By Harris                                              S.B. No. 243
         77R2563 PAM-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to financing capital improvements and facility expansions
 1-3     through the assessment of impact fees; providing a civil penalty.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Sections 395.001(4), (8), (9), and (10), Local
 1-6     Government Code, are amended to read as follows:
 1-7                 (4)  "Impact fee" means a charge or assessment imposed
 1-8     by a political subdivision against new development in order to
 1-9     generate revenue for funding or recouping the costs of capital
1-10     improvements or facility expansions necessitated by and
1-11     attributable to the new development.  The term includes amortized
1-12     charges, lump-sum charges, capital recovery fees, contributions in
1-13     aid of construction, and any other fee that functions as described
1-14     by this definition.  The term does not include:
1-15                       (A)  dedication of land for public parks or
1-16     payment in lieu of the dedication to serve park needs;
1-17                       (B)  dedication of rights-of-way or easements or
1-18     construction or dedication of on-site or off-site water
1-19     distribution, wastewater collection or drainage facilities, or
1-20     streets, sidewalks, or curbs if the dedication or construction is
1-21     required by a valid ordinance and is necessitated by and
1-22     attributable to the new development; [or]
1-23                       (C)  lot or acreage fees to be placed in trust
1-24     funds for the purpose of reimbursing developers for oversizing or
 2-1     constructing water or sewer mains or lines; or
 2-2                       (D)  other pro rata fees for reimbursement of
 2-3     water or sewer mains or lines extended by the political
 2-4     subdivision.
 2-5           However, an item included in the capital improvements plan
 2-6     may not be required to be constructed except in accordance with
 2-7     Section 395.019(2), and an owner may not be required to construct
 2-8     or dedicate facilities and to pay impact fees for those facilities.
 2-9                 (8)  "Roadway facilities" means arterial or collector
2-10     streets or roads that have been designated on an officially adopted
2-11     roadway plan of the political subdivision, together with all
2-12     necessary appurtenances.  The term includes the political
2-13     subdivision's share of costs for [does not include any] roadways
2-14     and [or] associated improvements designated on the federal or Texas
2-15     highway system, including local matching funds and costs related to
2-16     utility line relocation and the establishment of curbs, gutters,
2-17     sidewalks, drainage appurtenances, and rights-of-way.
2-18                 (9)  "Service area" means the area within the corporate
2-19     boundaries or extraterritorial jurisdiction, as determined under
2-20     Chapter 42, of the political subdivision to be served by the
2-21     capital improvements or facilities expansions specified in the
2-22     capital improvements plan, except roadway facilities and storm
2-23     water, drainage, and flood control facilities.  The service area,
2-24     for the purposes of this chapter, may include all or part of the
2-25     land within the political subdivision or its extraterritorial
2-26     jurisdiction, except for roadway facilities and storm water,
2-27     drainage, and flood control facilities.  For roadway facilities,
 3-1     the service area is limited to an area within the corporate
 3-2     boundaries of the political subdivision and shall not exceed six [a
 3-3     distance equal to the average trip length from the new development,
 3-4     but in no event more than three] miles[, which service area shall
 3-5     be served by the roadway facilities designated in the capital
 3-6     improvements plan].  For storm water, drainage, and flood control
 3-7     facilities, the service area may include all or part of the land
 3-8     within the political subdivision or its extraterritorial
 3-9     jurisdiction, but shall not exceed the area actually served by the
3-10     storm water, drainage, and flood control facilities designated in
3-11     the capital improvements plan and shall not extend across watershed
3-12     boundaries.
3-13                 (10)  "Service unit" means a standardized measure of
3-14     consumption, use, generation, or discharge attributable to an
3-15     individual unit of development calculated in accordance with
3-16     generally accepted engineering or planning standards and based on
3-17     historical data and trends applicable to the political subdivision
3-18     in which the individual unit of development is located during the
3-19     previous 10 years [for a particular category of capital
3-20     improvements or facility expansions].
3-21           SECTION 2.  Section 395.014(a), Local Government Code, is
3-22     amended to read as follows:
3-23           (a)  The political subdivision shall use qualified
3-24     professionals to prepare the capital improvements plan and to
3-25     calculate the impact fee.  The capital improvements plan must
3-26     contain specific enumeration of the following items:
3-27                 (1)  a description of the existing capital improvements
 4-1     within the service area and the costs to upgrade, update, improve,
 4-2     expand, or replace the improvements to meet existing needs and
 4-3     usage and stricter safety, efficiency, environmental, or regulatory
 4-4     standards, which shall be prepared by a qualified professional
 4-5     engineer licensed to perform the professional engineering services
 4-6     in this state;
 4-7                 (2)  an analysis of the total capacity, the level of
 4-8     current usage, and commitments for usage of capacity of the
 4-9     existing capital improvements, which shall be prepared by a
4-10     qualified professional engineer licensed to perform the
4-11     professional engineering services in this state;
4-12                 (3)  a description of all or the parts of the capital
4-13     improvements or facility expansions and their costs necessitated by
4-14     and attributable to new development in the service area based on
4-15     the approved land use assumptions, which shall be prepared by a
4-16     qualified professional engineer licensed to perform the
4-17     professional engineering services in this state;
4-18                 (4)  a definitive table establishing the specific level
4-19     or quantity of use, consumption, generation, or discharge of a
4-20     service unit for each category of capital improvements or facility
4-21     expansions and an equivalency or conversion table establishing the
4-22     ratio of a service unit to various types of land uses, including
4-23     residential, commercial, and industrial;
4-24                 (5)  the total number of projected service units
4-25     necessitated by and attributable to new development within the
4-26     service area based on the approved land use assumptions and
4-27     calculated in accordance with generally accepted engineering or
 5-1     planning criteria; [and]
 5-2                 (6)  the projected demand for capital improvements or
 5-3     facility expansions required by new service units projected over a
 5-4     reasonable period of time, not to exceed 10 years; and
 5-5                 (7)  a plan for awarding:
 5-6                       (A)  a credit for the portion of ad valorem tax
 5-7     and utility service revenues generated by new service units during
 5-8     the program period that is used for the payment of improvements,
 5-9     including the payment of debt, that are included in the capital
5-10     improvement plan; or
5-11                       (B)  in the alternative, a credit equal to 50
5-12     percent of the total projected cost of implementing the  capital
5-13     improvement plan.
5-14           SECTION 3.  Section 395.015(a), Local Government Code, is
5-15     amended to read as follows:
5-16           (a)  The impact fee per service unit may not exceed the
5-17     amount determined by subtracting the amount in Section
5-18     395.014(a)(7) from [dividing] the costs of the capital improvements
5-19     described by Section 395.014(a)(3) and dividing that amount by the
5-20     total number of projected service units described by Section
5-21     395.014(a)(5).
5-22           SECTION 4.  Section 395.016(d), Local Government Code, is
5-23     amended to read as follows:
5-24           (d)  This subsection applies only to land platted in
5-25     accordance with Subchapter A, Chapter 212, or the subdivision or
5-26     platting procedures of a political subdivision after adoption of an
5-27     impact fee adopted after June 20, 1987.  The political subdivision
 6-1     shall assess the impact fees before or at the time of recordation
 6-2     of a subdivision plat or other plat under Subchapter A, Chapter
 6-3     212, or the subdivision or platting ordinance or procedures of any
 6-4     political subdivision in the official records of the county clerk
 6-5     of the county in which the tract is located.  Except as provided by
 6-6     Section 395.019, if water and wastewater capacity is available, the
 6-7     political subdivision may collect the fees [at either the time of
 6-8     recordation of the subdivision plat or connection to the political
 6-9     subdivision's water or sewer system or] at the time the political
6-10     subdivision issues a [either the] building permit [or the
6-11     certificate of occupancy].
6-12           SECTION 5.  Subchapter C, Chapter 395, Local Government Code,
6-13     is amended by adding Section 395.0411 and amending Sections
6-14     395.042-395.045, 395.047, and 395.049-395.051 to read as follows:
6-15           Sec. 395.0411.  CAPITAL IMPROVEMENTS PLAN.  The political
6-16     subdivision shall provide for a capital improvements plan to be
6-17     developed by qualified professionals using generally accepted
6-18     engineering and planning practices in accordance with Section
6-19     395.014.
6-20           Sec. 395.042.  Hearing on Land Use Assumptions AND CAPITAL
6-21     IMPROVEMENTS PLAN.  To impose an impact fee, a political
6-22     subdivision must adopt an order, ordinance, or resolution
6-23     establishing a public hearing date to consider the land use
6-24     assumptions and capital improvements plan for [within] the
6-25     designated service area [that will be used to develop the capital
6-26     improvements plan].
6-27           Sec. 395.043.  INFORMATION ABOUT LAND USE ASSUMPTIONS AND
 7-1     CAPITAL IMPROVEMENTS PLAN AVAILABLE TO PUBLIC.  On or before the
 7-2     date of the first publication of the notice of the hearing on the
 7-3     land use assumptions and capital improvements plan, the political
 7-4     subdivision shall make available to the public its land use
 7-5     assumptions, the time period of the projections, and a description
 7-6     of [the general nature of] the capital improvement facilities that
 7-7     may be proposed.
 7-8           Sec. 395.044.  Notice of Hearing on Land Use Assumptions AND
 7-9     CAPITAL IMPROVEMENTS PLAN.  (a)  Before the 30th day before the
7-10     date of the hearing on the land use assumptions and capital
7-11     improvements plan, the political subdivision shall send a notice of
7-12     the hearing by certified mail to any person who has given written
7-13     notice by certified or registered mail to the municipal secretary
7-14     or other designated official of the political subdivision
7-15     requesting notice of the hearing within two years preceding the
7-16     date of adoption of the order, ordinance, or resolution setting the
7-17     public hearing.
7-18           (b)  The political subdivision shall publish notice of the
7-19     hearing [once a week for three consecutive weeks, the first notice
7-20     to appear] before the 30th day [but on or after the 60th day]
7-21     before the date set for the hearing, in one or more newspapers of
7-22     general circulation in each county in which the political
7-23     subdivision lies.  However, a river authority that is authorized
7-24     elsewhere by state law to charge fees that function as impact fees
7-25     may publish the required newspaper notice only in each county in
7-26     which the service area lies.  [The notice of public hearing may not
7-27     be in the part of the paper in which legal notices and classified
 8-1     ads appear and may not be smaller than one-quarter page of a
 8-2     standard-size or tabloid-size newspaper, and the headline on the
 8-3     notice must be in 18-point or larger type.]
 8-4           (c)  The notice must contain:
 8-5                 (1)  a headline to read as follows:
 8-6                    "NOTICE OF PUBLIC HEARING ON LAND USE
 8-7             ASSUMPTIONS AND CAPITAL IMPROVEMENTS PLAN RELATING
 8-8                    TO POSSIBLE ADOPTION OF IMPACT FEES"
 8-9                 (2)  the time, date, and location of the hearing;
8-10                 (3)  a statement that the purpose of the hearing is to
8-11     consider the land use assumptions and [that will be used to develop
8-12     a] capital improvements plan under which an impact fee may be
8-13     imposed; and
8-14                 (4)  [an easily understandable map of the service area
8-15     to which the land use assumptions apply; and]
8-16                 [(5)]  a statement that any member of the public has
8-17     the right to appear at the hearing and present evidence for or
8-18     against the land use assumptions and capital improvements plan.
8-19           Sec. 395.045.  Approval of Land Use Assumptions AND CAPITAL
8-20     IMPROVEMENTS PLAN REQUIRED.  (a)  After the public hearing on the
8-21     land use assumptions and capital improvements plan, the political
8-22     subdivision shall determine whether to adopt or reject an
8-23     ordinance, order, or resolution approving the land use assumptions
8-24     and capital improvements plan.
8-25           (b)  The political subdivision, within 30 days after the date
8-26     of the public hearing, shall approve or disapprove the land use
8-27     assumptions and capital improvements plan.
 9-1           (c)  An ordinance, order, or resolution approving the land
 9-2     use assumptions and capital improvements plan may not be adopted as
 9-3     an emergency measure.
 9-4           Sec. 395.047.  HEARING ON [CAPITAL IMPROVEMENTS PLAN AND]
 9-5     IMPACT FEE.  On adoption of the land use assumptions and
 9-6     [completion of the] capital improvements plan, the governing body
 9-7     shall adopt an order or resolution setting a public hearing to
 9-8     discuss the [adoption of the plan and] imposition of the impact
 9-9     fee.  The public hearing must be held by the governing body of the
9-10     political subdivision to discuss the proposed ordinance, order, or
9-11     resolution [adopting a capital improvements plan and] imposing an
9-12     impact fee.
9-13           Sec. 395.049.  NOTICE OF HEARING ON [CAPITAL IMPROVEMENTS
9-14     PLAN AND] IMPACT FEE.  (a)  Before the 30th day before the date of
9-15     the hearing on the imposition of an [capital improvements plan and]
9-16     impact fee, the political subdivision shall send a notice of the
9-17     hearing by certified mail to any person who has given written
9-18     notice by certified or registered mail to the municipal secretary
9-19     or other designated official of the political subdivision
9-20     requesting notice of the hearing within two years preceding the
9-21     date of adoption of the order or resolution setting the public
9-22     hearing.
9-23           (b)  The political subdivision shall publish notice of the
9-24     hearing [once a week for three consecutive weeks, the first notice
9-25     to appear] before the 30th day [but on or after the 60th day]
9-26     before the date set for the hearing, in one or more newspapers of
9-27     general circulation in each county in which the political
 10-1    subdivision lies.  However, a river authority that is authorized
 10-2    elsewhere by state law to charge fees that function as impact fees
 10-3    may publish the required newspaper notice only in each county in
 10-4    which the service area lies.  [The notice of public hearing may not
 10-5    be in the part of the paper in which legal notices and classified
 10-6    ads appear and may not be smaller than one-quarter page of a
 10-7    standard-size or tabloid-size newspaper, and the headline on the
 10-8    notice must be in 18-point or larger type.]
 10-9          (c)  The notice must contain the following:
10-10                (1)  a headline to read as follows:
10-11           "NOTICE OF PUBLIC HEARING ON ADOPTION OF IMPACT FEES"
10-12                (2)  the time, date, and location of the hearing;
10-13                (3)  a statement that the purpose of the hearing is to
10-14    consider the adoption of an impact fee;
10-15                (4)  [an easily understandable map of the service area
10-16    on which the proposed fee will be levied;]
10-17                [(5)]  the amount of the proposed impact fee per
10-18    service unit; and
10-19                (5) [(6)]  a statement that any member of the public
10-20    has the right to appear at the hearing and present evidence for or
10-21    against the plan and proposed fee.
10-22          Sec. 395.050.  ADVISORY COMMITTEE COMMENTS ON [CAPITAL
10-23    IMPROVEMENTS PLAN AND] IMPACT FEES.  The advisory committee created
10-24    under Section 395.058 shall file its written comments on the
10-25    proposed [capital improvements plan and] impact fees before the
10-26    fifth business day before the date of the public hearing on the
10-27    imposition of the [plan and] fees.
 11-1          Sec. 395.051.  APPROVAL OF [CAPITAL IMPROVEMENTS PLAN AND]
 11-2    IMPACT FEE REQUIRED.  (a)  The political subdivision, within 30
 11-3    days after the date of the public hearing on the imposition of an
 11-4    [capital improvements plan and] impact fee, shall approve or
 11-5    disapprove the [adoption of the capital improvements plan and]
 11-6    imposition of an impact fee.
 11-7          (b)  An ordinance, order, or resolution approving the
 11-8    [capital improvements plan and] imposition of an impact fee may not
 11-9    be adopted as an emergency measure.
11-10          SECTION 6.  Section 395.052(a), Local Government Code, is
11-11    amended to read as follows:
11-12          (a)  A political subdivision imposing an impact fee shall
11-13    update the land use assumptions and capital improvements plan at
11-14    least every five [three] years.  The initial five-year [three-year]
11-15    period begins on the day the capital improvements plan is adopted. 
11-16          SECTION 7.  Subchapter D, Chapter 395, Local Government Code,
11-17    is amended by adding Section 395.082 to read as follows:
11-18          Sec. 395.082.  CERTIFICATION OF COMPLIANCE REQUIRED.  (a)  A
11-19    political subdivision that imposes an impact fee shall submit a
11-20    written certification verifying compliance with this chapter to the
11-21    attorney general each year not later than the last day of the
11-22    political subdivision's fiscal year.
11-23          (b)  The certification must be signed by the presiding
11-24    officer of the governing body of a political subdivision and
11-25    include a statement that reads substantially similar to the
11-26    following:  "This statement certifies compliance with Chapter 395,
11-27    Local Government Code."
 12-1          (c)  A political subdivision that fails to submit a
 12-2    certification as required by this section is liable to the state
 12-3    for a civil penalty in an amount equal to 10 percent of the amount
 12-4    of the impact fees erroneously charged.  The attorney general shall
 12-5    collect the civil penalty and deposit the amount collected to the
 12-6    credit of the housing trust fund.
 12-7          SECTION 8.  Sections 395.025(b), 395.046, 395.048, and
 12-8    395.0515, Local Government Code, are repealed.
 12-9          SECTION 9.  This Act takes effect September 1, 2001.