Fort Worth City Council reached a compromise between neighborhoods and developers Tuesday, passing an ordinance that forces developers to pay a higher share of the cost of new roads surrounding their developments.
But neighborhood leaders said council could have gone further to ensure developers are picking up their share of the bill.
Still, the compromise is a win for neighborhoods, said Rusty Fuller, president of the North Fort Worth Alliance.
It “will build those roads quicker with less impact to bond plans in the future,” Fuller said “It’s a win for the taxpayers in that regard. I’m just disappointed that they want to put it off.”
The Council voted unanimously Tuesday to increase the rates of impact fees, or the fees that developers must pay to offset the cost of road construction. Previously, rates for residential and commercial development were set at 30%. Starting June 1, 2023, developers will pay for 50% of road construction costs for residential developments and 40% for commercial and industrial developments.
The residential development rate will increase by 5% every year for three years, until the impact fee rate reaches 65%.
Although Fuller dislikes the three-year roll out, the new rate will be significantly higher than the previous rate.
Developers speaking about the ordinance cited housing affordability as a reason for not increasing impact fees too much or too quickly.
The average value of a single-family home has increased significantly over the past five years. The average value increased from $188,347 in 2018 to $261,185 in 2022, according to the Tarrant Appraisal District.
“This is going to be a gut punch to the housing industry across Fort Worth,” said Clint Vincent, vice president of land at Bloomfield homes. “If the 65% is passed, it shuts housing down in certain districts.”
Staff previously recommended an 80% impact fee rate for residential development and 55% for commercial, but the council lowered the residential rate to 65% and then agreed to slowly implement that rate over three years at the request of builders and developers.
The recommendation was based on a study, which found that the city will need $3.15 billion in new thoroughfares, based on the city’s master thoroughfare plan. About $2.85 billion of that construction is recoverable through the impact fee program, the study found.
At a 65% collection rate, developers will pay the city $8,885 for the average single family residential home before the home is built. Taxpayers will pick up $4,784 to supplement the cost of building roads necessary for new developments through property taxes.
Taxpayers will foot the rest of the cost for roads, typically through bonds like the $560 million bond passed in May 2022.
Council members can revisit the impact fee rate at any time, and Carlos Flores, who represents parts of north Fort Worth, signaled a willingness to do so.
“We’re more than doubling what we’ve been collecting in past years,” Flores said.
The council also amended the ordinance so that private and charter schools are exempt from paying impact fees, just as public schools are.
“It’s about parity,” Mayor Mattie Parker said. “In the state of Texas you cannot charge an ISD, so we’re going to treat all schools the same.”
The ordinance will also include a 25% discount for small businesses. A small business is defined in the ordinance as a business or non-profit that makes $2.5 million or less in revenue per year, employs up to 25 employees, is not a subsidiary of a larger company or a franchise with five or more franchises and has a Fort Worth address.
The ordinance also ensures that builders who choose to develop in an area that requires more road expensive construction pay proportionally more.
“The areas that require the most money to build the roads will have to pay that amount of money,” Fuller said.
Developers who spoke said that increasing residential fees to 65% may be too dramatic.
“We’re willing to increase our fees, but please be reasonable,” said Don Allen, a single-family real estate developer.
Council member Elizabeth Beck pushed back, saying the city is still subsidizing developers for the cost of building roads and passing on those expenses to the taxpayers.
Council members commended staff for consistent outreach to those in the real estate industry — builders, real estate agents – and residents. Fuller said he agrees outreach was effective.
“They need to listen to everybody, and they did,” Fuller said. “They just listened to the developers more. But, hey, we got 65% in three years so we’ll just wait for it to happen.”
Rachel Behrndt is a government accountability reporter for the Fort Worth Report. Contact her at email@example.com or via Twitter. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.