JH H.B. 3603 75(R) BILL ANALYSIS URBAN AFFAIRS H.B. 3603 By: Craddick 5-7-97 Committee Report (Unamended) BACKGROUND The City of Midland, and cities similarly situated, who have not adopted impact fees, face difficult decisions when considering the funding of needed capital improvements to encourage growth and development in and around its municipal boundaries. Municipalities typically have subdivision ordinances requiring developer participation for capital improvements directly related to a given development. However, the enactment of impact fee legislation several years ago, left municipalities who were unable to approve or adopt impact fees, for whatever reason, very limited options. The municipality is left with either financing the entire cost of the improvements or having the developer front the costs and collect pro-rata as other landowners or developers connect to the capital improvements. Current legislation does not provide for pro-rata collection when a municipality finances the cost up front. PURPOSE The proposed legislation would allow certain municipalities who have not adopted impact fees the ability to participate in the orderly growth and development of their city and expand their tax base by encouraging residential and commercial development. Specifically, the legislation would permit a municipality who has not adopted an impact fee to construct needed capital improvements (including water and sewer lines, street and roadway facilities, and drainage improvements) within or outside its boundaries and to collect a proportional share of the cost of the capital improvement from a landowner or developer desiring to connect to the capital improvements. The proposed legislation would allow a municipality to treat a landowner whose land adjoins or is within a specified distance from the capital improvement in a fair and consistent manner. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Section 395.081(a) This section applies to municipalities with a population of 105,000 or less that constitutes more than three-fourths of the population of the county in which the majority of the area of the municipality is located. Section 395.081(b) This section applies to a municipality which has not adopted an impact fee and is constructing or participating financially in the construction of a capital improvement. The discretion lies solely with the municipality as to whether or not the capital improvement is to be constructed, the area to be served by the capital improvement, and the amount to be charged the landowner or developer. The landowner or developer will pay a cost reasonably proportional to the total cost of the capital improvement. Capital improvement is defined as a public improvement including, but not limited to, sewer and water lines and related appurtenances, street and roadway facilities, and drainage improvements. This section does not affect a Public Improvement District as authorized by Chapter 372 of the Texas Local Government Code. Section 395.081 (c) The determination by the municipality shall include a finding that the municipality will benefit from the improvement and the benefit shall be specifically described. The determination and description or benefits made by the municipality are discretionary and final. Section 395.081 (d) A municipality and its officers or employees are granted absolute immunity as to any action, decision or determination made pursuant to this Section.