A new 197-acre municipal utility district near the northwest intersection of Ronald Reagan Boulevard and Hero Way could spur future commercial development after Leander City Council members approved the MUD's creation on Dec. 5.

Council members also approved the Palmera Ridge MUD's development agreement and facilities agreement during the meeting. The approvals presume an upcoming annexation of the new district, meaning that its future residents would pay city property taxes and a MUD tax rate, City Manger Kent Cagle said.

Leander Development Services Director Tom Yantis told council that the agreement makes way for 600 single-family residential units. Upon annexation, the land would be zoned as a planned unit development that can include commercial sites along with 20 acres of parks and open space.

The agreement also stipulates that adjoining sites could be included in the MUD, Yantis said.

Construction of buildings, however, will likely not begin for at least another year.

Residents will likely first see work on a new sewer line—roughly alongside Ronald Reagan Boulevard—that would also provide resources for other development in that area, Cagle said.

At the meeting, Yantis said the Palmera Ridge MUD can provide financing for the developer to front the cost of the sewer line. The line will range from 12 inches to 30 inches in diameter and serve all the property in the Brushy Creek watershed, Yantis said.

The result is a better way for the city to achieve its planned utility structure without also fronting the line's construction costs, Yantis added.

A MUD allows developers to finance new subdivisions' infrastructure costs through separate property taxes. Often MUDs function outside city limits, but the Palmera Ridge MUD would likely be fully annexed this January, Cagle said. The new agreement allows for any additional land acquired by the developer to be added to the existing MUD, he said.

Between the city and MUD taxing rates, future property owners within the MUD would likely pay property taxes no higher than $1 per $100 of valuation, Cagle said. Moreover, unlike other MUDs outside city limits that can remain active for decades, the agreement sets out a specific timespan for Palmera Ridge of 35 years, Cagle said.

City residents will not yet see much change in the area, but the changes are coming, he said.

"[The MUD] adds another subdivision, adds more taxbase to the city—probably an above-average residential taxbase that's positive—[and] brings some significant public infrastructure that will open other property for development," Cagle said.