Denton staff recommend 75% of maximum recoverable for water/wastewater impact fees; public hearing set for Aug. 5

Stephen Gay, general manager for Water Utilities and Street Operations, presented an update and proposed amendment to Denton’s water and wastewater impact fees at the July 15 City Council meeting. The proposal would set impact fees at 75% of the maximum recoverable fee calculated under the local government code and the city’s capital plan.

Gay told council that the methodology follows state law (Local Government Code Chapter 395) and standard AWWA guidance for service units, using the 5/8‑inch meter as the single‑family equivalent service unit. The city’s updated capital plan identifies new water and wastewater infrastructure required to support projected growth over a 10‑year horizon; some older projects still contain unused capacity and were treated as existing capacity in the fee calculation.

Staff originally proposed a 100% recoverable fee to the Capital Improvement Advisory Committee (CIAC); after developer feedback in March and July public meetings and the availability of other financing mechanisms — notably WIFIA and committed Texas Water Development Board funding for the Ray Roberts expansion — staff recommended stepping back to 75% of maximum recoverable to balance developer concerns and generational equity.

Key details and council questions

• Fee structure: Staff modeled fees across three water service areas and a single wastewater service area. The 75% recommendation is intended to preserve a balanced approach to growth‑paying‑for‑growth while recognizing financing tools available to the city. • Developer concerns: Presenters told council developers said high impact fees could impede projects in some areas. Staff reported outreach included a March developer town hall and a July meeting with developers; CIAC had earlier recommended 100% recoverable but did not consider the post‑meeting refinements. • Financing and timing: Jessica Williams (CFO) and Stephen Gay said the city had an active WIFIA application and a Texas Water Development Board program already in place for the Ray Roberts treatment plant expansion; those programs provide flexibility that informed the 75% recommendation. Gay emphasized impact fees can be re‑examined at least every three years under state law.

Questions from council focused on grandfathering, timing, and alternatives. Staff said impact fees are assessed at platting and collected at permitting; projects already through platting would be assessed at the previously disclosed rate. Staff also explained that if developers build capacity earlier, the city provides impact‑fee credits (a standard credit for developer‑installed infrastructure) and that credits may be structured for affordable or public‑benefit projects following council‑approved policies.

What council did

Council set a public hearing for Aug. 5 to continue the impact‑fee adoption process. Several council members voiced support for staff’s 75% recommendation during discussion; others asked for comparative materials on total all‑in fees (impact fee plus transport/road/park fees) so councilors could judge total development costs per housing unit.

Why it matters

Impact fees are a direct tool to fund growth‑related water/wastewater infrastructure. The balance between fee levels and debt issuance/alternative financing affects both how fast new infrastructure is built and how much of the upfront cost is borne by new development instead of existing ratepayers. Staff emphasized the fee is part of a broader strategy that includes WIFIA and TWDB financing, debt sizing and reserve policy.

Next steps

Staff will hold the public hearing on Aug. 5; following that, council will consider an ordinance to amend the fee schedule. Council members asked staff to provide a single‑page comparison of ‘all in’ development fees and a clearer timeline for grandfathering/plats where petitioners have advanced projects prior to the fee change.