Relating to the approval of land use assumptions, capital improvement plans, and impact fees, the official text

S.B. No. 1883

AN ACT

relating to the approval of land use assumptions, capital

improvement plans, and impact fees.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 395.043, Local Government Code, is

amended to read as follows:

Sec. 395.043. INFORMATION ABOUT LAND USE ASSUMPTIONS AND

CAPITAL IMPROVEMENTS PLAN AVAILABLE TO PUBLIC. At least 60 days [On

or] before the date of the first publication of the notice of the

hearing on the land use assumptions and capital improvements plan,

the political subdivision shall make available to the public its

land use assumptions, the time period of the projections, and a

description of the capital improvement facilities that may be

proposed.

SECTION 2. Section 395.051(a), Local Government Code, is

amended to read as follows:

(a) The 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. Approval of

the imposition of an impact fee by a political subdivision requires

an affirmative vote of two-thirds of the members of the governing

body of the political subdivision.

SECTION 3. Subchapter C, Chapter 395, Local Government

Code, is amended by adding Section 395.0515 to read as follows:

Sec. 395.0515. LIMITATION ON IMPACT FEE INCREASE. A

political subdivision may not increase the amount of an impact fee

for three years from the later of the date the fee was adopted or

most recently increased, if applicable. Nothing in this section

prohibits the political subdivision from implementing an impact fee

collection schedule that allows less than the maximum adopted

impact fee to be collected or phased in up to the maximum adopted

impact fee for a period not to exceed ten years, as authorized by

this chapter.

SECTION 4. Section 395.053, Local Government Code, is

amended to read as follows:

Sec. 395.053. HEARING ON UPDATED LAND USE ASSUMPTIONS AND

CAPITAL IMPROVEMENTS PLAN. The governing body of the political

subdivision shall, within 120 [60] days after the date it receives

the update of the land use assumptions and the capital improvements

plan, adopt an order setting a public hearing to discuss and review

the update and shall determine whether to amend the plan.

SECTION 5. Section 395.054, Local Government Code, is

amended to read as follows:

Sec. 395.054. HEARING ON AMENDMENTS TO LAND USE

ASSUMPTIONS, CAPITAL IMPROVEMENTS PLAN, OR IMPACT FEE. A public

hearing must be held by the governing body of the political

subdivision to discuss the proposed ordinance, order, or resolution

amending land use assumptions, the capital improvements plan, or

the impact fee. At least 60 days [On or] before the date of the

first publication of the notice of the hearing on the amendments,

the land use assumptions and the capital improvements plan,

including the amount of any proposed amended impact fee per service

unit, shall be made available to the public.

SECTION 6. Section 395.058(b), Local Government Code, is

amended to read as follows:

(b) The advisory committee is composed of not less than five

members who shall be appointed by a majority vote of the governing

body of the political subdivision. Not less than 50 [40] percent of

the membership of the advisory committee must be representatives of

the real estate, development, or building industries who are not

employees or officials of a political subdivision or governmental

entity. [If the political subdivision has a planning and zoning

commission, the commission may act as the advisory committee if the

commission includes at least one representative of the real estate,

development, or building industry who is not an employee or

official of a political subdivision or governmental entity. If no

such representative is a member of the planning and zoning

commission, the commission may still act as the advisory committee

if at least one such representative is appointed by the political

subdivision as an ad hoc voting member of the planning and zoning

commission when it acts as the advisory committee.] If the impact

fee is to be applied in the extraterritorial jurisdiction of the

political subdivision, the membership must include a

representative from that area.

SECTION 7. Subchapter C, Chapter 395, Local Government

Code, is amended by adding Section 395.059 to read as follows:

Sec. 395.059. INDEPENDENT FINANCIAL AUDIT. (a) Before a

political subdivision may increase an existing impact fee or adopt

a new impact fee for a service area where an impact fee had

previously been adopted, the political subdivision must conduct an

independent financial audit in accordance with this section.

(b) An independent financial audit conducted under this

section must be performed by an independent auditor who:

(1) is a certified public accountant or public

accountant licensed by the Texas State Board of Public Accountancy;

and

(2) is not, and has not been during the 12 months

preceding the commencement of the audit, under contract to provide

any other service to the political subdivision or a related entity

of the political subdivision.

(c) An independent financial audit conducted under this

section must provide, if applicable, a detailed accounting of:

(1) the amount of funds collected from any impact fee

imposed by the political subdivision in the service area;

(2) the amount of interest accumulated under Section

395.025 on impact fees collected by the political subdivision in

the service area;

(3) any proposed capital improvements or facility

expansions to be financed from an impact fee collected by the

political subdivision in the service area that were not

constructed, as described by Section 395.025, including the

categories of each improvement and expansion;

(4) the amount of funds collected from impact fees by

the political subdivision in the service area that have not been

spent;

(5) each impact fee collected by the political

subdivision in the service area;

(6) the allocation of each impact fee made to the

political subdivision in the service area;

(7) any waived impact fees in the service area under

Section 395.016(g);

(8) any requested refunds of impact fees in the

service area under Section 395.025;

(9) any impact fees in the service area refunded under

Section 395.025; and

(10) any errors or omissions of credits in impact fee

calculations for impact fees in the service area.

(d) An independent financial audit conducted under this

section must be submitted to the political subdivision and advisory

committee described by Section 395.058. Before the political

subdivision may increase an existing impact fee or adopt a new

impact fee for a service area where an impact fee had previously

been adopted, the political subdivision must hold a public hearing

on the results of the audit received under this subsection.

(e) A political subdivision shall make available to the

public on the political subdivision's Internet website an

applicable independent financial audit at least 30 days before:

(1) the publication of notice required under Section

395.044; and

(2) the adoption of an order as required under Section

395.053.

(f) A political subdivision may use money collected from an

impact fee to conduct an audit required under this section.

SECTION 8. Section 395.077, Local Government Code, is

amended by adding Subsection (f) to read as follows:

(f) The attorney general may bring an action on behalf of a

property owner to contest an impact fee or to recover a refund for

an impact fee under Section 395.025.

SECTION 9. Section 395.078, Local Government Code, is

repealed.

SECTION 10. Section 395.059, Local Government Code, as

added by this Act, applies only to a new impact fee or an increase to

an existing impact fee adopted on or after the effective date of

this Act.

SECTION 11. Sections 395.043 and 395.054, Local Government

Code, as amended by this Act, apply only to a land use assumption,

capital improvement plan, or impact fee that is the subject of a

public hearing required to be held by Section 395.042 or 395.053 of

that code, as applicable, that is held on or after the 90th day

after the effective date of this Act. A land use assumption,

capital improvement plan, or impact fee subject to a public hearing

that is held before the 90th day after the effective date of this

Act is governed by the law in effect immediately before the

effective date of this Act, and the former law is continued in

effect for that purpose.

SECTION 12. Section 395.051(a), Local Government Code, as

amended by this Act, applies only to the approval of the imposition

of an impact fee on or after the effective date of this Act.

SECTION 13. Section 395.0515, Local Government Code, as

added by this Act, applies only to the increase of the amount of an

impact fee that is adopted on or after the effective date of this

Act.

SECTION 14. This Act takes effect September 1, 2025.

______________________________
______________________________

President of the Senate
Speaker of the House

I hereby certify that S.B. No. 1883 passed the Senate on

April 23, 2025, by the following vote: Yeas 26, Nays 5; and that

the Senate concurred in House amendments on May 21, 2025, by the

following vote: Yeas 26, Nays 5.

______________________________

Secretary of the Senate

I hereby certify that S.B. No. 1883 passed the House, with

amendments, on May 16, 2025, by the following vote: Yeas 87,

Nays 32, one present not voting.

______________________________

Chief Clerk of the House

Approved:

______________________________

Date

______________________________

Governor