With the adoption of the 2030 Allen Comprehensive Plan in 2014, the land use assumptions for the community have been updated. Impact fees, which are based on projected growth, land-use, and planned construction, have remained unchanged since 2002 and it is appropriate to update these fees to reflect true infrastructure cost and current growth projections.  

The development community pays transportation impact fees when applying for a building permit, to help fund the infrastructure necessary to accommodate growth of our community. Similarly, water and sewer impact fees are paid with each new account established, based on meter size - the larger the meter, the more water a user consumes, and thus impacts the water and sewer system accordingly. The impact fee concept is a way to distribute the cost of infrastructure across new users and growth, easing the burden on existing tax- and rate-payers (residents and businesses). Impact fees may only be used to pay for growth-related infrastructure within the published study (not reconstruction of old asset).  

The findings of this study legitimizes water impact fees can increase 2.5x and wastewater impact fees can increase 3x, when compared to current rates (see Table 1, below). These increases can be explained by the following primary influences:

1. Fees have remained unchanged since 2002. Time value of money accounts for some of the increase, since construction prices have increased 30-40%,
2. The adopted fees in 2002 were below the suggested rate.  This was done to encourage (or incentivize) development. This accounts for a substantial amount of the increase.  The community has matured to a point where development subsidy should no longer be necessary.
3. The current study accounts for the increased regional infrastructure costs that are being passed-through to the City of Allen from the North Texas Municipal Water District. Most of the infrastructure costs, associated with growth, are being realized in wholesale water and sewer rates from NTMWD that result from substantial capital costs (Lower Bois d'Arc Creek Reservoir, Treatment Plant Expansion, etc). Our proportionate share of these regional capital costs are reflected in the impact fee study calculations. This accounts for most of the increase.

Similarly, an increase in transportation impact fees is legitimized in the published impact fee study calculations. The increase can be attributed to the following factors:

1. Fees have been unchanged since 2002 (buying power is less than 15 years ago).
2. Fees are higher in zones where more roadways must be built (i.e. north of Stacy, missing segments of Ridgeview and Chelsea have yet to be constructed).
3. Fees should be higher for more "traffic-intensive uses" as compared to lower impact uses (i.e. drive through restaurants would pay a higher fee than medical offices).
4. Fees were artificially suppressed in 2002 to stimulate growth and development. This competitive edge in fees worked well at a time when the County was partnering 50/50 on virtually every arterial roadway. (Note: Such partnerships are not likely in the future, as the County now is focusing investment on highways and limited access roadways.)
   
   

The generic unit of measure for assessment of transportation impact fee is the Equivalent Service Unit (ESU), and it varies by location (zones) within the City as shown in Table 2.

This generic ESU is then multiplied by a factor (representing the intensity of trip generation of the subject use) to derive a total fee. In so doing, the fee is proportional to the relative traffic impact that the proposed development has on the community and roadway network.To put this proposed fee into perspective, benchmark projects are shown in the attached graphic format, in comparison to other growth-oriented communities in the metroplex (proposed fees shown in green, using an average of the three zones). (See attachment: Comparison Charts)

Even with an increase in fees, these benchmark examples demonstrate that the transportation impact fees are within the range of expectation for the development community. Since regional partnerships have dwindled in recent years, it will be more important for our fee structure to reflect the reality of funding arterial roadway projects ourselves with impact fees, coupled with GO Bonds (not with County partnerships). Additionally, a more substantial transportation impact fee will motivate the development community to build infrastructure projects with their respective developments, since such investments by a developer can be used to offset impact fees due (e.g. a development building arterial roadway or intersection improvements could get credit against fees).

The State of Texas mandates an automatic reduction of the maximum fee by 50%.  The fees proposed herein are after the 50% legislative reduction. State law requires City Council action every five (5) years on the impact fee structure - to either change the fees or determine no revision is required. In 2007 and 2012, the Allen City Council determined no revision was needed, based on staff recommendation that land use assumptions and proposed construction projects had not changed significantly. Since the land-use projections have now changed within the last five years, and the financial assumptions surrounding regional infrastructure philosophy have changed, it is now appropriate to revisit and recalculate the fee structure.  

Texas Local Government Code requires a public hearing on the proposed impact fee structureThe impact fee study has been published since June 22, 2017, and made available to the public for review. Advertisement in the Allen American, as required by law, also took place on June 22nd (Classified Section). The Planning & Zoning Commission (P&Z), which serves as the Advisory Committee for impact fees, is required to receive a copy of the study and provide written comment, by law.  To comply with this legal requirement, P&Z was provided a copy of the impact fee study on June 23 and written feedback from P&Z was received on July 7 from all members of the P&Z. 

Staff recommends that Council adopt an Ordinance amending the Allen Land Development Code, updating the City's Land Use Assumptions, Capital Improvements Plan, and Impact Fees.

I make a motion to adopt Ordinance No. ____________ amending the Allen Land Development Code, updating the City's Land Use Assumptions, Capital Improvements Plan, and Impact Fees.