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. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Subtitle I, Title 2, Education Code, is amended 1-5 by adding Chapter 47 to read as follows: 1-6 CHAPTER 47. DEVELOPMENT FEE FOR PUBLIC SCHOOL FACILITIES 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. 4-20 Sec. 47.005. CONDITION OF PLAT APPROVAL OR PERMIT ISSUANCE. 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.