By Moses Leos III

The creation of an additional road and stormwater impact fee could be on the horizon in Buda. 

But for Mayor Todd Ruge, the goal is to balance the amount new development pays for infrastructure while also not driving out business. 

“We want to be competitive, but we don’t want to sacrifice businesses coming in because the (impact) fee is too high,” Ruge said. “It’s a delicate balance we have to find. We want businesses to pay their fair share and not have to pass it on to taxpayers.” 

Buda’s discussion on impact fees came during a presentation earlier this month on possibly reevaluating them. 

Chance Sparks, interim assistant city manager and director of planning, said an impact fee is a one-time charge that’s assessed to new development for a “portion of costs related to a specific capital improvement program.”

“The idea behind it is that growth is paying for itself, instead of growth happening on the backs of citizens,” Sparks said. 

Impact fees are used as mechanisms to fund new facilities and infrastructure, or recoup certain capital improvement costs related to growth. Impact fees can be applied in city limits and in the extra territorial jurisdiction. 

Sparks said cities can implement water, wastewater, roadway and stormwater/drainage impact fees under Texas Local Government Code. But Sparks said stormwater fees are rare in Texas, but are becoming more popular. 

Earlier this year, Kyle city leaders gave the green light for a new $5 stormwater fee, which will be assessed in residents’ utility bills. The fee will fund a new stormwater utility service. 

Currently, Buda levies a water and wastewater impact fee, which was last updated in 2010, according to city documents. 

But Ruge said a “lot has changed” since the city first implemented impact fees. The city has gone from having roughly 7,800 to nearing 14,000 residents. 

During the 2015-2016 budget session, funding was included for updating the city’s water and wastewater fees. 

With the amount of growth occurring in the city, the Buda City Council earlier this month authorized City Manager Kenneth Williams to commission a study to look at impact fees and how they can be in line with other cities.  Ruge said the study would determine how much the city should levy. 

“We did the right thing by implementing them in 2010,” Ruge said. “With everything that went on in the city, maybe we should have addressed it a little sooner and in line with other cities.” 

But Ruge said opposition could arise if the city chooses to add another impact fee. Roughly a year ago, the city attempted, but ultimately failed, to implement a $1 to $5 stormwater fee, despite several public input meetings. 

“The pushback was tremendous from the citizens and we decided not to do it,” Ruge said. 

The city could implement a Capital Improvements Advisory Committee, which could oversee impact fees and how funds are allocated to specific CIP projects. The committee could either be made up of five members, with at least 40 percent of the representatives from real estate, building industry and not employed by the city. 

Buda could also tab the planning and zoning commission as the advisory committee. However, the P&Z must have an ad hoc member appointed by the city when it acts as the advisory committee. 

For Ruge, ensuring Buda keeps up with the growth is an important factor. 

“The way I look at it, it’s a way for a newcomer or business to pay their way in, as opposed to people who have been here for many years,” Ruge said. “Essentially to pay for the impact it has on infrastructure.”  

What’s the impact of impact fees?

Pros

•  Allowable by state law. 

•  Alleviates burden of new facilities on existing taxpayers 

•  Allows recoupment of projects already under construction which contains excess capacity 

•  Allows for implementation of key system improvements over a piecemeal approach 

•  Provides up front knowledge of the exact fee imposed 

•  Fairly charges based on system impacts

•  Establishes rough proportionality 

•  Allows for pooling of funds

•  Allows for developer credit

Cons

•  City to front the cost of improvements and collect fees as development occurs

•  Slower economic times may mean cost recovery may be slow, depending on new development

•  Fees can only apply to CIP projects within city limits 

•  System update every five years 

•  Administrative requirements may be burdensome to the city 

•  Increases the cost of development, which can affect economic development strategies