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1. What are impact fees?

An  impact  fee  is  a  one-time  payment  made  to  the  political  subdivision  (city,  water  or  utility  district) by a developer of a new development to pay for the cost of construction or expansion of water  and  sewer  facilities  located  outside  the  boundaries  of  the  new  development  and  that  are  needed by new development and its impact on the surrounding community.

2. Why charge an impact fee?

Impact fees redistribute who pays for the new or expanded infrastructure.  Impact fees shift the burden of system expansion as a result to new development to the new customers.  Without impact fees, the expansion of existing facilities or the construction of new facilities (that are off-site of the development) would be paid using water and sewer utility rates, thus placing the financial burden on all existing and new customers.

3. What do impact fees pay for?

• Extending sewer and water lines
• Increasing capacity in existing facilities
• Building new water storage facilities
• Building lift stations
• Building or expanding water and wastewater treatment facilities
• Other fees related to the above such as surveys, engineering, and land acquisition

4. How are impact fees determined?

Calculation

The process is set out in state law (Texas Local Government Code Ch. 395).

                          0.5 * Total Cost of capital improvements required to serve new development in the service area
Impact Fee =   ___________________________________________________________________________________________
                             Total number of new service units expected in the service area over the next 10 year period

Determining The Total Cost of Capital Improvements:

• Land use assumptions must be prepared in order to determine the number of new service units as well as capital improvements needed to serve those units in the service area. 
• Land use assumptions forecast what the population and land uses (residential, office, retail) will be throughout the service area.
• The capital improvements identifies the facilities needed to meet the project demand from new development and an estimate of the cost of construction of those needed facilities.
• Service units are a standardize measure of consumption of water or discharge of wastewater.  For example, one single family residence may be considered one service unit, where commercial properties or an apartment complex may be considered two or more service units.

5. How is the impact fee updated?

The city must update the land use assumptions and capital improvements plan at least every five years.

The process is as follows:

1. The city reviews and evaluates it current land use assumptions and updates the capital improvement plan accordingly.
2. Within 60 days after the city receives the update, a public hearing will be set and City Council will discuss and review the proposed updates.
3. Notice of the public hearing is published at least 30 days before the hearing. The proposed amendments and fees will be made publicly available.
4. The advisory committee must file written comments on the proposed amendments to the land use assumptions, capital improvements plan, and impact fee 5 business days before the date of the public hearing.
5. City Council must approve or deny the amendments to the land use assumptions, capital improvements plan, and impact fee within 30 days after the date of the public hearing.

6. Who is charged an impact fee?

Property owners or developers who:

• Subdivide land
• Construct, reconstruct, redevelop, convert, or alter a structure in such a way so as to increase the number of service units attributable to the property
• Relocate or enlarge any structure, or use the land in such a way that increases the number of service units attributable to the property