Impact Fees and CIP Timing: Why Phasing Costs Blindside Developers When the Capital Improvement Plan Schedule Does Not Match Their Build Out

Quick answer

Impact fees and CIP timing are two different questions in McKinney. A water or wastewater impact fee buys a share of capacity in the city's 10-year capital improvements plan, but it does not build your lines or move a planned project up to match your buildout. Read the plan's capacity analysis, know when your fee is locked, and budget for offsite lines and reimbursement that pays only when neighbors develop.

What does an impact fee actually pay for?

Planned capacity, not your lines. Under Texas Local Government Code Chapter 395, an impact fee funds capital improvements or facility expansions made necessary by new development. Section 395.001 excludes on-site and off-site distribution and collection lines that a valid ordinance requires you to build, and pro rata fees that reimburse whoever extended a main.

McKinney's 2019 to 2029 utility impact fee update, posted on the city's impact fee page, covers pump stations, storage tanks, transmission lines, collection lines, lift stations, and McKinney's share of the North Texas Municipal Water District's regional wastewater expansions. It left out NTMWD's water supply expansion, and the city says only listed projects are eligible for impact fees.

Meanwhile, McKinney's Unified Development Code, Section 301E, has the developer build required public improvements at its sole cost, through to adjacent properties. You pay the fee and build your lines. A pro forma that carries only the fee is short.

When is the fee locked, and when is it paid?

Locked at plat recordation, paid at building permit. Section 395.016(d) has the city assess impact fees before or at recordation of the plat, and collect them when it issues a building permit where water and wastewater capacity is available. McKinney's utility fee schedule sets the maximum assessable fee by the date of final plat recordation.

Once assessed, Section 395.017 bars added or increased fees on the tract unless the number of service units grows. Two 2025 changes, effective September 1, 2025, limit increases further: Section 395.0515 bars raising a fee for three years after it was adopted or last raised, and Section 395.059 requires an independent financial audit before an increase.

What if the CIP project is not built yet?

The fee can be assessed, but collection is limited. Section 395.019 says that, except for roadways, impact fees may not be collected where service is not currently available unless one of three things is true:

1. The city commits to start the listed improvement within two years and have service available within no more than five.
2. The owner builds or finances the improvement and receives credits or reimbursement from later fees.
3. The owner asks the city to reserve capacity, and they sign a written agreement.

Once a fee is paid, Section 395.020 entitles the development to immediate service from existing facilities with actual capacity. Section 395.025 requires a refund on the owner's request if service is denied while capacity exists, or if a fee collected under the two-year commitment is not followed by timely construction and service. A fee not spent within 10 years must be refunded.

Is the impact fee CIP the city's construction schedule?

No, and that gap is the timing risk. Section 395.014 builds the impact fee plan around projected demand over no more than 10 years. It must include an engineer's analysis of total capacity, current usage and commitments for usage of existing facilities. That analysis is the best public view of where capacity is already spoken for.

Construction timing lives in a separate place. McKinney's Capital Improvement Program picks projects from master plans, citizen boards and needs identified by staff and council, is updated annually, and has an interactive web map. Check both: a project can be fee-eligible and still years from a contract.

The March 2020 impact fee report also says the city's water and wastewater hydraulic model results, for 2019, 2029 and buildout, are available for review from the city. Ask for them.

How current is McKinney's impact fee plan?

Check before you underwrite. Section 395.052 requires land use assumptions and the capital improvements plan to be updated at least every five years, and Section 395.0575 lets a city instead adopt a finding that no update is needed.

As of October 2026, McKinney's impact fee page still presents the 2019 update: land use assumptions approved September 17, 2019, and the plans and fee ordinance approved December 1, 2020. The city's June 2025 semiannual report used that plan. Ask Planning which plan and schedule will apply on your plat date.

One more change: Section 395.0231, effective January 1, 2026, requires credits against water and wastewater impact fees for eligible reuse, conservation or water-saving facilities, under procedures each city sets.

What do offsite improvements and reimbursement look like in McKinney?

A facilities agreement, and patience. Under UDC Section 302A, an owner can seek a facilities agreement for pro rata reimbursement or city participation, and the city may participate in lift stations and oversized utilities that serve other development.

The code's pro rata provision is blunt: rebates for oversized or offsite improvements are paid only from money the city receives as surrounding areas develop. Collection runs for no more than 10 years after final acceptance. Model reimbursement as uncertain income, as our post on how wastewater infrastructure affects your pro forma explains.

Phasing has its own trigger. Section 301E requires all required public improvements to be built before filing the final plat that pushes your cumulative final-platted area past 50 percent of the parent tract's gross developable land. That matters most for master planned communities in McKinney.

Is your impact fee and CIP exposure understood before you close?

Ready means every answer below is yes.

1. Do you know which impact fee plan and fee schedule will apply on your plat recordation date?
2. Have you read the plan's capacity and commitments analysis for your service area?
3. Have you matched each phase to a project in the city's Capital Improvement Program, with its status?
4. Is service available now, or does collection depend on a Section 395.019 exception?
5. Are the offsite lines you must build priced separately from the fee?
6. Is any reimbursement modeled as uncertain and capped at 10 years?
7. Does the phasing plan account for the 50 percent improvements trigger?

A note on limits: this is general education from Chapter 395 as amended through 2025 and McKinney's published code and impact fee records as of October 2026. Fee amounts and schedules change, so confirm them with the city for your project.

Frequently asked questions

Are impact fees the only utility cost to budget?

No. Chapter 395 excludes the distribution and collection lines an ordinance requires you to build, and McKinney's code has the developer build them. Budget the fee, the lines, any oversizing and the easements.

Does confirmed service availability mean capacity is reserved for us?

No. Section 395.019 recognizes a written capacity reservation agreement as its own step. Ask the city whether one is available for your project.

I'm a developer with a McKinney final plat ready to record, and I hear the city may update its impact fees. Does recording now protect us?

Assessment happens at plat recordation under Section 395.016(d), and Section 395.017 bars later increases unless your service units grow. Confirm with the city which schedule applies to your recordation date before you rely on it.

I'm the finance lead for a Collin County subdivision and the city wants us to build an oversized line now. How should we model the reimbursement?

In McKinney, as income that arrives only if and when neighbors develop, within 10 years of final acceptance, under a facilities agreement. Put the terms in the agreement and carry the full cost in the base case.

Related resources

• McKinney Utility Availability Study: What Developers Need Before Submitting a Plat in Collin County's Fastest Growing City
• NTMWD Connection vs. Private Treatment: The McKinney Developer's Guide to Choosing the Right Wastewater Path
• The US-380 Corridor Boom: Utility Capacity Planning for Prosper, Celina, Anna, and Melissa Ahead of the Rooftops
• Dallas Water Utilities Impact Fee Structure for Infill Redevelopment: What Changes When You're Rebuilding Inside the Loop

Underwriting a Collin County project around impact fees and CIP timing?

We read the city's plans, map your phases against them, and price the lines and agreements the fee does not cover, before you commit capital.

We specialize in:

• Site feasibility and utility due diligence
• Utility service requests and capacity coordination with providers
• Offsite utility extension design and easement coordination
• Water distribution and wastewater collection design
• Lift station and force main design
• Site civil design for land development

Modern Engineering Solutions, McKinney, Texas. Contact: (214) 833-6748 or mod-eng.com