Residential development spikes, commercial permits hold steady

Local business construction and residential development has surged over the past two years while the number of commercial building permits has remained relatively steady in Tomball and Magnolia.

Since 2013, residential building permits filed in the city of Tomball have seen an increase of almost 30 percent while numbers have more than doubled in the city of Magnolia. Over the past two years, commercial building permits have seen a slight dip in Tomball but have remained steady in Magnolia.

“[Officials are] expecting the population is probably going to double in about 10 years,” Montgomery County Permits Manager Phil Jones said. “There’s a lot of growth here, and a lot of commercial businesses coming in. The Woodlands, Willis, New Caney, Magnolia—everything is growing.”

Depending on whether a business is located within city limits or in the surrounding area, residents must navigate through different permitting processes that could span from a few days to several months. The processes include zoning, building codes, site approvals and paying impact fees in certain areas within city limits as well as possible construction and utility setbacks through individual providers, officials said.

Tomball impact fees

Impact fees are one of the biggest challenges for small businesses looking to open in Tomball, said Bryan Hutson, attorney and owner of development company The Hutson Group. Since 2009, the city has charged a one-time impact fee to new businesses at varying costs for different zoning uses, such as $35 for a retail shop, $1,200 for bars and about $49,000 for restaurants, he said.

“Impact fees are only charged when the building changes occupancy,” Hutson said. “If you have a building that’s been retail its whole life and you have a bakery wanting to go into it, it’s a change in occupancy, which triggers impact fees. Since we’re developing Old Town Tomball, we’re converting old houses and barns to something different, so every single business we bring to Tomball has to pay an impact fee.”

The impact fees are used to support future utility system expansions that are re-evaluated through the city’s Infrastructure Master Plan each year based on growth trends, Tomball Community Development Director Craig Meyers said.

“A restaurant or a car wash uses a lot of water and would tend to have a higher impact fee because they have a higher impact on our system, rather than a bookstore or single-family house that doesn’t have as much of an impact,” Meyers said.

In February 2013, Tomball City Council voted to waive the collection of impact fees in the eight-block area of Old Town Tomball for two years. This February, council voted to extend the waiver another two years until March 2, 2017.

If the impact fees were kept in place, Tejas Chocolate founder Scott Moore Jr. said he might not have selected Old Town Tomball as the new site for his business. The Spring-based craftory plans to relocate to Tomball early this fall with the opening of its new chocolate factory and barbecue cafe that will also serve beer and wine, he said.

“If [city officials] had reinstituted the impact fees in Old Town, everything they want to develop here, which is family-friendly restaurants, would disappear.” —Bryan Hutson, attorney and owner of development company The Hutson Group

“The fact that they waive [the impact fees] for Old Town [Tomball] is a good thing because it keeps fostering that small, independent person starting a business,” Moore said. “If you’re on the other side of town, you have to pay the fee. If you’re in Old Town you don’t, so it’s basically a zone incentive.”

Without the impact fee waiver in Old Town Tomball that has been in place since 2013, Hutson said more than 20 other small businesses he helped develop, including Jane and John Dough Bakery, Lunch Ladies Cafe and Doggy in Wonderland, would not have been able to open in the area. The impact fees are harmful to future development in other areas of Tomball that do not receive waivers, he said.

“If [city officials] had reinstituted the impact fees in Old Town, everything they want to develop here, which is family-friendly restaurants, would disappear,” Hutson said. “The impact fees right now are heavily skewed against family restaurants based on their numbers, but I could line bars up and down Main Street because they only pay $1,200 [in impact fees].”

During the April 20 meeting, council members discussed whether to extend the impact fee waivers to cover Main Street in the area west of Pine Street to Business 249 and east of Elm Street to FM 2978. Tomball Mayor Gretchen Fagan made a motion to approve the waiver extension, however no action was taken due to conflicting opinions from council members.

Tomball City Council Member Lori Klein Quinn said she is in favor of extending the waivers farther down Main Street to encourage small-business development. However, Tomball City Council Member Derek Townsend spoke against the waiver extension because he said it could lead to the city doing away with the impact fees altogether, which could mean less revenue for the city.

“If somebody comes in and says, ‘Well, I’m building one block off of Main Street and you’re giving [certain businesses] a waiver on their impact fees, why aren’t you including me?,’” Townsend said. “That’s where I want to make sure that we don’t get into an issue of not being fair to everyone.”

Magnolia impact fees

In Magnolia, impact fees have been in place since the city was incorporated in 1968. The rates are $1,500 for water hookups and $3,000 for sewer utilities on new residential and commercial structures, said Rachel Evans, the city’s permit technician and utility billing clerk.

“If developers are moving into a strip center, they would pay [impact fees] to set up the account with water and sewer,” Evans said. “The impact fees go to maintaining our systems and allow them to hook up to our line.”

With residential development skyrocketing in subdivisions like Magnolia Ridge, the builder is responsible for paying an impact fee to the city for each new home constructed, Evans said. This fiscal year, the city of Magnolia has received about $228,000 in impact fees while an estimated $292,000 was received in fiscal year 2014, she said.

Outside of city limits in areas like the Westwood Magnolia Parkway Improvement District, business owners are not obligated to pay impact fees.