City staff propose higher water, wastewater impact fees; public hearings set for Aug. 5

City staff on Tuesday previewed a proposed update to San Marcos’ water and wastewater impact fees that would substantially raise the city’s maximum allowable fees to reflect the costs of large capital projects identified in recent master plans.

Sean Condor, director of engineering and CIP, told council that impact fees are calculated from the master plans and capital improvements program (CIP) to recover expansion‑related costs and are intended to offset the cost burden on existing ratepayers when new development adds capacity demand. Condor stressed fees are for expansion (new capacity), not for routine replacement or maintenance.

Assistant Director Richard Reynosa reviewed the cost basis and the study’s recommended maximums. On the water side staff presented a maximum allowable water impact fee of approximately $14,519 per residential equivalent meter; on the wastewater side staff presented a recommended maximum near $11,161 per residential equivalent. Reynosa noted the current fees were last adopted in 2018 and that comparable cities have updated fees more recently.

Reynosa explained how fees are assessed in practice: the fee is established at plat recording but collected at the time a building permit is issued. Council members raised concerns about whether higher fees would be passed through to homebuyers and how the city could encourage green building; staff said statute governs timing and allowable credits but that the utilities department already offers rebates and that staff can return with research on creditable activities and incentive mechanisms.

Condor and Reynosa walked through the CIP connection and funding assumptions and told council the next steps: the impact fee advisory committee will finalize recommendations July 13, staff will hold public hearings on Aug. 5 and seek council approval at a Sept. 1 meeting (final action must occur within 30 days of the public hearing under state law). Staff emphasized council may set a fee lower than the maximum and must also choose an effective date if approved.

Council discussion focused on balancing future rate pressure with development incentives and on whether to couple fee increases with targeted rebates or post‑construction incentives for sustainable practices. Staff agreed to return with clarifying detail on statutory crediting and examples from peer cities.

Note on transcript numbers: staff discussed historical and projected impact‑fee collections and presented annual trend figures; one figure reported verbally in the meeting transcript appears inconsistent with surrounding figures (transcript references a multi‑billion number that does not match the multi‑million range shown elsewhere). Staff presentation materials and the posted impact‑fee website will contain the official numeric tables and are the authoritative source for exact dollar totals and historical collections.