Proposed Killeen development fees spark concern from builders

Killeen Daily Herald
By Kevin Limiti | Herald
August 6, 2023

Several real estate developers were alarmed by increases in development and inspection fees in the proposed 2024 Killeen municipal budget.

“The increase in development fees is astronomical, which in effect will kill development,” Anca Neagu said during the citizens comment section of Tuesday’s City Council workshop meeting. “This does not make sense. Who and how did they come up with these increases?”

The developers’ reaction was mostly based on the fee increases in the Subdivision Construction Plan Review section of the presentation. Some of the outrage, however, was based on a misprint.

There was a $500 increase for land that was between one to 10 acres. However, it was not based on “per acre” as the presentation slide suggested but based on “per permit,” as Miranda Drake, Killeen’s assistant director of finance, explained during the meeting.

“This is not a $600,000 fee,” Kent Cagle, city manager, said in response to some of the developers who showed up at Tuesday’s meeting.

“Just to make sure everyone understands ... when we get there, it’s still not a $600,000 fee,” he said, responding to someone in the gallery.

Gary “Bubba” Purser, a local developer who also spoke during the citizens comments period, complained about the fees.

“We never paid these,” Purser said. “And they couldn’t tell me (what they were), and these are your engineering people along with your consultant.”

At one point in the meeting, Purser stood up with his hand raised attempting to speak, but Mayor Debbie Nash-King assured him the council wasn’t making a decision on the fees that night.

Fees and frustrations

Across the board, there are proposed increases in everything from the Preliminary Plat Application — $300 to $500, a change of $200 — to donation container permits — $10 to $25, a change of $15.

Developer Joshua Welch said during the citizens comment period of the meeting that the increases were “baffling and frustrating” and felt developers weren’t given enough notice about the changes.

“I looked through the presentation the staff had prepared. It said they had asked for comments, and didn’t receive any. Well, when you don’t let anyone know, it’s not surprising you didn’t get comments,” Welch said.

Drake said the city’s policy was to send out an alert, but she wasn’t sure if it was sent out.

Councilman Ramon Alvarez remarked that the issue with the fees was a “darned if you do, darned if you don’t” type of situation.

“There’s probably a thousand different ways to try and dissect these issues. I kind of lean towards a more pragmatic way of looking at it,” he said, explaining that he looked at Harker Heights and said that city’s development fees were lower. “Obviously, they don’t have the infrastructure we have.”

He asked for “clarification and edification” between now and Tuesday, when the council is scheduled to vote on the changes after another public hearing on the issue.

Should developers pay?

Alvarez told the Herald Friday that a municipality only functions if it raises taxes and fees, cuts services or continues to grow.

“Development ‘paying for itself’ is a Strong Towns principle. One that is good to keep in mind and even strive for,” he said in an email. “However, there is a delicate balance as with most things in life. Too much one way or the other and the ecosystem can be put in a panic. There is always room for improvement and this is no different with Killeen.”

This statement aligns with Killeen’s Comprehensive Plan, which states that due to the population growth of the city, the city has been left with more infrastructure than it has the budget to pay for.

“Residents’ ability to pay more in taxes and fees is limited,” the plan reads. “This has created a constant tension between elected officials, staff, and citizens around priorities and how to best address growing wants and needs of the community with limited resources.”

“In order to be fiscally sustainable long-term and maintain or improve service levels, the city will need to generate additional revenue to cover the costs of what is realistically required to do so,” it continues, saying some of those means are raising property taxes or adding fees.

The city paid $349,140 for a consultant to develop its comprehensive plan in 2020. The plan was adopted in August 2022.

Councilman Riakos Adams likewise expressed concerns about the fees, saying that he could see the “shock that this has caused.”

Adams said in the past the city has had incremental changes.

“Even if that’s just another option of this — I know we’re not at the decision phase right now,” he said, but suggested that they consider spreading the fees out so it doesn’t cause harm to developers.

City Engineer Andrew Zagars explained that the city had undercharged for developer fees for the past several years.

Cagle remarked that even with the new fees, the costs are still higher than the revenue.

Slashing fees

Councilman Jose Segarra ultimately made a motion of direction to slash the proposed fee increases in half, arguing that the changes should be made gradually, echoing Adams’ and Alvarez’s assertions,

The motion of direction passed 7-0.

“I don’t want to see people get priced out of our market,” Segarra said, drawing out his experience as a real estate agent to explain that what the council does could have an effect on the market.

Segarra told the Herald Friday he didn’t believe city staff were intimidated by any developer.

“I have full confidence in our exceptional staff, who are skilled at effectively engaging with both citizens and developers. The fact that they made the recommendation they presented indicates that they were not influenced by any form of bullying, as they are committed to their work with integrity and professionalism,” Segarra said. “If any other fees were to be raised by 200% or 500% in a single year, I would also be in disagreement, as it could burden residents and businesses disproportionately.”

While developers are known to fund council members’ election campaigns, Segarra said he has “no intentions of accepting donations in the future, just as I self-funded my last election,” when asked if he intends to accept campaign donations from Purser or other home builders in the future.

In his last election — May 2022 — Segarra received a total of $2,000 in campaign contributions, according to a campaign finance report filed to the city. He received his funding from the Killeen Firefighters for Responsible Government and the Texas Association of Realtors Political Action Committee in donations of $1,000 each, according to the report.

“My utmost priority is always the well-being and interests of our citizens, as well as ensuring that the few voters who take the time to participate in our city’s elections are well represented,” Segarra said. “It’s important to recognize that money alone is not enough; garnering support from voters is paramount, as evidenced in past elections both locally and nationally.”

Councilwoman Jessica Gonzalez brought up that some cities outsource their permitting to third-party companies and asked if that could save the city money.

Alvarez emphasized to the Herald that the vote of slashing the proposed fee increases was a motion of direction and not final. He said that he had asked for more information at the time.

Cagle was adamant that the fees were going to affect either residents or developers, one way or the other.

He said in the past, permitting was “like hitting a tennis ball against the wall. It came right back.”

“It’s a complicated issue. Any time you try to change, there’s going to be a lot of pushback,” Cagle said.

Cagle made a comment during the meeting about criticisms of city staff.

“It’s not right to tell the staff we’re trying to run somebody out of business,” he said. “We’re running a business just like any other business. ... Where does the money come from if not from the customers?”

The fee increases are expected to be voted on next week, when there will also be a second public hearing.