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Item 7ACity of Southlake, Texas M E M O R A N D U M March 26, 2008 TO: Shana Yelverton, City Manager FROM: Greg Last, Director of Economic Development Consider Ordinance 657-B, an ordinance revising impact fees on new land SUBJECT: development in the City of Southlake, Texas for water, wastewater and roadway facilities necessitated by such new development; adopting revised land use assumptions for the city; adopting revised Capital Improvements Plans for water, wastewater and roadway improvements; providing for the assessment, payment and time of payment of water, wastewater, and roadway impact fees; providing for review of water, wastewater and roadway impact fees and the fee schedules; providing for the placement of revenue collected from water, wastewater and roadway impact fees into water and wastewater impact fee accounts and roadway impact fee accounts established for that purpose; providing for offsets and credits, providing for refund of unexpended funds; providing for use of funds derived from water, wastewater and roadway impact fees; providing that impact fees may be pledged toward payment of bond issues and similar debt instruments. ______________________________________________________________________________ st Action Requested: Approve the 1 reading of the ordinance cited above. Background Information: The Local Government Code, Chapter 395, allows for cities to charge impact fees for water, wastewater, and roadway capital improvements. Southlake has charged water and wastewater impact fees since 1990 and roadway impact fees since 1996. One of the provisions of this chapter calls for periodic updates to the ordinances and related studies adopting the impact fees. City staff have been working with a variety of consultants over a year to prepare and update the required reports and capital improvement plans. A briefing on the status of these items was presented during your work session on March 4, 2008 at which time Council directed staff to evaluate many variables related to the actual fees adopted and make a recommendation for Council to consider. Staff met soon thereafter to discuss various aspects of fee determination and formulated the following recommendation:  Water Impact Fee: Increase current fee by 10%  Wastewater Impact Fee: Increase current fee by 5%  Roadway Impact Fee: Increase the current fee by 15% across most land use categories with the following exceptions: Hold the five (5) “Office” categories at the current fees (i.e. o 0% increase) Two other categories of land use were limited in the o amount of increase to the current fee based on the “maximum fees” identified by the studies. These were “Apartment / multi-family” which is limited to a 5% increase so as not to exceed the maximum fee and “Retirement Community” for which the current fee exceeds the maximum fee, resulting in a recommendation at the maximum fee level. On March 24, 2008 staff met with representatives of the development community, both residential and commercial, to discuss the impact fee research and reports to date, as well as the fee recommendation from staff. Their comments are represented by:  Increases to development fees stifle development.  Impact fees are only a part of the overall fees paid for development.  The summaries do not include the Fort Worth “pass-thru” fees.  Even the simplest of plat revisions imposes the new fees.  Impact fees can be in multiples on a particular development due to individual business / restaurants either desiring or demanding individual water meters.  Larger projects are charged exponentially increased fees based on the equivalency factors required for larger water meters. There was considerable discussion related to the proposed fees, the time evolved since the last fee changes and the actual fee increases in comparison to the percentage fee increases. In conclusion there was a general consensus that the fee increases as proposed by staff would be a rational compromise they would be willing to support if approved as recommended, with one addition:  They would like a transition period from the date of Council adoption of the ordinance until the new fees are actually assessed. This is primarily requested due to projects that are either “in progress” or near term and financial aspects are already in place.  Recognizing this, staff is proposing the fees be assessed beginning October 1, 2008, the beginning of the new fiscal year. Financial Considerations: The Capital Improvements Advisory Committee approved a Status Report on August 24, 2007 which was provided to Council on September 12, 2007. Citizen Input/ Board Review: This process has been led by the Capital Improvements Advisory Committee (Planning and Zoning Commission) and they have been intimately involved in all aspects of the update. All documents required to be made available to the public for review have been made available prior to the date of publication of the public hearings in the newspapers. Legal Review: The City Attorney’s office (Wayne Olson) has been involved throughout this update process. Alternatives: 1. Approve the fees as recommended by staff. 2. Approve fees as determined by City Council. Supporting Documents: The following documents are attached for your reference.  Ordinance No. 657-B (Will be provided at the meeting Tuesday)  Land Use Assumptions Report  Water and Wastewater Capital Improvements Plan  Roadway Capital Improvements Plan  CIAC summary comments to Council Staff Recommendation: Approve ordinance No. 657-B adopting fees as recommended by staff, and to be assessed beginning October 1, 2008.