The City of Keller charges a multitude of fees when a residential developer brings a project to town. They include a Preliminary Plat Fee, a Final Plat Fee, a Site Plan fee, a Roadway Impact Fee, a Park Development Fee, Water and Sewer Impact Fee, a Water Meter Installation Fee, a Water Tap Fee and finally a Sewer Tap Fee. The total cost to a developer to bring a 10 lot subdivision to the City of Keller would be $64,215.00 This compares to Southlake at $97,000, Colleyville at $79,000 and Grapevine at $43,000 (see attached matrix).
Some of these fees are offsets of costs the city incurs during development; they help pay for having a planning staff and offset direct payments to the City of Ft. Worth for adding customers to their water supply. The Roadway Impact Fee goes into a fund to help fund roadways that are feeders or are otherwise impacted by the building of a development.
The Park Development Fee goes into a fund to purchase park land or upgrade existing parks. This isn’t a straight fee, as the developer has the option to donate one acre of land for every 30 units in lieu of paying the fee. See where this is going?
If you do the simple math, the Parks Department is valuing land in the City at $30,000 an acre, when in reality it is between $82,000 and $106,000 (per City of Keller appraisal report, May 2008). What the Parks Board wishes to do is raise their Park Development Fee to be in line with the real cost of land in Keller.
So, in typical Doug Miller fashion, when I heard the Parks Board wanted to increase their fee 60%, I had a cow. What did they think they are doing? In the mean time, I did some research, talked to some people at City Hall and came to the conclusion that while this fee increase might be reasonable, it’s going to be a hard sale.
What the Parks Board is basically proposing is increasing the fee from $1,000 per unit to $1,600 per unit, but at the same time increasing the ratio to 50 units in lieu of paying the fee. Do the math now, and it values land in Keller to $80,000 an acre.
I want to make this point clear, according to Keller Park and Recreation Director Dona Kinney, the City would rather have the land than the money. And in fact, she states that in the recent past, most developers are more apt to give the land in lieu of paying the fees. Why? Lots of reasons; one being that having trails in your development that tie into the City’s Trail System only enhances your property value or that land the developers may deed to the city may not be buildable but great for a trail or a park.
In changing the formula, the City will now value land at its correct value but at the same time they will be short changing the city when it comes to park land acquisition. When and if another 100 lot subdivision comes to town, they will have to dedicate only two acres of land versus the three plus that they are now receiving. If they chose to pay the fee instead, the city will receive 60% more cash up front.
I also talked to City Councilman John Baker about this issue and he stated that while he is open minded to what the Parks and Rec Board is proposing, he feels the timing may not be right with the economy the way it is. New development being brought into the city has nearly ground to a halt. Every developer I know is sitting on the sidelines right now with a wait and see attitude. When talking with Joey Grissam, the City’s Economic Development director, he stated that “Upfront costs for developers are critical in this economy.” He stated banks are really cutting down on the percentage that they normally loan for a project, so the developer is having to fund a larger portion of any deal he does out of his front pockets. He also stated that “From my standpoint, this isn’t the best time to be adding fees to developers.”
With all of that being said, I think I come full circle. If the Parks Department really wants land rather than money, don’t change the ratio and the fee. It seems to be working fine, and to raise the rate just to raise the rate will only cause heartburn in the development community.