Developers seek municipal utility districts in citys ETJ

The proximity to the city of Georgetown and its amenities as well as the natural beauty of the South San Gabriel River basin along Hwy. 29 has made the area attractive to real estate developers, city officials have said.

As the area continues to grow, several developers have approached the city to request creating municipal utility districts, or MUDs, to help fund infrastructure including water lines and roadways, Georgetown Chief Financial Officer Micki Rundell said.

Weve got several [MUD agreements] that are in the process right now, Rundell said. Hwy. 29 is kind of our [MUD] corridor. It looks like it will end up being primarily MUDs.

City Council heard a request at its March 25 meeting from Dallas-based developer Hillwood Communities to create a MUD for the proposed Wolf Ranch master-planned community in the citys ETJ. It would join existing MUDs Oaks at San Gabriel just to the east of Cimarron Hills and Water Oak at San Gabriel located just to the south between Hwy. 29 and Leander Road.

City Council tabled the resolution to allow the creation of the MUD from the March 25 meeting to allow time for the developer to gather more information. Council was expected to continue the discussion in executive session at its April 8 meeting, after Community Impact Newspapers press time.

What MUDs really have become for master-planned, high-quality projects are a long-term growth tool, and they really need to be viewed that way in the sense that they pay their own way, meet [the citys] standards and then eventually they will be able to be annexed in[to the city], said Steve Robinson, a partner with the Allen Boone Humphries Robinson LLC law firm. [The city] is going to generate water and sewer revenues from the project but will not assume the burden of full municipal services within this area.

Wolf Ranch is a proposed 750-acre community with the possibility of more than 2,400 residential units depending on lot sizes and housing types, Hillwood Senior Vice President Brian Carlock said.

In May City Council is also expected to consider the creation of a MUD for a 350-acre development known as Woodhull on the east side of town near SH 130 and Sam Houston Avenue.

MUD creation

Created by either the Texas Commission on Environmental Quality or by an act of the Texas Legislature, MUDs are able to issue debt to pay for infrastructure improvements that help spur residential development.

Each MUD is overseen by an elected board of directors chosen by MUD residents that is responsible for finances, management and policies within the MUDs boundaries.

The MUDs offer an opportunity for quality growth to occur outside the city, Rundell said. The main idea is that the development pays for the cost of its own utility infrastructure, and its not on the utility [ratepayers] or the city [taxpayers to pay for it], and it ensures that when the city goes to annex it in the future there is a quality development with home values to support its service requirements to annex.

The district is able to take on debt by issuing bonds to pay for parks and roads as well as water and wastewater infrastructure. Those costs are then passed on to the future homeowners, who pay off the debt through property tax revenue.

Although the debt assumed by a MUD can detour the city from annexing the development for many years, MUDs do benefit the city, Rundell said. MUD residents add to the areas workforce and pay sales taxes when shopping in Georgetown stores while saving the city the cost of providing police, fire and other municipal services, she said. MUDs receive some of those public safety services from the county.

To establish a MUD, developers must enter into a consent agreement with the city, which gives the city the authority to establish development standards in the ETJ as well as set how high property taxes can go, what infrastructure must be built and how the property could be annexed in the future, Rundell said.

There are pros and cons to both sides of it, she said. I dont know that you can ever make it even, but we cant afford to extend the [water] lines and do traditional development. So if development is going to occur, this is the mechanism that facilitates it.

Infrastructure improvements

Rundell said MUDs can provide valuable infrastructure that helps open areas up to other developments. For example, the Woodhull proposal includes the construction of a $5 million sewer line that will increase the developability of neighboring properties.

That infrastructure will create activity in the southeast quadrant of the city where there has been none, Rundell said.

Unlike other MUD proposals before City Council, the Woodhull tract is currently within the city limits and would require de-annexation before an out-of-city MUD could be created, project developer David Nairne said.

The Woodhull proposal, first presented to City Council on March 11, includes plans for 230 acres of residential development with a majority of single-family housing and some other housing types, 70 acres for commercial use and 50 acres of open space, Nairne said.

City Council members requested additional information about the project, including if Nairne could move forward with the project as an in-city MUD.

The argument for doing a regular MUD is that you are not asking the city to pay for anything to do with that property, and that property alone is paying for its cost, Nairne said.

In an in-city MUD the developers reimbursement for infrastructure improvements from taxes collected is about half of what it would be in an out-of-city MUD. The in-city MUDs property tax rate is added to the citys property tax rate and the combined total is still required to stay below the maximum out-of-district tax rate of 95 cents to 100 cents, Rundell said.

City Council also requested Hillwood Communities look at the possibility of an in-city MUD.

The council is hesitant to give conditional consent to the out-of-district MUDsthe ETJ MUDs, City Attorney Bridget Chapman said at the March 25 council meeting. I think what [council is] looking for is financial comparison so that they can compare what an in-city MUD would look like versus what an ETJ MUD would look like.

Carlock said his company would commit to help fund an approximately $5 million$6 million portion of the Southwest Bypass roadway as well as a 24-inch water line that is needed to help regional growth in the area.

With an [out-of-city] MUD we could commit to building a component of what the city is building [for the Southwest Bypass], he told the council at the March 25 meeting. This is a spirit of partnership that now we are going to split the pie.

Along with the required infrastructure, Carlock said the development includes plans for a trail that would be able to connect to the future Garey Park and link up to the citys regional trail system.

If both projects were approved by council, both developers said construction could begin in early January.