Title
Hold a public hearing and consider an ordinance adopting updated and amended Water and Wastewater Impact fees and associated Land Use Assumptions and Capital Improvement Plan.
Body
DATE: November 17, 2026
TO: Dr. Peoples, City Manager
FROM: Andrew Zagars, City Engineer
SUBJECT: Hold a public hearing and consider an ordinance adopting updated and amended Water and Wastewater Impact Fees and associated Land Use Assumptions and Capital Improvement Plan
BACKGROUND AND FINDINGS:
On April 13, 2021, Killeen’s City Council adopted Ordinance 21-015, which implemented water and wastewater impact fees in the City effective April 14, 2021. With City Council’s adoption of the 2025 Water and Wastewater Master Plan on April 1, 2025, an update to the 2021 impact fees was needed to incorporate a new capital improvements plan and a current pricing structure.
In accordance with Texas Local Government Code Chapter 395, Section 395.053, on October 6, 2026, City Council established a Public Hearing date of November 17, 2026, regarding an update and amendment of the City’s Water and Wastewater Impact Fees and associated Land Use Assumptions and Capital Improvement Plan. Notice for this Public Hearing has been published in the newspaper and the 2025 Water and Wastewater Impact Fee Study as well as the 2025 Water and Wastewater Impact Fee Financial Audit have been made available to the public on the city website.
The 2025 Water and Wastewater Impact Fee Study calculated the maximum assessable impact fee per service unit for water to be $3,764 while the current fee is $1,161. The Study calculated the maximum assessable impact fee per service unit for wastewater to be $1,080 while the current fee is $418. The City Council may establish impact fees at a rate equal to or less than the maximum assessable impact fee per service unit. The Capital Improvement Advisory Committee has reviewed the 2025 Water and Wastewater Impact Fee Study and has submitted the attached comments which include responses from Kimely-Horn, the authors of the 2025 Water and Wastewater Impact Fee Study, and city staff.
Impact Fees are a funding mechanism that allows entities to recover the costs associated with new facility expansions to serve future development. These fees are utilized to assist in reducing the cost of needed infrastructure paid by existing customers through water and wastewater rates. Chapter 395 of the Texas Local Government Code provides guidance for the process, development, and calculation of the fee as imposed on new development in order for the city to generate revenue to fund or recoup the costs of capital improvements or facility expansion necessitated by and attributable to such new development.
THE ALTERNATIVES CONSIDERED:
1. Do not approve the ordinance adopting updated and amended water and wastewater impact fees. This results in higher utility bill rates to pay for the projects.
2. Approve an ordinance adopting updated and amended water and wastewater impact fees at a rate lower than the maximum assessable impact fee per service unit. Any lower amounts collected would be funded through the utility billing.
3. Approve the ordinance adopting updated and amended water and wastewater impact fees at the maximum assessable impact fee per service unit. This results in the highest available funding towards capital projects through impact fees.
Which alternative is recommended? Why?
City Staff recommends that the City Council adopts the updated and amended water and wastewater impact fees at the maximum assessable impact fee per service unit in order to provide for the future growth of the city.
CONFORMITY TO CITY POLICY:
This item conforms to state and local policies.
FINANCIAL IMPACT:
What is the amount of the revenue/expenditure in the current fiscal year? For future years?
Adoption of the proposed water and wastewater impact fees at the maximum assessable rates would generate an estimated $4,703,524 in annual revenue, based on 971 estimated service units.
The FY 2027 Adopted Budget includes $1,000,000 in water impact fee revenue and $389,000 in wastewater impact fee revenue, for a combined total of $1,389,000. The proposed fees would generate an estimated $3,314,524 in additional annual revenue compared to the adopted budget.
These projections are annualized estimates provided for informational purposes and do not account for the implementation date of the proposed fees. Actual FY 2027 collections will depend on the effective date of the ordinance and development activity.
Impact fee revenue will be used to fund eligible capital improvement projects associated with future development.
Is this a one-time or recurring revenue/expenditure?
Recurring revenue, dependent upon future development activity.
Is this revenue/expenditure budgeted?
Yes. The FY 2027 Adopted Budget includes $1,000,000 in water impact fee revenue and $389,000 in wastewater impact fee revenue. The proposed fee increases are not reflected in the adopted revenue estimates.
If not, where will the money come from?
N/A
Is there a sufficient amount in the budgeted line-item for this revenue/expenditure?
N/A
RECOMMENDATION:
Staff recommends that the City Council hold a public hearing and adopt an ordinance that updates and amends Water and Wastewater Impact fees at the maximum assessable impact fee per service unit and adopt the associated Land Use Assumptions and Capital Improvement Plan.
DEPARTMENTAL CLEARANCES:
Purchasing
Finance
City Attorney
ATTACHED SUPPORTING DOCUMENTS:
Ordinance
Water and Wastewater Impact Fee Update Study
Independent Financial Audit
CIAC Comments
Presentation