2022 Impact Fee Information
The basis for the adoption of an impact fee is that growth should pay its own way. The purpose of an impact fee is to require a developer to pay for a share of a city’s cost of providing off-site infrastructure to serve the developing property. Impact fees allow cities to recoup some of the cost of providing infrastructure at the time development begins, rather than waiting until tax revenue or service charges are collected after the development occurs.
Impact fees are authorized by the State and governed by Local Government Code, Chapter 395. For municipalities to assess impact fees, the municipality is required prepare a plan for growth (land use assumptions) and a capital improvement plan to accommodate the anticipated growth. Eligible facilities include water treatment and distribution facilities, wastewater treatment and collection facilities, storm water drainage and flood control facilities, and roadway facilities.
Costs which can be included in calculating the impact fee are:
- Construction of the capital improvement
- Engineering and financial consultants’ fess to prepare the impact fee program
- Land acquisition costs
- Interest and other financial costs of the capital improvement project
- Debt service on a bond, note or other obligation issued to finance a capital improvement
Costs which cannot be paid with impact fees:
- Projects not included in the capital improvement plan
- Repair, operation and maintenance of existing or new facilities
- Upgrading, updating, expanding or replacing existing capital improvements to meet stricter safety, efficiency, environmental or regulatory standards or to provide better service to existing development
- Administrative costs of operating the impact fee program
- General debt or finance charges for projects not included in the capital improvement plan
Impact fees are assessed at the time of recordation of a subdivision plat and collected at the issuance of a building permit or at the time of application of a meter connection (if outside the city). For land on which new development occurs, but is not platted, the fee may be assessed at any time during the development and building process, and collected at the time of connection to the political subdivision’s water or sewer system or at the time the building permit or certificate of occupancy is issued. (LGC Sec. 395.16)