Fort Worth wants to charge these fees to builders, and it could raise home prices
Fort Worth is considering charging developers and builders higher fees to extend water and sewer lines — a move that could help offset the cost of the city’s tremendous growth, but also could lead to higher prices for home buyers.
Many cities charge so-called impact fees, and Fort Worth has done so since 1990.
Under the proposal, the fee of $2,802 for each water meter in a new development would increase to $3,290 beginning next year, and $3,777 starting in 2023. The fee would remain at $3,777 for about another three years before the city would revisit the issue in 2026-27, officials said.
The proposed new water and sewer fees are separate from impact fees the city charges developers for road and transportation improvements. Transportation impact fees can vary depending upon the location and type of development, but the fee typically ranges from $1,100 to $3,000 for single-family homes, according to the city.
Although builders and developers typically pay those fees at the time of construction, they usually raise the price of homes to pass along that burden to buyers, officials said.
If the city decides to go along with the higher fees, it could make the region’s steep home prices jump even higher.
The prices of homes in the Fort Worth area have surged in recent years, pushing the median price above $300,000, up 22% from a year ago, according to the Greater Fort Worth Association of Realtors.
Water and sewer impact fees
It will cost $1.25 billion just to provide water and wastewater systems to all the new homes that are expected to be built within the city during the next decade. The new fees would cover an estimated 40% of that cost, with current Fort Worth residents and water customers paying the remainder, said Chris Harder, Fort Worth water director.
During a work session, Harder told City Council members that Fort Worth’s new fees would still be lower than cities such as Austin, which charges a water/sewer fee of $7,200 for new houses, and Flower Mound, which charges $6,831 for new homes in that town’s Lakeside district. But Fort Worth’s new fees would be higher than cities such as Houston, which charges $1,990 per home, and Arlington, which charges $1,246.
To explore the issue of impact fees, the city assembled a committee made up of representatives from the community and the real estate development and building industries. That committee explored whether to keep the impact fees at the 40% level or to raise them to 45% or 50%, committee chairman Bob Madeja, a builder, told the council.
Even though the impact fees would remain at the 40% level, the cost of the fees would be higher because of the increasing cost of delivering services to neighborhoods farther away from the city center, officials said.
“We went back and forth. Every time that fee goes up, it just adds more costs to a house,” Madeja said. “We don’t want to just keep piling on fees, so that was the compromise. We came back down to the 40%.”
Even keeping the rate at 40% was controversial among committee members, who voted 4-2 to approve that rate despite concerns from some members that the fee would be too high. It wasn’t clear why the seven-member committee cast only six votes on the matter.
Ultimately, the home buyer pays
However, Harder said it’s commonly understood that developers and builders often pass along the cost to buyers of new homes — and that could be an issue for many prospective home buyers who are already paying skyrocketing prices for houses in Fort Worth.
Harder also explained that the fees aren’t charged to new or existing homes in areas that already have city services, and that could be an incentive for prospective buyers to buy an existing home or a new one in older parts of the city.
A public hearing on the proposed fees is scheduled for the Aug. 24 City Council meeting. The council is scheduled to vote on the fees in September.
Rusty Fuller, president of the North Fort Worth Alliance, said his organization supports the higher impact fees, even though the fees can lead to higher home prices. The alternative is to put the entire burden on existing home owners, who are already overburdened with paying the costs of city services and dealing with worsening traffic problems in newer neighborhoods.
“These fees are extremely necessary,” Fuller said. “If the new home owner doesn’t pay for it, everybody else has to pay for it at some point.”
Later he said: “This is a case of growth happening faster than anybody possibly could have anticipated.”
This story was originally published August 6, 2021 at 5:20 AM.
