I've researched impact fees ad nauseam. The conclusions I've come to are in this letter I recently sent to elected officials in Austin.
My question to you all is, am I wrong? Am I off base, or do you think this accurately describes what's happening in our housing market?
Please let me know.
Respectfully,
Yancy '95
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April 3, 2025
To:
The Honorable Senator Paul Bettencourt re: SB1883
The Honorable Senator Charles Schwertner re: SB1883
The Honorable Representative Brad Buckley re: HB2025; HB5489
The Honorable Representative Paul Dyson re: HB5489; HB2025
Chairman, The Honorable Representative Gary Gates, House Committee on Land & Resource Management
Chairman, The Honorable Senator Paul Bettencourt, Senate Committee on Local Government
Subject: Impact Fees
Honorable Senators & Representatives:
My name is Bob Yancy and I am a councilman for the City of College Station, Place 5. I am writing this letter in support of Senate Bill 1883, HB2025 and in particular HB5489 regarding Impact Fees. I support your legislation curtailing impact fees because empirical data indicate these and other exorbitant fees are doing damage to the College Station single family housing market, particularly the entry level housing market.
As you are aware, the State of Texas is undergoing a housing crisis. Perhaps nowhere in our state is that crisis being experienced the same way as it is in College Station. The City of College Station itself, at both the council and staff level, have acknowledged the housing crisis in our community. To identify these challenges and craft solutions, we recently completed a Housing Action Plan that contains startling information, some of which is identified below, with my supplemental observations:
Most College Station workers live outside the city limits, where they can afford a home.
69% of College Station employees do NOT live in College Station. This number has grown exponentially in recent years, roughly coinciding with our depressive housing policies.
Population and development predictions project a significant housing supply shortage by 2030, in just 5 years. I contend it's happening now.
58% of renters and 18% of homeowners with a mortgage in College Station are cost burdened (spending more than 30% of their monthly income on housing costs).
The 2023 median sales price for a non-new construction home in College Station was $389,000 a price that is out of reach for most middle-income families.
Current housing production projections estimate a shortage of over 4,100 units.
Our average home price has grown by 73% since 2015, strongly correlating with the city's impact fee policy in 2016.
The median family income has only increased by 25.86%.
The median sales price for a new single family home in College Station is $442,513.
Occupancy pressures, in which too many people occupy too few dwellings, are on the rise in our community.
And today, as of this writing, there are only 2 new single family homes for sale listed in the MLS in the city limits of College Station for less than $310,000.
While the preponderance of these facts were given rise to by larger economic forces such as the 'Texas Miracle' and growth of Texas A&M, I contend that our housing policies in the City of College Station have exacerbated the problem. Put simply, our excessive fee regime is causing 'builder flight' to neighboring jurisdictions, leading to scarcity of new single family housing inventory and artificial inflation of home valuations.
Why are single family home builders leaving College Station? Our neighboring city, the City of Bryan, imposes a dramatically lower fee regime across the board. Because of our proximity, an easy comparison can be made to measure the efficacy of pro-growth versus anti-growth housing policies, such as the imposition of impact fees, and other fees, at exorbitant rates. For example:
The City of College Station imposes a Parks Fee assessed per lot of $5,256.00, over 10 times greater than the city of Bryan. (This is our parks impact fee by another name.)
Developer fees are approximately 4 times greater in the City of College Station than Bryan.
Other inspection and connection fees are approximately 1.25 times higher in College Station.
The City of Bryan imposes no impact fees, while College Station imposes fees that are highly variable depending upon where the home is built, but in no instance are less than thousands of dollars per lot.
As a consequence of a higher starting land cost and the difference in fee regime, the same size and quality new home (1500 square foot, 3 bedroom entry level home) differ between the two cities by approximately $45,000 in price.
In 2016 the City of Bryan made a policy decision to incentivize entry level housing in a significant way. Concurrently, the City of College Station made the policy decision to impose impact fees and adhere to its more stringent fee structure. The results could not be clearer. Two years later, in 2018, Bryan eclipsed College Station in new single family housing starts for the first time in modern history, despite being a much smaller city. In every year since, Bryan has significantly outpaced College Station in single family housing starts. The data are below, and are irrefutable (see chart).
Why is the single family detached home important? The single family residential home is the bedrock upon which the United States and Texas' housing markets are built. Single family detached homes are more sought after, appreciate in value faster than any housing type, and allow young families and homebuyers from all walks of life the ability to accumulate wealth. Single family detached homes hold their value better over time. The buildup in equity this product provides allows a first time homebuyer to step up into a larger home later.
Families grow with a city and as they do, opportunity is passed onto younger families, urban professionals or retirees that seek to purchase their original home from them. But, excessive fees and resulting builder flight artificially elevate home prices and thusly income requirements to qualify. This in turn delays a potential home buyer's entry into the market.
Also, impact fees that don't vary with the size of a home are terribly regressive. Thousands of dollars in impact fees assessed on a starter home are felt much more acutely than the precise same fee added to the cost of a $1,000,000+ home. When these costs are amortized, the impact only worsens.
Developers and builders can simply avoid College Station's fee assessments by taking their business elsewhere, and data indicate they are doing so. Neighboring jurisdictions do not charge impact fees and other fees are significantly less burdensome. While College Station's new single family housing market is stagnant at best, Navasota, Snook, Bryan and unincorporated areas of Brazos County are booming as builders turn to these areas. Recall from above that almost 70% of our workers do not live in our city, because they cannot afford a home here, yet they drive our streets and utilize our public amenities while paying no property taxes.
While the professed goal of assessing impact fees is a transference of infrastructure tax burden to new home buyers for the benefit of existing residents (i.e. to "make growth pay for itself") the real world impact of impact fees is that BOTH are happening. As builders and developers leave a jurisdiction, a new housing shortage occurs as it is in College Station. This shortage artificially inflates the value of ALL existing real estate in a city as buyers compete for dwindling options, thus causing property owners, both new and existing, to pay more in property tax. Only those with frozen property valuations remain immune to these deleterious effects.
Furthermore, from a fairness perspective, how can those who enjoyed the benefit of their infrastructure burden being shared by an entire city for decades, suddenly impose policies that transfer this burden disproportionately to those entering the market anew? Infrastructure is a public good. You no doubt drive on streets every day that you don't live on. We all enjoy the benefits and amenities of well designed infrastructure. Are we to begin assessing those who live closer to a new fire station a greater portion of the financial burden to build it? The same argument might be made for parks, amphitheaters and all manner of developments for the public good.
As Texas works its way out of this housing crisis, I applaud your efforts to hold the line on disproportionately punitive fees that are damaging our housing markets and I offer this "Tale of Two Cities" as ample economic evidence that you are on the right track. It is no surprise that both parties in this session are filing significantly more housing and land use bills. We have unfortunately earned this scrutiny.
While I believe in the concept of local control, in this instance, the damage I believe we are doing to our new single family home real estate market compels me to endorse your legislation for the benefit of the next generation of Texans. I believe SB1883, HB2025 & particularly HB5489 would help College Station at this critical time, and as one member of council, I thank you for this proposed legislation.
Respectfully yours,
Bob Yancy
[eSign]
Bob Yancy
College Station City Council, Place 5
My opinions are mine and should not be construed as those of city council or staff. I welcome robust debate but will cease communication on any thread in which colleagues or staff are personally criticized. I must refrain from comment on posted agenda items until after meetings are concluded. Bob Yancy 95
