Developers in League City will soon not only have to pay capital recovery fees for roads but increased fees for water and wastewater when constructing commercial and residential projects.
The League City City Council on April 9 unanimously voted to increase the existing capital recovery fees for water and wastewater from a total of $5,634 per connection for a single-family home to $7,668. The new total is the maximum the city is allowed to charge under state law, according to a recent study from consultant Freese and Nichols Inc.
The fee is based on the size of the water meter installed, meaning developments with larger meters will pay a higher fee. The fee will be paid at the time of connection to the water system, Freese and Nichols consultant Rich Weatherly said.
Capital recovery fees are a way for municipalities to recover the costs for capital projects made necessary by new development. The city adopted an ordinance in January creating capital recovery fees for roadways created as a result of new development.
“The idea is that growth pays for growth,” Weatherly told City Council.
Without capital recovery fees, the cost of new roads and water and wastewater lines to accompany new developments, such as an apartment complex or retail center, would fall on the taxpayers. With capital recovery fees, the cost falls back on the entity raising the cost: the developer, Weatherly said.
Mayor Pat Hallisey voted in favor of the motion but urged caution considering the cost it will have, particularly on new homes.
“When you talk about your cost of a new home being $14,000 before you even drive a nail into the first piece of wood … we’re getting close to driving ourselves out of the market,” he said.
The city can use the fees to pay for construction, surveying, engineering, land acquisition and debt service but not maintenance or upgrades to projects, he said.
Capital recovery fees for water and wastewater already existed, but the city is required to update them every five years. League City last updated its fees in February 2013, according to city documents.
Other nearby cities such as Friendswood, Pearland, Seabrook, Webster and Baytown also have water and wastewater capital recovery fees in place. Many of them will soon update their fees, and they will likely increase as well, Weatherly said.
“The trend is definitely going up,” he said.