Sherman is exploring new options to offset the costs related to new development and infrastructure needs. Among other options, the city is considering imposing an impact fee for future developments that will help finance their infrastructure needs.
Impact fees would charge developers a one-time fee related to the impact the development would have on city resources, included water and sewer infrastructure and roadways, to reduce the costs to the city and taxpayers.
“Staff started looking at the issue several months ago,” City Manager Robby Hefton said Monday. “With the level of development and construction going on in Sherman, and the other challenges we’ve been handed through state legislation, wee felt this would be an appropriate time for us to start looking at the idea of impact fees.”
Hefton referred to tax reforms that were signed into law by Gov. Greg Abbott last year. Among other changes, the reforms limit the amount of additional revenue a city can receive based on property taxes over the previous year without the need for an election.
Many cities, especially in large growth areas like North Texas have turned to using impact fees in recent years. Outside of Sherman, the cities of McKinney, Allen, Anna and Melissa all utilize an impact fee structure.
“Large-scale developers active in the Metroplex see this all the time,” Sherman Community and Support Services Manager Nate Strauch said. “It has really become the norm for fast-growth cities to use impact fees to build new roads rather than put it onto the tax base.”
Jeff Whitacre, representing consulting firm Kimley-Horn and associates, said the fees can be useful for cities as it lets growth effectively pay for growth. By establishing the fees, and the tools used to determine them, cities can also get a better understanding of the real impact and dollar value of development decisions.
“It is an additional tool in the toolbox,” he said.
In order to put the fees in place, Whitacre said the city would still need to conduct several master plans for water, wastewater and roadways to be able to set up the initial rates.
Strauch said the city is not prepared to make a decision on fees just yet, but said he expected it to be a major talking point during the annual budget retreat early this summer.