The PID, according to city information, would permit Bee Cave to levy an assessment against properties within a selected area to pay for desired public improvements that would primarily serve that area. Bee Cave would then issue bonds to fund those capital projects and pay them off by levying an annual installment on those within the PID.
Bee Cave City Council unanimously passed a resolution during an Oct. 13 meeting to establish a PID following a presentation from Robert Rivera, a representative of FMS Bonds Inc. and the city’s acting PID underwriter.
In this case, the PID will pertain to the roughly 35 acres of land between Bee Cave Parkway and Hwy. 71 slated for the upcoming multiuse development. Site plans for The Backyard were approved in May and feature a high-capacity outdoor entertainment venue, a 125-room hotel, offices, parking garages and a hilltop garden, among other features.
Backyard Partners Finance LLP petitioned Bee Cave officials to request the establishment of a PID, according to Mayor Kara King, who said the financing tool would enable the developers to complete improvement projects faster than if they raised the capital internally.
Per the drafted terms, the desired improvements are estimated at $25 million, and the maximum bonds to be issued by the city are estimated at $20 million.
Future services conducted through the PID could include public maintenance, capital improvements, marketing efforts or various beautification projects, Rivera noted.
“Ultimately, you have a developer who believes so much in his or her project that they’re asking the city to issue bonds to pay for future infrastructure,” Rivera said. “But the city is not on the hook; these bonds are not recourse to the city.”
Rivera said nearby cities have also established PIDs in the process of constructing new developments—Austin, Leander and Hutto, to name a few—and ultimately, they pose little financial risk for municipalities.
Bee Cave is not responsible for the issued debt, and if the developers are unable to meet the financial obligations, it would not impact the city’s credit rating and financial stability, Rivera said.
City Manager Clint Garza also noted the obligation would not be dispersed throughout the city, meaning the property owners within The Backyard would be solely responsible for paying the annual installments.
However, resident Marie Lowman questioned whether a PID was a suitable choice for Bee Cave. During the meeting’s open forum session, Lowman said, “projects that do not work without a PID, will not magically work with one.”
Furthermore, Lowman stated PIDs, while common in Texas, were initially created to spur developments and infrastructure projects in regions that developers were not traditionally interested in. Yet, according to Lowman, Bee Cave remains a desirable location for future developers.
Following council’s approval of the PID, King clarified the actions taken during the Oct. 13 meeting will not obligate the city to issue any future bonds. Bee Cave has the opportunity to pull back from this agreement if desired.