ATTORNEY GENERAL OF TEXAS 

GREG ABBOTT 

September 20,2010 

The Honorable Eddie Lucio, Jr. Opinion No. GA-0797 

Chair, Committee on International Relations 

and Trade 

Texas State Senate 

Post Office Box 12068 

Austin, Texas 78711 

Dear Senator Lucio: 

Re: Calculation of impact fees for a platted 

subdivision (RQ-0854-GA) 

On behalf of the City of Brownsville's Public Utilities Board, you ask several questions about 

chapters 245 and 395 of the Local Government Code.! 

Chapter 245 is commonly referred to as the "vested rights statutes" and grants a project 

"grandfathered" status. See TEx. Loc. GOy'rCoDEANN. §§ 245.001-.007 (West 2005); Milestone 

Patranca Dev., Ltd. v. City of San Antonio, 298 S.W.3d 242, 248 (Tex. App.-San Antonio 2009, 

pet. denied) (referring to chapter 245 as "the vested rights statutes"); Save Our Springs Alliance v. 

City of Austin, 149 S.W.3d 674, 681 (Tex. App.-Austin 2004, no pet.) (referring to chapter 245 as 

containing a "grandfather clause" that protects owners from changes in laws that occur during the 

pendency of a development project). As one court explains, "[ c ]hapter 245 ... recognizes a 

developer's vested rights and requires a regulatory agency to consider approval or disapproval of an 

application for a permit, such as a subdivision plat, based on regulations and ordinances in effect at 

the time the original application is filed." Milestone Potranco Dev., Ltd, 298 S.W.3d at 248; see 

Tex. Att'y Gen. Op. No. JC-0425 (2001) at 1 (explaining that chapter 245 works to "Iock[] in, for 

the duration of a real-property 'project,' the development regulations in effect when the original 

application for the first necessary permit is filed"). 

Chapter 395 governs the imposition of impact fees by municipalities as well as other 

governmental entities. See TEx. Loc. GOy'r CODE ANN. §§ 395.001-.082 (West 2005 & Supp. 

2010). "An impact fee is generally described in one Texas case as a charge 'on new development 

to pay for new public facilities that become necessary as the result of city growth in a particular 

area.'" Tex. Att'y Gen. Op. No. GA-0577 (2007) at 2 (citing DeSoto Wildwood Dev., Inc. v. City 

of Lewisville, 184 S.W.3d 814, 820 n.3 (Tex. App.-Fort Worth 2006, no pet.)). 

lRequest Letter at 1-2 (available at http://www.texasattorneygeneral.gov). 
The Honorable Eddie Lucio, Jr. - Page 2 (GA-0797) 

I. First Series of Questions 

As a preliminary matter, we clarify the context in which you ask your first series of questions. 

In relation to your first three questions, you ask that we assume "a developer initiates a development 

plan, pays the impact fees applicable at the time of initiation, and retains ownership of the property, 

but allows a development plan to lapse due to inactivity under local ordinances and regulations." 

Request Letter at 1. We understand the initiation of a development plan to mean that the developer 

in your scenario filed some type of preliminary plan or plat that triggered statutory vesting rights 

underchapter245. See TEx. Loc. GOV'T CODE ANN. § 245.002(b) (West 2005) ("Preliminary plans 

and related subdivision plats, site plans, and all other development permits for land covered by the 

preliminary plans or subdivision plats are considered collectively to be one series of permits for a 

project."); City of San Antonio v. En Seguido, Ltd, 227 S.W.3d 237,244 (Tex. App.-San Antonio 

2007, no pet.) ("Reading ... [sub]sections [245.002(a) and (b)] together, the filing of a plan for 

development or plat application, including preliminary plans and plats, gives rise to vested rights 

regardless of whether the plan or plat was required to be filed. "). We understand your reference to 

the payment of impact fees to mean statutory impact fees imposed under chapter 395 and, 

furthermore, we assume that the fees were collected in compliance with chapter 395. See TEx. Loc. 

GOV'TCODEANN. §§ 395.016, .019 (West 2005)(addressingthe collection ofimpactfees). Finally, 

we understand the "lapse" of the development plan "due to inactivity under local ordinances and 

regulations'" to mean that the project is dormant under Local Government Code section 245.005.3 

See id § 245.005 (authorizing a regulatory agency to place an expiration date on permits); see also 

Brieffrom Richard O'Neil, on behalf of the City ofBrownsville and the City's Public Utilities Board 

at 2 (Mar. 26, 2010) (on file with the Opinion Committee) [hereinafter City Brief] (indicating that 

he too understands your scenario to involve a dormant project). 

A. Question l(a) 

Having clarified the context, we now consider your first series of questions. You want to 

know if, in this context, "the developer [is] entitled to a refund of the impact fees if the municipality 

and the municipal utility have spent the impact fees previously collected to construct regional capital 

improvements associated with anticipated new growth[.]" Request Letter at 2. 

Chapter 395 provides for the refund of impact fees in specific circumstances. See TEx. Loc. 

GOv'T CODE ANN. § 395.025(a), (c) (West 2005) (providing for a refund where a municipality 

denies service, fails to cornmence construction within a certain time, fails to make service available 

'Neither chapter 245 nor chapter 395 uses the tenn "lapse" or "inactive." See TEX. Loc. GOy'T CODE ANN. 

§§ 245.001-.007 (West 2005), id. §§ 395.001-.082 (West 2005 & Supp. 2010). 

'It is not altogether clear to us how the project has become donnant under chapter 245 in light of the fact that 

impact fees have been paid. See TEX. LOC. GOy'T CODE ANN. § 245.005 (West 2005) (authorizing the placement of an 

expiration date on a pennit if no progress has been made towards completion of the project and providing that the 

payment ofirnpact fees to a regulatory agency constitutes progress towards completion ofa project). However, we will 

assume for purposes of this opinion that the facts articulated in your request are correct. Cf Tex. Att'y Gen. Op. No. 

GA-0249 (2004) at 2 (assuming the facts provided by the requestor are correct). 
The Honorable Eddie Lucio, Jr. - Page 3 (GA-0797) 

within a certain time, or fails to spend fees as authorized by chapter 395 within a certain time). 

Section 395.025 addresses the refund of an impact fee and provides: 

[d. 

(a) On the request of an owner of the property on which an 

impact fee has been paid, the political subdivision shall refund the 

impact fee if existing facilities are available and service is denied or 

the political subdivision has, after collecting the fee when service is 

not ayailable, failed to commence construction within two years or 

service is not available within a reasonable period considering the 

type of capital improvement or facility expansion to be constructed, 

but in no event later than five years from the date of payment under 

Section 395.019(1). 

(c) The political subdivision shall refund any impact fee or part 

of it that is not spent as authorized by this chapter within 10 years 

after the date of payment. 

The municipality must refund the impact fees under chapter 395 only if your scenario fits 

within section 395.025. See id.; TEx. GOV'TCODEANN. § 31l.016(2) (West 2005)(explainingthat 

the term "shall" is construed to impose a duty unless the context or statnte provides otherwise). If 

it does not, we find no other requirement in chapter 395 that a municipality refund impact fees. That 

a project becomes dormant under Local Government Code section 245.005 is not, standing alone, 

one of the circumstances that triggers a refund under section 395.025. Ultimately, however, you do 

not provide sufficient information to determine if the sitnation you describe fits within the refund 

provisions of section 395.025: 

B. Question l(b) 

You next inquire whether "the developer who later attempts to reinstate the development plan 

after the municipality adopts additional or increased impact fees [is 1 entitled to grandfathered statns 

or a vested right to be subject to the originally assessed impact fees[.]" Request Letter at 2. We 

understand the terms "grandfathered" or "vested" to refer to rights acquired under chapter 245. 

'We note that, in any particular circumstance, factors other than chapter 395's refund provisions may be 

important in answering this question, such as the terms of any agreement between the developer and municipality and 

relevant ordinances and regulations adopted by the municipality. C/, e.g., McNair v. City o/Cedar Park, 993 F.2d 1217, 

1219 (5th Cir. 1993) (noting that the municipality's ordinance made no mention of refunds and rejecting developer's 

claims that municipality was unjustly enriched when it failed to retnrn impact fees after the developer abandoned the 

development because of bad economic conditions and business disputes); DeSoto Wildwood Dev., Inc., 184 S. W.3d at 

824-25 (involving a developer's breach of contract claims against a municipality regarding the use of impact fees). 
The Honorable Eddie Lucio, Jr. - Page 4 (GA-0797) 

Milestone Patranca Dev., Ltd, 298 S.W.3d at 248 (referring to chapter 245 as "the vested rights 

statutes"); Save Our Springs Alliance, 149 S.W.3d at 681 (referring to chapter 245 as containing a 

"grandfather clause" that protects owners from changes in laws that occur during the pendency of 

a development project). 

Even assuming chapter 245 applies to impact fees,' your scenario involves a dormant project 

for which the permit has expired under section 245.005.6 See Request Letter at 1 (asking that we 

assume the development plan has lapsed due to inactivity). Thus, so long as the facts are as you 

describe and there is no contractual or extra-statutory basis for preserving the original application, 

the developer has no grandfathered status or vested rights in the project under chapter 245. See Tex. 

Att'y Gen. Op. No. JC-0425 (2001) at 3 (explaining that a "project would be subject to current 

development regulations" if the permit has expired and the project is dormant under section 

245.005). Because we answer question l(b) in the negative, we do not address question l(c). 

II. Second Series of Questions 

In your second series of questions, you ask us to assume "a platted subdivision is assessed 

impact fees under Section 395.016(d), Local Government Code, but no impact fees are actually 

collected because of subdivision inactivity (for example, no requests for building permits or utility 

connections), and the municipality adopts additional or increased impact fees during the inactivity 

period." Request Letter at 2; see also TEx. Loc. GOV'T CODE ANN. § 395.016(d) (West 2005) 

(providing that a municipality may assess impact fees before or at the time of recordation of a 

subdivision plat and collect the fees when a building permit is issued or an application for an 

individual water meter connection is filed). 

A. Question 2(a) 

You ask whether "a distinction [should] be made between an 'assessment' or determination 

of impact fees and an actual collection of impact fees under [subsections] 395.016(d) and (f), Local 

Government Code." Request Letter at 2. Subsection (d) provides that a municipality may assess 

impact fees before or at the time of recordation of a subdivision plat, but may collect the fees when 

a building permit is issued or an application for an individual water meter connection is filed. TEx. 

Loc. GOV'T CODE ANN. § 395.016(d) (West 2005). Subsection (f) defines the term "assessment" 

to mean "a determination of the amount of the impact fee in effect on the date or occurrence 

provided in this section and is the maximum amount that can be charged per service unit of such 

development." Id. § 395.016(f). In a prior opinion, this office concluded that the collection of an 

'It is not clear and we find no court that has addressed whether chapter 245 applies to impact fees. See TEx. 

Loc. GOy'T CODE ANN. §§ 245.004(6) (West 2005) (explaining that chapter 245 "does not apply to ... fees imposed 

in conjunction with development permits"); 395.001(4) (defming "impact fee" as a fee imposed against new 

development); 395.0 16( e) ("The political subdivision may assess the impact fees at anytime during the development and 

building process .... "). 

'Section 245.005 is entitled "Dormant Projects" and authorizes a regulatory agency to place an expiration date 

on a permit. Id § 245.005(a)-(b). Here, we understand that the preliminary plan or plat that triggered statutory vesting 

rights under chapter 245 has now expired leaving the project dormant. See discussion supra p. 2. 
The Honorable Eddie Lucio, Jr. - Page 5 (GA-0797) 

impact fee refers to the time the governmental entity receives payment of the fees. Tex. Att'y Gen. 

Op. No. GA-0577 (2007) at 2. In sum, the express language of the statute reflects, and a prior 

opinion of this office recognizes, a distinction between the assessment of an impact fee and the 

collection of an impact fee under subsections 395.016(d) and (1). 

B. Question 2(b) 

You next ask whether "the enactment of an impact fee ordinance by a municipality 

constitute[ s] an 'assessment' of an impact fee without any other specific act by the municipality[.]" 

Request Letter at 2. 

Considered as a whole, chapter 395 contemplates that the act of adopting an impact fee and 

the act of assessing an impact fee are separate activities. See Helena Chem. Co. v. Wilkins, 47 

S.W.3d 486, 493 (Tex. 2001) (stating that in determining legislative intent, a court "must always 

consider the statute as a whole rather than its isolated provisions"). First, the act of assessing an 

impact fee appears to relate to a specific new development whereas the act of adopting an impact fee 

generally relates to a larger area. As previously set out, section 395.016(1) defines the term 

assessment to mean "a determination of the amount of the impact fee in effect on the date or 

occurrence provided in this section and is the maximum amount that can be charged per service unit 

of such development." TEx. Loc. GOy'T CODE ANN. § 395.016(1) (West 2005) (emphasis added); 

see also id. § 395.001(10) (defining the term "service unit"). This indicates that the assessment of 

an impact fee is a calculation related to a specific new development. Similarly, section 395.016( d), 

upon which your scenario is based, indicates that an assessment is made against a particular 

subdivision plat. !d. § 395.016(d) ("The political subdivision shall assess the impact fees before 

or at the time of recordation of a subdivision plat or other plat under Subchapter A, Chapter 

212 .... "); see also Request Letter at 2 (asking that we assume "a platted subdivision is assessed 

impact fees under Section 395.016( d), Local Government Code"). In contrast, the act of adopting 

an impact fee is generally applicable to an area broader in scope than one particular development. 

For instance, the adoption of an impact fee is preceded by and based upon the adoption ofland use 

assumptions and a capital improvement plan. TEx. Loc. GOy'T CODE ANN. § 395.045 (West 2005). 

The land use assumptions include a description of a service area. ld. § 395.001(5). The service area 

is the entire area "to be served by the capital improvements or facilities expansions specified in the 

capital improvement plan." ld. § 395.001(9). 

Second, chapter 395 requires an entity to take specific action when adopting an impact fee 

but not when assessing an impact fee. The act of adopting an impact fee must be reflected in an 

ordinance, order, orresolution, whereas, section 395.016(1) provides that, inregard to an assessment, 

"[n]o specific act by the political subdivision is required." ld. §§ 395.051, .016(1). 

Third, chapter 395 does not use the term "assessment" when referring to the adoption of an 

impact fee. See Laidlaw Waste Sys. (Dallas), Inc., v. City o/Wilmer, 904 S.W.2d 656, 659 (Tex. 

1995) ("[E]very word of a statute must be presumed to have been used for a purpose."). Section 

395.051, for instance, provides that "[t]lie political subdivision, within 30 days after the date of the 

public hearing on the imposition of an impact fee, shall approve or disapprove the imposition of an 

impact fee" and prohibits the "ordinance, order, or resolution approving the imposition of an impact 
The Honorable Eddie Lucio, Jr. - Page 6 (GA-0797) 

fee" from being "adopted as an emergency measure." TEx. Loc. GOy'TCODEANN. § 395.051 (West 

2005) (emphasis added). Section 395.024 provides that "[t]he order, ordinance, orresolution levying 

an impact fee must provide that all funds collected through the adoption of an impact fee shall be 

deposited in interest-bearing accounts." Id. § 395.024(a) (emphasis added). The act of assessing an 

impact fee is, in contrast, referred to in a limited number of provisions of chapter 395-sections 

395.016 and 395.0 1 7-and is not referred to in provisions related to the act of adopting an impact 

fee. See id. §§ 395.016-.017. In sum, we conclude that the acts of adopting an impact fee and 

assessing an impact fee are distinct activities. 

However, we find nothing in chapter 395 that would prohibit a single ordinance from serving 

as both the means by which a municipality imposes and assesses an impact fee. Whether any 

particular ordinance both imposes and assesses an impact fee is an issue this office cannot resolve. 

See Tex. Att'y Gen. Op. No. GA-0648 (2008) at 6 (explaining that this office generally does not 

construe city ordinances and cannot answer questions that require the resolution of fact questions). 

C. Question 2( c) 

Finally, you ask whether the developer" in your scenario pays "the originally assessed impact 

fees or the additional or increased impact fees" "when subdivision activity begins, assuming that no 

increased subdivision use density requires any consumption of additional utility service units." 

Request Letter at 2. Section 395.017 expressly provides that "[aJfter assessment of the impactfees 

attributable to the new development or execution of an agreement for payment of impact fees, . 

additional impact fees or increases infees may not be assessed against the tract for any reason unless 

the number of service units to be developed on the tract increases." TEx. Loc. GOy'T CODE ANN. 

§ 395.017 (West 2005) (emphasis added). Under the express language of the statute, no additional 

impact fees or increases may be assessed against a tract after the original assessment and thus, the 

developer in your scenario would pay the originally assessed impact fees. 8 See Galbraith Eng 'g 

Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex. 2009) (explaining that, when construing 

a statute, the "primary objective is to give effect to the Legislature's intent as expressed in the 

statute's language"). 

'0ne brief received by our office contends that it is the builder not the developer who pays impact fees. See 

Brief from Ned MuIloz, Yice President of Regulatory Affairs and General Counsel, Texas Association of Builders at 6 

(Mar. 3, 20 I 0) (on file with the Opinion Committee). However, we will assume for purposes of this opinion that the facts 

articulated in your request are correct and that the developer in your scenario is responsible for paying the impact fees. 

C! Tex. Att'y Gen. Op. No. GA-0249 (2004) at 2 (assuming the facts provided by the requestor are correct). 

'We recognize that section 395.0 17 is arguably inconsistent with other provisions in chapter 395. See TEX. Lac. 

GOV'T CODE ANN. §§ 395.055-.057 (West 2005); City Brief at 9 ("A plain reading ofLGC Section 395.017 seems 

contrary to the overall intent ofLGC Chapter 395 for cities to keep impact fees reflective of current utility infrastructure 

costs."). 
The Honorable Eddie Lucio, Ir. - Page 7 (GA-0797) 

SUMMARY 

Local Government Code chapter 245 recognizes a developer's 

vested rights and requires a regulatory agency to consider approval or 

disapproval of an application for a permit based on regulations and 

ordinances in effect at the time an original application is filed. A 

developer has no vested rights in a project under chapter 245 if the 

project is dormant under section 245.005. 

Local Government Code chapter 395 governs the imposition 

ofimpact fees by municipalities. Impact fees are, as a general matter, 

charges on new development to pay for public facilities that become 

necessary as the result of growth in a particular area. A municipality 

must refund impact fees as provided in section 395.025. There is, as 

reflected in the express language of chapter 395 and in prior attorney 

general opinions, a distinction between the assessment of an impact 

fee and the collection of an impact fee. Chapter 395 indicates that the 

act of adopting an impact fee and the act of assessing an impact fee 

are distinct activities. However, we cannot say as a matter oflaw that 

a single ordinance could not serve as both the means by which a 

municipality imposes and assesses an impact fee. By its express 

terms, section 395.017 prohibits the imposition of additional or 

increased impact fees against a tract after the fees have been assessed 

unless the number of service units to be developed on the tract 

increases. 

DANIEL T. HODGE 

First Assistant Attorney General 

DAVID I. SCHENCK 

Deputy Attorney General for Legal Counsel 

NANCY S. FULLER 

Chair, Opinion Committee 

Christy Drake-Adams 

Assistant Attorney General, Opinion Committee