Austin, Texas
                    FISCAL NOTE, 77th Regular Session
                              April 23, 2001
          TO:  Honorable Gary Walker, Chair, House Committee on Land &
               Resource Management
        FROM:  John Keel, Director, Legislative Budget Board
       IN RE:  SB243  by Harris (Relating to financing capital
               improvements and facility expansions through the
               assessment of impact fees; providing a civil penalty.),
               Committee Report 2nd House, Substituted
*  No significant fiscal implication to the State is anticipated.        *
Local Government Impact
The bill would change the methodology for determining the maximum impact
fee a city can charge to include calculation of a credit or discount.
The bill would require a city to project the total amount of ad valorem
tax and utility service revenue that would be generated by new
development that would be used to pay for facilities contained in the
capital improvements plan.  This amount would be subtracted from the
total projected cost of the capital improvements plan prior to
calculating the maximum fee.  Alternatively, the bill would permit a city
to reduce the total cost of the capital improvements plan by 50 percent.
The bill would also amend public hearing and reporting requirements. The
bill would take effect on September 1, 2001.

According to a working group formed by the Texas Municipal League, costs
to cities should be minimal.  Their preliminary estimate indicates a 35
percent reduction in the maximum fee may result from the requirement,
with no loss of impact fee revenue anticipated by local governments.
They indicate that some cities relying on impact fees may not lose
revenue under the bill because ad valorem tax and utility service charges
generated by existing and future development would be used to build new
facilities to serve growth, and impact fees could possibly offset a
portion of the cost.

Although the Texas Comptroller of Public Accounts indicates that any
fiscal impact to cities should be offset by additional eligible
projects, and streamlined administrative and adoption procedures that
would result in savings, other cities indicate that the provisions of
the bill would have a negative fiscal impact. The fiscal impact could
range from no impact for cities not currently charging an impact fee or
charging less than allowable, to a significant revenue loss for a city
that charges impact fees and currently collects those fees from an area
in which the city does not issue building permits but provides services
for which impact fees can be charged.  The cities of Austin and Laredo
both indicate the provisions of the bill would cause significant revenue
losses.  Austin estimates it would lose $3.7 million or more each year.
Laredo estimates incurring a revenue loss of $22.5 million.
Source Agencies:   302   Office of the Attorney General, 580   Texas
                   Water Development Board, 304   Comptroller of Public
LBB Staff:         JK, CL, DB, BR