Denton to consider charging developers road impact fees
Denton may change how it assesses developers for road work after the City Council agreed to reconsider its policy on how the city collects such fees.
The city staff briefed the council during its work session Tuesday afternoon with an analysis that included how much money the city could have collected the past several years if the city had road impact fees, instead of the “exaction” fees it currently collects under the development code.
Many other cities in the Dallas-Fort Worth area charge developers a fee for the impact their projects have on roads. Argyle, Corinth, Flower Mound, Frisco and The Colony are among those Denton County cities that charge the fees, staff told the council.
Denton has been charging water and wastewater impact fees for new development since the 1990s. Impact fees help shift the cost of growth away from current taxpayers, something the city already does with new water and wastewater lines.
But Denton has not used impact fees for roads, instead relying on recovering some costs through its development code.
Over time, the current system has proved difficult to negotiate, P.S. Arora, a division manager for the city’s wastewater department, told the council.
“I can tell you that it has caused hard feelings with developers in many ways,” Arora said.
With each deal negotiated separately, some developers are caught off guard because they aren’t expecting the exaction fee, Arora said.
Impact fees are more impartial, he said, being calculated on units equivalent to the traffic increase associated with a new, single-family house.
“Although that [perception of fairness] may depend on which side of the bench you’re sitting on,” Arora said, acknowledging that some developers could end up paying more under the proposed system.
The staff analyzed what the city collected on four recent projects to show the inequities between exaction and impact fees. A new restaurant paid more under the old system than it would under the new system, in part because it built along a state highway, Arora said. But an apartment complex on Fort Worth Drive paid only a fraction of its impact on the city’s streets under the old system.
The staff also analyzed how much was collected for the past several years under the old system and determined that the city could not only collect more fairly, but also simply collect more.
For example, in 2008-09, the city collected about $1.5 million in road fees, compared to as much as $3.5 million the city could have collected. From 2008 to 2012, the city collected $4.1 million under the old system, when it could have collected $11.6 million if the new system had been in place.
The city staff has already identified about 50 arterial roads and 50 intersections that could be improved through the assessment of road impact fees. In addition, the staff identified more than two dozen intersections where road impact fees could help pay for traffic signal improvements.
The staff also estimated the city had about $15.3 million invested in “excess capacity” on recently upgraded arterials. Under the law, some of that cost could be recovered through impact fees, too.
Several decades worth of street work could be covered by fees in the new system, Arora said. But the city must follow certain steps to implement the fees that include developing a plan and holding public hearings.
The fees can be pooled for projects, but if they aren’t used within 10 years, they must be refunded to the developers who paid them.
The City Council generally agreed that the staff could use $300,000 allocated in next year’s budget to study the matter.
Council members encouraged the staff to reach out to the development community about the change being considered.
Mayor Mark Burroughs was concerned whether the policy change would affect infill development, one of the city’s planning priorities.
And council member Jim Engelbrecht recommended that the study include bicycle paths as well as sidewalks.
“I want to see us really build these, and this could be a way to fund that,” Engelbrecht said.
PEGGY HEINKEL-WOLFE can be reached at 940-566-6881 and via Twitter at @phwolfeDRC.
IN OTHER ACTION
During its regular meeting Tuesday, the Denton City Council also:
- Amended the animal control donation fund from $30,000 to $250,000 to cover increased veterinary costs associated with increased adoptions.
- Awarded a capital contract to Dell Financial Services for a four-year, $1.77 million contract for the lease purchase of personal computers, notebooks, peripherals and other services.
- Authorized additional payment of $56,912 in transmission fees for a total of $407,091 to Electric Transmission of Texas and of $16,515 for a total of $175,120 to Lone Star Transmission.
- Approved a three-year, $500,000 contract for office furniture from HON Brand Office Furniture.
- Authorized a grant application to the Texas Department of Housing and Community Affairs Amy Young Barrier Removal Program for up to $20,000 in local assistance.
- Approved city’s sponsorship of the 15th annual Blues Festival Sept. 21-22 for up to $16,000 of in-kind services.
- Changed the city’s fund balance policy to maintain a utility fund balance in a range based on annual expenses, instead of a minimum amount.