In taking the first steps toward creating impact fees for new development entering the city, Sherman City Council approved a $150,000 contract with Kimley-Horn and Associates Wednesday to conduct a impact fee study for the city. If approved, the impact fees would set guidelines for charges imposed on incoming development for their usage of city infrastructure.
The city previously discussed the possibility of imposing impact fees during the first council meeting of February.
During the previous discussions on the topic, Hefton said conversations on impact fees in Sherman started following state-wide tax reforms that limited the amount of property tax revenue revenue cities could generate compared to the previous year.
“It follows the presentation that was given at the previous council meeting, so this is just getting us started,” City Manager Robby Hefton said.
Prior to 2019, cities were limited at collecting eight percent additional tax revenue over the previous year from existing properties without the need of voter approval. The reforms dropped this threshold to just 3.5 percent.
Impact fees would act in lieu of property taxes and direct charges for the construction of new roadways, and the impact on water and waste water capacity, to new development based on their usage.
“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 said in early February.
City council member Shawn Teamann said major developments can have a significant impact of the city’s resources. Currently the city has two large multi-use developments that are currently in the planning phase along FM 1417 that will bring hundreds of new homes and other retail and commercial development.
In recent years, many cities, including McKinney, Allen, Anna and Melissa, have turned to impact fees as a way to collect revenue from new development. In cities near the Metroplex, these fees have become the cost of doing business, city officials previously said.
The study by Kimley-Horn will look at several aspects of the city’s infrastructure and utilities in an effort to set a baseline for future development and impact. Subjects that will be studied include land use, roadway, water and waste water impacts and information on the adoption process.