San Marcos Impact-Fee Update Heads to Aug. 5 Public Hearings
San Marcos will hold Aug. 5 public hearings on a proposed water and wastewater impact-fee update; the $14,519.11 water figure is only a calculated maximum.
San Marcos is approaching public hearings on a proposed update to its water and wastewater impact-fee program, a process that could affect the cost of new development and how the city finances added utility capacity.
The city has scheduled both hearings for Aug. 5, 2026. City Council action to approve or deny an amendment is listed for Sept. 1, 2026, but neither the hearings nor the council decision has occurred as of July 28.
What the fees cover
Impact fees are one-time charges imposed on new development. They are different from the recurring water and wastewater rates paid each month by existing residential and commercial customers.
San Marcos says the fees are intended to help fund infrastructure capacity associated with growth, including improvements needed to provide additional water and wastewater service. The program operates under Chapter 395 of the Texas Local Government Code, which sets rules for calculating, adopting and administering impact fees.
What the studies calculate
The city’s 2026 studies examine projected growth from 2026 through 2035, eligible capital improvements and the system capacity associated with new development. The water study calculates a maximum allowable water impact fee of $14,519.11 per living-unit equivalent.
That number is a ceiling calculated by the technical study, not an adopted fee. It does not mean every new home or project will automatically be charged $14,519.11. The final amount would depend on the amendment approved by City Council and the final structure of the water and wastewater charges.
The wastewater study uses its own service-unit and capital-improvement calculations. Its maximum allowable figures also should not be treated as final charges before the city completes the public process.
Where the process stands
The Capital Improvements Impact Fee Advisory Committee’s July 27 agenda called for review of the water and wastewater study results, including land-use assumptions, the capital improvements plan and the proposed fees. The agenda also called for written comments to City Council.
The committee is advisory. Its review and recommendations are separate from the council’s authority to approve or deny an amendment.
The city’s schedule identifies Aug. 5 as the date for public hearings on both the impact-fee amendment and the financial audit of the current program. The city then lists Sept. 1 as the target date for council action within 30 days of the public hearings.
What the audit adds
The agreed-upon-procedures report covers the period from April 17, 2018, through Sept. 30, 2025. It lists $44,514,174 in water and wastewater impact fees collected during that period. The report separately lists $5,088,969 in interest earned on the accounts.
At the end of fiscal 2025, the report listed accumulated unspent impact-fee balances of about $15.8 million for water and $10.8 million for wastewater. It also identified capital-improvement projects intended to be financed with impact fees that had not been constructed as of Sept. 30, 2025.
The report is not a traditional audit opinion. The accounting firm said it performed agreed-upon procedures requested for the city’s purposes and did not conduct an audit or review engagement.
Why the decision matters
For builders and developers, the final amendment could affect project feasibility, permitting costs and development timing. For residents and future buyers, higher or lower development charges could influence project economics, housing supply and prices, although the effect will depend on the adopted fee structure and market conditions.
Existing utility customers should not assume that their monthly water or wastewater rates will change automatically because of this update. The next key points are the Aug. 5 hearings, the advisory committee’s written comments, the final amendment language and the expected Sept. 1 council action.
Sources
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