Denton advisory committee backs higher water and wastewater impact fees; council hearing set for March 25

The Capital Improvement Advisory Committee of Denton City on Feb. 12 recommended that the City Council adopt updated water and wastewater impact fees that staff said are needed to pay for a planned $582 million water capital improvement program and a $760 million wastewater program over the next 10 years.

Staff presented growth assumptions drawn from the Denton 2040 comprehensive plan, the city’s 2023 wastewater master plan and the 2024 water master plan, and explained how those assumptions feed the impact‑fee calculations. Kyle Pedigo, site engineer and utility manager, said the staff calculation produces a 10‑year maximum assessable fee of $11,046 for water and $14,551 for wastewater per base service unit, and that the wastewater fee increases are driven in part by reconstructing and expanding treatment capacity.

The advisory committee’s recommendation matters because impact fees fund the portion of new water and wastewater infrastructure that serves new development rather than existing customers. Kyle Pedigo told the committee the recommended update assumes a 100% cost‑of‑service recovery for the recoverable portion of the 10‑year capital improvement plan and divides those costs among projected service units; staff estimated 52,774 service units for water and 52,276 for wastewater over the 10‑year window.

Pedigo said the city’s base residential meter is a 5/8‑inch by 3/4‑inch meter and that a 2‑inch meter — typical for a large retail connection — provides up to eight times the flow of the base meter and therefore is assessed eight times the base unit fee. He showed maps indicating existing infrastructure that has available capacity and planned conveyance and treatment projects that are fully counted in the fee calculation. For water, projects outlined in blue are existing capacity; projects outlined in red are planned conveyance and treatment costs that staff fully included in the fee base. For wastewater, existing capacity is shown in green and future infrastructure in red.

The wastewater program also proposes changing the city’s single wastewater service area into three basins aligned with drainage: Clear Creek (north), Pecan Creek (central), and Hickory Creek (southwest). Pedigo said the change reflects planned new treatment locations and gravity‑fed conveyance patterns. He told the committee the Pecan Creek Water Reclamation Facility’s permitted treatment capacity would increase from 21,000,000 gallons per day to 26,000,000 gallons per day and that the facility will undergo substantial reconstruction because it is nearing the end of its useful life.

Developers whose large, known projects contributed to the study — including Hunter Ranch, Cole Ranch and TCCI MUD — were shown the maps and the capital plan, Pedigo said. “They’re not happy with the increase, but at the same time, they understand with the amount of infrastructure involved to bring service to that area that an increase is necessary,” Pedigo said.

Scott McDonald, the city’s director of development services, described the maps and unit counts as reflecting “truth to facts on the ground,” citing rapid growth to the west, southwest and north that was not anticipated when the comprehensive plan was drafted. He said the planned interceptor line would extend to U.S. 35 to serve the basin in the northeast even though some development there is paused.

Stephen (name not specified), general manager of water utilities and street operations, discussed how the utility is reevaluating funding strategies and said staff is pursuing federal finance tools such as WIFIA loans to defer debt service and increase the ability to cash‑fund projects as customers come online. He said WIFIA allows a multi‑year deferral of debt service after substantial completion of a project, which can reduce near‑term rate pressure while still moving toward generational equity in funding.

Committee members asked detailed questions about the growth assumptions, the maps, and the basis for the 100% recovery recommendation. After discussion, Commissioner Riggs moved to recommend the proposed impact fee update as presented; Member Kalacek seconded. The committee voted in favor; the chair announced the motion passed unanimously with five votes in favor and one absence.

Next steps staff outlined include advertising the City Council public hearing on the impact fee update following the committee recommendation, with a council public hearing scheduled for March 25 and ordinance adoption targeted for April 1, pending council action.