Civic Insights: Who Pays for that Pipe? Part II

(City council, school board, planning commission, county commissioners – these groups and several others represent us.  They do the day to day work of running our community. It is our responsibility to keep informed about their work so that we can help them represent us effectively.  “Civic Insights” by Jeffrey Vitarius is a regular feature of Act Locally Waco.  Its purpose is to help us understand decisions that shape our community so that we can participate effectively as informed, engaged residents of Waco. – ALW)   

By Jeffrey Vitarius

Two weeks ago, we took a broad look at impact fees as a policy. In that post, I noted that Waco is in the transition between the could part of the adoption process and the should part of the adoption process. This week, let’s dive into some of the details of the “could” work that has already been done.

The impact fee adoption process (both could and should)is governed by Local Government Code Chapter 395 – Financing Capital Improvements Required by New Development in Municipalities, Counties and Certain Other Local Governments. The local government code can be seen from a high level as “rules for cities and counties.” Different chapters of the code deal with different issues. For example Chapter 372 provides the rules around how PIDs are established and maintained, Chapter 102 deals with municipal budgets, and Chapter 309 addresses arts and entertainment districts. 

Chapter 395 lays out in detail how a City or County could go about establishing impact fees. It, for example, defines capital improvements as facilities that are expected to last at least three years, are owned and operated by a “a political subdivision” (read city or county, though there are other kinds of political subdivisions. Incidentally this is also defined in Chapter 395), and are water supply, treatment, and distribution facilities; wastewater collection and treatment facilities; storm water, drainage, and flood control facilities (pipes), or roadway facilities (roads). 

Chapter 395 identifies a six-part process in adopting impact fees (more details on these steps below):

  1. Establish an Advisory Committee 
  2. Develop a Capital Improvements Plan
  3. Hold a Public Hearing on Land Use Assumptions and Capital Improvements Plan and Potentially Approve these Items
  4. Calculate Maximum Impact Fee Per Service Unit
  5. Hold a Public Hearing on Impact Fees 
  6. Potentially Approve Adoption of Impact Fees

Right now Waco is between steps four and five. Step five is scheduled with a public hearing on October 6th and based on Chapter 395 step six would have to occur within thirty days of that public hearing. Let’s take a look at each of the steps that have already occurred in a little more detail.

1. Establish an Advisory Committee

Chapter 395 requires that the “governing body of the political subdivision” (in this case the City Council of Waco) establish a committee to weigh in throughout the impact fee adoption process. The code makes it clear that this committee needs to include at least one voice from the real estate, development, or building industries to speak into the impact fee process. These are the industries most likely to bear the cost of an impact fee. The code also tasks this committee with providing advice on the adoption of land use assumptions, file written comments on the capital improvements plan (more on that below), and reviewing the progress of the capital improvements plan over time. 

The City Council created such a committee on July 16th 2019 and it held its first meeting on July 23rd, 2019. Since that time it has met regularly to review and provide input to this process.

2. Develop a Capital Improvements Plan

The development of the Capital Improvements Plan is likely the most complicated part of the entire impact fee process. If you remember back to the post two weeks ago, I used the simple example of a new set of homes on what used to be a farm. Under those conditions it is easy to trace certain infrastructure improvements to that specific development. However, in reality, the city needs to be able to project (theoretically) all of the developments that are going to take place over the next ten years andthe capital improvements that go along with those developments. That difficult projection work (which we will take a closer look at another time) is compiled into a Capital Improvements Plan. For right now we will just take a summary view.

From a high level you can think through the process of developing this plan in the following way. First, you need to make some assumptions about land use. You need to know how it is anticipated that land not currently developed will be used if developed. There is a big difference between a farm turning into the Central Texas Marketplace and the same farm becoming a set of one-story single-family homes. These assumptions are so critical to the process that they are explicitly listed as being part of the Capital Improvements Plan public hearing.

Once you identify how land is likely to be used, you can work on projecting how much different parts of town will grow. You combine the amount of growth and the land use assumptions together to figure out what kind of growth will occur (once again the Central Texas Marketplace and single-family suburbs are very different). Knowing what kind of growth is projected to occur, lets you know how much increased demand for water, wastewater, and roadways there will be. 

Next, you compare projected need against the capacity of the current system to see what projects will be needed by the anticipated demand. Where will you need to increase the size of a pipe or lay down a new road? Finally, you establish projected budgets for the needed projects. The result (of this and some additional analysis noted below) is a two-hundred and thirty-four page study. In Waco, this work was conducted by Freese and Nichols, Inc with input from the advisory committee and various City Departments. Once this analysis is complete it is ready to be reviewed by the public and potentially approved by City Council. 

3. Hold a Public Hearing on Land Use Assumptions and Capital Improvements Plan and Potentially Approve these Items

The City held a public hearing on the Land Use Assumptions and Capital Improvements Plan on March 17th, 2020.  At that time there were no public comments. The City Council passed RES-2020-237 approving the Land Use Assumptions and Capital Improvements Plan at its next regular meeting on  April 7th, 2020

4. Calculate Maximum Impact Fee Per Service Unit 

Once the Land Use Assumptions and Capital Improvements Plan are approved a calculation can be done that (in the broadest sense) divides the cost of the capital improvements needed by the number of new “service units” (think individual houses) generated by new developments. The result is the maximum impact fee that can be imposed per service unit. There are some details regarding this analysis that we won’t get into this week, but this provides a high-level overview. This analysis is also included in the lengthy study linked to above. 

This calculation was presented to City Council on August 18th, 2020. At that time the council discussed the process. Concerns were expressed on both sides of the policy (that implementation might discourage development or that not implementing would burden resident taxpayers with the cost of these improvements). It was noted that peer cities had implemented impact fees. 

That gets us caught up with the process so far. I hope to be back to with a more detailed look at that Freese and Nichols study around the time of the public hearing on the subject.

Meeting Basics – Waco Capital Improvements Advisory Committee – 09/23/20

  • Regular Meeting – 12:00 pm
  • For the full agenda click here

Jeffrey Vitarius has been actively local since early 2017. He lives in Sanger Heights with partner (JD) and his son (Callahan). He helped found Waco Pride Network and now serves as that organization’s treasurer and Pride Planning Chair. Jeffrey works at City Center Waco where he helps keep Downtown Waco clean, safe, and vibrant. He is a member of St. Alban’s Episcopal Church and graduated from Baylor in 2011.

The Act Locally Waco blog publishes posts with a connection to these aspirations for Waco. If you are interested in writing for the Act Locally Waco Blog, please email ashleyt@actlocallywaco.orgfor more information.

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