GRA Note:  This is from the Business Journal and well written.  But there are many fundamental issues raised that need a bit more clarity for the average reader, which is likely not the target audience.   Of course if you interview a developer, it will inevitably have this perspective. It would be great to see a city management response to this article on the cost of infrastructure, subsidies by the tax base and the fundamental economics that these costs don't automatically get 'passed on' to the future home buyers.

Rising transportation impact fees in Fort Worth could stifle housing development, says trade organization

A potential increase in impact fees could put Fort Worth homebuilders in a bind, stifling development and adding to growing affordability issues in the city, said the president of the Greater Fort Worth Builders Association. 

Every $1,000 increase in a home’s price cuts out 20,000 families from the buyer pool, said Eason Maykus, president of the Greater Fort Worth Builders Association and president of Maykus Homes and Neighborhoods, a boutique building company based in Grapevine. The potential increase in transportation impact fees could add to deepening affordability issues within Fort Worth.

“I know $1,000 on a $300,000 house doesn’t seem like much,” he said. “But in these communities, that $1,000 increase… has a huge repercussion.” 

The city of Fort Worth is considering raising transportation impact fees on residential and commercial development. While the potential increase would help bolster vital services in the city, critics have argued the sharp rise in fees could stifle development and make end-result products like housing more expensive for residents. 

Transportation impact fees are, as defined by the city, charges assessed by local governments on new development projects that help fund transportation improvements that become necessary as new development occurs. Simply put, they’re a vehicle the city uses to pay for infrastructure that’s worn down by new development. 

Because new development wears down existing infrastructure, the fees are leveled at developers to help pay for some of that cost. 

The exact amount developers can expect to pay differs by service area within the city. However, city staff is recommending a hike well above the current rate. The Fort Worth City Council is taking action regarding impact fees during its meeting on Tuesday. 

Each service area in the city has a different maximum, or total amount that the city can charge developers in transportation impact fees. The current average rate that developers pay in service areas that have transportation impact fees is about 30% of the maximum rate for residential development and 12% for non-residential, which includes all other types of development. 

Staff is recommending that developers pay 80% of the maximum rate for residential development and 55% for non-residential development. 

There has been a population boom in Fort Worth, and with it has come to a need for new road infrastructure, Maykus said. However, a sharp increase would make homebuilders and developers pause development as they reassessed the new costs. It would also add costs to the end user. 

Maykus spoke with the Dallas Business Journal about how the potential rise in transportation impact fees could impact development. 

What is your opinion on the transportation impact fee system as it is today? 

So the impact fee system schedule has been used for seemingly a long enough period of time that developers and builders have gotten used to it. It seems to be one that everyone is comfortable with. At this point, obviously, there are moves being made because of the growth in DFW, primarily in Fort Worth and the outer areas. 

People want to live here. With that, I totally understand the need for roads and infrastructure and the ease of transportation that brings people to Tarrant County and Fort Worth proper. That’s my understanding of how it’s been. I do understand that with the volume of growth that has been experienced over the last two to three years, if not longer, we’re at a tipping point where the roads need to be improved.

What would you consider to be the correct path forward regarding transportation impact fees? 

I think there’s a balanced approach for builders and developers on the residential side to digest and be able to adopt these fees in an (elongated) timeframe, instead of just absorbing it so quickly at such a high rate compared to what they’re used to. 

From your perspective, what would be the end result if these fees were adopted? 

Right now, the price of land is not going down. Even though things are slowing down, the cost of land is still very high. It’s at a premium, and for obvious reasons. We’re in North Texas and Fort Worth. 

This is a place everyone wants to live. It’s a great place to raise a family, it’s safe. It’s got, for the most part, a great cost of living… So, by potentially increasing impact fees at a multiple of three or four of what they’re currently at, that cost is going to get passed to the end-user, the end-user being the homeowner. 

During a public hearing about transportation impact fees, several developers mentioned the increase could impact the level of development in Fort Worth. Tell me about that. 

We already have a shortage of homes. We have more demand than homes as it stands, even with the affordable housing crisis and inflation. (Those developers) are spot on. 

What this will do is halt development, which will halt new housing coming onto the market. Developments that are in process at early to mid-stages of development will have to delay to either reconsider doing the development period (or) reassess the lot pricing... If it's adopted in a rapid fashion or it goes up in a rapid fashion, it's going to stifle development and homebuilding. 

40% (of the maximum rate) is the goal, which is double what it is right now, with an adoption schedule over a period of time that’s easier to adjust to. That way, the people that are developing and building currently aren’t penalized for being in the process.