The Shady Hollow Municipal Utility District held a public hearing Sept. 3 about its proposed Strategic Partnership Agreement with the city of Austin, which is considering annexing the neighborhood for full purposes.

MUD President Ron Stried said Austin could decide to annex Shady Hollow sometime within the next three years by placing the neighborhood on its annexation plan, but under the proposed agreement, the City would not annex the MUD until Dec. 15, 2020, allowing more time to prepare.

"They have annexed everything on the north, they have annexed things on the east, they've got it annexed on the south, and they want to close the donut hole, is what they want to do," he said. "They want to make it one contiguous taxing area."

Shady Hollow consists of more than 1,400 homes around the south end of Brodie Lane and is part of a municipal utility district, or MUD. For homeowners, living in the MUD means a lower tax bill than in some nearby subdivisions. After annexation, residents must pay city taxes. The MUD estimates local tax rates per $100 of valuation will increase from 2.066146 to 2.419046 after annexation, based on 2012 tax rates.

After annexation, residents will also have the right to vote in city elections. The MUD will turn over operations of its water and wastewater systems to the city on April 2, 2018. The MUD can sell its office on Capistrano Trail and use the proceeds for any authorized purpose.

Russ Downey, who lives in the MUD to be annexed and is on his homeowners association's board, said he went through the annexation process with the city of Austin when he lived in a different neighborhood, and his goal is to ensure residents in his neighborhood receive the services they are promised along with their new tax bills.

"The problem is [that] the homeowners association basically has no legal say in the annexation," he said. "The city of Austin does not even have to talk to the homeowners association; they have to talk to the MUD because it's a political subdivision."

In 2011, the MUD adopted a resolution expressing intent to negotiate an SPA. Downey noted some homeowners, particularly those living in the sections just outside the MUD, have been unaware of the progress on the annexation.

Shady Hollow Sections 1 and 2, the Enclave at Shady Hollow, Shady Hollow West and the Estates of Shady Hollow are located outside the boundaries of the MUD, so they will not be part of the SPA. City staff will recommend these areas be annexed at the same time as the MUD, Stried said.

"The MUD will do everything that we can legally to help the community," Stried said.

The city mailed a notice about the annexation to homeowners Aug. 30, and hearings have been scheduled as part of upcoming city council meetings. George Armstrong, resident of Shady Hollow Section 2, said he attended the public hearing because he received the notice and wanted to know more.

"We're talking about 2020, which is a good seven years away," he said, explaining he wants to wait to see what happens. "I do plan on maybe attending some of the Shady Hollow homeowners meetings."

City Council will consider comments related to the SPA and annexation at public hearings on Sept. 26 and Oct. 3 at 4 p.m. at City Hall, 301 W. Second St.

"It's not going to turn out the way I want it to, because I have no desire to be annexed," Downey said. "And I'm glad to see that we're put off at least to 2020. I would just as soon [have] them put it off forever, but that's not going to happen."