Denton utility staff backs 75% impact‑fee recovery; council presses on grandfathering and effective date

Stephen Gay, general manager for Water Utilities and Street Operations, presented the city's updated water and wastewater impact‑fee study and the capital improvement plan at a public hearing. Gay explained service units are based on meter sizes (AWWA conventions) and that the wastewater plant is operating near 90% of its rated capacity (21 million gallons per day), triggering Texas Commission on Environmental Quality thresholds that require entering design at 75% and being under construction by 90%.

Staff described red‑line infrastructure in the study, CCN‑defined service areas that extend beyond Denton’s corporate limits, and a recommendation to recover 75% of the capital costs through impact fees (a revision down from a prior staff posture of 100% recovery after development‑community meetings). Gay and Scott McDonald explained the calculation steps and the reason a staggered step up was mathematically difficult for the utility because of debt service requirements.

Developers and the Dallas Builders Association told council higher fees would increase mortgage payments and could reduce housing supply; David Leddy (Dallas Builders Association) urged phasing or lower initial rates to preserve affordability. Council members asked detailed questions about grandfathering, the effective date (staff recommended Jan. 1, 2026), and how the ordinance would lock fees for final plats or permits. Staff said fees are typically locked in when a final plat is recorded and that impact fees are collected when permits are pulled; staff agreed to return with more detail and expects to seek adoption on Aug. 19.

No adoption vote occurred on Aug. 5. Council asked staff to refine grandfathering language and timing and to supply additional fiscal and implementation details ahead of the Aug. 19 adoption vote.