Title
Approving a resolution authorizing the City Manager to execute a renewal of the Interlocal Cooperation Agreement for Public Health Services between the City of Austin and the City of Pflugerville.
Summary
The proposed request is to authorize a renewal of the Interlocal Cooperation Agreement for Public Health Services between the City of Austin through Austin Public Health (APH) and the City of Pflugerville. The Interlocal Cooperation Agreement approved on July 25, 2023 was a five year term agreement which allows for four successive 12-month renewals; this is the second 12-month renewal of that agreement. The Interlocal Cooperation Agreement approved in 2023 included adoption of the City of Austin fee schedule and contains no financial requirement or annual renewal fees by the City. If the proposed renewal is approved, Austin Public Health will continue to provide the administration of permits and all health inspections for food inspections, public pools, spas, childcare facilities, and certified farmers markets throughout FY2026.
The initial agreement was approved in 2019 and included three successive 12-month renewal terms. The initial agreement included financial responsibility by the City of Pflugerville to establish the program which was fulfilled by 2022 and there is currently no cost to the City for this service.
Prior discussion with Council raised concerns related to permit fees for events. Since the approval of the last renewal of the interlocal, two pieces of legislation passed during the 2025 Legislative Session, impacting Austin Public Health (APH) permitting services:
• Senate Bill 1008 places a cap on temporary food establishment permit fees, limiting them to the state rate plus 20%. Effective September 1, 2025, APH will only be able to charge a maximum of $62 per food booth for a 1-14 day permit. This represents a reduction of approximately $218 per booth from current fees.
• House Bill 2844 shifts all Mobile Food Vendor licensing and permitting authority from local health departments to the State of Texas, effective July 1, 2026. This means APH will no longer oversee this function locally and will be coordinating with staff on how these changes may impact any operations they have for public health services in Pflugerville prior to any changes.
The City of Austin has been reviewing the fees charged for the services provided by Austin Public Health. APH fees have not been increased since 2019. The City of Austin budget includes a fee increase for services provided by APH that are in line with recent legislation which states that permit fees for health services cannot exceed the state permit fees plus 20 percent. APH is estimated to provide approximately 487 permits and 527 inspections in FY26 which would equate to a gross revenue for APH of $255,175.
If the City Council chooses not to renew the interlocal agreement with APH, alternative options such as third-party review or in-house permitting are available. A detailed comparison of these options is attached for your review.
After reviewing the updated fees provided by APH, staff found that most fees that impact Pflugerville permits remain unchanged, with the exception of two key areas: Temporary Food Booth Permits and Retail Food Establishment Permits.
Temporary Food Booth Permits (Special Events)
Previous Fee: $280
New Fee (State-Mandated Cap): $62
Cost Savings per Permit: $218
Should the City contract with a third-party vendor for health permitting services, the maximum fee the City could impose remains $62. However, third-party vendors charge between $150–$250 per permit. This could result in annual cost to the City ranging from $8,000 to $17,000, not including additional administrative and technology expenses.
Retail Food Establishment Permits (Restaurants)
Previous APH Fee Structure (Risk-Based):
APH previously set fees based on risk categories—high, medium, and low—determined by:
Complexity of food preparation
Menu type
Volume of meals served
This structure allowed for targeted inspections, with higher-risk establishments receiving more frequent oversight. FY24 permit fees ranged from $359 to $896, averaging $546 per permit based on the total number of permits issued and their related cost. These fees include routine inspections annually, with no additional charge. APH conducts approximately 525 routine inspections annually for Pflugerville businesses.
New State-Mandated Fee Structure:
Fees must now align with annual gross food sales, with three categories:
$150,000 or more
$50,000–$149,999
$0–$49,999
Under this model, FY26 permit fees range from $309 to $927. These fees include routine inspections annually, with no additional charge from APH.
Comparison of Service Delivery Options for Food Establishments
|
Service Model |
Permit Fee |
Routine Inspection Cost |
Estimated Total Cost to Business (Annually)* |
|
APH |
$309–$927 |
Included |
$309–$927 |
|
3rd Party |
$309–$573* |
$150–$250 per inspection |
$609–$1,073 |
*Permit fees under a 3rd party would be within the state-imposed range, but inspections are charged separately. Two (2) routine inspections are assumed in this estimate.
In-House Health Permitting and Inspection
Staff also evaluated the option of fully bringing health permitting and inspections in-house. This approach would result in fees comparable to APH's current structure but would require an additional $133,000 annually from the General Fund to sustain operations.
Conclusion
While state legislation has simplified and capped health permit fees, these changes introduce trade-offs in service delivery models. The APH structure continues to provide comprehensive inspection services within the permit cost, while third-party or in-house models would either increase business costs or require General Fund support.
Staff will continue to monitor implementation impacts and explore service efficiencies to align with Council priorities.
This item is supported by the Safety pillar of the Strategic Plan.
Prior City Council Action
City Council approved a renewal of the Interlocal Cooperation Agreement for Public Health Services between the City of Austin and the City of Pflugerville on July 9, 2024.
City Council approved an amended agreement on November 14, 2023.
City Council approved the five year term agreement on July 25, 2023.
City Council held a worksession on July 11, 2023 with Austin Public Health to discuss the contract and fee schedule.
City Council approved third renewal of Interlocal Cooperation Agreement on August 23, 2022.
City Council approved second renewal of Interlocal Cooperation Agreement on September 14, 2021.
City Council approved renewal of Interlocal Cooperation Agreement on August 25, 2020.
City Council approved the initial Interlocal Cooperation Agreement on October 8, 2019.
Deadline for City Council Action
Consideration is requested by August 12, 2025 to ensure there is no inadvertent loss of coverage. Completed renewal is required to be completed prior to September 30, 2025.
Funding Expected: Revenue __ Expenditure __ N/A
Budgeted Item: Yes __ No __ N/A __
Budget Source: _N/A
Amount: $0; no implementation cost to City__
1295 Form Required? Yes __ No __
Legal Review Required: __ Required _X_ Date Completed: __July 3, 2025_________
Supporting documents attached:
Resolution
Renewal Letter
Interlocal Cooperation Agreement
Austin Public Health fee schedule FY26 (marked draft but approved by Austin City Council in August)
Austin Public Health fee schedule previous (provided for comparison purposes)
Recommended Action
Approving a resolution authorizing the City Manager to execute a renewal of the Interlocal Cooperation Agreement for Public Health Services between the City of Austin and the City of Pflugerville.