Item 10CCity of Southlake
Department of Planning
MEMORANDUM
July 14, 2004
TO: Honorable Mayor and City Council
FROM: Bruce Payne, Planning Director
SUBJECT: Application of Impact Fees to the Lakewood Ridge & Indian Creek subdivision
Action Requested: Approval of Minute Order pertaining to the assessment of Impact
Fees on the Lakewood Ridge & Indian Creek subdivisions.
Background
Information: In February 2004, the City of Southlake entered into an agreement with
AquaSource Utility Inc., for the transfer of Certificate of Convenience and
Necessity in the two subdivisions of Lakewood Ridge and Indian Creek. The
attached minute order clarifies the application of the City of Southlake and
City of Fort Worth Water Impact Fees to the properties. As per the City
Attorney's attached correspondence, the city's regular impact and tap fees are
not applicable to existing AquaSource customers. However, the pass- through
City of Fort Worth water impact fee of $621.32 per customer is applicable.
Legal Review: Yes.
Supporting
Documents: 1. Proposed Minute Order
2. City Attorney's opinion letter dated June 29, 2004
3. Map showing the all the properties in the two subdivisions
Attachment 1
Minute Order No. 04 - 01
The City Council of the City of Southlake has been requested to make a formal determination
as to the applicability of the provisions of Ordinance No. 657 -A relating to the imposition of
the City's impact fees on the Lakewood Ridge and Indian Creek subdivisions.
The Lakewood Ridge subdivision was platted pursuant to state law in 1997 and the Indian
Creek subdivision was platted pursuant to state law in 1984. Homes have been constructed
on forty -five (45) of the fifty -eight (58) lots within the combined subdivisions and those
properties have secured the required utility meters and taps to the existing water system
operated by AquaSource and its predecessors. All properties now receiving water utility
service from AquaSource have fully complied with the "tap" requirements to secure formal
authorization to receive service from the public system.
In February 2004, the City of Southlake entered into a settlement agreement with
AquaSource Utility Inc., for operations and maintenance, sale of ground water supply and
distribution systems and transfer of Certificate of Convenience and Necessity (CCN) in the
Lakewood Ridge and the Indian Creek Estates subdivisions. The agreement has been
approved by the Texas Commission on Environmental Quality authorizing the change of the
CCN from the name of AquaSource to the City of Southlake. The City of Southlake has now
become the utility provider for these subdivisions.
Chapter 395 of the Texas Local Government Code authorizes cities to impose impact
fees on new development at the time that a final subdivision plat is being approved by a city or
when the property is seeking to "tap" into the municipality's utility system. The developed
properties within the Lakewood Ridge and Indian Creek subdivisions currently possess water
utility meters properly authorized by AquaSource or its predecessor and will not be requesting
tap authorization from the City of Southlake. Subsequently, these developed properties are
not subject to the city's water impact fee. The developed properties are also not subject to
the city's roadway impact fee and will not be subject to the waste water impact fee until such
time as they make application to connect to the city's sanitary sewer system.
However, each of the developed properties within these two subdivisions will be
subject to the pass - through Fort Worth impact fee of $621.32, which the City of Southlake is
obligated to assess for all properties connected to the water system for which Fort Worth
provides the wholesale water service. Property owners in the two subdivisions of Lakewood
Ridge and Indian Creek were advised of this requirement prior to the service agreement
between the City of Southlake and AquaSource. The City of Southlake, by this minute order,
imposes an assessment of $621.32 on each developed lot within the Lakewood Ridge and
Indian Creek subdivisions.
All vacant, undeveloped properties within these two subdivisions that do not currently
have a utility meter in place shall be subject to the full impact fees of the cities of Southlake &
Fort Worth at such time as they may seek to secure an initial "tap" to the public utility system
and shall be subject to the Impact Fee Ordinance as amended.
2
Attachment 2
6000 WESTERN PLACE, SuiTE 200
1 -30 AT BRYANT- -1RviN ROAD
FORT WORTH, TEXAS 76107 -4654
EMAIL: TOASE @TOASE.COM
WEESITE: WWW.TOASE.COM
Taylor Olson Adkins Sralla Elam
L.L.P.
Attorneys * Counselors
TELEPIrow: (817) 332 -2580
TOLL FREE: (800) 318 -3400
FAcsimiw: (817) 332 -4740
DENTON: (940) 383 -2674
DENTON MPTRo: (972) 434 -3834
E. ALLEN TAYLOR, JR.
extension 212
ataylor@toase.corn
June 29, 2004
Mr. Bruce Payne
Director of Planning
City of Southlake
!400 Main Street, Suite 310
Southlake, Texas 76092
Re: Application of Impact Fee Charges to the Lakewood Ridge and Indian Creek
Subdivisions
Dear Bruce:
I have now had the opportunity to review, in some detail, the materials that you transmitted
to my office relating to the Lakewood Ridge and Indian Creek subdivisions which have historically
been provided water utility service by AquaSource and its predecessor entities. The question
presented for review is the applicability of the city's impact fee program implemented by Ordinance
No. 657 -A to these particular developments. As you are aware, the authority of a city to impose an
impact fee is derived from the provisions of Chapter 395 of the Texas Local Government Code. To
deter - nine if an impact fee is applicable, it is necessary to do a factual investigation to determine the
status of the property and whether or not it qualifies for assessment and collection of a fee pursuant
to the statute and the local ordinance.
The records of the city reflect that the Lakewood Ridge addition was platted in 1977. The
Indian Creek subdivision was platted in 1984. Both subdivisions received final subdivision plat
approval pursuant to the provisions of state law prior to the adoption of Chapter 395 of the Texas
Local Governznent Code which occurred in 1987. Information presently available to the city
indicates that there are a total of fifty -eight (5 8) lots existing within the combined subdivisions. The
city's records reflect that there are forty -five (45) existing residential units located within these two
developments, forty -seven (47) water utility accounts exist of record and thirteen (13) lots are
identified as vacant at this time. As we are all aware, the City of Southlake recently entered into an
agreement to purchase the water utility system owned by AquaSource which has traditionally
provided water utility service to these two subdivisions. The agreement was entered into on
February 3, 2004, and has been approved by the Texas Commission on Environmental Quality
authorizing the transfer of the Certificates of Convenience and Necessity for water utility service
from AquaSource to the City of Southlake. The majority of the homes in the two subdivisions were
built in the 1980's and early 1990's. One home was constructed in May of 2003. All of the existing
residential units had already connected to the AquaSource water system prior to its acquisition by
the City of Southlake.
The city's impact fee ordinance provides that new development must be assessed an impact
fee and that fee must be collected prior to the connection to utility service. New development is
June 29, 2004
Page 2
defined in Section 4 under Subheading (19)
New Development - The subdivision of land; or the construction, reconstruction,
redevelopment, conversion, structural alteration, relocation, or enlargement of any
structure; or any use or extension of the use of land; any of which increases the
number of service units for water, waste water or roadway services or requires the
purchase of a new water or waste water tap. New development includes the purchase
of a water tap resulting from the conversion of an individual well to the city's water
utility and includes the purchase of a waste water tap resulting from the conversion
of an individual septic or other individual waste disposal systems to the city's waste
water utility.
The definition of new development makes it clear that new development occurs when a
subdivision plat is filed or when a structure or lot proposes to tap into the city's water or waste water
utility systems.
It is an undisputed fact that the subdivision process on both Lakewood Ridge Addition and
Indian Creek had been completed by 1984 prior to the adoption of the city's impact fee system. All
ofthe existing residential units in the subdivision had been constructed and tied into the public utility
system operated by AquaSource and its predecessor entities. The AquaSource system was operating
pursuant to a permit issued by the Texas Commission on Environmental Quality and/or its
predecessor entity the Texas Natural Resource Conservation Commission. On February 3, 2004,
the date that the city entered into a written agreement with AquaSource to buy the AquaSource
system and secure the transfer of the Certificates of Convenience and Necessity, all existing
residential units were customers of the AquaSource system. Each residential unit had complied with
whatever requirement AquaSource had imposed to secure permissions to tap into the system. None
of the existing residential units or structures will be approaching the City of Southlake to secure
permission to tap into the water utility system. The "tap" process, procedure and requirement had
been undertaken and completed within the AquaSource system.
The City of Southlake has voluntarily purchased the AquaSource system and pursuant to the
provisions of Texas Property Law takes the purchased items with the benefits and burdens enjoyed
by the seller. Southlake becomes subrogated to the position of AquaSource and is simply the new
owner.
It is clear from the analysis of the factual history of the subdivisions that the existing
residences within the subdivision are not subject to a requirement to pay a new tap fee to the City
of Southlake and, therefore, they are not subject to the water impact fee imposed by the city at this
time. They would only be subject to the waste water impact fee if they should at, some point, in the
future seek to tie into the city's sanitary sewer system. At the time those residential units make
application for that connection they would be treated as any other similarly situation propertymaking
an initial application for connection to the sanitary sewer system.
The properties in question will be receiving benefit from the City of Fort Worth wholesale
water contract for the first time and as such may be assessed the pass through fee that the City of
Southlake has committed to pay to the City of Fort Worth for all new connections to the interrelated
systems. The purpose of this fee, established by interlocal agreement between the cities, is to allow
Fort Worth to acquire raw water resources and facilities, water treatment plant capacity, treated water
4
June 29, 2004
Page 3
storage and distribution capability to deliver wholesale water to customer cities. Residents of these
subdivisions were advised prior to the city's purchase of the AquaSource system that this contractual
fee to the City of Fort Worth would be assessed and collected in order to comply with the terms of
the Interlocal Agreement. It is my understanding that the individual lots owners have agreed to
accept this burden without question and, therefore, this is not an issue in our analysis.
The only question remaining concerns the vacant properties upon which no residences now
exist. Apparently, two of these tracts have secured taps onto the AquaSource system and have
meters that would permit utility service to the property. The two vacant lots that have already paid
their "tap" fee to the AquaSource entities and who have meters in place, would be exempt from the
water impact fee requirement as they would not be required to secure a new tap when taping out a
single family residential construction permit. The remaining vacant properties have not completed
the "tap" process or procedure and if they should, at some point in the future become home sites, the
owner will be required to go through the "tap" procedure with the City of Southlake. At the time
that an application for a tap is made the property owner will be assessed the impact fee and it will
be collected prior to the authorization for meter placement. The properties in this category have
simply not "vested" any rights to service as they did not avail themselves of the option available
under the AquaSource system. If the owner of a vacant tract should object to the payment of an
impact fee at the time that a permit is sought for new construction, they may institute an appeal
pursuant to Section 18 of Ordinance No. 657 -A. A specific element of appeal is the applicability of
an impact fee to the specific development in question. A property owner who believed that they
could present compelling evidence that they should not be subject to the fee would have the
opportunity to secure an individual review of their case by the city council if they feel that the
imposition of the fee is unjust or unreasonable based upon their circumstances.
I would recommend that in order to document the status of these two subdivisions relative
to the imposition of impact fees under Ordinance No. 657 -A that the city council issue a Minute
Order affirming the determination that they are not subject to the water impact fee because they will
not be subject to the "tap" requirement mandated by the definition of new development contained
within the ordinance. I am attaching to this letter a copy of a proposed Minute Order which might
be adopted by the council to achieve this purpose.
If I may provide you with any additional information or assistance, please feel free to contact
me.
Sincerely,
E. Allen Taylor,
EAT /ds
1207.001
Enclosure
W :1SouthlakeU,ETTERS1 Payne \'ayiie.EAT.re.impacifees.wpd
cc: Billy Campbell
City Manager
City of Southlake
1400 Main Street, Suite 310
June 29, 2004
Page 4
Shana Yelverton
Assistant City Manager
City of Southlake
1400 Main Street, Suite 460
Southlake, Texas 76092
M
Aquasource to
City Water Conversions
in
Lakewood Ridge &
Indian Creek Subdivisions
Total number of lots in both subdivisions = 58
Number of existing residential units = 45
Number of accounts = 47
Number vacant lots = 13
(including 1 lot used for pasturing /grazing)
All Utility Billing accounts are only for
water & garbage service
0 Vacant Residential Lots
D Household activities
® Flood control, dams, and other activities
® Mass water storage activities
=Active leisure shorts and related activities
0 Passive leisure activities
Pasturing, grazing, and livestock related activities
0 No human or unclassifiable activities
n
C
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