HomeMy WebLinkAboutIR 8707The purpose of this Informal Report is to provide information to the City Council concerning a
proposed increase in the collection rate for water and wastewater impact fees.
Background
Impact fees are charges imposed by a city against new development to generate revenue for funding
or recovering the costs of capital improvements made necessary by the new development. Water
impact fees are used to fund a portion of the cost of plants, pump stations and storage tanks.
Wastewater impact fees are used to fund a portion of the cost of plants and lift stations. Water and
wastewater mains necessary to serve a development are constructed at the developer's cost, with the
City funding, any oversizing.
As a prerequisite to assessing impact fees, cities are required to develop and periodically update land
use assumptions to project growth over a 10-year planning period and a capital improvements plan
identifying projects to serve the projected growth. The most recent updates to the land use
assumptions and capital improvements plan were approved by the City Council on May 18, 2004.
Cities are permitted to assess impact fees for up to 50% of the total projected cost of implementing
the capital improvements plan. Cities may charge more than 50% of the cost of implementing the
plan, provided the city credits a portion of the ad valorem tax and utility service revenues generated
by the new development against the impact fees. The City of Fort Worth currently assesses impact
fees at the rate of 35% of the maximum assessable amount. The remaining 65% of the cost to
construct water and wastewater plants, pump stations, lift stations and storage tanks needed to serve
new development is funded by the City's water and wastewater customers through rates.
Recommended Increase in Collection Rate
1 SSUED BY THE CITY MANAGER FORT WORTH, TEXAS
A
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8707
To the Mayor and Members of the City Council August 23, 2005 µ
At Page 2 of 3
a
SUBJECT: Proposed Increase in Collection Rate for Water
1471 and Wastewater Impact Fees
On July 14, 2005, the CAC and Water Department met again. At that time the committee
unanimously recommended increasing the collection rate for water and wastewater impact fees from
35% to 50% over a two -year period beginning January 1, 2006. Increasing the rate will ensure that
new development bears a greater share of the cost of water and wastewater infrastructure to serve the
development. In addition, the increase will provide the Water Department with the flexibility to
leverage both cash and debt financing options.
In order to mitigate the impact of the increases, the CAC and the Water Department recommend that
the increases be phased in, as follows:
Effective period
Jan. 1 — Dec. 31, 2006
Jan. I — Dec. 31, 2007
Jan. 1, 2008 — June 6, 2009
Water collection rate
42.5%
50%
50%
Wastewater collection rate
35%
42.5%
50%
By way of example, the combined water and wastewater impact fees for a single- family home with a
standard 3 /a" meter are currently $920 and will increase to $1,058 on January 1, 2006; $1,255 on
January 1, 2007 and $1,314 on January 1, 2008.
The attached chart compares the City of Fort Worth with 16 other cities with regard to the maximum
allowable impact fee, collection rate and actual impact fees collected for a 3 /a" meter, which is the
standard meter for a single - family home. As reflected in the attachment, only the City of Arlington,
with a collection rate of 30 %, has a lower collection rate than the City of Fort Worth. However,
even at the 30% collection rate, the impact fees assessed in Arlington exceed the fees assessed in Fort
Worth. The proposed increased water and wastewater impact fees of $1,314 effective January 1,
2008 would be less than the current impact fees for all of the 16 cities except Houston and Plano.
Procedure for Considering Increase in Collection Rate
Increase in impact fees requires adoption of an ordinance by the City Council. A public hearing must
be conducted to receive comment concerning the proposed increase in the collection rate. Notice of
the hearing must be published at least 30 days before the hearing. The following schedule is
proposed:
• August 30, 2005: City Council adopts resolution setting public hearing
• October 4, 2005: City Council holds public hearing
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
mo
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If approved, the increase in the collection rates will also apply to the City's wholesale water and
wastewater customers. which include a total of 33 municipalities. The City must give 90 days
notice of any increase to the wholesale customers.
In an effort to ensure that affected parties receive adequate notice of the proposed increase, staff will
contact the Development Advisory Committee and local realtor and builder organizations concerning
the proposed increase before the public hearing.
If you have any questions or need any additional information, please contact Acting Water Director
Frank Crumb at 817-392-8207.
INJA
Charles R. Boswell
City Manager
Attachment
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS