The background
Impact fees are charges imposed by a political subdivision against new development to help generate revenue to recoup the costs of capital improvements, according to local government code.
The Texas Municipal League describes impact fees as a tool cities can use to recover some of the costs from property developers that new development places on city infrastructure. Per the TML, impact fees may be used to pay for:
- Constructing capital improvements
- Constructing facility expansions for water supply, treatment and distribution facilities
- Wastewater collection and treatment facilities
- Stormwater, drainage and flood control facilities
- Roadways
While local government code requires impact fee studies to be updated every five years, council members have directed staff to update Georgetown’s impact fee study more frequently due to high growth pressures and the changing economy, per city documents.
On June 20, lawmakers passed Senate Bill 1883, which prevents political subdivisions from increasing impact fees until three years after the day the fee was last adopted or increased. SB 1883 goes into effect Sept. 1, according to the Texas Legislature Online.
In a June 25 Facebook post, Georgetown Mayor Josh Schroeder said the legislature’s impact fee “freeze” prompted city council members to update fees prior to Sept. 1. He said impact fees will continue to increase due to “massive amounts” of planned water and wastewater projects in the city.
“Council is committed to keeping the fees within the confines of the law and not raising them so high that it slows down development and forces existing rate payers to pay for the cost of all the infrastructure coming online,” Schroeder said in the post.
Explained
The last impact fee study was conducted in 2022, and the 2025 study was completed by staff, two consultants and approved by the impact fee review committee and the Georgetown Water Utility Advisory Board, per city documents.
Georgetown Systems Engineering Director Wesley Wright presented the committee and advisory board’s impact fee recommendations to council members during a June 24 workshop. New projections show Georgetown could have as many as 56,643 new water service units and 30,000 new wastewater service units over the next 10 years, Wright said.
To calculate the maximum assessable impact fee for water or wastewater, officials divide the maximum recoverable cost for the impact fee—which consists of anticipated capacity usage for projects over the next 10 years, interest rates and more—by the number of new water service units expected during that timeframe, Wright said.
For example, while the city's total wastewater projects total $1 billion, officials anticipate only 41% of that capacity will be utilized in the next 10 years, Wright said. This means the maximum recoverable cost of $407 million will be divided by 30,000 new service units to equal $13,577: the maximum assessable fee recommended for wastewater.
“That helps make the impact fee more fair towards development,” Wright said. “If we've overestimated growth, that is to the city's detriment—as far as fee collection goes.”
By the numbers
While Georgetown has maximum assessable impact fees for water and wastewater, officials can still charge a lower amount in fees than the maximum, which is called the assessed fee.
The maximum fee and the assessed fee for wastewater currently totals to $6,129, per city documents. The maximum impact fee for water is currently $12,215, but council members decided to only collect $11,000 per service unit in 2022—the last year the impact fee study was conducted, Wright said.
According to Wright’s presentation, calculations show the new maximum assessable impact fee is $13,835 for water and $13,577 for wastewater. The committee recommended approving phased increases to water and wastewater impact fees by August before new legislation becomes effective, he said.
The discussion
Council members directed Wright to increase the assessed wastewater impact fees at a faster rate than the committee recommended over the next few years.
Wright said some committee members believe the proposed $13,577 maximum fee for wastewater cost could “scare” some developers off, causing them to build their own package plants instead of opting into the city’s infrastructure.
“I think there's certainly realistic concerns to that,” Wright said.
Schroeder said the council can decide the maximum step up, or increase on impact fees, through 2027 now, and lower it at a later date if officials notice a drop off in wastewater connections.
“It sounds like we probably want to be as aggressive in setting the maximum step up so we can always back down from it, but we could never go over,” Schroeder said.
In April, the city outlined nearly $2 billion in water and wastewater projects over the next five years, including two new water reclamation facilities.
“We're building them, so somebody's going to pay these costs,” Schroeder said. “I feel like we're not going to be making a bad investment in wastewater, but new growth needs to pay for it as much as legally possible.”
Going forward
After Wright incorporates council’s feedback, the new proposed water and wastewater impact fee changes will have:
- A public hearing and first reading July 22
- A second reading Aug. 12
- An effective date of Aug. 31
