Council votes to raise water impact fees to near maximum rate
Friday, October 25, 2013 by Michael Kanin
Austin City Council members Thursday approved an immediate increase of impact fees for public infrastructure to just below the maximum allowable rate. Those are the fees that the Austin Water Utility assesses to help offset the cost of extending water and wastewater utility lines.
The move, which came by unanimous vote, sets the fees to $5,400 for water lines and $2,200 for wastewater lines. The will take effect on January 1.
At that time, current zone discounts designed to promote development in certain regions of the city will be eliminated. All told, projections have the new impact fee structure raising more than $400 million over the next 10 years.
The final vote came after an attempt by Council Member Bill Spelman to institute a two-part phase-in of the new rates. Had that passed, it would have allowed an initial impact fee hike of 75 percent of the maximum allowable fee beginning in 2014, and the full amount in 2015.
Council members expressed some concerns about the idea. Council Member Kathie Tovo asked Water Utility staff for the cost of Spelman’s idea – the potential loss in revenue that would result from a delay in full implementation –to the city register. Utility officials put that figure somewhere in the range of $6 million, but noted that it was based on an average, and could be less than that.
Council Member Laura Morrison suggested that she and her colleagues had pushed for a fee impact change for some time – and that, despite staff statements to the contrary, Council members may have been able to change the rate at any time.
“I feel a little frustrated because I think for the past four years it’s been suggested, and there have been discussions, and I thought that we had at least informal questions into staff of ‘we want to change the impact fee’ – and the answer that always came back was, ‘We can’t do it, we can only do it on our five-year cycle,” she said. “Now maybe I misunderstood that answer but what it sounds like during these past five or six years, we could have increased it across the board up to what had been defined as the maximum at that point.”
Morrison asked for confirmation of that fact from staff. Though he suggested that the question might be best answered by city legal staff, Water Utility Director Greg Meszaros said this was the case, so long as Council members followed proscribed public input processes. Utility counsel also confirmed that answer.
Spelman reminded his colleagues that they would be the ones to vote on the second round of fee hikes under his proposal. Still, it wasn’t enough, and his motion failed on a 3-4 vote, with Council Members Mike Martinez, Chris Riley, Tovo, and Morrison voting against the idea.
Development interests have expressed concerns that the fee increase – a dramatic one – will bring about an increase in home costs. Austin Homebuilders Association’s Harry Savio told Council members last week that the fee hikes could cause prices to rise significantly, should they elect to raise the fees.
Other advocates suggest that the higher fees help offset potential rate increases for Austin Water customers. This set includes Brian Rodgers, who serves on the city’s Impact Fee Advisory Committee, and has been sharing a presentation that urges a move toward the maximum rate.
Two key city boards also weighed in on the issue. Both – the Impact Fee Advisory Committee and the Water and Wastewater Commission – endorsed the idea of a maximum fee hike.
Spelman asked Water and Wastewater Vice Chair Sarah Faust, who was present for Thursday’s discussion, whether the commission had considered the question of a phase-in for the fees. When Faust confirmed that they had, and that they had decided against the idea, Spelman asked why.
Faust suggested that there had been plenty of opportunity to weigh in on the issue. “This has been in public process since even before we formally considered it as a commission,” she offered, adding later: “We felt that was plenty of warning.”
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