Thomas Payne (upper left) and Jordan Wheatley (lower right). Graphic by LubbockLights.com
The controversial issue of impact fees to help pay for new developments comes back to the Lubbock City Council in June with a committee recommendation to keep them at 25 percent as they’ve been for the past five years.
But the issue is much more complex say the people who build new residential and commercial buildings accompanying Lubbock’s growth.
Jordan Wheatley, developer and co-owner of 806 Land Group, wants the city to dump impact fees and create an ongoing city-operated road bond process. Impact fees are not enough to make up the $700 million in road needs, Wheatley said.
Plus, impact fees are forcing some people to build outside city limits, he said.
Victoria Whitehead, CEO of the West Texas Homebuilders Association, also spoke at the CIAC meeting, saying impact fees make it harder for people to buy a home.
But Thomas Payne, another local developer, believes impact fees play an important part of the existing process, help make new construction possible and are fairer. He’s also a member of the Capital Improvements Advisory Committee (CIAC) that recommended the Council keep the fees at 25 percent.
Even at 25 percent, future road costs are expected to nearly double due to inflation for the materials used to build roads, which is why some builders advocate for dropping impact fees to something like 12 ½ to 15 percent to offset rising costs.
In a May 12 meeting, CIAC approved a restudy of impact fees (required every five years under state law).
“Our recommendation to the Council was that the current structure would be left in place,” said Payne.
Developers pay for the streets and other infrastructure inside the development. But impact fees help offset the cost of improving major roads leading to a development to handle increased traffic.
Property taxes, generally speaking, pick up the other 75 percent. And the fees collected for roads in one area of town must be spent in that same area. (The rules are different for water and wastewater impact fees which Lubbock does not currently collect.)
Cost of road construction is one factor, but the state formula is much more complicated –with estimates of “vehicles miles” for each new home and business and other factors.
“I have a specific example in service area ‘F’ which is Southwest Lubbock. The current impact fee is $1,764. And the new impact fee would be $3,149,” Payne said, explaining the increase is mostly because of inflation.
The fee typically gets passed along in the cost of a new home or business.
Payne’s example is not quite an 80 percent increase, assuming the council agrees.
The other direction
Wheatley has a different idea, which he explained during public comments at the CIAC meeting.
“I think we need a road bond advisory and oversight committee,” Wheatley said.
There would be one member for each City Council district and two more at large.
“The members will be appointed by each Council district and have one hourly paid consultant. Every road bond must have one project per district to advocate for all citizens since all citizens are voting when it comes time to vote. There could be more projects, but I think there needs to be one per district,” Wheatley said.
By his estimate, the city is running behind $700 million or more on roads is based on a 14-year gap between major road initiatives from 2008 to 2022. Voters approved two bond packages since then worth $303 million.
“The next road bond could be as early as November 2026. And then from there, I think we need to have a plan to roll out road bonds for 15 to 20 years,” Wheatley said.
A road bond committee is cheap in comparison to the studies required under state law for the impact fees, Wheatley said.
“Lubbock has spent in excess of $500,000 and consultant fees just on this program alone,” Wheatley said – cutting into the $12 million collected so far.
Payne is unpersuaded.
Basic fairness
Impact fees were never meant to pay for an entire project. Even if Lubbock charged the maximum 50 percent under state law, it could never be more than half the cost of new roads or road expansions, Payne said.
So, it ends up being 75/25 split with new development paying 25 percent.
“That doesn’t mean new development pays for all of new development. It simply means that there’s a piece that new development pays for. But the other piece is still paid for by all of the citizens,” Payne said.
Payne paraphrased Wheatley as saying, “I can get a bond passed anytime. All I gotta do is include a project for each council district.”
But if voters in certain parts of town feel like they were treated unfairly, they will not vote ‘yes,’ Payne said. They will not care if there’s a project in East Lubbock or Central Lubbock.
“They’re gonna be madder than a swamp cat because they were not treated fairly,” Payne said.
On top of that, Payne called it “gas lighting” to say impact fees have never paid for a project when they were never supposed to. He cites examples (see our previous coverage) of impact fees bridging the gap between cost and available money.
One of them is Quaker Avenue between 146th Street and Woodrow Road. Without that project, Payne said, nine homes expected to be on the 2026 Parade of Homes (the Estates at Red Feather) would not be possible.
“Without impact fees, there’s no Quaker. Without Quaker, there’s no lots. Without lots, there’s no homes to build in the Parade of Homes, and there’s not a Parade of Homes at Red Feather. So there’s your first easy softball,” Payne said.
Payne admits his own motive for promoting the fees. He said he and other developers cannot put expensive new homes on dirt roads.
His argument works the other way too, he said.
“Give me an example – an example – I mean a name, an example – of someone who was negatively affected by impact fees or a project that did not happen because of impact fees,” Payne said.
Previous coverage:
- Builders not fond of impact fees for new Lubbock roads, but mayor wants to know what would replace them
- Could road costs price people out of new homes or push growth burden on current owners? Developers debate best path forward
Pushing development away
Wheatley did not give an example of a project that stopped. However, he speculated that some developers took projects outside of Lubbock to avoid impact fees.
“It pushed a lot of developments outside of city limits. One prime example of that was in Wolfforth, south of the highway. Some 2,000 acres were purchased for residential use.”
He also mentioned Slide Road and FM41 south of Lubbock.
“You have a Gebo’s, a gas station, new storage coming soon, a car lot. This development skipped over some two miles of prime development land. I have to think impact fees influence those decisions,” Wheatley said.
Raising the fee is no guarantee of collecting the fee.
“Renters and home buyers can choose to take their projects elsewhere outside of the city limits.” Wheatley said.
Whitehead said, “An impact fee is a tax on the most vulnerable. … The average homeowner in Lubbock, Texas has a median income of $60,000 every year.”
Homes are already too expensive, she said. Folks cannot qualify for a mortgage.
“They can’t qualify anymore. We have a crisis in Lubbock, and it’s a housing crisis, especially for those that need affordable housing,” Whitehead said.
Impact fees make new residential lots more expensive.
“You guys are a recommendations committee. … Your recommendation to council could be we see other options,” Whitehead said.
She asked for no increase in the impact fee.
Wheatley made a similar request, saying, “I urge you guys to keep impact fees unchanged today and acknowledge the need of a steady road bond advisory committee going forward.”
The Council will hold a public hearing in June before taking a vote.
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