Panel hears draft impact‑fee study that raises maximum allowable water and sewer fees; members question growth assumptions

Consultants from Freese & Nichols told the Capital Improvements Advisory Committee that their update to Manvel’s water and wastewater impact‑fee study calculates maximum allowable fees using 10‑year land‑use assumptions, eligible portions of CIP projects and an explicit rate‑credit analysis.

"The goal of this study is to calculate the maximum allowable water and wastewater impact fee based on the Texas, local government code chapter 395 regulations and the best available information that we have on the city system," said Ishita Rahman, who presented the study and answered committee questions.

Rahman said the study projects roughly 7,300 equivalent single‑family connections (ESFCs) of water growth and about 5,200 ESFCs of wastewater growth over a 10‑year planning window and attributed roughly $35 million of the 10‑year water CIP and about $48 million of the wastewater CIP as impact‑fee‑eligible costs. Using financing cost allowances and a detailed rate‑credit method rather than the simplified 50% credit used in the 2021 study, the calculated maximum allowable fees rose materially in the draft.

Members repeatedly questioned the growth assumptions. One member said, “As a developer, I struggle with that — there’s no way I could do that many in 10 years for the city,” challenging the projection that equated commercial meter sizes and large developments to high single‑family equivalent counts. Consultants responded that the study used developers’ submitted plans, planning‑department inputs and the recently adopted future land‑use plan; they also noted that the methodology reduces both numerator (eligible CIP) and denominator (projected service units) if growth fails to materialize.

Several members raised concerns about business competitiveness and the potential for higher impact fees to discourage commercial investment. The consultants and staff emphasized that the figure presented is the maximum allowable rate under statute and that council could adopt a lower collection rate or phase increases; they also noted that certain projects were financed or paid partially by developers and therefore excluded from the city’s eligible cost.

The committee received the draft and was told that the report must go to a 60‑day public display followed by a public hearing (advertised at least 30 days before the hearing). The advisory committee must file its written recommendations to council five business days prior to the hearing; consultants suggested council adoption could occur in October following the display and hearing process.

The committee asked staff and consultants to supply additional documentation — including appendices showing the calculations of ESFCs and a clearer comparison to the 2021 study — and staff will circulate materials and schedule a follow‑up meeting the week of July 20 for final committee comments.