Impact Fees for Car Wash Developments as a Feasibility Aspect: Sacramento vs. Houston vs. Tucson

Introduction: Impact Fees and Car Wash Developments

Impact fees are one-time charges levied on new developments to fund the infrastructure needed to serve them. They are designed to ensure that projects like tunnel-style automatic car washes – which can have high water usage and generate significant vehicle traffic – pay their “fair share” of expanding utilities, roads, and drainage systems. In many states (e.g. California), laws prohibit using existing utility ratepayers’ money to build new capacity for growth, making impact fees essential for financing new water, sewer, and roadway infrastructure For a car wash, these fees help offset the strain on municipal systems: large volumes of wash water and wastewater, increased stormwater runoff from impervious surfaces, and additional car trips on local roads. Below we break down the impact fee structures in Sacramento, CA, Houston, TX, and Tucson, AZ, covering water/wastewater, transportation, drainage, and other applicable fees, followed by a comparative analysis and implications for stakeholders.

Sacramento, CA – Fee Structure and Rationale

Water and Wastewater: The City of Sacramento’s Department of Utilities (DOU) administers impact fees for water supply, stormwater, and wastewater infrastructure. Sacramento imposes separate sewer fees depending on location: projects in older central districts pay a Combined Sewer System fee, while those in separated sewer areas pay a standard sewer fee. The water development impact fee is based on the size of the water meter required, which in turn reflects the project’s peak water demand. (For example, a high-volume car wash needing a large meter would pay more than a small retail shop.) These one-time connection fees help fund new pipes, treatment capacity, and storage for the added demand. Recent city studies found the existing fees insufficient for future growth, prompting a 2023 ordinance to raise water and sewer impact fees over four years (fully phased in by 2027. This increase moves Sacramento’s fees from below-average to roughly mid-pack among local jurisdictions, aligning fees with the true infrastructure costs of new developments. Notably, regional sewer agencies also levy charges: developments in Sacramento must pay hookup fees to the Sacramento Regional County Sanitation District and Sacramento Area Sewer District for treatment and collection capacity (on the order of $6,000+ per equivalent dwelling unit). These regional fees are assessed separately by the county’s permit services unit and can add tens of thousands for a commercial project like a car wash, depending on its expected sewage flow.

Transportation (Roads): Sacramento participates in a countywide transportation impact fee program to fund road and transit improvements under the voter-approved “Measure A.” This Sacramento County Transportation Mitigation Fee applies to new developments citywide and is calculated based on the development’s trip generation. A tunnel-style car wash is categorized similarly to other auto-related services; currently the fee is approximately $2,362 per 1,000 square feet of car wash facility. In practical terms, a 3,000–4,000 sq. ft. drive-through car wash would owe around $7,000–$10,000 in road impact fees. This rate is derived from traffic studies – essentially multiplying the expected daily vehicle trips generated by the car wash by a cost-per-trip factor. (For land uses not explicitly listed, Sacramento uses an average trip rate times $166 per trip as the fee basis.) The revenue helps widen roads, add signals, and mitigate traffic congestion caused by new businesses. Sacramento’s transportation fee is collected at building permit issuance and forwarded to the regional transportation authority.

Drainage and Flood Control: In 2023 Sacramento moved to implement a new storm drainage impact fee to fund stormwater infrastructure for growth. This fee addresses the burden that developments like car washes place on storm drains (with large paved areas accelerating runoff). While details of the drainage fee structure are being finalized, it is expected to scale with impervious surface area (much as Houston and others do) – effectively charging per square foot of new pavement/roof. Regional flood control fees also apply in certain parts of Sacramento. For example, the Sacramento Area Flood Control Agency (SAFCA) collects an impact fee on new structures in the 200-year floodplain to fund levees and flood protection projects. In the North Natomas area (a flood-prone district), this SAFCA fee is on the order of a few thousand dollars per development. All told, a Sacramento car wash project may encounter multiple layers of fees: city utility fees, regional sewer fees, Measure A transportation fees, and possibly a SAFCA flood fee – each governed by different agencies or ordinances (City Code for utilities, County Code for roads, SAFCA resolutions for flood control).

Calculation & Methodology: Sacramento’s fee methodologies are rooted in nexus studies that tie the fee to project impacts. Water/sewer fees are based on capacity needed – e.g. meter size and equivalent flow units – ensuring the developer funds the new water mains, pumping and treatment capacity their project will consume. Traffic fees rely on the Institute of Transportation Engineers (ITE) trip generation rates for car washes and similar uses, multiplied by the cost of planned roadway expansions attributable to those trips Drainage fees(once active) will likely consider the increased runoff (e.g. requiring detention basins or larger storm sewers) and charge per added impervious area. Each fee is backed by an ordinance or program: e.g. City Code Chapter 18 for utility impact fees (recently updated by City Council in fall 2023), and the Measure A Transportation Ordinance administered by the Sacramento Transportation Authority. In sum, Sacramento’s approach is comprehensive but complex – multiple agencies ensure new car wash developments contribute proportionately to water supply expansions, sewer treatment plants, road widenings, and flood control systems.

Houston, TX – Fee Structure and Rationale

Water and Wastewater: The City of Houston imposes impact fees for water and sewer capacity under Chapter 395 of the Texas Local Government Code. These fees are managed through Houston Public Works’ Wastewater Capacity Reservation (WCR) process, which developers must undergo for any new or expanded development Houston uses a “service unit” methodology: one service unit is defined as 250 gallons per day of demand (roughly the usage of a typical single-family home). An automatic tunnel car wash, with its intensive water use, is assigned multiple service units based on its expected daily flow. The current fee rates (2024) are $2,091.03 per service unit for water and $1,746.32 per service unit for wastewater. These rates are set at a percentage of the maximum allowable costs (Houston assesses below the state-allowed cap). For instance, if a car wash is estimated to demand 5 service units of capacity, the one-time impact fees would be about $10,455 for water plus $8,732 for sewer. Importantly, Houston ties its fee calculation to development size: after the first 3,000 sq. ft. of a project, each additional square foot adds 0.0002 service units for both water and wastewaterg. In practical terms, a larger facility or one with extensive customer amenities will incur slightly higher fees. Developers secure these utilities by obtaining a WCR letter, and once fees are paid, that capacity is reserved for the project (If a project is canceled, fees are non-refundable but can be transferred to a new site or owner under certain conditions.) Houston’s water/sewer impact fees are governed by City Code Chapter 47, Articles IX and X, and are reviewed at least every 5 years to align with infrastructure costs and growth projections.

Transportation: Notably, Houston does not levy a citywide transportation impact fee for roadway capacity as some jurisdictions do. Unlike Sacramento and Tucson, Houston historically has no general road impact fee program, thanks in part to its unique approach to urban development (Houston has no traditional zoning and often addresses traffic impacts via project-specific requirements or through its metropolitan planning funds). This means a car wash developer in Houston is not charged a per-trip or per-square-foot road fee by the city. However, developers may still face traffic mitigation obligations during permitting – for example, if a traffic impact analysis shows the car wash will significantly affect an intersection, the city might require adding a turn lane or traffic signal as a condition of permit approval. Those improvements are handled case-by-case rather than through a formula fee. It’s also worth noting that Texas law allows roadway impact fees if adopted via the Chapter 395 process, but Houston has to date focused its impact fees on water, sewer, and drainage infrastructure. The absence of a standard transportation impact fee can simplify Houston’s fee burden for projects like car washes, making upfront costs more predictable (limited to utilities and drainage) and potentially lower than in cities with hefty road fees.

Drainage: Houston has recently introduced a Drainage Impact Fee on new development to combat flooding issues. Separate from the city’s monthly stormwater utility charge, this one-time developer drainage fee is calculated based on increased impervious surface. The city is divided into watershed service areas, but the fee rates are currently uniform: $25 per 1,000 square feet of added impervious area (as of 2024). For a tunnel-style car wash, which typically includes a large building and extensive paved driveways/vacuum bays, this could add a few hundred dollars to a couple thousand dollars in fees. (E.g. 20,000 sq. ft. of new impervious area × $25/1,000 sq. ft. = $500.) The drainage fee is enabled by Houston’s Code of Ordinances (Chapter 47, Article XV) pursuant to state law. Its purpose is to fund detention basins, storm sewers, and bayou improvements needed to handle the runoff from new developments. By charging per impervious unit, Houston directly ties the fee to the project’s stormwater impact – a critical concern in a flood-prone city. The fee is assessed at permit time in conjunction with the building plan review. Alongside this impact fee, Houston also requires new developments to meet on-site detention requirements, but the fee revenue helps build larger regional drainage projects beyond the site.

Other Fees: Houston consolidates most development fees through its Permitting Center, and aside from the utility and drainage impact fees, a car wash developer would encounter standard permit fees, but no additional municipal impact fees for parks or public safety (those are typically handled through property taxes or other financing in Texas). One unique aspect: if the car wash is outside city limits but in Houston’s extraterritorial jurisdiction, a Municipal Utility District (MUD) might impose its own utility connection charges instead of city impact fees. But within city limits, Houston Public Works is the key agency, and the WCR process ensures the water/wastewater fees are calculated and paid up front. Houston’s streamlined approach – a single agency coordinating and collecting the fees – makes the procedural aspect relatively straightforward. The WCR application typically takes about 10 business days to process after which the developer pays the assessed fees and can proceed to building permits.

Calculation & Methodology: Houston’s impact fee methodology is very formula-driven and capacity-based. The city’s Land Use Equivalency Table assigns service units to different development types, translating a car wash’s characteristics (building area, expected usage) into an equivalent number of 250-gpd units. This ensures a proportional fee: a small self-service car wash might be only 1–2 service units, whereas a high-throughput tunnel could be several units. By state law, Houston can only use these fees for capital improvements related to water supply, wastewater treatment, or drainage serving the new development. The fee rates (per service unit) are set based on detailed infrastructure cost studies approved by City Council – for example, Houston currently charges roughly 70% of the maximum calculated cost for wastewater and 50% for water (keeping fees somewhat lower to encourage development while using utility revenue bonds for the remainder). The drainage fee similarly comes from a calibrated model of how much new impervious cover contributes to flood control project costs. In summary, Houston’s framework emphasizes clear unit costs (dollars per service unit, per 1,000 sq. ft. of runoff) and a centralized process. This can be advantageous for developers: they can estimate fees in advance using published rates and even online calculators, and the permitting center acts as a one-stop shop for obtaining the necessary capacity letters and paying fees.

Tucson, AZ – Fee Structure and Rationale

Water and Wastewater: Tucson’s impact fee landscape is somewhat split between city and regional authorities. Tucson Water (the city’s utility) charges one-time “system development” fees for new water connections, consisting of a System Equity Fee and a Central Arizona Project (CAP) Water Resource Fee. The System Equity Fee recovers the cost of the existing water infrastructure capacity for new users – it is calculated by meter size, reflecting how much demand the new connection will place on the system. For example, a standard 1.5-inch commercial water meter (common for a tunnel car wash) incurs about $6,555 in equity fees, whereas a 2-inch meter is around $10,488. In addition, Tucson charges a CAP water resource fee to cover the cost of securing water rights from the Colorado River. This fee is also scaled by meter capacity – about $1,000 for a 1½-inch meter or $1,600 for a 2-inch meter. Together, a car wash might pay on the order of $7,500–$12,000 to connect to Tucson’s potable water supply, depending on its meter. These fees are codified in the Tucson City Code (Chapter 27, Section 27-36) and are earmarked to pay debt on water infrastructure and procure future water supply (CAP allocations).

Wastewater service in the Tucson area is provided by Pima County’s Regional Wastewater Reclamation Department (RWRD). Thus, a new car wash must also pay a sewer connection fee to Pima County. This regional wastewater impact fee (sometimes called a sewer utility fee or connection fee) is typically calculated per Equivalent Dwelling Unit (EDU) or via plumbing fixture counts. Although exact figures vary, it is on the order of several thousand dollars per EDU. For instance, Pima County’s standard sewer connection fee has been roughly $4,000–$6,000 per EDU in recent years for new commercial connections (similar to Sacramento’s regional fees). A high-water-use facility like a car wash would be assigned multiple EDUs based on its flow, so sewer fees could easily reach five figures. These charges ensure funding for expansion of sewer mains and treatment plant capacity. (Notably, since 1979 the City of Tucson and Pima County have an agreement where the county is the sole sewer authority, so even projects inside city limits go through the county for sewer permits.) The developer would coordinate with RWRD to obtain a sewer capacity clearance and pay the required fee before the city will issue building permits. In summary, Tucson’s water and wastewater fees are split between city and county: Tucson Water handles the potable supply side, charging by meter size, and Pima County handles wastewater, charging by capacity needs. The responsible ordinances include Tucson Code §27-36 for water fees and Pima County Code Title 13 for sewer fees.

Transportation (Roads): The City of Tucson imposes roadway development impact fees on new construction to fund transportation improvements. Tucson is divided into service areas, but generally the fees are applied citywide with rates based on land use categories. A tunnel-style car wash falls under a high-traffic commercial “Services” category (similar to auto services or drive-thrus). For illustration, under the current Pima County fee schedule (which is comparable to Tucson’s scale), an “Auto Car Wash” is charged about $14,635 per 1,000 sq. ft. of building area for road impacts. Tucson’s city impact fee as of 2021 was in a similar range, and both the city and county are undergoing updates for 2025 to potentially increase these rates in line with new 10-year infrastructure plans. This means a 4,000 sq. ft. car wash building in Tucson could face roughly $58,000 in transportation impact fees. The fee is calculated using local land use assumptions and traffic modeling: car washes have high trip generation (customers driving in and out frequently), so they are assessed a higher fee per square foot than typical retailpima.gov. Tucson’s impact fee ordinance (Tucson City Code Chapter 23A, Article II) requires these fees to be paid prior to building permit issuance. The revenue is dedicated to road capacity projects like street widening, new signals, and intersection improvements to support the additional traffic. It’s worth noting that Arizona state law (ARS §9-463.05) mandates rigorous “nexus” studies for impact fees; Tucson updates its Land Use Assumptions (LUA) and Infrastructure Improvement Plan (IIP) every five years. Indeed, the city is in the process of revising impact fees for 2025 based on updated growth projections and project costs. For developers, this means Tucson’s road fee amounts can change periodically but are clearly published in tables per land use.

Drainage: Tucson does not impose a standalone city drainage impact fee analogous to Houston’s, but stormwater management is addressed through other mechanisms. The City may require on-site retention of the first flush of runoff (a common practice in Arizona’s water-scarce environment), and regional flood control is handled by Pima County. Pima County’s Regional Flood Control District can levy fees or require contributions for major drainage facilities, though these are often case-specific or covered by property taxes rather than a flat impact fee. That said, if a car wash development is in a designated floodplain or drainage improvement district, there could be exactions or special assessments for drainage infrastructure. Tucson’s development impact fee program historically has focused on roads, parks, police, and fire facilities – the categories enabled by state law – while water and sewer are treated as utilities with separate connection fees. Therefore, a Tucson car wash project’s “drainage fee” costs might come more in the form of site improvement requirements (like building water quality basins or oversized storm pipes on-site) instead of a city-imposed fee per square foot of impervious area. Additionally, if any regional drainage impact fee were in place, it would likely be administered by the Flood Control District countywide. As of 2025, Tucson is considering updates to all impact fees, but no specific citywide drainage fee has been reported (the focus has been on increasing roadway and public facility fees). In short, drainage costs in Tucson are present but not packaged into a single fee – they emerge through compliance with floodplain regulations and possibly county requirements rather than a blanket impact fee as seen in Houston.

Other Applicable Fees: Beyond the major categories above, Tucson’s development impact fee program also includes parks and recreation fees and public safety (police/fire) fees for new developments, per the city’s enabling ordinance. These typically apply more to residential projects, but commercial developments like car washes may pay nominal amounts for things like city police facilities. However, such fees are relatively small compared to utilities and road fees. For example, Tucson’s 2021 fee schedule (full adopted rates) showed non-utility fees per 1,000 sq. ft. for commercial uses – including contributions to parks, law enforcement, etc. – that in total were a few hundred dollars, a minor addition next to the thousands in road fees. The primary local agencies and ordinances governing Tucson’s fees are the City of Tucson Planning and Development Services (which administers the impact fee program and collects city fees) and the Pima County RWRD and Flood Control District (for sewer and any flood-related exactions). A car wash developer in Tucson will interact with both: obtaining a water meter and paying Tucson Water’s fees, and securing a sewer connection permit from Pima County. Coordination is improving – for instance, Tucson Water and Pima RWRD have intergovernmental agreements to streamline plan approvals – but it remains a dual-agency process.

Calculation & Methodology: Tucson’s methodology for impact fees is built on ensuring new development “pays proportionately for the infrastructure capacity it consumes.” For water, the meter-size method quantifies capacity in gallons-per-minute, aligning fee amounts to the cost of source, treatment, and distribution capacity needed. (The fee tables in city code explicitly list charges for each meter size, as we saw – effectively using meter flow ratios to scale the base fee.) The CAP fee is calculated by dividing the cost of acquiring an acre-foot of Colorado River water by the meter’s capacity share of that acre-foot. For wastewater, Pima County conducts sewer utility fee calculations based on EDUs or fixture units. Each plumbing fixture (drains, sprayers in a car wash, etc.) is assigned a value that rolls up into an EDU count for the facility, which is then multiplied by the per-EDU fee from the county’s ordinance. On the transportation side, Tucson’s fees are founded on detailed Land Use Assumption and IIP studies. These studies estimate how many new vehicle trips a type of business (like an auto car wash) will generate in the next decade and what roadway projects are needed to maintain traffic levels of service. The cost of those projects is allocated per unit of development (per 1,000 sq. ft., per dwelling, etc.), yielding the fee schedule. This ensures a rational nexus: for example, if car washes citywide in the next 10 years are expected to generate X trips, and $Y of road expansions are attributable to that growth, the fee per square foot is set to cover Y/X for that land use. All these calculations are documented in Tucson’s Impact Fee Infrastructure Plans and are subject to public hearings and Council approval. As a result, Tucson’s impact fees are transparent and periodically adjusted. A developer can anticipate that fees might rise every few years (the city is proposing three annual increments of increases starting 2025), but also that the fees are locked-in at permit time and provide a known contribution toward the infrastructure that will support their project.

Comparative Analysis: Fees, Timelines, and Complexity

When comparing Sacramento, Houston, and Tucson, distinct patterns emerge in both fee magnitude and procedural complexity:

• Overall Fee Burden: For a similar tunnel-style car wash, Sacramento and Tucson tend to have higher total impact fees than Houston. Sacramento’s combination of city and regional fees means a developer pays in multiple categories – water, sewer, transportation, drainage/flood – which cumulatively can reach into the mid five figures (USD). Tucson’s roadway fees are especially high (potentially $50k+), and its water/sewer fees combined are also substantial (perhaps $15k or more for a large car wash), yielding a total that can rival Sacramento’s. Houston, by contrast, forgoes road impact fees and has more moderate utility fees. A Houston car wash might only pay on the order of $10k–$20k total (mostly for water/wastewater capacity), whereas a Tucson car wash could be looking at $60k+, and Sacramento somewhere in between, depending on regional sewer costs. Houston’s lack of a transportation fee is a major advantage cost-wise, partly offset by Tucson’s lack of a formal drainage fee (Houston’s drainage fee is small, though, compared to Tucson’s big road fee). Each city’s priorities influence these costs: California and Arizona cities charge high fees to fund infrastructure through growth (“growth pays for itself”), whereas Houston historically relies more on general funding and requires less upfront from each project.

• Agency Coordination: Houston is the most streamlined – through its Permitting Center, a developer can handle all impact fees in essentially one process (obtaining a WCR letter and paying fees there). The city itself controls water, sewer, and drainage utilities, simplifying coordination. Sacramento is the most fragmented, requiring navigation of city departments and regional agencies. A car wash developer in Sacramento works with the City’s utilities department for water/drainage, but must also get fee clearance from the Regional Sanitation District for sewer and pay the Measure A transportation fee (often collected by the city on behalf of the county). This means extra steps – e.g. applying to SRCSD for a sewer capacity determination – which can lengthen the timeline. Tucson falls in between: the developer pulls city permits (and pays city road and water fees) at Tucson’s Planning and Development Services, but also needs a sewer connection permit from Pima County. This two-stop process is fairly routine but requires coordination between jurisdictions. From a permitting timeline perspective, Houston’s impact fee process (10-day WCR review) is predictable, and impact fees are typically paid when utilities are approved, well before final permit. Sacramento’s process can be slower; utility impact fees are calculated during plan review and added to the building permit invoice at issuance, but any hiccup in getting sign-off from regional sewer or flood agencies can delay the permit. Tucson’s timeline for fee payment is tied to the building permit as well, with the city waiting for proof of sewer fee payment to the county. Generally, the permit approval in Tucson and Sacramento can take longer due to more complex reviews (California’s environmental and planning reviews, or Tucson having to align city/county steps), whereas Houston’s famously laissez-faire approach can result in faster groundbreaking.

• Methodology and Fairness: All three cities use rational formulas linking fees to project impact, but their focus differs. Sacramento and Tucson explicitly factor in traffic impacts (vehicle trips per day) in their fee, making those cities more expensive for traffic-intensive uses like car washes. Houston does not charge per trip, so a car wash isn’t “penalized” for being high-traffic in the fee sense – though traffic considerations may arise during approval, there’s no fixed cost. Water usage is a key factor everywhere: Sacramento and Tucson both size fees by water meter (bigger demand = bigger fee), and Houston by service units (which boil down to usage and square footage). This means all three will charge a tunnel car wash significantly more than, say, a small retail store, reflecting the car wash’s heavy draw on the water system. Drainage impact treatment also varies: Houston’s per-impervious fee directly charges for runoff, Sacramento’s new drainage fee is expected to do similarly, while Tucson’s approach is indirect (development must mitigate runoff but doesn’t pay a city fee for it). For developers, this affects strategy – in Houston one might simply pay the modest drainage fee; in Tucson, one might invest in on-site retention to satisfy regulations (an upfront cost but not labeled as a fee).

• Regulatory Complexity: From a developer or lender standpoint, Sacramento’s process can seem the most daunting due to California’s broader regulatory environment. Beyond fees, there are often lengthy reviews (environmental impact reports, design commission approvals, etc.) which can interplay with fee calculation (e.g. fee estimates might change if project scope changes during environmental review). The impact fees themselves in Sacramento are being updated through 2027, so a developer today faces a phased schedule – possibly an escalating fee if the project is built later Sacramento does offer certain exemptions or grandfathering(projects in the pipeline by early 2024 avoid the new higher fees for a period), which adds complexity in determining final costs. Houston’s environment is more straightforward and pro-development: fees are known, the city even discounts below max allowed, and there is less red tape. Houston also allows fee transfers (if capacity was paid for but a project didn’t proceed, the fee value can move to another project), which can protect developers’ investments. Tucson’s complexity stems from the dual jurisdiction – a developer must be mindful of both city and county requirements (for example, obtaining a county sewer “will serve” letter is an extra task). However, Arizona’s impact fee law also provides predictability: the city publishes all fee rates and cannot arbitrarily change them without a public update process, so developers and lenders can plan for known fees. Tucson in recent years has also improved turnaround times for permits and coordination with Pima County, making the process more seamless than it once was.

In quantitative terms, a Sacramento car wash might pay roughly $40k in utility impact fees (water + sewer) plus $10k in transport and maybe $2k in flood fee – total around $50k (illustrative). A Houston car wash might pay $15k for water/sewer and a few hundred for drainage – total under $20k. A Tucson car wash could pay $8k water, $5k sewer (if one EDU, more if higher flow), $50-60k roads – totaling in the $60-70k range. These estimates underscore that Tucson’s road fee is a standout, while Houston is lowest across the board except perhaps sewer (Houston’s sewer fee for a large user can add up since service units accumulate with size, but even then it’s competitive). It’s also important to consider ongoing costs: Houston has a monthly drainage fee for all properties, so the car wash will see a recurring charge on utility bills (not an impact fee per se, but a factor in long-term cost). Sacramento and Tucson may have slightly higher property taxes or utility rates to fund infrastructure not covered by impact fees (Houston’s model shifts more to operating revenue and bonds).

Implications for Developers, Lenders, and Planners

For Developers: Impact fees directly affect project feasibility and site selection. A tunnel car wash is a significant capital investment, and in markets like Sacramento or Tucson, the tens of thousands in fees must be budgeted into the project pro forma. Higher upfront fees mean a developer needs more cash or financing before the business even opens. This can lead developers to weigh locations carefully: for example, a developer might favor the Houston metro area for expansion because the lower impact fees improve the return on investment (all else equal). Within regions, developers may also compare just outside city limits versus inside – e.g. in Pima County just beyond Tucson city, road fees might differ or water might be served by a smaller utility with different fees. Impact fees can thus influence where car washes get built. In Sacramento’s case, if fees increase and add $100k+ to a multi-site development program, a developer might pause or seek incentives/fee deferrals. Indeed, some jurisdictions offer impact fee deferral or reduction programs to spur economic development (Sacramento has deferred impact fee programs for certain projects). Developers also must navigate the timing of fees: most fees are due at building permit issuance or prior to certificate of occupancy. This timing means the project must secure sufficient capital upfront. Lenders typically do not release full construction funds until permits are issued, so having all fees calculated and ready is critical. Additionally, developers must stay abreast of fee updates – as seen in Tucson and Sacramento, fees can rise over time, so a delay in starting construction can literally increase costs if a new fee schedule kicks in.

For Lenders/Investors: Impact fees affect the cost basis of the project and thus the amount that needs financing. A lender evaluating a car wash development will include impact fees in the uses of funds and will be interested in any uncertainty or volatility in those fees. For example, if a project is in Sacramento and City Council is debating a fee hike, a lender might require the borrower to have extra contingency funds or even hold off closing the loan until fees are locked in. Lenders also view impact fees as part of the entitlement risk: the risk that a project can’t get permitted or will incur unexpected costs. A complex multi-agency fee environment (like Sacramento’s) could be seen as higher risk compared to Houston’s simpler process. However, once fees are paid, they effectively become part of the project’s equity (some lenders may not finance 100% of fee costs). The appraisal of a new car wash may consider that in high-fee cities, the barrier to entry is higher – which could be a competitive advantage for those who do build, as there may be fewer competitors due to the high upfront costs. Thus, in an ironic way, high impact fees can limit oversupply of car washes, potentially supporting better performance for the ones that do get built. Lenders will also look at whether fees can be passed on or mitigated – for instance, some cities allow fee credits if a developer builds public improvements themselves. If a car wash developer agrees to construct, say, a turn lane or a water line that benefits others, that sometimes offsets fees. These nuances will factor into loan agreements and covenants.

For Land-Use Planners and Policy Makers: Impact fees are a crucial tool for planners to ensure infrastructure keeps pace with growth. The comparison highlights different philosophies: Sacramento and Tucson planners place a strong emphasis on infrastructure concurrency, using fees to channel funds into needed expansions. This approach supports long-term sustainability – new car washes and other businesses fund the additional water supply, sewer treatment capacity, road widenings, etc., preserving service levels for the community. However, planners must balance this with economic development goals. If fees are too high, they can discourage desirable commercial projects or push them to outlying areas. Tucson’s planned fee increases in 2025, for example, have been met with input from business coalitions concerned about competitiveness. Planners have to justify fees via rigorous nexus studies, demonstrating to elected officials and stakeholders that the fees are proportionate and necessary. In Houston, where fees are lower, planners rely on alternative funding (like bonds or drainage charges) to handle growth impacts. The implication is that Houston’s model may spur more development (due to lower cost barriers) but can strain public infrastructure funding if growth is rapid. Indeed, Houston’s recent adoption of drainage impact fees indicates planners there recognized a gap in how unchecked development was contributing to flooding.

Another consideration is procedural complexity vs. certainty. Sacramento’s multi-agency system, while complex, also means specialized agencies manage each aspect – water experts handle water fees, transportation authorities handle road funds, etc. This can lead to well-targeted use of funds (e.g. SAFCA ensuring flood fees go to levee improvements) and possibly more robust infrastructure outcomes. The trade-off is a heavier process for applicants. Planners might work on creating one-stop permitting or inter-agency MOUs to ease this – similar to Tucson coordinating with Pima County – to reduce friction for businesses without removing the fees. Houston’s one-stop model is business-friendly but requires strong internal planning to allocate the collected fees effectively across utility projects.

Finally, for long-term planning, impact fees can influence urban form. High transportation fees encourage developers to look for infill locations (since fees are sometimes lower for infill, as in some Sacramento fee zones) or to minimize project size. For instance, a Tucson car wash developer might shrink the building footprint or omit a secondary structure to cut a few thousand off fees. They might also incorporate water recycling aggressively – not only to cut ongoing water bills but potentially to argue for a smaller meter (and thus lower water impact fee). Planners see these responses and may adjust policy: e.g. offering fee reductions for green infrastructure or for projects in priority corridors. Impact fees, in summary, are both a funding mechanism and a planning lever. They send price signals about the true infrastructure costs of certain developments. A tunnel car wash in a water-scarce area (Tucson) or traffic-congested area (Sacramento) will come with a higher price tag, ideally reflecting the need to secure additional water rights or widen roads. Planners must ensure these funds are then invested to actually provide the capacity (new wells, treatment plant upgrades, road lanes, drainage channels) so that the community benefits from the growth paying its way.

In conclusion, Sacramento, Houston, and Tucson each illustrate a different balance of impact fee philosophy. Sacramento represents a comprehensive but complex regime ensuring all aspects of infrastructure are funded by development. Houston offers a streamlined, lower-cost path, relying more on general infrastructure funding and only charging what is deemed absolutely necessary for utilities. Tucson sits somewhere in the middle – leveraging high fees especially for roads to keep pace with growth, while coordinating city and county roles. For a tunnel-style car wash developer or investor, these differences mean the “bottom line” can vary dramatically by location, and careful due diligence is needed. Yet, from a planning perspective, each city’s approach is tailored to its context: Sacramento’s fees respond to California’s infrastructure financing constraints, Houston’s minimal fees align with its growth-attracting policies, and Tucson’s fees reflect a water-conscious, auto-oriented Sunbelt city ensuring its future infrastructure needs are met. Each model has implications for the viability of projects and the sustainability of urban growth, underscoring why impact fees remain a pivotal and sometimes delicate tool in urban development across the U.S.

June 13, 2025 by a collective of authors at MMCG Invest, LLC, car wash feasibility study consultants

Sources: Sacramento City Dept. of Utilities Impact Fee FAQ; Sacramento County Transportation Fee Schedule; CADA Board Report on Sacramento Fee Increases; Houston Permitting Center – Impact Fee Administration Guides; City of Houston Code Ch.47 (Fee Schedule Excerpts); Pima County Roadway Development Fee Tablep; Tucson City Code §27-36 (Water fees by meter); Tucson Metro Chamber Advocacy Update on Impact Fees (2025); and relevant city ordinances and agency publications as cited above.