Austin debates new fee for developers

A plan that would bump up costs of Austin commercial development by adding a new city fee is getting pushback from local real estate interests.

Austin City Council postponed discussion of raising parkland dedication fees at its July 28 meeting, the Austin Business Journal reported. Developers and other business leaders have expressed concern about the move at a time when other real estate costs are in rapid ascent.

Parkland dedication fees require developers to set aside land for a park or pay a fee, called a fee-in-lieu, to be used for acquiring new parkland land or developing park facilities. The city’s plan to expand the fees would apply to new commercial developments, including office, retail, industrial and hotel projects.

Council voted at its July 28 meeting to delay consideration of the fee expansion and to review a plan to hold a public hearing at its scheduled August 11 meeting. That will give those opposed to the expansion time to propose changes.

The council also wants to get the input of the city Planning Commission, which voted July 12 to postpone a code revision planned for the coming fiscal year, which starts on October 1. The commission has a working group that is expected to review and suggest recommendations for the fee plan.

Concerns over the fee expansion include fears that state authorities could take action against the city if it’s implemented and that fees might inhibit new development. The fact that they would be based on an existing formula that has allowed large increases in similar fees for residential developments is an indicator that they’d have the same effect on commercial development, planning commissioner Greg Anderson said. In addition, fees would start early in the planning process rather than after a building can be occupied, Anderson said.

Advocates of parkland dedication say the new fee is necessary for maintaining a good quality of life as the city continues to grow at a quick pace.

Most parties involved in the debate agree that developers should pay to support civic features and services that attract and are used by them and their future occupants. At issue is largely the amount of the fees and how they’re determined.

The new commercial fee would be based on the number of employees per square foot, with deductions based on hours of operation, occupancy rates and commuter percentage rates.

The plan would include a fee-in-lieu based on the cost of purchasing new land and a development fee based on the cost of developing new land. The city would use the former to purchase new parkland and the latter to expand access or provide additional structure to existing parks. Funds from the fee-in-lieu could be used for land improvements after a year-long period during which the acquisition of new parkland must be considered.

The commercial formula would be based on the city’s current system for residential development, which requires providing 9.4 acres of parkland per every 1,000 new users of the parks system. City documents include the example of a 325,000-square-foot office building with a total of 1,083 employees and 92 percent occupancy, which would require a development fee of about $48,000 and a fee-in-lieu of $520,000.

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