Jun 25, 2025 Capital Improvement Advisory Committee on 2025-06-25 4:00 PM

Good afternoon and welcome to the City of Denton Capital Improvement Advisory Committee meeting on Wednesday, June 25th. I will call this meeting to order with the quorum present at 4.01 p.m. Our only item on the agenda here is Item 1a, CIAC 25-008. And before you start your presentation, for those who are somewhat new to the commission and the role of P&Z in this role, please explain for us. Good evening, Chair and Planning, Zoning, Commissioners. I'm Keisha Siriano, Assistant Plaint Director. I'd just like to provide some guidance for the meeting today as many of you are new sitting at the CIAC in this role. And as Chair mentioned earlier, you see Jason here, so that is a requirement of the ordinance that we have someone representing from our ETJ. So now I'm going to quickly review the responsibilities of the CIAC. So the Advisory Committee serves in an advisory capacity to the City Council and is established to advise and assist the City Council in adopting land use to assumptions, review the Capital Improvements Plan and file written comments. And those written comments will be the minutes that are taken today, monitor and evaluate implementation of the Capital Improvements Plan, file semi-annual reports with respect to the progress of the Capital Improvements Plan, and report to City Council any perceived inequities in implementing the plan or imposing the impact fee. And lastly, advise City Council the need to update or revise the land use assumptions, Capital Improvements Plan and impact fee. And with that, I'll turn it over to Kyle. Good afternoon. I'm Kyle Pedigo, the Planning and Engineering Division Manager for Water Utilities. I'm here today to present our final Water and Wastewater Impact Fee Study and request approval to bring this to Council for adoption of the full proposed impact fees. So a previous version of this was presented to the Capital Improvement Advisory Committee in February of this year. Before bringing it to City Council, we found some language in both the Hunter and Cole operating agreements that needed to be addressed in the adopted study. We worked closely with both our consultant and other city departments to ensure that the requirements detailed in the Texas Local Government Code Section 395 and the Hunter and Cole operating agreements were met. Since the land use service units and Capital Improvement Plans were not altered, I'll briefly explain the process before moving on to the calculated impact fees and Hunter and Cole considerations. Our land use assumptions and population growth projections mirror the Denton 2040 Comprehensive Plan, showing a projected 8.1% growth in the zero to five-year time frame, which tapers off to 3.4% in the five to 10-year time frame. The service units are based on water meter sizing. The city's smallest water meter, which is the 5/8 by 3/4 inch meter, is adequate to serve a single-family home. In comparison, a retail development would likely require a two-inch water meter. The flow provided by the two-inch water meter is equivalent to eight times that of our smallest meter, so therefore that retail development would be responsible for eight times the base impact fee that we adopt. This is the Water Impact Fee Capital Improvement Plan. This mirrors the infrastructure that is proposed in the Water Master Plan that we plan to adopt in August of this year. The projects shown in blue represent existing infrastructure that still has capacity to serve this projected growth. Therefore, a portion of the installation cost is still recoverable through impact fees. The projects shown in red represent planned infrastructure, which would be 100% recoverable in our impact fee calculations. This is the Wastewater Impact Fee Capital Improvement Plan. This is based off of the 2023 Wastewater Master Plan, which was adopted in May of last year. This is similar to the previous slide, where all of the projects shown in green are existing infrastructure that still has capacity to serve, and therefore a portion of it is recoverable through the impact fee calculation, and everything shown in red is future infrastructure that is 100% recoverable. This impact fee will not alter the existing water service areas, which are shown in this map. So the service areas are 1A, which is the central downtown area, 1B, which is the ring around that area, and 2, which is focused on the west side of the Hickory Creek Basin. Wastewater impact fees currently have a single service area due to our single water reclamation plant, the Pecan Creek Water Reclamation Plant. The new Wastewater Capital Improvement Plan shows the necessity of two additional water reclamation plants to be constructed to accommodate the growth planned in the outlying areas. Since each facility lines an independent drainage basin, Water Utilities is recommending the division of the single wastewater service area into three separate wastewater service areas. This map is an overlay showing the drainage basins, the Clear Creek in blue to the north, the existing Pecan Creek through the center of town in red, and the Hickory Creek to the west in green. To calculate impact fees, the estimated recoverable cost of the Capital Improvement Plan is divided by the estimated number of units served. If separate service areas were not implemented, this chart demonstrates the maximum impact fees that would be eligible citywide. So for water, you have a $583 million Capital Improvement Plan divided by 52,774 service units for $11,046. And for wastewater, you have the $707 million Capital Improvement Plan divided by a similar number of service units for a $13,526 estimated fee. Based on the existing water service areas and the proposed wastewater service areas, this chart shows the proposed maximum impact fees per service area. So for service area 1A for water, it would be a decrease of the existing impact fee of $3,569 to $1,820 because that area is mostly built out. For service area 1B, it would be an increase from $5,352 to $10,745. For service area 2 of water, it would be an increase from $7,638 to $12,139. For wastewater, since we have a current service area as a single unit, we have our current accessible fee as $4,716. Due to the treatment plant construction as the economic driver behind these fees, the Pecan Creek, Hickory Creek, and Clear Creek basins would all see an increase. Pecan Creek would increase to $11,615, Hickory Creek to $12,791, and Clear Creek to $17,916. These are very slightly different from what was presented in February. We found a calculation, we made some adjustments to the calculations. So the Hickory Creek saw a reduction of roughly $1,500 and Clear Creek saw an increase of roughly $80 per service unit. For the Hunter and Coal Ranch considerations, so the City of Denton has existing operating agreements with both the Hunter Ranch District and the Coal Ranch District, with the ordinance numbers listed there, which stipulate certain calculations to be included with the water and wastewater impact fee study. The included appendix in the final study details the impact fee eligible projects considered city off-sites and calculations regarding the impact fee of both the Hunter Ranch and the Coal Ranch developments. So according to the operating agreements, both Hunter and Coal Ranch are going to contribute an additional six cent contract tax in excess of their impact fees toward certain infrastructure on the capital improvement plan, which we list as the city off-sites. The appendix is the agreed upon mechanism to track that collection and expenditure of Hunter and Coal's contributions for their proportionate share of the city off-sites. Staff recommends full adoption of the proposed maximum assessable impact fees for each service area. For next steps, we published the notice for public hearing on June 21st. Today we're meeting with the Capital Improvement Advisory Committee. On July 15th, we're set up for a work session with City Council to set the public hearing meeting date and to review the impact fee study. On July 22nd, we have the public hearing meeting set up with City Council. On August 5th, we have the City Council Ordinance Update Meeting, and then we would follow up, once it's adopted, with a Public Utilities Board memo update on September 22nd. Any questions? - Thank you, Kyle. Let the record show that Commissioner Riggs is now present. Questions? Commissioner McTuffin. - I couldn't repeat any of this out loud, but I understand everything, Kyle. It's very well done. May I ask if this is the maximum impact fee that we can charge legally? - Yes. So, due to the calculations, once we assembled the capital improvement plan and estimated the service units, this is the maximum that we can charge. - Okay. Thank you. And then I just had another comment on the criticality of this, I appreciate this, only because of every day we have to have our water, and then we have to dispose of our wastewater, so I realize, I think we all realize the criticality of this, so well done. Thank you. - Thank you. - I had a question, Kyle. If you could go back to the slide with the map of the wastewater projects, please? - Yep. - This one? With the service areas? - Yes. Thank you. - It's wonderfully all white anyway on the screen, but I think we get the idea from the back up. I guess when I look at this, the majority of the projects in the Pecan Creek section, right, seem to be out in the mostly undeveloped low residential future land map area east of Mayhill Road. Is that accurate? - That's correct for the conveyance. - Okay. It seems like that wastewater impact fee went up dramatically. I know maybe three or four years ago when the CIAC was considering some roadway impact fees, there was talk about some infill overlays or something to handle, even though it's in the same drainage basin, right? Most of the projects that it looks like we're building are for future buildout, not for areas that already have the infrastructure, as you said, on the water side of the zone 1A. I guess I'm just wondering, are we expecting some follow-ups in the future to offset or handle the increased wastewater impact fee in the core where we already have infrastructure so that we don't dissuade reinvestment in the core? - The primary cost driver for that increase within the Pecan Creek Basin, which is the core of the city, is not the conveyance shown here, the red lines. It's the reconstruction of the Pecan Creek water reclamation plant. That plant is near on 50 years old and near the end of its useful life cycle, and we're currently performing a CMAR, a construction manager at risk project, to rebuild and expand that plant. That's the cost driver for that increase. It is an increase in that area, but it is also lower than the outlying areas because there's not nearly as much conveyance to construct, if that answers your question. - Yeah, I think that helps. That begs other questions about why we have an aging plant and no revenue to replace it without growing more, but I'll leave that be. Any other questions? Commissioner Riggs? - Yeah, I would say that this is a pretty common fee assessed by communities to essentially fund that future infrastructure, and the idea is that you would want this infrastructure in place before the development comes, so that way, development can actually happen. But most of this, whenever we're looking at the land use, we're kind of assuming that this is going to be assessed on basically the vacant properties, undeveloped properties. - Correct. - Okay. Well done. - Thank you. - Any other questions? I'm seeing none, so they do need direction from us on the amount. I think the first time this came through, I guess specifically, any questions about the Hunter Cole that's a new appendix, new confusion, a little bit, new accounting. Okay, so you do need direction from us on what fee to recommend, and Steph is recommending the full calculated fee, correct? - Correct. So we're recommending the fees shown on this slide. - Okay. So, Commissioner Riggs? - So I don't know if it was in your presentation, I apologize for being late, but do you have maybe some comparisons of what an impact fee might be to a development of a different type, say like fast food restaurant versus residential or something of that nature? We can get an idea. - Yes. So the service unit where the impact fees are calculated off of is the size of the water meter installed for the establishment. So our base water meter size for our single family, that was enough to serve a single family home is our 5/8 by 3/4, which is the base impact fee that we're adopting. For a large retail development of a big box store, mall type area, they would likely require a two inch meter. So we take and we compare the flow of that two inch meter to our base unit. So that two inch meter can handle eight times the flow of our base unit. So then that development would be responsible for eight times our base impact fee. Then the two inch, I mean for a smaller development, we have, there's graduated meter sizing up to that level. - So a big box development, would that be like a Home Depot, Costco, something like that? - Yeah, like a Home Depot and surrounding area. Commissioner Dyer. - Would you mind going back to the fee structure with the different, yes. I'm sure you said this and just, you know, trying to process all this information. On the wastewater side of things, why is Clear Creek so much higher than the other two? - So if this map should give a good comparison. So if you see on Pecan Creek with the green is the lowest, the green is all of our existing infrastructure that's already built out, that only has a portion that's recoverable and the red is the new infrastructure. And Hickory Creek is lower than Clear because we already have some infrastructure out there. With Clear Creek, we have almost no infrastructure up in that area. So it would be a completely independent plant, water reclamation plant, plus all of the conveyance upstream of that. - Okay. You're going from scratch. - Going from scratch. And then it's also compared on the number of service units. So I know that there's a higher density out in Hickory Creek per acre of housing than would probably be installed in the Clear Creek Basin. - And have you guys calculated how long you think it's gonna take to have the funds to be able to build these like, I mean, will there come a time where in those zones and those areas of development, where you'll be able to lower the costs to the developers to the fees? Like, do we look at this again in five years? Like what's the cycle? - Potentially. So this is a five year process where we recalculate and update. And what we do is we take and we examine a 10 year window. So these fees are based off of the infrastructure we expect to be built within 10 years. - So that population that you were showing us, the five year and then the 10 year projections. - Correct. So then we come back in five years and then we redo it for the next 10 year window, redo our calculations. - Okay. Thank you. - Yes. - I'd like to just touch on a couple of things. One thing you said, something when you were comparing the Hickory Creek to the Clear Creek Basin, that the future land use in the Hickory Creek is a little bit higher. It's per acre, I guess. And that would have the effect of lowering the capital cost per unit, essentially? - Correct. For the conveyance. So because that area is a little further along in development, we know of developments that we could calculate the density per acre and by increasing the number of units that are served off of infrastructure, that lowers the price somewhat. - Okay. And I guess just to touch on my earlier point of the increased fee in the section where we already have some conveyance, but we have an aging reclamation plant. I'm pretty sure, gosh, more than 10 years ago now, the water department was moving toward 100% replacement schedule of capital infrastructure on revenue instead of depending on bond money. Not for expansion of the system, obviously, but just for replacement, right? Is that something we're looking at for the wastewater side of things? I know there is a wastewater charge on the utility bill, right? - Well, part of what these impact fees do is they reduce the amount of bond money. By collecting the impact fee and having, letting development help pay for this infrastructure, it reduces that amount of bond money that needs to be spent to replace the same infrastructure that's aging. - Okay, so then if we move forward with this and we get enough development to pay for replacing the aging concrete water reclamation plant, then in 2080 when the new one is getting old, we'll need additional development in order to be able to replace it and serve our existing citizens? - No, and Steven might be able to speak more towards our future plans or what we had in the past with the revenue planning. - Steven Gage, General Manager, Water Utilities and Street Operations. Yes, we're absolutely moving towards a fully revenue funded scenario. This is, the best way to put it is the previous leadership had all of the great intentions of doing this the right way, but didn't execute as well, right? And so we're coming back and we're doing the assessments and we're saying let's take our time, let's build this infrastructure well, let's put in place asset management programs so we can actually maintain it, so we can meet and/or exceed the useful life of the assets, and let's diversify our financial portfolio so we're not just relying on debt. And when we do rely on debt, it's not just issuing bonds, we're actually leveraging programs like the Bureau of Reclamation has a lot of bond or actually grant funding that's available that we can pursue to help offset the cost of this, and so we're working with our grants department to identify those opportunities and pursue them. We're also working with WIFIA, which is Water Infrastructure Innovation and Funding Act. That's a federal program that allows us to utilize the federal government's bond rating, which saves us in debt, so even though we're issuing debt, we're saving basically two basis points off of the money that we're borrowing, so to put it in perspective, we did this very similar thing to up at Ray Roberts when we did it, we're doing the expansion, and we borrowed $195 million from the Texas Water Development Board, well by borrowing that money from them and leveraging their debt or their credit rating, that project actually saved the city about $48 million in long-term debt services, so those are the things that we're doing. It's gonna take us a little while to turn that ship back around, but that's definitely the direction that we're going, and you'll also see that we're doing rate and fee studies because we've been undercharging for the services that we've been delivering for years, and so we're trying to level set there as well, so it's not about making money, it's about recovering the cost associated with the services that we're delivering, and once we reach that point where we're receiving those revenues, then we can revenue fund all this great investment in infrastructure, and hopefully that answered your question, sir. Yeah, it does, thank you, I understand it takes a long time to move, if there's anything that we as a body can do to ensure that the best laid plans get moved through to fruition, please let us know. Absolutely, thank you. Thank you. So, any other questions, I don't know how everybody's thinking, you know, the first time this came through, we did recommend the 100% fee collection as recommended by staff, does anybody else have any other thoughts, different direction beyond that, or just general comments? So, I personally think that, obviously from my break, investing in your infrastructure is super important, and the more funding sources that we can find keeps rates lower, you know, so if this were all revenue funded, then the rates would be through the roof, and so I really like what Stephen had to say about looking at WIFIA and all the grant packages, but, you know, when we don't do 100%, then that means it's not 100% funded, so we have to figure out how to fund that by other means, so I think it should go up 100%. Okay, anyone else, Commissioner MacDuff? Are you ready for a recommendation? Sure. I'd like to move approval to accept this report and to approve the 100% funding for the impact fee. Okay. Is there a second? I'll second. Thank you. Commissioner Riggs, any other comments or questions? Okay. We are posted for a vote on this, right? Yeah, so, we'll take a voice vote, and just go down the line, so Commissioner MacDuff, I'll say you. Aye. Commissioner Riggs. Aye. Commissioner McDade. Aye. Commissioner Dyer. Aye. Commissioner Kalaszczuk. Aye. And the Chair is an aye, so that passes 6-0. Thank you very much. Thank you. And that will bring us to a close of our Capital Improvement Advisory Committee meeting. Thank you, and we will reconvene as the Planning and Zoning Commission at 5 p.m. for the work session.