After months of employee turnover and pending legal action, Kyle City Council is close to finalizing a policy that will help guide decisions on creating public improvement districts in the city.

On June 2 the council approved on first reading an ordinance establishing a policy for PIDs in the city. The council voted 6-1 to approve the policy, which had been in the works for about a year.

The city is pending legal action in connection with PID Holdings’ attempt to collect assessments from homeowners in the Bunton Creek Village neighborhood, many of whom say they were not aware their homes were subject to assessments. The Bunton Creek PID was created in 2005, but collection of assessments stalled until 2014 when homeowners crowded City Hall after liens had been placed on their homes.

“I have spoken with the original drafters of that PID,” City Manager Scott Sellers said. “I think there was probably a sequence of unfortunate events that led us to this point. With the PID policy that is before you tonight we are going to protect the city and citizens from another Bunton Creek.”

A PID is a special district that funds the development of certain infrastructural improvements through assessments placed on properties within the district. The assessments, which are paid in addition to property taxes, are typically paid over a period of many years.

In July, Kyle City Council released liens that had been placed on homes in the Bunton Creek PID via an ordinance. Mayor Todd Webster said in July the city does not believe PID Holdings has the legal authority to collect assessments on homes in the PID.

On the agenda of its June 2 meeting was an item to, in part, discuss “contemplated litigation” in connection with the Bunton Creek PID. Council took no action on the item.

The PID policy ordinance includes measures to require notifying homeowners as part of the closing of their homes that their property is in a PID and subject to assessments.

Oversight measures enforced with the PID policy include the requirement of a market feasibility study along with a developer’s petition for the PID. The policy also outlines the components needed in a petition for a PID to be considered, such as the nature and cost of improvements as well as the boundaries of the district.

Plum Creek Developers’ petition for a PID in Kyle, first presented in October 2013, has been in limbo amid pending legal action and employee turnover at the city.

Walton Development and Management has also proposed the creation of PIDs for two planned residential developments, one on the city's eastern boundaries near Lehman High School and another southeast of the city but within its external territory. Any PIDs created outside the city limits would subsequently be annexed, according to the PID policy.

“We are looking forward to working with city staff and council on moving forward with the [policy],” said Adam Moore, Walton Development and Management planning and development manager. “I believe a PID is a great way to bring quality housing, quality development and quality commercial projects into the area.”

Diane Hervol was the sole council member to vote against the measure. She said homeowners' associations throughout the city have had financial difficulties that have made them unable to maintain common-area amenities, such as pools and parks. When an HOA folds, those common areas become the city's responsibility, costing taxpayers, Hervol said.

Hervol would have supported a PID policy that included more support for the financial viability of HOAs, she said.

"I'm concerned, in this particular instance, all HOAs will become subordinate to the PIDs," Hervol said.

Webster called the measure a “necessary first step,” and although he understands the concerns of Bunton Creek Village residents, he said PIDs can be a good financing tool for development.

“Frankly, it allows for development in a way that provides less of a burden on existing taxpayers,” he said.

The second reading of the ordinance is expected to be taken up at Kyle City Council's next regular meeting.