By: Hall S.B. No. 2427
A BILL TO BE ENTITLED
AN ACT
relating to the use of impact fees by a political subdivision.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 395.001(4), Local Government Code, is
amended to read as follows:
(4) "Impact fee" means a charge or assessment imposed
by a political subdivision against new development in order to
generate revenue for funding or recouping thepay the actual costs
of labor, including the cost of surveyors, engineers, and other
similar professionals, and materials for capital improvements or
facility expansions necessitated by and attributable to the new
development. [The term includes amortized charges, lump-sum
charges, capital recovery fees, contributions in aid of
construction, and any other fee that functions as described by this
definition. The term does net include:
[(A) dedication of land for public parks or
payment in lieu of the dedication to serve park needs;
[(B) dedication of rights-of-way or easements or
construction or dedication of on-site or off-site water
distribution, wastewater collection or drainage facilities, or
streets, sidewalks, or curbs if the dedication or construction is
required by a valid ordinance and is necessitated by and
attributable to the new development;
[(C) lot or acreage fees to be placed in trust
funds for the purpose of reimbursing developers for oversizing or
constructing water or sewer mains or lines; or
[(D) other pro rata fees for reimbursement of
water or sewer mains or lines extended by the political
subdivision.]
However, an item included in the capital improvements plan
may not be required to be constructed except in accordance with
Section 395.019(2), and an owner may not be required to construct or
dedicate facilities and to pay impact fees for those facilities.
SECTION 2. Sections 395.012(a), (b), and (d), Local
Government Code, are amended to read as follows:
(a) An impact fee may be imposed only to pay the costs of
labor and materials for constructing capital improvements or
facility expansions, including and limited to the:
(1) labor and materials explicitly accounted for in
the construction contract price;
(2) surveying and engineering fees; and
(3) [land acquisition costs, including land
purchases, court awards and costs, attorney's fees, and expert
witness fees; and
[(4)] fees actually paid or contracted to be paid to an
independent qualified engineer or financial consultant preparing
or updating the capital improvements plan who is not an employee of
the political subdivision.
(b) Projected interest charges and other finance costs may
be included in determining the amount of impact fees only if the
impact fees are used for the payment of principal and interest on
bonds, notes, or other obligations issued by or on behalf of the
political subdivision to finance the labor and materials for
capital improvements or facility expansions identified in the
capital improvements plan and are not used to reimburse bond funds
expended for facilities that are not identified in the capital
improvements plan.
(d) A municipality may pledge an impact fee as security for
the payment of debt service on a bond, note, or other obligation
issued to finance labor and materials for a capital improvement or
public facility expansion if:
(1) the improvement or expansion is identified in a
capital improvements plan; and
(2) at the time of the pledge, the governing body of
the municipality certifies in a written order, ordinance, or
resolution that none of the impact fee will be used or expended for
an improvement or expansion not identified in the plan.
SECTION 3. Section 395.019, Local Government Code, is
amended to read as follows:
Sec. 395.019. COLLECTION OF FEES IF SERVICES NOT AVAILABLE.
Except for roadway facilities, impact fees may be assessed but may
not be collected in areas where services are not currently
available unless:
(1) the collection is made to pay for labor and
materials for a capital improvement or facility expansion that has
been identified in the capital improvements plan and the political
subdivision commits to commence construction within two years,
under duly awarded and executed contracts or commitments of staff
time covering substantially all of the work required to provide
service, and to have the service available within a reasonable
period of time considering the type of capital improvement or
facility expansion to be constructed, but in no event longer than
five years;
(2) the political subdivision agrees that the owner of
a new development may construct or finance the capital improvements
or facility expansions and agrees that the costs incurred or funds
advanced for labor and materials for the capital improvements or
facility expansions will be credited against the impact fees
otherwise due from the new development or agrees to reimburse the
owner for such costs from impact fees paid from other new
developments that will use such capital improvements or facility
expansions, which fees shall be collected and reimbursed to the
owner at the time the other new development records its plat; or
(3) an owner voluntarily requests the political
subdivision to reserve capacity to serve future development, and
the political subdivision and owner enter into a valid written
agreement.
SECTION 4. Section 395.021, Local Government Code, is
amended to read as follows:
Sec. 395.021. AUTHORITY OF POLITICAL SUBDIVISIONS TO SPEND
FUNDS TO REDUCE FEES. Political subdivisions may spend funds from
any lawful source to pay for all or a part of the labor and material
costs for capital improvements or facility expansions to reduce the
amount of impact fees.
SECTION 5. Section 395.023, Local Government Code, is
amended to read as follows:
Sec. 395.023. CREDITS AGAINST ROADWAY FACILITIES FEES. Any
labor and material costs for construction of, contributions to, or
dedications of off-site roadway facilities agreed to or required by
a political subdivision as a condition of development approval
shall be credited against roadway facilities impact fees otherwise
due from the development.
SECTION 6. Section 395.079(a), Local Government Code, is
amended to read as follows:
(a) Any county that has a population of 3.3 million or more
or that borders a county with a population of 3.3 million or more,
and any district or authority created under Article XVI, Section
59, of the Texas Constitution within any such county that is
authorized to provide storm water, drainage, and flood control
facilities, is authorized to impose impact fees to cover the labor
and material costs for [provide] storm water, drainage, and flood
control improvements necessary to accommodate new development.
SECTION 7. The changes in law made by this Act apply only to
an impact fee enacted or imposed on or after the effective date of
this Act. An impact fee enacted or imposed before the effective date
of this Act is governed by the law in effect immediately before the
effective date of this Act, and the former law is continued in
effect for that purpose.
SECTION 8. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2025.