bill narrowing what impact fees can pay for

The text as introduced · 1,193 words

By: Hall
S.B. No. 2427

A BILL TO BE ENTITLED

AN ACT

relating to the use of impact fees by a political subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 395.001(4), Local Government Code, is

amended to read as follows:

(4) "Impact fee" means a charge or assessment imposed

by a political subdivision against new development in order to

generate revenue for funding or recouping the pay the actual costs

of labor, including the cost of surveyors, engineers, and other

similar professionals, and materials for capital improvements or

facility expansions necessitated by and attributable to the new

development. [ The term includes amortized charges, lump-sum

charges, capital recovery fees, contributions in aid of

construction, and any other fee that functions as described by this

definition. The term does net include:

[ (A) dedication of land for public parks or

payment in lieu of the dedication to serve park needs;

[ (B) dedication of rights-of-way or easements or

construction or dedication of on-site or off-site water

distribution, wastewater collection or drainage facilities, or

streets, sidewalks, or curbs if the dedication or construction is

required by a valid ordinance and is necessitated by and

attributable to the new development;

[ (C) lot or acreage fees to be placed in trust

funds for the purpose of reimbursing developers for oversizing or

constructing water or sewer mains or lines; or

[ (D) other pro rata fees for reimbursement of

water or sewer mains or lines extended by the political

subdivision. ]

However, an item included in the capital improvements plan

may not be required to be constructed except in accordance with

Section 395.019(2), and an owner may not be required to construct or

dedicate facilities and to pay impact fees for those facilities.

SECTION 2. Sections 395.012(a), (b), and (d), Local

Government Code, are amended to read as follows:

(a) An impact fee may be imposed only to pay the costs of

labor and materials for constructing capital improvements or

facility expansions, including and limited to the:

(1) labor and materials explicitly accounted for in

the construction contract price;

(2) surveying and engineering fees; and

(3) [ land acquisition costs, including land

purchases, court awards and costs, attorney's fees, and expert

witness fees; and

[ (4) ] fees actually paid or contracted to be paid to an

independent qualified engineer or financial consultant preparing

or updating the capital improvements plan who is not an employee of

the political subdivision.

(b) Projected interest charges and other finance costs may

be included in determining the amount of impact fees only if the

impact fees are used for the payment of principal and interest on

bonds, notes, or other obligations issued by or on behalf of the

political subdivision to finance the labor and materials for

capital improvements or facility expansions identified in the

capital improvements plan and are not used to reimburse bond funds

expended for facilities that are not identified in the capital

improvements plan.

(d) A municipality may pledge an impact fee as security for

the payment of debt service on a bond, note, or other obligation

issued to finance labor and materials for a capital improvement or

public facility expansion if:

(1) the improvement or expansion is identified in a

capital improvements plan; and

(2) at the time of the pledge, the governing body of

the municipality certifies in a written order, ordinance, or

resolution that none of the impact fee will be used or expended for

an improvement or expansion not identified in the plan.

SECTION 3. Section 395.019, Local Government Code, is

amended to read as follows:

Sec. 395.019. COLLECTION OF FEES IF SERVICES NOT AVAILABLE.

Except for roadway facilities, impact fees may be assessed but may

not be collected in areas where services are not currently

available unless:

(1) the collection is made to pay for labor and

materials for a capital improvement or facility expansion that has

been identified in the capital improvements plan and the political

subdivision commits to commence construction within two years,

under duly awarded and executed contracts or commitments of staff

time covering substantially all of the work required to provide

service, and to have the service available within a reasonable

period of time considering the type of capital improvement or

facility expansion to be constructed, but in no event longer than

five years;

(2) the political subdivision agrees that the owner of

a new development may construct or finance the capital improvements

or facility expansions and agrees that the costs incurred or funds

advanced for labor and materials for the capital improvements or

facility expansions will be credited against the impact fees

otherwise due from the new development or agrees to reimburse the

owner for such costs from impact fees paid from other new

developments that will use such capital improvements or facility

expansions, which fees shall be collected and reimbursed to the

owner at the time the other new development records its plat; or

(3) an owner voluntarily requests the political

subdivision to reserve capacity to serve future development, and

the political subdivision and owner enter into a valid written

agreement.

SECTION 4. Section 395.021, Local Government Code, is

amended to read as follows:

Sec. 395.021. AUTHORITY OF POLITICAL SUBDIVISIONS TO SPEND

FUNDS TO REDUCE FEES. Political subdivisions may spend funds from

any lawful source to pay for all or a part of the labor and material

costs for capital improvements or facility expansions to reduce the

amount of impact fees.

SECTION 5. Section 395.023, Local Government Code, is

amended to read as follows:

Sec. 395.023. CREDITS AGAINST ROADWAY FACILITIES FEES. Any

labor and material costs for construction of, contributions to, or

dedications of off-site roadway facilities agreed to or required by

a political subdivision as a condition of development approval

shall be credited against roadway facilities impact fees otherwise

due from the development.

SECTION 6. Section 395.079(a), Local Government Code, is

amended to read as follows:

(a) Any county that has a population of 3.3 million or more

or that borders a county with a population of 3.3 million or more,

and any district or authority created under Article XVI, Section

59, of the Texas Constitution within any such county that is

authorized to provide storm water, drainage, and flood control

facilities, is authorized to impose impact fees to cover the labor

and material costs for [ provide ] storm water, drainage, and flood

control improvements necessary to accommodate new development.

SECTION 7. The changes in law made by this Act apply only to

an impact fee enacted or imposed on or after the effective date of

this Act. An impact fee enacted or imposed before the effective date

of this Act is governed by the law in effect immediately before the

effective date of this Act, and the former law is continued in

effect for that purpose.

SECTION 8. This Act takes effect immediately if it receives

a vote of two-thirds of all the members elected to each house, as

provided by Section 39, Article III, Texas Constitution. If this

Act does not receive the vote necessary for immediate effect, this

Act takes effect September 1, 2025.