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Council approves street impact fee program

Tuesday, December 15, 2020 by Ryan Thornton

Beginning in mid-2022, developers eager to contribute to Austin’s growth will need to pitch in to help pay for the transportation infrastructure costs necessitated by the new development. The street impact fee program that City Council unanimously adopted last week will require a one-time payment from developers in proportion to how much traffic their project is likely to generate.

“This is a big step forward to achieving our mobility goals established by the Austin Strategic Mobility Plan,” said Gina Fiandaca, assistant city manager for mobility. “Austin keeps growing and our transportation staff has worked hard to find the right balance to have development pay its fair share of infrastructure costs.”

The program will officially take effect Dec. 21, but fees will not be collected until June 2022 due to an 18-month grace period intended to help the development community prepare for the new costs. Following the grace period, the city will begin issuing fees for new developments based on a uniform fee system that will vary based on a site’s location inside or outside the urban core and its land use. The fee is set at 50 percent of the state’s allowed maximum for non-residential uses and 35 percent of the maximum for residential, or $1,250 per generated vehicle mile and $850 per vehicle mile, respectively.

The uniform fee system is a departure from previous iterations of the proposed impact fee program, which set fee amounts specific to the infrastructure needs in each of the 17 geographical service zones. The uniform fee is intended to prevent pushing developers away from parts of the city that have greater infrastructure needs due to historic disinvestment.

Over the next six months, the Austin Transportation Department will finalize the revision of the city’s Transportation Criteria Manual. Transportation Director Robert Spillar said the new criteria manual will operate in tandem with the impact fee program to “help improve predictability and transparency in design standards and financial impact for the development community.”

Comments are now open through the end of the year for the draft criteria manual. In February, the department will submit the draft for interdepartmental review before initiating a public comment period before adoption.

The 18-month grace period adopted by Council is six months longer than the period proposed by the city. In total, Transportation estimates the additional half-year period could cut approximately $25 million in revenue from the roughly $260 million the program could generate in its first 10 years. According to Liane Miller, the department’s lead on the impact fee program, the impacts of the reduced revenue would be felt most in parts of East, Northeast and Southeast Austin, where the program stands to have the most benefit.

Council Member Natasha Harper-Madison proposed the extra six months based upon the impact fees’ potential of complicating efforts to bring much-needed development into the eastern crescent and elsewhere. Harper-Madison explained, “Given the amount of time it takes to work through Austin’s development process, a one-year grace period, frankly, wouldn’t be adequate.”

Harper-Madison also clarified with city staffers that projects could still be completed through other sources like bonds, and that bond debt can then be paid down through the use of impact fees for any qualifying transportation capacity projects. On the other hand, Harper-Madison added that rushing the fees into place could work against the city’s housing goals.

“I think if ensuring that we have enough housing that Austinites at all income levels can afford is truly the goal of the city, then it’s important that we are mindful of how we might unintentionally hinder that goal and make the appropriate adjustments,” Harper-Madison said.

According to Alter, the extra six months is not a necessary compromise, especially considering that the city is only charging a portion of the maximum fee amount allowed by the state and that the state only requires a one-year grace period. As a member of Council’s Mobility Committee who has participated in the development of the impact fee program, Alter said the development community and other stakeholders “have been well aware of what was coming down the pipeline” and will still have adequate time to plan without the additional six months.

Kitchen agreed that the need for fee collection is urgent: “The sooner that we get these into place, we can have a mechanism for … development paying more for their impact.”

The 18-month grace period passed 7-4 with Council members Leslie Pool, Ann Kitchen, Kathie Tovo and Alison Alter opposed.

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