By Nelson                                             S.B. No. 1634
         76R6032 KKA-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to school development impact fees.
 1-4           SECTION 1.  Subtitle I, Title 2, Education Code, is amended
 1-5     by adding Chapter 47 to read as follows:
 1-7           Sec. 47.001.  DEFINITIONS.  In this chapter:
 1-8                 (1)  "Developer" means a person undertaking
 1-9     development.
1-10                 (2)  "Development" means the construction or expansion
1-11     of a building or structure, or a change in the use of a building or
1-12     structure, or a change in the use of land, that creates additional
1-13     demand and need for public education facilities.
1-14                 (3)  "Development approval" means a written
1-15     authorization from a municipality or county that authorizes the
1-16     development to begin.
1-17                 (4)  "Development fee" means a payment of money imposed
1-18     on a project as a condition of development to pay for a
1-19     proportionate share of the cost of system improvements needed to
1-20     serve new growth or development.
1-21                 (5)  "Encumber" means to legally obligate by contract,
1-22     or to otherwise commit to use, by appropriation or other official
1-23     act.
1-24                 (6)  "Level of service" means a measure of the
 2-1     relationship between service capacity and service demand for public
 2-2     educational facilities in terms of demand-to-capacity ratios, the
 2-3     comfort and convenience of use or service of the facilities, or
 2-4     both.
 2-5                 (7)  "Public educational facility" means land,
 2-6     buildings, furnishings, fixtures, and equipment having a useful
 2-7     life of at least 10 years and owned and operated by a school
 2-8     district.
 2-9                 (8)  "Present value" means the current value of past,
2-10     present, or future payments, of contributions or dedications of
2-11     goods, services, materials, or construction, or of money.
2-12                 (9)  "Project" means a particular development of an
2-13     identified parcel of land.
2-14                 (10)  "Proportionate share" means that portion of the
2-15     cost of system improvements that is reasonably related to the
2-16     service demands and needs of the project.
2-17                 (11)  "Service area" means a geographic area defined by
2-18     a school district in which a defined set of public facilities
2-19     provide service to development in the area.  A service area may
2-20     include  all or part of the land within a school district.
2-21                 (12)  "System improvement costs" means the costs
2-22     incurred to provide additional capacity of facilities needed to
2-23     serve new growth and development, including planning, design and
2-24     construction, land acquisition, land improvement, and related
2-25     engineering.
2-26                 (13)  "System improvement" means an improvement by new
2-27     construction or other action that increases the service capacity of
 3-1     a public educational facility.
 3-2           Sec. 47.002.  DEVELOPMENT FEES AUTHORIZED.  (a)  The board of
 3-3     trustees of a school district that has adopted a facilities master
 3-4     plan as provided by Section 47.012 may by resolution impose a
 3-5     development fee.
 3-6           (b)  A school district may impose a development fee for
 3-7     previously incurred system improvement costs to the extent that new
 3-8     growth and development will be served by previously constructed
 3-9     system improvements.
3-10           Sec. 47.003.  PUBLIC HEARING REQUIRED.  Before finally
3-11     adopting a resolution imposing a development fee, a board of
3-12     trustees must hold two public hearings in regard to the resolution.
3-13     The second hearing must be held at least two weeks after the first
3-14     hearing.
3-15           Sec. 47.004.  DETERMINATION OF AMOUNT OF FEE.  (a)  A
3-16     development fee must be:
3-17                 (1)  based on actual system improvement costs or
3-18     reasonable estimates of those costs;
3-19                 (2)  calculated and imposed on the basis of service
3-20     areas determined by the school district; and
3-21                 (3)  calculated to impose a proportionate share of the
3-22     costs of system improvements needed to serve new growth and
3-23     development.
3-24           (b)  Before imposing a development fee, the school district
3-25     shall contract with qualified professionals to assist the district
3-26     in the preparation of a written study that recommends the amount of
3-27     the fee.  The  fee adopted by the district may not exceed the
 4-1     amount recommended in that study.
 4-2           (c)  The development fee must be calculated on a basis that
 4-3     is net of any credits for the present value of revenues, including
 4-4     taxes, assessments, user fees, and intergovernmental transfers,
 4-5     that:
 4-6                 (1)  will be generated by new growth and development
 4-7     based on historical funding patterns; and
 4-8                 (2)  are anticipated to be available to pay for system
 4-9     improvements.
4-10           (d)  The resolution imposing a development fee must include a
4-11     schedule specifying the fee by various land uses per unit of
4-12     development and by service area.
4-13           (e)  The school district shall certify the amount of a fee to
4-14     the developer of a project.  The certification must be effective
4-15     for not less than 180 days, during which period the district may
4-16     not change the amount of the fee.
4-17           (f)  The school district shall permit the individual
4-18     assessment and payment of development fees at the option of an
4-19     applicant for development approval.
4-21     A county or municipality may not grant final approval under Chapter
4-22     212 or 232, Local Government Code, as applicable, to a plat or
4-23     replat of a development or issue permits required for development
4-24     unless the developer presents evidence of having:
4-25                 (1)  paid or otherwise satisfied the obligation of any
4-26     applicable development fee imposed under this chapter; or
4-27                 (2)  been determined by the school district imposing
 5-1     the development fee to be exempt from that fee.
 5-2           Sec. 47.006.  CREDITS.  (a)  If a development is abandoned,
 5-3     the school district shall credit the present value of a development
 5-4     fee paid against future development fees on the same land.
 5-5           (b)  A developer may agree with the school district to
 5-6     construct, fund, or contribute system improvements as a credit
 5-7     against a development fee.  If the amount of the credit exceeds the
 5-8     development fee, the school district shall reimburse the developer
 5-9     for the excess.  The reimbursement shall be paid from other
5-10     development fees paid by developments located in the service area
5-11     benefitted by the improvement.
5-12           Sec. 47.007.  REFUNDS FOR FAILURE TO CONSTRUCT.  (a)  The
5-13     owner of property on which a development fee has been paid is
5-14     entitled to a refund of the fee if the school district has failed
5-15     to encumber the fee for construction or begin construction before
5-16     the sixth anniversary of the date the fee was paid.  In determining
5-17     whether the fee has been encumbered, fees are considered encumbered
5-18     on a first-in, first-out basis.
5-19           (b)  If a right to a refund exists, the school district shall
5-20     give written notice of that right to the person who paid the
5-21     development fee, at the address shown on the records of the school
5-22     district relating to the fee, unless a successor in interest has
5-23     given notice to the school district of a transfer or assignment of
5-24     the right and has provided a mailing address, in which case the
5-25     notice shall be sent to the successor in interest.  In addition to
5-26     the mailed notice, if a right to a refund exists the school
5-27     district shall publish notice in a newspaper of general circulation
 6-1     in the school district.  The notice must be published before the
 6-2     31st day after the date the right comes into existence and must be
 6-3     published under the heading:  "Notice of Entitlement to Public
 6-4     Educational Facilities Development Fee Refund."
 6-5           (c)  If no express transfer or assignment of a right to a
 6-6     refund under this section exists, the right to the refund does not
 6-7     run with the land.
 6-8           (d)  An application for a refund under this section must be
 6-9     filed with the school district before the first anniversary of the
6-10     date on which newspaper notice of the right was published.
6-11           (e)  The amount of a refund includes the pro rata share of
6-12     interest actually earned on the fee.
6-13           Sec. 47.008.  EXEMPTIONS.  (a)  A school district may exempt
6-14     from the development fee:
6-15                 (1)  a project that will create extraordinary economic
6-16     development and employment growth; or
6-17                 (2)  a project  for affordable housing.
6-18           (b)  The revenue lost by a school district from the exemption
6-19     of a project may not be recovered through an increase in the amount
6-20     of development fees.
6-21           (c)  The portion of a project for which a valid building
6-22     permit has been issued before the effective date of a resolution
6-23     imposing a development fee is exempt from the development fee if
6-24     the building permit remains valid and construction is begun and
6-25     pursued according to the terms of the permit.
6-26           Sec. 47.009.  APPEALS AND PROTESTS.  (a)  A school district
6-27     that imposes a development fee shall provide for an administrative
 7-1     appeal of the determination of the development fee for a particular
 7-2     project.
 7-3           (b)  A developer may pay a development fee under protest in
 7-4     order to obtain approval of a plat or building permit, as
 7-5     applicable.  A developer paying under protest may not be estopped
 7-6     from exercising any right of appeal or from receiving a refund of
 7-7     amounts ultimately determined to have been improperly imposed.
 7-8           Sec. 47.010.  ACCOUNTING; INTEREST-BEARING ACCOUNTS.  (a)  A
 7-9     school district shall deposit and maintain development fees in an
7-10     interest-bearing account.  Interest earned on development fees may
7-11     be spent only for the purposes for which development fees may be
7-12     spent.
7-13           (b)  The annual financial report of the school district shall
7-14     account for, by service area, development fees collected,
7-15     encumbered, and spent during the preceding year.
7-16           Sec. 47.011.  PERMITTED USES OF DEVELOPMENT FEES.  (a)
7-17     Development fees may be spent only on  public educational system
7-18     improvement costs benefitting the service area within which the
7-19     fees were collected.
7-20           (b)  System improvement costs include the costs of:
7-21                 (1)  construction;
7-22                 (2)  surveying and engineering;
7-23                 (3)  land acquisition, including purchase costs, court
7-24     awards and costs, attorney's fees, and expert witness fees;
7-25                 (4)  staff, including engineers, planners, architects,
7-26     landscape architects, and financial consultants; and
7-27                 (5)  administration of the imposition and collection of
 8-1     development fees, not to exceed three percent of total development
 8-2     fee revenue.
 8-3           (c)  In addition to the costs listed in Subsection (b),
 8-4     system improvement costs include projected interest and other costs
 8-5     of financing if the development fees are to be used for the payment
 8-6     of the principal of and interest on bonds, notes, or other evidence
 8-7     of indebtedness used to finance public educational facilities.
 8-8           (d)  System improvement costs do not include the cost of
 8-9     routine and periodic maintenance, personnel training, or other
8-10     operating expenses.
8-11           Sec. 47.012.  FACILITIES MASTER PLAN.  (a)  Before imposing a
8-12     development fee, a school district must adopt a facilities master
8-13     plan.
8-14           (b)  The plan must be prepared in consultation with qualified
8-15     professionals and must include:
8-16                 (1)  the projected student enrollment over a 10-year
8-17     period;
8-18                 (2)  an inventory of existing public educational
8-19     facilities, including land, classroom space, portable classroom
8-20     space, and administration facilities;
8-21                 (3)  level of service measures, such as maximum
8-22     classroom size, to be used in projecting future facility needs; and
8-23                 (4)  a list of identified needed improvements,
8-24     including the relative priority, estimated cost, and anticipated
8-25     source of funding for each needed improvement.
8-26           Sec. 47.013.  ADVISORY COMMITTEE.  (a)  A school district
8-27     planning to impose a development fee shall appoint an advisory
 9-1     committee to advise the district in the preparation of the
 9-2     development fee study under Section 47.004(b) and in the
 9-3     development of the terms of the resolution imposing the fee.
 9-4           (b)  The advisory committee must include at least five but
 9-5     not more than 10 members, and at least 40 percent of the membership
 9-6     must represent the development, building, or real estate industry.
 9-7           Sec. 47.014.  INTERGOVERNMENTAL AGREEMENTS.  In accordance
 9-8     with Chapter 791, Government Code, a school district and a
 9-9     municipality or county may enter into an interlocal contract for
9-10     the performance of any functions and services related to the
9-11     imposition, collection, enforcement, and expenditure of development
9-12     fees imposed by the school district or the applicable municipality
9-13     or county.
9-14           SECTION 2.  The importance of this legislation and the
9-15     crowded condition of the calendars in both houses create an
9-16     emergency and an imperative public necessity that the
9-17     constitutional rule requiring bills to be read on three several
9-18     days in each house be suspended, and this rule is hereby suspended,
9-19     and that this Act take effect and be in force from and after its
9-20     passage, and it is so enacted.