represent Hidalgo County on matters reiaiing
10 ACOUISIIIOA of draln46e tlghls•Of•way.
Jim's extensive experience with municipal government and development Issues has allowed him to Coordinate the iMeraOllon of
all toool political luilediollons. His work with the provision of Waist and sewer setvlce to dolonla Areas of the Rlo GOAde Valley
has been especially noteworthy. HIS direct InyOlvemenl in the forfhuiallon. Implemehtstlon and AdminatrollOn of McAllen%
jr Sower Plant Pee regulation I9 pa too lily valuable.
r j As this brief resume shows, the W01ee6101181 Individuals and organizations which IormThe 936 Group haveextensive successful
't experience. They understand the Impllootlons of SD 936 and Are prepared to offer timely, coahsffectlvC and praollckl solutions
n' , I to your community
.
- ,,.u,4,nw4wW.~M:,yACnwr Yff/tiYMFNiAFhWkMi.uw
1 t •
,
'1 r
i
i~
i j
,yy W~
f l
{ CITY of DONrON
i OKAFTON, rM# rego,
i
June 26, 1987
I ~
Mayor and Members of the City Council
Chairman and Members of the Capital Recover
Committee y. Pee Citizens
}
Chairman and Members of the Denton Public Utilities Board
SUBJECT: Final Report for Phase I
I i
The final report for Phase I has been submitted from the
Consultant, Camp, Dresser, McKee, to the City'1ltilities Staff.,
We are attaching a copy of
information, this report hereto for your
I
I wish to thank each of you for
• your efforts in bringing this
phase to a successful conclusion, Ile app rer.i lte your
? P' f willingness to be a part of this effort and the spirit of
cooperation you hove shown.
Best regards,.. ;I
{
s.' R. E. Nelson, Executive Director
Departmont of Utilities
I ,
8cr
cc: C. David Nam, Director of Wtr/WW Utilities
Attachment: Phase I Final Report CRP
488OU:53
P~r . I
j Y I
~~ir - „>.•.YN.s+'r+uMW~ea+vWMMY.N W..iv..w.y.wpr..ts.:,wna~
+wiata V;t~vr~~lN.nu'r.~x~aa4~e#,a~Y.kYLW~~r'~~tatikll!fuonao(walxru..wuu;.,,.:.v..wl.,..y.. vscurtwww'!,y~+i/4rngwuF6.•~+uw,nxa~
a
I rlfl r
NA
~l .
E j.i,
w
iA1181
i
{ I
F mow
ciry of DeNrON
CWNr*N, rtXA. re~o~
MbMGRANLLD~
Date; July 149 1988
t To; Executive Staff
Joe Morris, Assistant City Attorney
} nave Nam, Director Of Water/Wastewater Utilities
Jerry Clark, City Engineer
Lee Allison, Senior Engineer
From; Prank H. Robbins, Executive D
f Planning and Development Director for
` Subfects Impact Fee Legislation (SB 336)
The city is preparing to p
legislation 'Ay an important role in the upcoming
,sI r session,
legislation will be emeOne he ndmenttof theoimpact pfeeelaw(SBt3 related
a~''I ! in 1987, Organizations and other cities are preparing _to3d
6) ssed
this issue. As an example of this activity, representative s from
ealawith
TbiL will address proposed amendments at an upcoming semi
end of the month, nar at the
As part of our legislative effort, it may 4''~ amendments that would be beneficial to y be useful to discuss
discuss the applicability of the law, Denton, if any, and to
I Attached is a copy of the curront I
f s, "red line", An informal meeting toaconsolidate your ounccommen,ts, if
you are able to make them on this short notice b
at 2x00 p,m., Monday, July 25, 1988) in the Planning/Engineerinled
conference room, I would like to pass these comments on to ThILg
and others at the meeting in San Antonio, I
1 i
t
, p"`----~
ran o its
a b
Attachment
cr
t~
Jr t " 7 /
ft i ~
I
kr
t
'I r~ +
M
I
,I
i
k
PEp1.1L.AT I NG THE FINANCING OF' CAPITAL
IMPROVEMENTS THOUGH THE USE OF "IMPACT FEES"
SECTION It Definition" i
r SECTION 2, Authorization For Impact Flee
SECTION 3, Procedures For Adoption
Impact Poo Of
i SECTION 40 Us* Of Proceeds
' SECTION G, Rofunds
I SECTION S. Plan Update
SECTION 7, Advirory Committee
SECTION 8 General Provisions
l SECTION 9,
SECTION 10, Appeal* I
Storm Water, Orair►age, and
Flood Control
f SECTION 11
SECTION 12, Exempt Transactions
Effective Oat*
ar
rr, I fi
3 `t t
I r
rho ldllorlnp 1091 It ppovidid of 4 torvlto by rho WRAC! 6poyo, rhlt lo,rl 11 provided lop
ottior roadlog tnd rho 104CI Bpotp romvl ho hold potponr/bl0 for l o ro lrt! trrurt,
OP t/ilnllrproNlion by Mo wdor lop any Poiton,'dlrititl topitt of Mo 0111 t1,7 64
oblNnOd IhNVO MAP $100 Of !0x41 pr1,111V olrlto ar lhrmoh your Mopi4y,
J
SNP f
J ,
t 1 t I'
• f)• ~ I . ""'rMifllq\YYYM\,v\S.IMM, r,..
' 1 4Hiw..\iwM.IwMwa. a(eyw r\n N'i.swwyuauw I•rw
I'
i
3", r.;
v
Nlt1W7.,
Mal
'+x711 ~
;~L, Pit kk
7
SENATE BILL 336
As Passed and Signed by the Governor
AN ACT
relating to financing of capital improvements
by political subdivisions,
8E IT ENACTED BY THE LEGISLATURE OF THE STATE
OF TEXAS
SECTION 1, DEFINITIONS, In this Artj
(1) "Capital Improvements plan" means a plan required by
this A,.t which identifies capital improvements or facility
expansions pursuant to which impact fees may be assessed,
l (2) "Capital improvement" means water su 1 treat
and distribution facilities wastewater col lection sent,
j treatment facilitioal storm water, drainage, and flood
control facilities: whether or not located within the
service area, or 5l f 1 with a life Axpeotancy
' of three or more a 1W crated by or on behalf
' of a political subdivision, f
(3) "Paaility ex j
~ parteinn" meana the expaneidn of the
capacity of an existing facility which serves the came i
fund",lo na as an otherwise necessary new capital improvement,
in order that the existing facility may serve new j
' devalopmentr "Paoility expansion" does not include the
1 repair, maintenance, modernization, or expansion of an I
existing facility to better serve existing development. 1
(4) (A) "Impact fee" means a charge or assessment
impons?d by a politcal aubdlviaion against now development in
order to generate revenue for funding or recouping the costs
of capital improvements or facility expansions necessitated
' by and attributable to such new development. As used in this
Act, the terra "impact fee" includes amortized charges as
i well ae lump-sum charges and includes capital recovery fees,
( contributions in aid of oonstruotion, and any Other fee
which functions as described in this definition.
(9) Ispaot lees do not idoludot
(1) dedication of land for public parks or payment
i in lieu thereof to serve park needal
t (ii) or easements, or
construction or drainage- ~~~s **too aidewelks,
or curbs when such dedications and construotion are required
by valid ordinances and are necessitated by and !attributable
. -1-
Ir
.4Lx,.. .y..WNsAJI'li Rte ,..V.V.~L,4 YW
u+ ...vas ,u., 1.J.wis✓NNWw'AVIl.NnIhYL Md4N'v
k
f,
,y
` kl P.I , to the new developments or
QL0 lot or acreage fees to be placed in trust
funds for the purpose of reimbursing developers for
oversizing or constructing water or sewer mains or lines
provided, however, no item which is included in the capital
improvomgntw plan shall be required to be constructed,
oxcept pursuant to Subdivision (2) of Subsection (N) of
Section 2 of this Act, and no owner shall be required to
construct or dedicate facilities and pay impact fees for the
game facilities"
Qj) "Land use assumptions" includes a description of the
service area and projections in land uses, densities,
intensities, and population therein over at least a 10-year
period,
i(3) "flow development" weans the subdivision of land) or
the construction, reconstruction, redevelopment, conversion,
stru,.tural alteration, relocation, or enlargement of any
structured or, any use or extension of the use of lands any
of which increases the number of service units,
1 I
(7) "Political, subdivision" means a city or town,
whAther operating under general law or under special or
home--rule charter, a district or authority created under
• Aria cle 111, Section (52 or Article XVI, Section 50 of the
Texas Constitution, or, for the purposes set forth in
1 Section 10 of this Act, certain counties desoribed in
l Section 10"
~8, means arterial or collector
4 sstramtra or raa row been designated on an officially
adopted roadway plan of the political subdivision, together
{ with all necessary appurtenances, b
rc sa
,^hareu"uuM,e
(0) "Service area" means the area within the corporate
boundaries, or extraterritorial Jurisdiction as defined by
the Municipal Annexation Act (Article 970a, Vernon's Texas
Civil Statutes) of the political subdivision to be served by
the oapitai Improvements or faoili ies ex ansions specified
in the capital improvements plan,
'rho service area, for the purposes; o , •
all or part of the land within the olitical subdivision or
ita,m>R;~re, itorial jurisdiction, e
tllOYs1 hilt
limited to an ars~A w
political subdivision an e
E '
f
t
I
NI
WAN
to the avers e, tr 1an in-front the
"37ew, dove
lp
np @ve'f~Q"'nora~at three miles, which service a s a21
serve` ~y Ay facilities deaigued in the
improvement "bey
plan, capital
"ftervioe unit"
censump ,aption, means a standardized measure of
use, generation, or discharge attributable to
an individual unit of develnpmgnt calculated aorordance
with generally aceeptod engineering planning standards
far a particular category of capitalar improvements or
facllity axpansioner
SECTION Z, AUTHORIZATION ap IMPACT FED,
~A) UnlOslt A otherwise
law or this A<)t specifically authorized by etato
, no governmental antic or p
f subdivision shall enact or lapses an impactfeetipnilticaa2
bdivi
susions are authorized to enact or impose impact fees
an land within their corporate boundaries cr extra-
f territorial Jurfsdiotion only by complying with this Act,
except impact fees shall not be onaoted or imposed in the
extraterritorial Jurisdiction for roadway facilities, A
y,•' municipality may contract to provide capital im rovements
j` ! I except for roadway facilitias, to an area outside of its
corporate boundaries and extraterritorial jurisdiction and
f may charge an impact fore pursuant to the oontraot but
E Impact fee is charged they , if'an
sin
, the rou
ni
c
wit I al
h thin it mu
A P must
ctr y comply
(E) An impact fee may be imposed only to pay the costa
of conmtruoting capital improvements or facility expansions,
including and limited to the construction oontraot price,
surveying and engineering foam, land acquisitions costa
(including land purchaeess, court awards and costs,
attorn'eylo fees) and expert witness foes), and the fees
actually paid or contracted to be paid to an independent
t qualified engineer or financial consultant preparing or
updating the capital improvements plan who is not an
employee of the political subdivision. Notwithstanding any
4 other provision of this Act, the Edwards Underground Water,
hiatrict or a river authority, which is authorized elsewhere
by atate, law to ahargo foam which function as Impact fees as
defined irr this Act, may use impact fees to pay a staff
en lneor who prepares or updates a capital improvements plan
' under this Act. Projected intere"t charges and other finance
coat-it may be included in determining the amount of impact
foe% only if the impact foam are used for the payment of
principal and interoot on bonds, notes, or other obligations
Iosued b or an behalf of the political subdivision, to
f
....,.wow..... w,...
1
I .
N,
,iK i
*WWI
+ r, 1W.,l11 .
finance the capital improvements or, facility expansions
identified in the capital improvements plan and are not used
to reimburse bond funds expended for facilities that are not
identified in the capital improvements plan,
(C) Impact fees shall not be adopted or used to pay for
any of the follewingr
(1) construction, acquisition, or expansion of public
facilities or assets other than capital improvements or
facility expansions identified in the capital improvements
plan
(2) repair, operation, or maintenance of existing or
new capital improvements4 or facility expansions
(3) upgrading, updating, expanding, or replacing
existing capital improvements to serve existing development
in order to meet stricter safety, effioisnoy, environmental,
or regulatory standardras
(4) upgrading, updating, expanding, or replacing
exliDU ng capital improvements to provide bettor err-vice to
existing developments
(5) a tidminisstrative and operatfog coasts of the
political subdivision, except the Edwards Underground wetter
j District or a river authority, which is authuriz4d elsewhere
by state law to oharge fees which function as impact fees as
t defined by this Aot, may expend impact fees to pay its
administrative and operating costs
46) principal payments and intatost or other finance
t ?.hargaa on bonds or other indebtedness, except as allowed by
SubmootiUn (!1) of this section,
+ (b) (1) The political subdivision shall use qualified
i,. profeasosicnals to ;
to calculate the Impacteleathe . The capitalrimproovementsnplan
shall contain specific enumeration of the following itemsi
1 (a) a description of tba existing capital
improvements within the service
area and the
costs t
upgrade, update, improve, expand, or replace such improve-
ment* to most existing needs and usage and stricter sesfety,
efficiency, environmental, or regulatory standards, which
shall be prepared by a qualified professional engineer
licensed to preform such professional engineering services
in the State of Texas,
(b) an analysis of the total capacity, tha level
' of errant usage, and commitments for usage o: capacity of
the existing capital improvements, which shall be prepared
by a qualified professional engineer licensed to preform
E ouch professional engineering services in the State of
(o) a description of all or the portiones of the
J ; - .4-
P j
f
napital improvements or facility expansions and their costs
uecr3ssitated by and attributable to new development in the
service area based on the approved land use assumptions,
which shall be prepared by a qualified professional engineer
licensed to perform such professional engineering services
in the 3tata of Texas;
(d) a definitive table establishing the specific
level or quantity of use, consumption, generation, or
discharge of a service unit for each category of capital
improvements or facility expansions and an equivalency or-
conversion table establivIiing the ratio of a service unit to
varlouea ;ypas of land ueee3, including but not limited to
residential, commercial, and industrial;
(e) the total number of projected (aervics units
neoerssitated by and attributable to new development within
the service area bared on approved land use assumptions and
calculated in accordance with generally accepted engineering
or planning criteria;
(f) the projected demand for capital improvements
or facility expansions required by new service units
projected over a reasonable period of time, not to exceed 10
years,
(2) The impact fee per service unit shall not dxoedr1
the amount determined by dividing the 6oatm of thb capital
improvements described in Paragraph (c) above of this sub-
' section by the total 'number of projected service units
described in Paragraph (e) of this subsection. If the number
± of new Mervioe units projected over a reasonable period of
time is less than the total number of now service units
shown by the approved land use assumptions at full deve-
lopment of the service area, the maximum impact fee per
eorvice unit shall be calculated by dividing the costs of
1
the portion of the capital improvements necessitated by rind
attributable to projected now service units described in
R paragraph (f ) of this s,)ubseetion by' the projected new
sorvica unity described in that paragraph, The ahalysis
required by Paragraph (c) of this subsection may be prepared
an a system-wide basis within the serviue area for each
major oategory of capi+;,%l lmprovement or facility expansion
fur the designated service area.
s
(R) (1) This subdivision applies only to issspaot fens
adapted and land platted prior to the effeotivo date of this
Acts Por land which has born platted in accordance with "
'j (chapter 231, Ante of the 40th Legislature, R®gular Session,
Ir 1027 (Article 974a,Vernonee 'texas Civil Statutos), or the
r anbdiviasion or platting proaddures of a politio'al
subdivision prior to the (sffeotiva date of this Act, or any
j land on which now development odours or is proposed without
t -B-
P
t
i
i
dJ,'
h.
J& 1111j,
I
*hWV R , 4
rY~
i
platting, the political subdivision may assesa the "-:pact
fens at any time during the development approval of
building process and except as provided in rubMAotiu,i (H) of
I this .section, may collect the fees at either the time of
recordatlcn of the subdivision plat or connection to the
political subdivision's water or sewer system or at the time
the political subdivision Issues either the building permit
or th.a cnrtifirate of o,-cupancy,
(0) This aubdivisian applies to impact foam adopted
E prinr to the effective date of this Ant and land platted
Faubmaquont to the effective date of this Act. For new
development which is platted in accordance with Chapter 231,
A-:t.s of the 40th Legislature, Regular Session, 1927 (Article
9743, Vernon's Texas Civil Statues), or the subdivision or
r platting procedures of a political subdivision after the
4 effo,.tlve date of this Act, the political subdivision may
i assns: the impact fees before or tit the time of recordation
and, Axcgpt as provided in Subsection (H) of this sec tion#
may collect the fees at either the time of recordation of
the subdivision plat or connection to the political
` subdivision's water or sewer or at the time the political
subdivision issues either the building
nartifleate of ocoupanoy. pardait or the
(3) This subdivision applies only to i"ot fees
adopted subsequent to the effective date of this Act. Por 1
new development which is platted in aocordance with Chapter
.,:31, Acts 7
of
the
40th Legislature, Regular Session, 1927
(Ar ti,^ln 974a, Vernon's Texan Civil ,Stature), or the
I subdivision or platting procedures of a political eub-
11 division priur to the adoption of an impact fee, no impact
fop :shall boa collected on any service unit for which a valid
f building permit is issued within one year subsequent to the
date of adoption of the impact fee.
s (4) This subdivision applies to lend which iea platted
in accordance with Chapter 231, Acts of the 40th
Logislature, Regular Session, 1177 (Article 0't4ao Vernon's
Texas Civil Statues), or the subdivision or platting
praeedures of a political subdivision subsequent to adoption
of a,a ispaot fee which in adopted after the ef•fesdtive date
{ of this Act. The political subdivision shall aesese the
impaot fees before or at the time of recordation of a sub-
division plat or other plat pursuant to Chapter 231, Acts of
tho 40th Legisslature, Regular Session, 102' (Article 9,74a,
Vertwn'm Texas Civil Statues), or the subdivision or
platting ordinance or procedures of any political
subdivision in the official raoords of the county clerk of
the county in which the tract is located and, except as
( provided in Subsection (H) of this section, may oolleot the '
fees at either the time the political subdivision issues
-8~
q
r
r
t w
1l
-10
i
999
l
vvr,~w
either the building permit or the certificate of oocupancy,
(5) Nor land on which now development occurs or is
proposed to occur without platting, the political
sllbclivlsion may assess the impact fee at any time during the
development and building process and may collect the fees at
either the time of recordation of the subdivision plat or
connection to the political aubdivision's water or sewer
s3yettom or at the time tho political subdivision issues
either the building permtt or the certificate of occupancy"
(6) Assessment means a determination of the amount of
the impact fee in effect on the date or occurrence provided
in this subdivision and is the maximum amount which can be
charged per service unit of suoh development, No speoifio
act by the political subdivision is required,
(F) After assessment of the impact fees attributable to
the new developtoont or execution of an agreement for payment
of Impact fees, no additional impact fees or increases
thereof shall be assessed against such tract for any reason,
unless the number of service units to be developed on such
tract increases. In the event of the increase in the number
y' of service units, the impact fees to be imposed shall be
limited to the amount attributable to the additional service
units,
j ((D) A political subdivision is authorized to enter into
an agrseemrant with the owner of a tract of land for which the
1 plat has been recorded providing for the time and method of
II payment of the impact fees,
(H) Except for roadway facilities, impaot fees may be
! assame*d, but shall not be collected, in arois where
services are not, currently available unless;:
(1) colleotion is made to pay for a capital
improvement or facility expansion which has been identified
in the capital improvements plan and the political sub- i
division Aommite to,wfthin two year's, commenosi construction, G
I pursuant to duly awarded and executed contracts or
commitments of staff time covering substantially all of the
work required to provide :.service, and have the service
t available within a reasonable period of time considering the
type of capital improvement or facility expansion to be
E constructed, but in no event longer than five year•sei
(2) the political subdivision agrees that the owner
l of n now development may construct or finance the capital
f <<.. Lmpravnmanta or facility expansions atsd agrees that the
! cowts Incurred or funds advanced will be credited against
the impas.t fees otherwioa due from the new development or
i agrees to reimburse the owner for such costs from impact
i
r
s t,
E
I
i
fees paid from other, new developmentm which will use such
capital improvements or facility expansions, which fees
shall be collected and reimbursed to the owner at the time
the other new development records its plat ors
(3) an owner voluntarily requests the political
subdivision to reserve capacity to serve future development,
and the political subdivision and owner enter into a valid
written agreement,
(I) Any new development for which an impact fee has been
paid shall be entitled to the permanent use and benefit of
the services for which the fee was exacted and shall tie
entitled to receive immediate service from any existing
facilities with actual capacity to serve the hew service
unitsa, subject to compliance with other valid regulations,
s
(,i) Political subdivisions are authortied to expend
funds from any other lawful source to pay for all or a
{ portion of the capital improvements or facility expanesians
to reduce the amount of impact fees,
I
(R) Political subdivisions and other governmental
ontitias are authorized to pa im act fee
' to this Aot, Y p : imposed pursuant !
(1) Any construction of, contributions to, or
dedications of tiff-site roadway facilities agreed to or
required by a politicalsubdivision as a condition of
development approval shall be credited against roadway
j facilities impact fees otherwise dun from such development,
} Si~C'P I dN 3, PROCEDUReS FOR ADOPTION OF
IMPACT FEM,
(A) Except as otherwise provided in this Act, an impact
fee as authorized by Section 2 of thie Act shall he levied
by a political subdivision only upon complying with the
provisions stet forth in this section,
(8) A political subdivision intending to impose an
impact fee shall adopt an order, ordinance, or ratsolution
E establishing a public hearing date taLconsider land use
assumptions within the designated service area that will be
used to develop the capital improvements plan.
(C,) Not later than the day of adq
the governing baby of the political ~ubdivimianb hall er,
i
appp r,t an advisory oomraittea in accordance with Section 7
of this Act,
4
i
t
r
,h
i`rt
IY
1
owl 4
Q!1lNY\W
I
(U) on or before the date of the first publication of
the notice, the political subdivision shall make available
to the public its land use assumptions, the time period of
the projections, and a description of the general nature of
the capital improvements facilities which may be proposed,
(8) The political subdivision shall provide public
notice of the hearing,
(1) At least 30 days before the hearing, the
political subdivision shall sent a notice of the hearing by
certified mail to any person who has given written notice by
certified or registered mail to the city secretary or other
r designated official of the political subdivision requesting
! notice of such hearing within two years preceding the date
of adoption of the resolution or order setting the publio
` hreariug,
(2) The political subdivision shall publish notice of
I( the hearing once a week for three consecutive weekes, the
first notice to appear at least 301 but not more than 60
days before the date set for the hearing, in one or more
newrpaparss with general circulation in each county in which
the political subdivision lies. However, a river authority
which Is which is authorized elsewhere by state law to
charge fees which function as impact fails ass defined in this
Act may publish the required newspa
roun+ per notice only in_e)ach
Jor" y in which the service area lies. The notice of ~sublio
bearing shall not be in the part of the paper in which legal
notices and classified ads appear and shall not be smaller
than one-quarter page of a standard-size or tabloid-size
newspaper, and the headline on the notice must be in 18-
point or larger type,
s i (3) The notice shall contain the followings
(a) a headline to read am followass
"NOTICE OP PUBLIC HEARING 09 LAAD USE ASSUMPTIONS RBLATINO
TO 1V8bIBL8 ADOPTION OP IMPACT PBBS"
t` (b) the tine, date, and location of the hearings
(o) a statement that the purpose of the hearing is
€ to consider the land use assumptions that will be used to
i develop a capital improvements plan pursuant to which an
impact fee may be imposedt
(d) an easily understandable map of the service
area to which the land use aseumpiicnas applyl and
t (e) a statement that any member of the publio has
the right to appear at the hearing and present evidenoe for
+ or asgairsst the land time assunptioft s,
rca: ,
3r
(P) After the public hearing, the political subdivision
shall determine whether to adopt or reject an ordinanote,
order, or resolution approving the land uses assumptions.
s
oa ;
aayr
a
(0) The political subdivision shall have 30 days from
the date of the public hearing within which to approve or
disapprove such land use assumptions,
(N) An ordinance, order, or resolution approving land
use a8sumptions shall not be adopted as an emergency
measure.
(I) If the governing body adapts an ordinance, order, or
resolution approving the land use asasumptions, the political
subdivision shall provide for a capital improvements plan to
} be developed by qualified professionals using generally
v a,:cepted engineering and planning practices in accordance
with Subsection (D) of Section 2 of this Act. s
is. (J) Upon completion of the capital improvements plan,
the governing body shall adopt an order or resolution
setting a public hearing to discuss the adoption of the plan
I and imposition of the impact fee,
(K) A public hearing must be held by the governing body
x of the political subdivision to discuss the proposed
ordinance, order, or resolution adapting a capital
! improvements plan and imposing an impact fee= On or before
the date of the first publication of the notice, the capital
improvements plan shall be available to the public,
r (L) The political subdivision shall provide public
a,r notice of the hearing,
I (1) At least 30 days before the hearing, the
political subdivision shall sent a notice of the hearing b
i Y
( certified mail to an arson who has given written notice by
certified at, registered mail to the city secretary or other
deaignatad official of the political subdivision requesting
notir,e of such hearing within two Yearn preceding the date
r„ of adoption of the resolution or order setting the public
f hearing,
(2) The political subdivision shall publish notice of
the hearing once d week for three consecutive weeks, the
first notice to appear at least 30, but not more than 60
days before the date met for the hearing, in one or~ more
newspapers wits general circulation in enoh county in which
the political e4*diviisiwn lies. However, a river authority
which'is which is authorized elsewhere by stator law to
charge fete whioh function as impact fees ae.defined in this
Ant may publish the required newspaper notice only in each
county in which the service area lioo. the notice of public
hearing shall not be in the part of the paper in which legal
notieee and classified ads appear and shall not be smaller
.to-
,y
(yl4 i
arncwi .
than oneer-quaarter page of a standard-size or tabloid-size
newsepap, nd the headline on the notice must be in 18-
poi1U'. or larger type.
(3) The notice shall contain the following;
<e) a headline to read as follows,
"NOTME UP PUBLIC HKAlING ON ADOPTION QR IMPACT Pair
(b) the ttrrte, date, and location of the hearing;
(c) a statement that the pusrpose of the hearing is
to consider the adoption of an impact fee;
(d) an easily understandable map of the service
area on which the proposed fee will be levied;
(e) the amount of the proposed impact fee per
service unit; and
(f) a statement that any member of the public has
the right to appear at the hearing and present evidenoe for
or against the plan and proposed fee.
(M) The advisory committee :hall file its written
comments on the proposed capital improvements plan and
impact fees not less than five business days prior to the
public hearing,
s
(N) The political subdivision shall Approve or disaprove
the adoption of the capital improvements plan and imposition
of an impact fee within 30 dayr after the
public hearing,
(0) An ordinance, ardor, or resolution approving the
:a
pital improvements plan and imposition of an impoot fee
shall not be adopted as an emergency measure
~wr f $lIkG'T I pN 4, USE OF PROCSSC)S ,
{r. i feq (A) The order, ordinance or resolution levying an i
provide that all funds collected through the mpaot
aduptinlr of an impact fee eha,ll be d6posited in interesst-
`t}i~ i bearing accounts:eslearly identifying the oategary of capital
" improvements or facility expansions within the service arse
" for which the fee was adopted. Interest earned on impact
loess shall be considered funds of the aooaunt on.whioh it is
earned and shall be subject to all restrictions pplaosd on
use of impact fees under the provisioner of this
Aot,
gxpeenditures of impact fee funds shall be made only for the
purposes for which the impact fee was Impoeed as shown by
the capital improvements plan and as authorized by this Act,
Thor records of the accounts into which Impaot fees are
deposited shall be open for, public inspection and copying
during ordinary business hours,
E
dir.
i
y
i
(B) The governing body shall be responsible for
suporvising implementation of the capital improvements plan
in a timely manner.
SECTION S. REFUNDS,
(A) Upon the request, of an Owner of the property on
which an impact fee has bee;( paid, the political eubdivision
shall refund the impact fees if existing facilities are
available and service is denied or the political subdivision
has, after collecting the fee when service was not
available, failed to commenoe construction within two years
or service ie not available within a reasonable period of
time considering the type of capital improvements or,
facility expansion to be constructed, but in no event later
than five years from the date of payment pursuant to the
F ' provisions of Subdivision (1) of Subsection (H) of Section 2
of this Act.
k (B) Upon completion of the capital improvements or
facility expansions identified in the capital improvements
plan, the political subdivision shall recalculate the impact
fee urging the actual casts of the capital_improvemontm or
facility expansion, If ti,, impact fee calculated based an
actual asst is leans than the impact fee paid, the political ~
3 subdivision shall refund the difference if the difference
exceeds the impact fee paid by more than 10 percent,
(C) The political subdivision shall refund any impact
fee or portion thereof which is not expended as authorized
by this Act within 10 years from date of payment.
(b) Any refund shall bear interest calculated from the
date of collection to the date of refund at the statutory
rate as set forth in Articlo 1.03, Title 79, Revised
I $tatutos (Article 5009-1.03, Vernon's Texas Civil Statute*),
+ or it% successor statute,
M All refunds shall be made to the record owner of the
property at the time the refund is paidl provided, however
if the impact food were paid by another political sub-
division or governmental entity, payment shall be made to
such political subdivision or governmental entity,
~ E
M The owner: of the property an which an impact.fe• hag
I boon paid brr another political subdiviasion or govetnmental
entity which paid the impact fee shall' have dtahding to slue
for a refund under the provisions of this (section.
-12-
i
,
r'
sou ,
",1111'
k
1
1
va~rr
SECTION 6, PLAN UPDATE,
(A) A political subdivision imposing an impact fee shall
update the land use assumptions and capital improvements
p1nn at least every three years, which throe-year period
rihall r.;ommence from the date of the adoption of the capital
iniiarnvssmHnts plan.
(g) The political :subdivision shall review and evaluate
its current land use assumptions and shall cause an update
i of the capital improvements plan to be prepared in
atNcordance with Section 2 of this Act.
(C) The governing body of the political subdivision
shall, within 60 days of receiving the update of the land
use assumptions and the capital improvements plan, adopt an
order setting a public hearing to discuss and to review the
' update and shall determine whether to ascend the plan,
M A public hearing must be held by the governing body
of the political subdivision to discuss the proposed
s' ordinance, order, or resolution amending land use
assumptions, the capital improvement* plan, or the impact
,t ! fee, r or before the data of the first publication of the
notice, land use asssum tions and nd the capital
Improvements, plan, including the amount of any proposed ~
amended impact fee per service unit, shall be available to
1 the public,
(E) The political subdivision shall provide public
notice of the hearing
(1) At least 30 days before the hearing, the
political subdivision shall sent a notice of the hearing by
rrertifiad mail to any permon who has given written notion by
ot+rtified or registered mail to the city set•retary or other
" do-signated offioisil of the political subdivision requesting
notice of such hearing within two years preceding the date
of adoption of the resolution or order setting the public
hearing
(2) The political s9ubdivi6ion shall publish notice of
r4 the hearing once a week for three eonsedutive wreaks, the
4 first notice to appear at least 30, but not more than 50
)r ' days before the data set for the hearing, in one or more
newspapers with gsansrral circulation in each county in which
the political subdivision lies, Howraver, a river Authority.
fly`:,1 which is which is authorized elsewhere by state law to
charge fees which function a* impact fees he defined in this
Act may publish the required newapapar notice only in each
naunty in which the earvice area lies. The notioal of ipublio
•
f
y ux.xlau .o-w ,wuy u.V~~N..nA...u.v.ur ".rv.W SUn rn• yi..vlµ,kW;AO'/h'.pa. Y.A°r4 VU:fF•ry
C
f
t
5
i
r
r;r
i
I JJ
WOW '.T
aY)iY ~
hearing shall not be in the part of the paper in which legal
notices and classified ads appear and shall not be smaller
than one-quarter page of a standard-size or tabloid-size
newspaper, and the headline on the notice must be in 18-
patnt or larger type,
(3) 'rho notice shall contain the fo.llowingi
(a) a headline to read aft; follows,
"NOTICE OP PUBLIC, HEARING ON ARRYDRENT OF IMPACT FURS"
(b) the time, date, and location of the hsaringl
(c) a statement that the purpose of the hearing is
to consider the amendment of land time assumptions and a
capital improvements plan and they imposition of an impact
fee{
(d) an easily understandable description and map
of the service area on which the update is being prepareds
and
t,; { (e) a statement that any member of the public hoe
the right to appear at the hearing and prese=nt evidence for
i or against the update,
(!r> The advisory committee shall file its written
,ommeanta on the proposed amendments to the land use
asoureptions,capital lmprovementr plan and impact fee not
less than five business days prior to the public hearing,
4, F (0) The political subdivision shall approve or disaprovs
t;;'~ 1 f the amendment of the hind uses, assumptions and the capital
xi improvements plan and modification of an impact fee within
38 days after the
I public hearing,
i f (H) An ordinances, order, or resolution approving the
amendment to the land use assumptions, the capital
Improvements plan and Imposition of an impact fee shall not
j be adopted as an emergenoy measure,
SECTION 7, ADVISORY COMMITTRE,
(A) A capital improvements advisory committee, composed
of not lasses than live members, shall be appointed by a
majority vote of the governing body of the political
C subdivision, Not lees than 40 percent of the membership of
" the advisory committee shall be topresontativae of the real
estate, development, or building industries whet are not
employeae or officals of a political subdivision or
` s governmental entity, if the political subdivision has a
planning and zoning commisimian, the commission may act as
the advisory committae, provided that the camtalsolon
io includes at least one r'eprosAntiVo of the real @etate,
development, or building industry who Is not an employee or
d -14
.
4 F" "
f r+d ~if~ ah'~.. I.
r' i r 1, °.u ,L. f. fr ruf ''F. :.l U. •n Y'~,:!'S'pl ; '
I
i
rWWA
offical of d political subdivisio or governmental entity,
,o n such r+~pre.gentive ins a m9mbs3nr of the planning and
zoning commis,
the coramic4slon may still act as the
advisory cammitte if at least one such representive is
Appointed by the political subdivision as an ad hoo voting
member of the planning and zoning commission when it acts as
the advisory committee, If the i)npact fee is to be applied
within the extraterritorial Jurisdiction of the political
subdivision, said membership sha21 include a representive
from Such area,
(B) The advisory committee shall serve in an advisory
' capacity and is established to perform the following
functional
g (1) to advise and assist the political subdivision in
adopting land use ammumptionsek
(2) to review the capital improvements plan and file k
written rommentek
(3) to monitor and evaluate Implementation of the
capital improvements plank
(4) to file semi-annual reports with respeoI to the
progress of the capital improvements plan and to rep
the political subdivision any perceived inequities ionrt. to
i.MIs menting the plan or imposing the impact fee)k and
E (3> to advise the political subdivision of the need
fso update or revise the land use assumption!,, capital
improvements -plan, and impact fool E
j (C) The poU tical subdivision shall
i the advisory committee any professional repti isiwith respect
I to developing and implementing the capital improvements
E plan)
(p) The governing body of the political !subdivision
shill adbPM
'procedural rules fore the committee to follow in
carrying out its'duties,
i'
SECTION 8, ggNERAL PROVISIONS,
(A) If the governing body of the political subdivision
dote not perform a duty imposed under this Act within the
prescribed time period, a person who ham paid an impact too
or an owner of land upon which an impact fee has been paid
,I ahall have +;he right to present a written request to the
4t Governing body of the political subdivifiaion stating the
nature of the unperformed duty and requesti» that it be
`1,performed within ®O days of the request. If the governing I`
t
body of the political subdivision finds that the duty is
roquired under this Act and le late in being perfbrkned, it
r ~ 15~
1
F
Mbrt
r
1C4~dGl 1i
shall Jauso the duty to commence within 00 days of the
request and continue until completion,
(fl) A record must bra made of any public h8mrin provded
for in this Act. Such record shall be maintained and beimade
available fare public Inspection by the political subdivision
for at least 10 years after the hearing.
(C) Any state or local restrictions that apply to the
imposition of an impact fee in a political subdivision where
an impact fee Is proposed will be cumulative with the
restrictions In this Act,
(D) An impact fee which is in plaoe on the effective
date of this Act must, within three years of maid effective
date, be replaced by an impact fee made pursuant to this
Anti provided, haswever, any political subdivision having an
f I Impact fee which [ism not been replaced pursuant to this Act,
within one year of the effective date of this Act shall be
1 liable to any party who, after the one-year period, pays an
impart fee which exceeds the maximum permitted under
Subsection (D) of Section Z of this Aht by more than 10
percent for an amount equal to two times the difference
p between the maximum fee alloweed and t
imposed,
plus reasonable aattorney's, fees! and court costs.
(8) This Act shall not be construed to prohibit, affoot,
or regulate any tax, foe, charges or assessment which is
kk specifically authorized by state law,
s
(P) No moratorium shall be placed on new d+evelopment'for
the purposa;3 of awaiting the completion of all or any part of
the process necessary to develop, adopt, or update the
impaot free.
SSCTION 9, APPSALS,
A person who ham exhausted all administrative remedies
within the political subdivision and who is aggriovnd by a
final decision is entitled to trial de novo under this Act,
y A suit to contest an impact fee must be filed within 00 days
from the, date of adoption of the ordinance, order, or
I resolution establishing the impact foe. Except for roadway
fFaciltties
n''',t! , a person who has paid an impact pee or an owner
of property on which an imprint foe has boon paid shall bn
4 entitled to a ecifio
~~v' p performance of the. serviooe by the
political mubdivialo for which the too, wad paid. Nothing in
this ssnaatlon *hall require oonsstruotian'o# a epooifio
facility to provide such M* rvicem, Any suit roust be filed in
q
NOT
'i
7R1NlM
i
the county in which the major port
political subdivi ion of the land area of
the sion is located. A successful litigant
shall be entitled to rAcover reasonable attorneyls fees and
court Costs, An impact 100 shall not be held invalid baomuse
he public
compliance wasiaubstantial Q and in r good t faithiied with if
SECTION 14, StORM WATER, ORAINAGe, AND
PLOOD CONTROL,
(A) Any county with a population of at least 2.2
million, according to the most rncerit federal census, or
which borders a ocunty with a population of at least c^.2 "
million, and any distriot ar authority created under, Article
XV11-134otion 590 of the Texas Constitution within an
County that is authorized to provide storm waters drainage, ~
and flood control fan any such
ilitlern, is authorized to impose impact
feota to provide storm water, drainage, and flood control
improvements necessary to accommodate new development,
The imAcrsitian of impact fees authorized by
Suberaotion (A) of this, section is exempt frnm the
I requirements of cJecti-in
Sertinn 8 of this Act, unless the political subdivision o¢
Proposes to increase the i1jpart faa,
(C) Any political subdivision deroribsd in subsection
'A) of this auction is aui;harized,to
contractually obligate all or pledge I art too@ to
paymrant of principal and interest t onf band so n. fear to the
obligations is6uad or incurred by or on behalftofssuohbther
If ptllit$oal oubdivlsidn and to the payment of any other
cfintractual obligations,
(D) An impnot fee adopted by a political subdivision
pursuant to Subsection (A) of this suction ;,hull not be
raducod ifr
(1) they political aiubdivislon has pledged or
otherwise contractually obligated all or part of the impact
fees to the Payment Of principal and interest on bonds,
notes, or other obligations: issued by or on the behalf of
Such Political Subdivisrioni and
(2) the political subdivision agreKs in suoh pledge
or contract not to reduce such impact tees during the term
of such bonds, note, or other contractual obligations,
SECTION 11, tEXEMWi TRANSACTIONS,
' (A) This Act
K does not apply to impact fees, charges,
IN i
WK
11
j
feew, assessmsnte, or contributions paid by or charged to a
district, created under Article XVI, ,5ention 59, of the Texas
Gons,rtitution to another district created under Article XVI,
0oction .rig, of the Texas Constitution if both districts are
required by law to obtain approval of their bond.% by the
Texas Water Commission,
<B> This Act does not apply to impact fees, charges,
flies assessments, or contributions charged which are
approved by the Texas Water Commission, Any district created
pursuant to Arti.c,le XVI, Section c9, or Article III0 S*otion
52, of tho Texas Constitution, may petition the Texas Water
Commiffision for approval of any such proposed fees, The
eommiasion shall adopt rulers for reviewing any much petition
and may charge the petitioner foes which rare adequate to
oover the oo.at of processing and ooneidering the petition,
Tho rulas shall require notice substantially the same as
that required herein for the adoption tf impact fees and
f shall afford opportunity for all affected parties to
participate,
SECTION 12, EFF.ECTNE DATR,
The importance of this legislation and the crowded oondition
of the calendars in both houses create an emergency and an
l imperative public necessity that the constitutional rule
requiring bills to be read on three consecutive days in each
JJ hovee be suspended, and this rule is hereby suspended, and
that thi.u Act take effect and be in force from and alter its
II passage, and it is so enacted.
i
j
i
I
~ ..lg.
I
• ^4~q MNNY11M9YU1wW Won..«...,....
r
MN~!
y.
1
Wtw
5t7~1
j Art. M, 4.08 APPENDIX A
Art. M. 4.08
i
(6) Pro rata Co" CAargee joy topping moms extsnded by ofty.•
The City of Denton MAY elect to extend a main when
conditions exist which cause a hardship dye to loch of
wit, or "Mary sewer service. In such caeca
~thr MWA
01 ;1 e44tw
tap+ thase''11nee elul 6e pt" ptilbd~fey ! Same L if anti such
tli~
main were extended by a davehtper, except the taps made
by the "special extensions to individual slrtrle Gamily rest
dens" as described below. Thore shall be no time limits.
tlon for tdw for lines extended under
the provlsv~ =r wietloh', a the ment."m special
extension section described below.
(C) $xtension to E.rtetirtg Subdkis(ona Whao extendons are
made W a subdivision lot, the lot owner shall pay a proportionata
share to extend the main aa*m the hoot of his property or on
I whichever side the pity of Damon Utilities Department. deems to
be two appropriate. Tim proportionate share for the owner and }
j the city shall be as stated below, '
f!f (D) Reimbursem m Pblto(es Jbr &tOnsfon Cosby
I (1) Any develo1w who been the cost of oflydte water or mW.
I tary sewer main extensions to a development, as provided
above, shall be entitled to reimbursement of the pro rats
cost paid to the city, as provided below, for each user who
extends a service line fom the main within twenty (10)
years font tIw date the main is ft ally inspectad sad ere. j
opted by the city.
j (8) The provisions of this section shall not apply to service
I , lines or main extensions constructed at the espense of the
1! City of Donlon under the tames at" section.
(0) Reimbursement payments shall be made by the city to the
person who paid the oost of the mobs, or bb aerignes,
no other parson skald be entitled to payment under the
terms of this section.
(4) The reimbursement skald be payable within thirty (80)
days of its receipt by the city.
(6) Prior to b"Oning of conrtr don of any facility for which
pro rata reimbw mitt Is providb for hemhn the devsl.
eeoa Ne.U
ilia
i
I
1
ED
MY of DEWON, rMAS MUNICIPAL BUILDINO / DENTON, TEXAS 78201 / TELEPHONE (817) 608.830?
Office of the City Mensgor
M E M O R A N D U M
i
TO: Rick 5vehla, Deputy City Manager
David Bltison, Acting Director of Planning and
Community Development
Bob Nelson, Executive Director for Utilities
PROM: Lloyd V. Harrell, City Manager f
DATE: July 28, 1987
SUBJECT: Impact Pee Study
Attached is a copy of a memorandum from Joe Morris, Assistant
City Attorney, which discusses the, senate 'bill relating to
Impact fees.' Please review and study this memorandum and be
prepared to discuss the organizational stance the City should
take on this issue at the meeting scheduled in the City
Manager's Conference Room on Monday, August 30 19870 at
2;00 p,m. :A
Thank you for your time and attention to this matter, i look
E forward to our discussion Monday.
oy arre
City Manager
sS
Attachment
cc: Joo Morw'.s, Assistant City Attorney
3568M
r
r
r
WWI
u rn
Voluma 2, Number 2
Summer, 1989
This Issue of the Gr;fflth Report will focus on the use of impact fees and related means of financing capitol infrastructure in
developing eommunittes, The following report was prepared under contract to David M, Griffith & Associates by the Government
Finance Research Center, the research and consulting arm of the Government Finance Officers Association, Author Joni taithe,
GFRC Manager, used the following books and publications as sources for the report; Development Impact Fees, 1988;
Government Finance Review, Aug. 1987, Oct, 1987 and Oct, 1988; Urban Land, Dec. 1988; Financing infrastructure) €
E innovations at the Local Level, 1987; State Lows Governing Local Government Structure andAdministrotion,1978, and land Use }
Law, Jan, 1988,
The Information included here Is being used in the development of a survey that will examine problems associated with the
deal Implementation and evoluoHon of impoct.fee systems.
If you have any questions regarding the use of impact feet In your community, contact your local DMG office or DMG of 666
Dundee Rd., Suite 602, Northbrook, IIL 60062, phone (312) 564.9270.
IMPACT FEE SURVEY
l The growing use of iripoct fees to finance the infrostruc• dard Planning Enabling Act required developers, as a
furs required by new development Is a reflectlon of a larger condition of approval, to provldo streets, water and sewer
" trend in goverrmnental fnanco to implement user fees, lines and other utility structures wlthin the planned subdivt•
The frond has been fueled by the taxpayer revolts of the slon, i
1970's and '80's, which have spawned restrictions on As focal governments realized that new developments j
conventional means of financing (for example, tox•sup. also required schools and parks, theybeganrequiring man.
1
ported bond Issuances), and also by a belief thatthe Individ• dotory land dedications or fees In lieu of land, In fact, these
uol pricing of government services could better ration do. dedications and fees were the first mechanisms used to w
Mond and control expenditures, require devoloperstocontribut6 totho costs of infrastructure i
Impact fees are also a response to the difficulty many located off.siteofthesubdivIslon, While #fill commonly used
local governments are having In finding the funds to pay for today, these decilcotions cover the cost othhe land only, not
now coplial Infrastructure, State and federal grants to fund the construction costs of building facilitles, f
sewage treatment plants and other capital items are not as Graduolly, local governments began requiring develop. I
plentiful as they once were, What's more, the maintenance ere to contribute both to the land and constructlon costs of
and replacomentofexisting infrastructure are consuming In. an increasing range of off•slie capital facilitles required by
creosingly larger shares of many local governmental budg, their developments, These Include water supply, solid waste
ets as governments attempt to comply with stricter federal and drainage facilitles, sewage treatment plants, arterial
and sfofe environmental standards and to make up for roads, schools, parks, libraries, public safety and day care
recent lags In the funding of maintenance and replacement facilities, and low. and moderate•Incoma housing, There
costs, are several mechanisms used to collect developer contribu•
The Imposition of Impact fees is also a result of enviren• tions, Including the mandatory land dedications or fees in
mental concerns that growth Is not always beneficial as well lieu of land referred to above, plus negotiated exactions,
as a sense that growth does not always "pay its 6wn way," impact fees and linkage fees,
but rather costs a local government more In copNol uxpen.
dltures than the amount of offsetting Increases in property Exactions, Impact Peas and Impod Taxes
taxes and other general revenues,
In spite of the recent surge of Interest In Impact fees, the Negotiated exactions, calisd proffers in some ofates, are
concept of developer contributionsto public Infrastructure is developer contrlbOlonsthat arenegotiated onaprojeet•by.
notnew,Most statesamacted legislatlonpormlftinglocal land project basls,Theamount andtype ofconfelbutionsvarywith
use regulation In the 1920'x, based on a model statute each project, depending on percelved,Impacts and on
developed by the U,S, Commerce Oapartment, The Stan. whether the local government offlctdlsorthedeveloper Isthe
f page 1
Ire,'
i
j
j
ments, Both of these methods can serve as a Means Of
I more skilled negotiator, Exactions can be cash payments or
lrn esseningtno burden onexs Ingtaxpayers,7woofihemost
e dollar fee programs that are assessed common means ofassessing newresidents arethrough lhe
Impact fees ees are
based on a standard formula such as amount of square formation of special financing districts and utilities,
footage or number of bedrooms per dwelling unit. The for- Special financing districts are created forthe purpose of
multi may vary by type of development, for example, com. collecting funds from property owners to finance benefits
morcial, Industrial, orrosidentlal, but not by Individual devel• acet uing exclusively to property owners within the district
oper or project. The fees are one-time assessments on new boundaries, In most cases, a majority of the affected
development, with one payment usually made of the time of landowners must approve the creation of the district. The
development approval, Some jurisdictions, however, permit funds collected may represent an earmarking of general
extended payments over a period of years, The fees are Can. tax revenues for specific projects benefiting the district or
erollycolculotodtorecovernomarathon thedeveloper's pro. may consist of fees collected in addition to regular fox s
portionato share of the capital costs of providing facilities to collections,
ihotdevelopmeni,and often, due to legal restrictions, recover Districts inwhichtoxesarsearmarkedare knownasTox
less than the proportionate share, Developers generally Increment Fi nrt,Financing d DisfHefis a and ch have been Fla tl n Min-
prefer to pay impact fees rather than negotiated exactions, npo 6 among
` because the latter add an element of uncertainty and add!. other jurisdictions, A relatively recent addition to govern.
tional risk to projects. mantal finance, Tox-lncrement Financing Districts hovb
linkage fees are a relatively recent and sophisticated usually been used In depressed areas targeted forredevel•
version of lmpactfeesand have soforbeen used in only a few opment. The Tax Reform Act has mode such districts less r
cities, most notably Boston and San Francisco, These fees are attractive an Investment vehicle because of restrictions on
assessed to developers of large commercial projects, goner. the Issuance of tax-exempt bonds that are financed by tax {
oily In areas where space is at a premium, They are based on increment district revenues and used to Iund projects bone•
an ostimnfe, of community needs the project will generate, fifing the district, j
Ingovecollected
which include ure, low. andmoderaielncomehousing tax sDin haven) whleh fees are
rnmentaifinance.Typi ally
and mass transit, , !
Proponents of linkage fees believe that developers should f",y°~ al asse9smen+s xh ch is usDua y based o a measure of It
be required to help finance +a Increase In cosistoihe city that
wiG result as now office workers come into the city and prc,,erty owned Nithln the district, such as square footage
demand thegoodsandservices definedascommunity needs, or footage fronting on the public right-of •way.
Another rationale for Imposing the foe Is that the new devel• In recent years, there have been some adaptations of
opment will take up valuable physical space that could the traditlonal Special Assessment District, such as the
otherwise be used for meeting such community needs as Community Facilities Districts that local governments In
housing, California may form as a resulfof the passage of the Mello
Incluslonary zoning Is another means of requiring devel• Roos Community Facilities Actin 1482, Mollookoos districts
1 opers to provide affordable housing, Often a densly bonus may finance a wider range of community projects that are
is offered in exchange for the developer's supplying low, or not as closely related to property Improvements, Including
moderate-Income housing. The housing may be provided police andfIra, librarlef schools and t recr etionproggrams,
on-site or off-site of the development, or as a cash payment. In addition, there is no oqff
Impact taxes are yet another mechanism to ossoss devel, betio ownership i0 Pro er purpose of constructing,
opera or builders of nowdevelopmanta,Thelegal authority to g utility
levy impact taxes stems from tax powers, !n contrast to the operating and maintaining public works represents yet
regulatory or police powers that poemli impact fees. At another means of charging now residents for the costs of
present, onlytwo afalso, California and Arizona, permit local public Infrastructure built to serve their needs, Onetime
governmentatoadoptsuchtaxes.Impact taxes hove substan• connection fees for capital costs, plus ongoing fees for
tlallydiffOren tcharact'a Ics from impact fees, since the funds maintenance and operations ore usually assessed to per. rist
collected Pram the tax do not necessarily have to benefit the sons or firms residing within the utility disirict,
development paying the fax, and the amount of ihefax does Impact Fees and Taxes
not have to approximate the cost of the facilities constructed Legal Authority to Adopt pad
with the fax revenues,
Marty jurisdictions around the country hays been taken
$pedol Financing Distrfcls to court by developers contesting the legality of impact feas,
Only impact fee programs that are designed with a thor•
All of theabovewoysoffinancing growth ,require payment oughunderstondIngofthalogolIssues Involved arelikely fe
from the builders or developers. A related way of financing survive the courts scrutiny:
the Infrastructure needed by new development la to assess the Local government power is dorlvative of state power,
purchasers or residents and tenants of the now develop- Most states grant some form of home rule power to titles
- page 2
.7 7
l
r " and/or counties; that is, local government Is assumed to and "due process" clauses of the Fourteenth Amendment
have power to administer h own affairs except where ad, and the "taking without lust compensation" Clause of the r
dressed bystate legislation, JMhestates that donotdelegate Fifth Amendment, The rational nexus standard is emerging
any powers to local governments, i,e., Dillon's Rule states, as the most commonly used standard for determining the
most local government powers must be specifically enacted constitutional valid
by state ity of impact fee ordinances.
The followin olowinion. The rational nexus standard requiresthefeeto meetthree
The g states do not grant home rule to titles; criteria;
Alabama, Arkansas, Kentucky, Mississippi, North Carolina,
Virginia, Idaho, Indiana and Vormonf. Statesin which home capital facilities; development has created a need for the
rule is not granted to counties include the above nine, plus 2} that the fee represantsthedevelopments proportion.
Delaware, Oklahoma, West Virginia, Wyoming, Iowa, Min• ate share, and
l nesoto, Nebraska, North Dakota, Connecticut (has no 3) that the fees collected from a development actually,
counties}, Maine, Massachusetts, New Hompshlre, New but not exclusively, benoN'the development.
Jersey and Rhoda Island. In general, establishing an impactfee system that would
Local governmental powers to levy Impact fees ore meet standards of the rational nexus test requires that a
i granted by the state either directly, through enactment of comprehensive land use plan be developed thot defines
j state legislation addressing impact fees, or Indirectly, through service areas and indicates standards for service. Thus, a t
exerelse of home rule powers, in•sfates'that do not have communitycancompareexisting resources toadefined level
home rule, the powerto levy impactfees must be specifically of needed resources. Capital projects that are proposed for
enacted bystato legisic;fion. Only Vermont ofthe non-home meeting deficiencies in service to current residents must be
rule states has enacted legislation (in 1988) permitting distinguished from those requiredto meet the needs of new
impact fees to bechargedbyallcitiesandtowns Inthestate. residents.
Virginia's 1989 General Assembly enacted legislation that in addition, the costs of proposed capital facilitles must s.
{ will permit fourcountlesIn Northern Virginiatoadopt Impact be estimated to ensure thatfundsore spent anlyfor projects
j
fees. North Carolina, also permits tome counties and the city providing' direct benefit to the deveiopmeM paying the
of Raleigh to adopt Impact foes, impact fee. Trustfundsshould b'eestablished forinestrict ac.
In home rule states, the power to levy Impact fees may counting of Impact fees paid by individual developments,
stem indirectly through the polite powers of land use regu• and disbursement of the funds should be monltored,
lotion that Is one of the exercises of home rule outhority, or The directly, if addressed In state legislation. It Is Important to and not Impact ltanexus standard
xes, Impact taxes alre a form oImpact excise fox,
note that enabling legislation in a home rule state can be a defined as a tax on a particular use of or power over
mixed blessing, While discouraging legol challenges to the properly. Few states appear to have granted local govern.
authority of local governments to levy Impact fees, it often ments the power to le excise t
limits the. ~ axes.
sco a levy California, Arizona,
p o local government authority, such as Colorado, Kansas, Maine, New York, Penntyh+anfa, 7en•
l Citing the types of facilities that can be funded by impact nesseo and Ma land appear
rytoallow local governmemato
Of the home rule states, Texas, Collfornlo,Arizona,Now andArizionafoxes on new construction, but hovae acted legislation specificollyouthloriznlg j
Jersey and Mane hove passed legislation permitting the use the use of Impact taxes,
of impact fees for Certain purposes, not Including the more The widespread statutes authorizing sewer and water connec• Impact fee QIstthat therepalre not geographictlrestrictions
lion fees, The state of Washington has also enactedlaoisla• where the money should be spent, and no restrictions on the
lion, albeit with the goal of limiting the use of Impact fees, purpose of funds, beneficiaries or amount that can be '
Maryland and Tennessee hove enacted legislation permit. assessed, Its purpose is simply to provide an additional
Ling specific local governments to adopt Impact fees. source of revenue for the jurisdiction,
In addition to legal chollenges questioning the authority
of the local government to I" the fee, Impact fees are
usually subject to other legal challenges, including whether Use of Fees in Texas
tho (mpoct fee Is really a fee or o fox, This question is typically In 1987, the Texas legislature passed what is considered
considered by the courts only offer the question of the to be the most comprehertsivejlntheaenseofunamblgvousj
authority to levy the fee has been satisfactorily resolved, leglsloflon addressing the use of impd ct fees,
lmpatt fees
RaNorfol Nexus Standard may be levledby citlas, towns and cerfaln speclol districts, In.
r j eluding munlelpalvtilitydlsiricts,roadutilr'rydlttrictsandriver
authorities; The use of fee revenues b ratfrlCfed to ca ifaf Im.
Once If has been determined that the fee Is legally clot. provement for water su I freotmenrand disftibution
sifted as a fee, and therefore considered a regulatory facilities, waste water cop ctiorr and treatment facilities,
measure under I"ol pollee powers, the court will consider storm water, drainage and flood control fachifies, and
constitutional challenges, including the "equal protection" spselPed roadway facilities,
page 3
r
V
r.1
rI
r. Certain dedications for land, primarily park land are left
unaffected by provisions of the bill. The feet to r dote rmining if a facility can be financed by an impact fee is strider than c>, n V
i f that of the rational nexus standard. The Texas standard is Q o
based on on Illinois court case requiring lhattheneed forth$
capital facility be specifically and uniquely attributable to the 4y ~
development project. The rational nexus standard requires c~
that the need for a capital project bo attributable, but not
uniquely so, to a particular development project being
assossed a fee, bMG AND VERTEX COST SYSTEMS
s Another provision of the Texas statute that Is different
I! from practices in other states Is that the fee schedules may nme and Vertex Cast Systems p yees 1, Texas have
not be distinguished by clots of customer, i,e„ residential, staff com one firm, a o all Vertex employees become nMG
commercial or industrial. Also, the new law makes no Vertex as of April i. s, wind E. Brower, former uthidsrtt r r
Cost Systems, wail be the new DRAG Southwestern r
provision to credit new growth forits tax dollar contributions
to the retirement of bonds for Infrastructure used by both Region Executive Vice President, His territory will Include the
new and existing development. Since the Texas impact fees Louisiana, states of Alaska, Arizona, Arkansas, Colorado, homoa,
apply to only afewtypes ofinfrastrucrure,itwasfelt that the Texas, Utah Montana, ng. We New Mexico, Oklahoma,
amounts of double charging would be less than the costs of Texas, Utah and Wyoming, We believe that the combined
administering the credits, strengths of the two firms will enhance our professions!
services to our combined clients.
f Use of Fees In Florida
The use of impact fees Is widespreaa among Florida NEW CONSULTING SERVICE'S
jurisdictions and has been extensively htlgated In court. From
theta court eases, generally ageeed•upon guidelines for DMG is pleased to announce the deforeca ting, o solid
evaluating Impact fee ordinances In Florida have emerged, andfwaste planning mode! This assist in the orecastinil costing
I They Include the following requirements for Impact fee undingoflandfilh,compuferizadmodeiwillprojed
programs: costs and revenues over a 20-year period and will be
i 1) They must meet rational nexus standards for a rea. extremely useful for those localities involved In the planning
sonableconnectlonbetwesniheneedforthofacilityandthe process. IfwlllpermitDMGconsuhantetoosslstcolnmunitios
i new development; in determining future landfill needs and costing 'various
2) There must be a reasonable connection between the technologies to treat waste that meet$ E.F.A, regul ,bons,
expenditures of collected funds and the benefits enjoyed by More Information will be forthcoming in the next Grlffhh
new development; Report.
( 3) New development must be cred(ied for Its share of
aconntributions to fund existing facilities (from genera( taxes),
4) Fee revenues must be spent within a reasonable
period after collection, ih. brrYf , S Sratsrrw i
's Volume ?,Number 2, rrer 1 PBS
There has been nostate legislation passedthat addresses
Impact fee use, but proposed leglalatian has been intro. f
duced and has failed. however, the state legislature enacted br r,WA" K"d l
a statute in 1985 that mandates local comprehensive plan. Wile do
ping and requires thatthe approvai of now development be ~
N~ "o fo3r 1 4dn
6rP? III
consistent with the local plan developed. Tho law requires Par 11) 56e.g136
"concurreney," meaning that the capitol proletts required
by new development be available at the time of the develop.
ment impact. The form 114ancurranuy" was not defined In
dololl by the legislation and h cis been a source of controversy Mithlgonr-Coornlchaetd,col olrollti Chico ope linnois-Ceurnbut &W City,
In Florida, Coppetl, Texas - Denver, Colorado - Harrisburg, Penntylvpnl4 ~ Hato key,
Among otherjurisdictlons, palm 3each Countyhas been octerto Arco • indlandpolis, Indiana - Madison, Wisconsin - Nerrh Holy,
a leader In the riots In terms of defining community service WNorth ood, California Richmond, PheIfto ~ - Atchenee, Rhode , Wns Raleigh, m6nd l standards for traffic
and linking approval of new develop. $1, Paul,, MIA6esota. prim e drllll cis, Tallahassee, Florida, ,Topeka,
} Mont projects to these standards, Kansas "I'he ofliea of Federal Compliance Is In 01envlew, Illinois,
page 4
~mf•Y.Y W..iW✓My.n.r.vrv'..v.n... um n.x.v{..x~ .n.~. .
.
T~Nils
4~.
f
I
IE
w
I
l
VIA 7r7
izt
IE
1r
t'!
.r
' r rA,c kf'~'
I