Title
Consider/Discuss/Act on a Request for the Waiver of Roadway Impact Fees in Accordance with the Neighborhood Empowerment Zone Impact Fee Waiver Program for a Proposed Multi-Family Development (Cotton Mill) Located on the Southeast Corner of State Highway 5 (McDonald Street) and Elm Street
Summary
COUNCIL GOAL: Enhance the Quality of Life in Downtown McKinney
MEETING DATE: July 21, 2026
DEPARTMENT: Development Services - Planning Department
CONTACT: Cassie Bumgarner, Planning Manager
Lucas Raley, AICP, CNU-A, CFM, Director of Planning
RECOMMENDED CITY COUNCIL ACTION:
• Staff recommends denial of the roadway impact fee waiver request.
ITEM SUMMARY:
• Pursuant to Article III, Section 98-85 (Neighborhood Empowerment Zone, NEZ) of the city’s Code of Ordinances, the applicant requests roadway impact fee waivers for a proposed multi-family development (Cotton Mill) located on the southeast corner of State Highway 5 (McDonald Street) and Elm Street.
• Typically, NEZ Program impact fee waivers can be approved by Staff; however, requests that exceed $50,000 or those that include multi-family residential construction require City Council review and approval.
• The proposed multi-family development consists of 1,140 multi-family residential units in four phases. Phase I will include both market rate and affordable multifamily housing governed by an HFC agreement with the McKinney Housing Authority.
• Approval of the impact fee waiver will result in foregone roadway impact fee revenues of $2,946,900, estimated from the 1,140 multi-family units on this application.
CRITERIA FOR ELIGIBILITY:
• For multi-family projects to receive NEZ Program impact fee waivers, the design and completion of the new construction must be generally compatible with the massing, size, scale, and architectural features of the surrounding neighborhood. Eligibility shall be determined, in part, by reviewing the project against the “Guidelines for New Construction in the NEZ” found in Appendix B of Section 98-85 (Neighborhood Empowerment Zone) of the Code of Ordinances.
• The Historic Preservation Officer has reviewed the project against the design guidelines of the NEZ Program and does not find the project compatible. Staff specifically notes the following:
• Height: The presented facades show the phase 1 building at 5-stories with phase 2, 3, and 4 buildings being 7-stories. As presented, the phase 1 building will be approximately 66 feet tall to parapet. Phase 2, 3, and 4 buildings will be approximately 90 feet tall to the parapet. In the “Guidelines for New Construction in the Neighborhood Empowerment Zone” the height of new construction “should take into consideration the general height of the buildings in the neighborhood and shall also comply with the regulating zoning district.” When reviewing the surrounding area, the existing historic Cotton Mill building is approximately 36 feet tall and the surrounding single-family residences are primarily 1-story homes at 18-20 feet tall. The historic Cotton Mill is considered one of the gateways into the downtown area. Historically, the mill building, smokestack, and water tower have been the prominent vertical elements to this part of town. These elements are vestiges of the historical significance of the textile mill to the development and economy of McKinney. As presented, the new multi-family buildings will be nearly double the heights of the existing buildings and create a dramatically altered skyline. As presented, the heights of these buildings will dwarf the surrounding area and contribute to the de-emphasis of the historic Cotton Mill buildings.
• Massing: In the “Guidelines for New Construction in the Neighborhood Empowerment Zone,” new construction should consider and reflect the massing patterns of the neighborhood structures. Massing refers to the full shape and form of the buildings. As presented, the four buildings are largely full rectangular boxes with minimal relief on some corners. The phase 1 building provides none of the relief, with no step-backs on any elevation. When evaluating compatibility with the NEZ guidelines, these buildings do not reflect the majority of the neighborhood context, which includes mostly single-family housing. The massing of the historic Cotton Mill is low and long, which the proposed multi-family buildings are all taller, compact, and boxy. The massing of the presented elevations creates much bulker forms than those in the surrounding area.
• Scale: To meet the guidelines for new construction, the scale of the new development should observe the scale of surrounding and nearby structures. As presented, the scale of the four multi-family buildings is out of proportion with the surrounding neighborhood. The buildings are tall, wide, and take up the majority of open space on the four parcels. The majority of the space bound by Anderson, Puckett, Burrus, and Fowler Streets will be all building, which does not reflect the scale of other buildings to their open space.
BACKGROUND INFORMATION:
• The Neighborhood Empowerment Zone Program (NEZ Program) was established in 2009 and expanded in 2013 to provide a complementary tool for addressing infill projects within the Town Center area of McKinney.
• Roadway impact fees and utility impact fees are imposed by the city on all new development in order to generate revenue for funding or recouping the capital costs of roadway and utility system improvements necessitated by the new development.
• Per Section 98-85 (Neighborhood Empowerment Zone) of the city’s Code of Ordinances, non-residential and residential projects within the Neighborhood Empowerment Zone may receive impact fee waivers based on specified criteria (excerpt below).
Multi-family: Within the NEZ, new multi-family construction, being three or more dwelling units on a single lot and commencing on a lot of record, is eligible to receive roadway impact fee waivers only, provided that the design and completion of the new construction is generally compatible with the massing, size, scale, and architectural features of the surrounding neighborhood. Prior to construction, an application shall be made to the HPO, who will present an eligibility determination for roadway impact fee waivers to the city council for approval or denial based on the proposed construction. The city council shall determine eligibility for impact fee waivers based, in part, on the “Guidelines for New Construction in the NEZ”. All impact fees shall be collected at the time of building permit issuance and remitted to the owner upon completion and final inspection of compliant construction.
FINANCIAL SUMMARY:
• Pursuant to the NEZ Program, impact fees are paid upfront by the developer and are reimbursed following construction and a final inspection to ensure the completed project complies with the NEZ Program approval documents.
• The properties are owned by Cotton Mill Partners LTD. The latest assessed ad valorem value of the 60 combined parcels by CCAD is $4,872,000 from 2026 Collin Central Appraisal District information.
• To date, nine (9) multi-family properties have been awarded roadway impact fee waivers pursuant to the NEZ Program, totaling $2,912,300 in foregone roadway impact fee revenues to the city.