What is HB0375/Chapter 140?
In 2025, the Tennessee General Assembly passed a law that requires all localities to document how their development-related fees exceeding $250 are reasonably related to the cost of providing the associated services. Whenever a fee amount is changed or a new fee is introduced, the documentation must be updated accordingly. This required documentation will be public record and subject to annual audit by the Comptroller’s Office. The law takes effect on July 1, 2026.
What is a Development-Related Fee?
The law defines development as “the construction, building, erection, or improvement to land or any infrastructure contributing to the ability to provide a new building or structure.” This will generally include fees for services related to planning and zoning, new construction, renovation, additions, or alterations, as well as site development, among others.
What will it take to get compliant?
Conducting a cost-of-service (fee) study will help Tennessee Jurisdictions come into compliance with HB0375 / Public Chapter 140. These studies help localities understand the full cost of the services they offer and make informed decisions about how much of those costs should be charged to stakeholders. The steps towards documentation of the full cost of service include:
- Reviewing existing development-related fee schedules to ensure alignment with current services
- Calculating fully burdened hourly rates inclusive of direct (salary, benefits, etc.) and indirect (department and jurisdictional overhead) costs
- Establishing service level baselines (e.g., number of plan reviews, inspections, etc.)
- Documenting the cost associated with each development-related service item
In an era of increasing fiscal pressures, fee studies are vital tools for governments to comply with laws and regulations, manage resources effectively, ensure fairness in charges for services, and maintain high-quality services.
How Can Matrix Consulting Group Help?
Our Financial Services team has over 20 years of experience providing cost-of-service studies for jurisdictions nationwide. We understand the industry standards and best practices and are committed to helping our clients develop defensible solutions that address fiscal needs and community impacts.
