City advisers review impact-fee program, find shortfalls reflect slower growth not collection failures

Alonzo Leon, City of Keller public works director, briefed the Capital Improvements Advisory Committee on the city’s impact‑fee program during a May 27 pre‑session meeting and recommended holding off on a full update until the program’s scheduled five‑year review.

Leon said the city’s current 10‑year impact‑fee program projects an annual growth rate of 1.55 percent, down from 3.2 percent in the prior study. That slower growth, not a breakdown in fee collection, explains why revenues are below earlier projections, he said.

The presentation explained how impact fees are calculated: staff produce land‑use assumptions and population projections, identify necessary capital projects for the next 10 years, remove costs attributable to existing development and to growth beyond the 10‑year window, and then apportion the remaining cost as a per‑service‑unit fee charged to new development at building‑permit time. Leon reiterated one statewide legal limit: local governments may assess up to 50 percent of certain infrastructure costs to development; the city currently charges less than that and council set the local collection level at 75 percent of the permitted amount (i.e., 75 percent of the statutory 50 percent), staff said.

Committee members asked whether internal data were complete; Leon said permit data exist but staff are converting permit systems and that some appendices were not yet extractable. Staff said there is no evidence of collection errors and that the shortfall is because projects and building permits have not materialized at the forecasted pace. Leon said a full reanalysis would cost about $250,000 and take six to nine months; because the city’s required five‑year update is about 18 months away, he recommended waiting unless an immediate inequity emerges.

Committee action: the committee approved the minutes from October 22, 2024, and accepted biannual impact‑fee progress reports for 9/30/2024 and 3/31/2025; both votes were unanimous. The committee noted the gap between the blue projection line (1.55% growth) and actual collections and recorded that staff’s current assessment is “no perceived inequities,” while reserving the option to request a midterm reanalysis if local conditions change.

Background: Leon walked committee members through how water, wastewater and roadway needs are costed and how meter size and service units translate to per‑unit fees charged when a building permit issues. He emphasized that impact fees are assessed only to new development and only for the portion of growth that will occur in the next 10 years.

Next steps: staff will continue monitoring permit activity, complete the data export from the new permit software, and bring the five‑year review on schedule in about 18 months. Committee members requested that staff share permit extracts and to flag any immediate evidence that fees are being misapplied.