League City City Council on Aug. 24 approved raising the fees for residential developments but keeping commercial development fees where they were at to avoid discouraging commercial developments the city is trying to attract.
In January 2019, City Council established roadway impact fees that are charged to developers to help cover the cost of road projects made necessary by new developments. The idea behind the fees was to facilitate new growth in League City, which is about halfway built out.
By the city collecting impact fees, taxpayers are not “subsidizing” roadwork for which developers should be paying, residents and officials have said. For these reasons, City Council adopted the roadway impact fees ordinance two years ago.
Council Member Nick Long said the city only has three options: charge developers fees to go toward road projects, collect more property tax dollars from residents for road projects, or not do road projects and instead deal with increased traffic. Long said it makes sense the charge goes to those who are causing necessary road projects: the developers.
“I think it’s a great idea [where] whoever causes the issue has to pay for the issue,” he said.
In 2020, the city collected over $186,000 in roadway impact fees, and so far in 2021, the city has collected almost $521,000 in these fees, Director of Engineering Chris Sims said.
Under the ordinance, the city is divided into four zones, each with its own fees for residential and commercial developments. The impact fee rate for Area 1, east of Hwy. 3, is $323 per service unit. The fee for areas 2-4 is $1,120 per service unit for residential developments and $560 per service unit for nonresidential developments. The amounts are based on the demand for development and roads in each area, Sims said.
Service units are calculated based on a formula that includes the number of cars that pass along a road during a peak traffic hour, the road’s length in miles and other factors. Service units for each type of development are predetermined; for instance, the number of service units for a general office building is 6.21.
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At City Council’s request, the League City Planning and Zoning Commission reviewed the fees and recommended increasing commercial fees in service areas 2-4 to $908 for Area 2 and $865 for areas 3 and 4. The commission also recommended raising fees for residential developments besides single-family homes to $3,632 in Area 2 and increasing fees for all residential developments to $1,153 for Area 3.
Council Member John Bowen said he supports raising the fees only for residential developments but not commercial ones. Other cities nearby have no roadway impact fees, and Bowen does not want commercial developments that could come to League City to instead go to a nearby one because the fees are too high, he said.
“We do want commercial business in LC. It’s something that we’ve all talked about,” Bowen said.
Long agreed with Bowen’s sentiment but said serious commercial developments will consider League City regardless of fees, and the city is capable of negotiating the fees down in cases in which a development would bring in a certain amount of property tax revenue, he said.
“Any commercial project worth its salt is going to come ask us,” Long said.
Millican also agreed, noting commercial developments have been almost nonexistent in League City, and the fees put a “tremendous burden” on developers who will look elsewhere to develop.
Director of Planning and Development David Hoover said the traffic League City sees today is due to residential, not commercial, development. He also said nearby cities are passing League City by due to the fact it has fees nearby cities do not.
“We’re losing things to Dickinson and La Marque,” he said. “I’m sorry to tell you; I think that is unfortunate.”
Council Member Hank Dugie said establishing roadway impact fees is one of the best things City Council has ever done even though the program is imperfect. Dugie said he would rather risk setting the fees too high and lowering them later than setting them too low and having to raise them.
The vote to raise the fees for residential developments but keep commercial development fees at their existing rate passed unanimously.
