Denison enacts impact fee ordinance

Herald Democrat
By Michael Hutchins, Herald Democrat
April, 5, 2023

Denison plans to offset the cost of future infrastructure improvements and expansions for existing taxpayers by making developers hoping to come into the area pay. In a unanimous vote, the Denison City Council approved a new impact fee ordinance Monday night that will pass the cost of new infrastructure and improvements onto new growth and development.

The basic premise behind the fee structure is that new development should pay for itself and its impact on city resources. This fee would not be put on existing residences of businesses unless the use increased through a new water meter or other mechanism.

Through the fees, existing residents do not have to bear the full burden of new infrastructure that is needed in order for development and growth to take place. At the same time, it helps ensure that these improvements are funded and go forward, which can encourage future development and growth, city officials said.

“It helps us pay for the cost of water lines and sewer lines, manholes and different infrastructure that has to be built to service those subdivisions and allow them to be built,” Interim City Manager Bobby Atteberry said Monday ahead of the meeting. “It also helps us pay for improvements to our sewer plants and water treatment plants that have to be expanded in size for the new development — the growth that is coming.”

Many cities across the region have turned to impact fees in recent years as a funding mechanism for road, sewer and water projects amid unprecedented growth and development. Sherman adopted its own set of fees a few years ago, leaving Denison as one of the few larger cities that did not have a fee structure in place.

“Denison is one of the few cities around that doesn’t have impact fees,” Atteberry said. “It’s something that cities do when they start to grow … so the residents don’t have to bear the cost of the added utilities and infrastructure that have to go in to service those.”

For the city of Denison, a single-family residence with a one-inch water meter could see an impact fee of about $11,732 based on its expected impact to water, sewer and road infrastructure. Other uses, including retail and industrial development, could see higher fees based on these criteria.

“All of these items come together… and this tells us what we are going to need to put in the ground, on the ground at our plants in the way of infrastructure to serve our population projections based on where they are in Denison,” Capital Improvement Projects Manager Fanchon Stearns said. 

After determining the impact costs, the city reduces this number by 50 percent due to state law that acknowledges that existing residents do see some benefit from the improvements and development. This establishes the maximum allowable fee that Denison or other cities can impose.

For its fee structure, Denison is starting at 50 percent of this allowable fee, which will allow the city to adjust it as needed without needing to establish another rate study.

During Monday’s discussions, several members of the Denison building and development community spoke regarding concerns they had with Denison’s proposed fees. While many acknowledged that fees are normal business in North Texas, they expressed concern that Denison may be starting too high and could strange incoming development and growth.

B. J. Wastoskie, representing CenterPoint Commercial Properties, said he had only recently become aware of Denison’s efforts to establish impact fees. He also expressed concerns on if local developers were consulted prior to the fees being presented to council. Wastoskie also asked what cities Denison used as comparisons when drafting the fees.

Mayor Pro Tem Robert Crawley, who led Monday’s meeting, said the public hearings and other meetings regarding the fees was publicized as all public meetings are through agenda postings. Other portions of the process were publicized 30 days in advance.

The impact fees structure was recommended by an advisory committee that included at least two local developers, city officials said. Crawley also noted that due to the individual nature of cities it is difficult to compare one to the other.

“I think one thing  we learned in the committee meetings was that there aren’t apples and apples out there,” he said. “Each community pretty much does what they want to or what they need to do in their own CIP program. There is no standard formula for each city to go by.”

Developer Jonathan Earnhart said he is currently working on a multi-family project that would see significant cost increases under the impact fee ordinance. While he noted the need for fees, he said other cities seemed to have lower fees, including high growth areas like Celina. He argued that while the fees may be necessary, placing them too high could stymie growth in the long term. 

City Council Member Kris Spiegel said he looked at the fees in Sherman and other neighboring communities and feels that the perception that Denison may be significantly higher is based on people looking at just one aspect of the fees rather than the full picture.

City Attorney Julie Fort, who also serves as attorney for the city of Celina, said Celina’s impact fees come out to about $15,100 for a single-family residence and the city still issues about 100 building permits per month.