Waco Impact Fees: What Developers and Property Owners Need to Know

If you've ever gotten deep into a development project in Waco and then been handed a fee schedule that made your stomach drop, you're not alone. Impact fees are one of the most common sources of budget sticker shock in the development process — and one of the least understood until it's too late to plan for them.

This post is a plain-language overview of what impact fees are in Waco, how they're calculated, what you can expect to pay, and where there may be opportunities to reduce what you owe.

What Are Impact Fees?

Impact fees are one-time charges assessed by the City of Waco against new development to help fund the capital infrastructure needed to serve that development. The legal authority comes from Chapter 395 of the Texas Local Government Code, which governs how cities in Texas can adopt and administer impact fees.

The basic idea is straightforward: when new development is built, it places new demand on public infrastructure — roads, water lines, wastewater systems. Impact fees are the mechanism by which the City recovers a portion of the cost of expanding that infrastructure to serve the new development. The fee is not a tax — it's a charge tied directly to the infrastructure demand created by your specific project.

Waco adopted its current impact fee structure through Ordinance 2020-793, effective June 1, 2021. The ordinance covers three categories of fees: water, wastewater, and roadway.

When Are Impact Fees Due?

Impact fees in Waco are collected at the time a building permit is issued. This is an important planning point — the fees are not due at plat approval or at the start of construction. They come due when you pull your building permit, which means you need to have them budgeted well in advance of that milestone.

For projects that received final plat approval before the June 1, 2021 effective date, there was a phased implementation schedule that gradually increased fees from 20% of the maximum in June 2021 up to 100% by June 2025. As of now, all developments are subject to the full fee schedule.

Water and Wastewater Impact Fees

Water and wastewater impact fees apply within the City limits and its extraterritorial jurisdiction. The fees are based on meter size, which scales with the service demands of your development. Larger meters carry significantly higher fees — which means meter sizing decisions made early in design can have a real impact on your project budget. On multifamily developments in particular, we have worked with clients to evaluate meter configurations that better serve the project while reducing impact fee exposure. It is worth having your engineer evaluate this before meter sizes are locked in.

Roadway Impact Fees

Roadway impact fees apply within the City limits only — not in the ETJ. The fee varies significantly depending on which of the 11 roadway service areas your project falls in, and also on the land use category of your development.

For single-family detached residential, the roadway impact fee after general credit ranges from as low as $19.20 per unit in Service Area 1 up to approximately $1,500 per unit in several other service areas. For commercial development, fees vary widely by use type and location. Some service areas carry $0 roadway impact fees, which can be a meaningful factor in site selection decisions.

The roadway fee structure is detailed and land-use-specific — a sit-down restaurant carries a very different fee than a warehouse, and a general office building is different from a medical-dental office. Getting the land use classification right matters, and it is worth confirming with the City early to make sure your project is being assessed in the right category.

Fee Caps and Credits

The ordinance includes provisions for fee caps and credits under certain conditions. Whether these apply to your project depends on specifics that need to be evaluated on a case-by-case basis with the City.

Waivers and Exemptions

The ordinance does include waiver and exemption provisions for certain development types and locations. Whether your project qualifies depends on how it is structured and where it is located. We recommend discussing this directly with the City's Development Services Department early in your project — and making sure any exemption you're counting on is confirmed in writing before you finalize your budget.

What This Means for Your Budget

The practical takeaway is simple: impact fees need to be in your pro forma from day one. A single-family subdivision can carry $3,000 or more per lot in water and wastewater fees alone before roadway fees are added. A multifamily project with larger meters can see combined fees in the tens of thousands of dollars per building. A commercial project in certain service areas can face significant roadway fees on top of utility fees.

The fees are not negotiable in most cases, but how your project is structured — meter sizes, land use classifications, service area, and whether any exemptions apply — can affect what you ultimately owe. Engaging your engineer early and making sure those variables are evaluated before you commit to a site plan or a permit application can make a real difference.

How Merritt Engineering Services Can Help

At Merritt Engineering Services we work on land development and infrastructure projects throughout McLennan County and Central Texas. We help clients understand the full cost picture of a development project before they commit to a design — including impact fees, drainage requirements, utility infrastructure, and permitting costs. If you have a project in Waco or the surrounding area and want to understand what you're looking at before you pull permits, reach out. We are glad to walk through it with you.

This post is intended for general informational purposes only and does not constitute engineering advice. Every project is unique. Contact a licensed Professional Engineer to evaluate the specific requirements for your project.