The City desires to update its capital recovery fees, or impact fees, in order to appropriately fund construction of new facilities and expand existing facilities to serve future development.  The fees consider and apply to water and wastewater projects identified on the City's Water and Wastewater Impact Fee CIP necessary to support growth and development.  To formulate the fees to be assessed, land use assumptions that project growth over a planning period must be established.  Additionally, Capital Improvement Plans that address the needs of that growth must be prepared and approved.

The purpose of the impact fee is to provide a funding mechanism for the implementation of the water and wastewater capital improvements over a planning period.  The impact fee program facilitates the funding participation of new development at a fair rate based on the demand placed on the City's water transmission and distribution and wastewater collection and conveyance systems by the development.  The process for amending the City's Land Use Assumptions, Capital Improvement Plans, and Impact Fees is established by Texas Local Government Code Chapter 395.  This public hearing on these amendments was scheduled by Resolution 25-R-017 passed on February 4, 2025.  Public notice of this hearing was published in the San Antonio Express News on February 12, 2025.

An initial step in the update of the impact fee is the establishment of land use assumptions, including population and employment projections over the 30-year planning period (2020-2050).  The assumptions include the type, location, quantity, and timing of land uses.  The Land Use Assumptions (LUAs) in Section 2 of the Impact Fee Update Report includes a description of the methodology used in preparation, explanation of the data considered, and presentation of historical and projected growth trends.

The other major step in the update of the impact fee is the preparation of Water and Wastewater Capital Improvement Plans (CIPs).  The proposed CIP for water was developed based on a hydraulic model of the existing water system, application of growth projections to that model, and identification of improvement projects needed to meet TCEQ minimum requirements for water service.  The proposed CIP for wastewater was developed based on a hydraulic model of the existing collection and conveyance system, application of growth projections to that model, and identification of improvement projects needed to provide required capacity within the sewer system.  Individual projects are identified and are spread as appropriate over the planning period into the categories of near term, 2030, and 2050 projects for planning purposes.  Projects may shift in time based on actual patterns of development and the plan should be reviewed and updated as needed in five years.  (The projects that make up the Capital Improvement Plans have also been configured in such a way to serve as updated Water and Wastewater Master Plans for development which were adopted by Council on March 4, 2025.)

After the summation of CIP costs, the totals are reduced by the amount of utility service revenues expected to be generated by development over the program period and used to pay for improvement costs.  Once growth rates have been established and CIP costs minus the calculated revenue credit determined, those values are used in the calculation of a cost per service unit (land use equivalent or LUE) for both water and wastewater.  Those resultant amounts are the updated maximum assessable water and wastewater impact fees.  Those updated maximum assessable fees are $8,814 per LUE for water and $5,556 per LUE for wastewater.

During its meeting on January 22, 2025, the Capital Improvement Advisory Committee (CIAC) held a workshop that included presentation and discussion of the LUAs, CIPs, and calculated maximum assessable impact fees.  The CIAC discussed and developed a recommendation to City Council regarding adopting the amendment to the Water and Wastewater Impact Fees.  Written comments on the proposed amendments have been provided to Council in the form of their meeting minutes and are summarized here and the associated letter. The minutes having been approved by the CIAC on March 5 and were filed by posting on the City's website that week.  The CIAC recommends the following:

• Adopt the Water and Wastewater Land Use Assumptions and Capital Improvement Plans as presented by Staff.
• Assess the impact fees at the maximum amount, but with a phase-in schedule as follows:
  • Adoption of the Water Impact Fee rate per living unit equivalent (LUE) for development of $4,407 during the first year of the program, $6,610 during the second year, and $8,814 during the third year until updated.  Those rates represent 50%, 75%, and 100% of the calculated maximum assessable rates to be charged in years one, two, and three of implementation, respectively.
  • Adoption of the Wastewater Impact Fee rate per living unit equivalent (LUE) for development of $2,778 during the first year of the program, $4,167 during the second year, and $5,556 during the third year until updated.  Those rates represent 50%, 75%, and 100% of the calculated maximum assessable rates to be charged in years one, two, and three of implementation, respectively.

Another public hearing will be held April 1, 2025, after which Council will have the opportunity to approve a resolution adopting the amendments to the Land Use Assumptions and Capital Improvement Plans and to set the schedule and rates to be charged for Impact Fees for Water and Wastewater.  Accordingly, proposed amendments to Code of Ordinances Chapter 90 Article V. Water and Wastewater Capital Recovery Fees will also be presented for consideration.

No action is proposed at this meeting.