Since 1999, the City of Austin has annexed numerous neighborhoods, expanding its tax base to include an additional 26,983 acres for full-purpose annexation and 12,442 acres for limited-purpose annexation. Within the next four years, the city's boundaries will grow by another 1,800 acres to include Lost Creek and River Place, landscaped developments located just outside city limits. These inhabitants will soon call Austin home, the result of the city's power to annex unincorporated territories along its perimeter.
Lost Creek
On Dec. 15, 2015, almost 10 years after the City of Austin first sought to incorporate Lost Creek, the development's municipal utility district, or MUD, is scheduled to be fully annexed by the city and its residents subject to city services, ordinances and taxes. In exchange, Lost Creek homeowners will be able to vote in City of Austin elections and run for city office.
The commercial property contained within the Lost Creek MUD, including approximately 45 acres of office complexes along Capital of Texas Hwy., was already annexed by the city on Dec. 31, 2008. The remaining 744 acres—residential property in Lost Creek, Hills of Lost Creek and Bluffs of Lost Creek neighborhoods—will be fully annexed in 2015.
Residents resist
The Lost Creek MUD was created July 24, 1972, through an agreement between the City of Austin and Lost Creek developers. The area's borders lie west of Capital of Texas Hwy. and its intersection with Lost Creek Boulevard.
Attracted by the Eanes ISD's reputation, Shelly Detomasi-Shaw, the current Lost Creek Neighborhood Association president, relocated with her family to the unincorporated area in 2003.
"It was one of the more affordable areas of Westlake for young families to get their foot in the door," she said. "We have a large July 4 parade. It's a really close-knit neighborhood."
On Dec. 31, 2005, Austin sought to annex the Lost Creek MUD, which had been located in the city's extraterritorial jurisdiction, or ETJ. The residents resisted, expressing concern for the continued maintenance of their parks, green spaces, MUD office and enforcement of the development's deed restrictions. Many homeowners said they felt that if the city fell on hard times, the MUD office at 1305 Quaker Ridge Drive, which also served as a meeting place for local Boy Scout and Girl Scout troops, would be closed and their playscapes and parks would possibly fall into disrepair. Some residents feared that under city government, deed restrictions could not be enforced causing the maintenance of the neighborhood and its property values to decline.
On Oct. 12, 2006, the Lost Creek MUD requested that the city annex the area through a strategic partnership agreement, or SPA. Although an agreement was drafted, the Lost Creek MUD board of directors did not approve the proposal.
"The first SPA didn't allow a limited district," Detomasi-Shaw said. "We had no vote and couldn't even elect the City Council voting on it. There was 100 percent opposition to it."
The controversy was submitted to arbitration, and in August 2007, the arbitrator approved the city's SPA. The MUD appealed the arbitrator's decision to the Travis County 126th District Court of Appeals, which entered a judgment adopting the agreement Feb. 14, 2008. The new agreement included modifications approved by both parties and set a date of 2015 for final annexation.
A workable compromise
On Feb. 14, 2013, Austin City Council approved an amended and restated SPA between the city and the Lost Creek MUD enabling the MUD to convert to a limited district on the date it's annexed.
Upon annexation, Lost Creek's limited district will be responsible for maintaining the parks, green space and former MUD office building as well as enforcing the neighborhood's deed restrictions.
"A limited district is only available to MUDs," said Jackie Chuter, senior planner with the City of Austin Planning and Development Review Department.
On May 11, the SPA, which establishes Lost Creek's limited district, will be voted upon by the development's residents. If the agreement passes, the City would assume operation of the water and wastewater utility from the MUD on Dec. 15, 2014, a year before annexation. Residents would not pay Austin city taxes until after January 2016. Garbage collection would continue through Progressive, the MUD's provider, until December 2017.
"I'm hopeful the [voting process] will work well," Chuter said. "It's better for planning purposes to know who's going to be maintaining the parks."
Detomasi-Shaw said she anticipates most Lost Creek residents' water rates may go down, but the wastewater rates may increase, and she expects the taxes assessed by the City of Austin to "be the largest hit."
According to Travis County Appraisal District records, residents of Lost Creek currently pay MUD property taxes of 12.5 cents per $100 of valuation and ESD No. 9 taxes of 8.45 cents per $100 of valuation. The area does not have a homeowners association but maintains a voluntary neighborhood association with dues of $60 per year per household. After annexation, residents will not be required to pay MUD or ESD taxes but will pay City of Austin property taxes at the rate of 50.29 cents per $100 of valuation and a Lost Creek limited district tax, which according to Detomasi-Shaw, may range from 3.5 to 4.5 cents per $100 of valuation. The Lost Creek Neighborhood Association will continue post-annexation with voluntary fees.
"It's our best-case scenario," Detomasi-Shaw said of the Lost Creek SPA. "But [the vote on the SPA] is a one-time shot to retain local control in our neighborhood."
Full-purpose annexation realized
Full annexation of the Lost Creek MUD will occur Dec. 15, 2015. When annexed, the Lost Creek MUD converts into a limited district if approved by voters May 11.
"It's a win-win for us and the city," said Tom Clark, general manager of the Lost Creek MUD limited district. "If the limited district doesn't pass, the city must pay to maintain [the parks] so it saves the city money.
"We have 13 different sets of deed restrictions," Clark said. "If the limited district doesn't pass, there won't be anyone to enforce the deed covenants, and the property values may decline."
The limited district's term ends Dec. 15, 2025, but can be extended.
River Place
The River Place Municipal Utility District, or MUD, including about 1,040 acres of land in Austin's extraterritorial jurisdiction, or ETJ, is slated to be fully annexed by the City of Austin on Dec. 31, 2017, a process which began Dec. 31, 2008.
In a strategic partnership agreement, or SPA, dated Sept. 9, 2009, the city agreed to a limited-purpose annexation of the MUD, allowing residents to vote in city elections without having to pay City property taxes. The MUD transferred ownership but not the operation of its water and wastewater systems to the city. On Oct. 1, 2014, the city will take over these utilities in full.
Parkland control
Upon River Place's full annexation, its MUD is scheduled to convert into a limited district, which will be responsible for trash and recycling at a possible lower rate for each homeowner, said James Casey, River Place MUD board of directors president. The new district will also maintain the subdivision's parks and nature trail.
The River Place MUD currently maintains 310 acres of preserve land to be transferred to the city at annexation.
Although Lost Creek residents will be voting on its limited district in May, the River Place MUD will convert into a limited district on Dec. 31, 2017, without voter approval. The new River Place Limited District Board of Directors will then vote to adopt the SPA at its first meeting. If the limited district does not adopt the agreement, the limited district will be dissolved and the city will take over all of its assets and responsibilities. After the limited district is created if the SPA is approved, residents will vote to ratify the limited district and authorize a tax to be used for operations. If the voters don't approve the limited district or the tax, the limited district will be dissolved.
Property tax increase
According to Travis County Appraisal District records, residents of River Place currently pay MUD property taxes of 33.5 cents per $100 of valuation and ESD No. 6 taxes of 10 cents per $100 of valuation. Homeowners association fees of $252 are mandatory with some areas assessing additional fees. After annexation, residents will not be required to pay MUD or ESD taxes but will pay City of Austin property taxes at the rate of 50.29 cents per $100 of valuation and a River Place Limited District tax, which is unknown as of press time but will not exceed 50 cents per $100 of valuation, said Jackie Chuter, senior planner with the City of Austin Planning and Development Review Department. Chuter said that homeowners in the recently annexed areas of Anderson Mill and the Tanglewood Limited District pay 13.3 cents and 20.3 cents per $100 of valuation respectively.
The limited district tax amount is left to voters as to what they want to charge, said Chuter.
Under the terms of the SPA, the limited district will last for 10 years, but voters can approve a longer term at its expiration.
