Photo courtesy City of LeanderA proposed public improvement district in Leander could allow developers to finance public areas with bonds.
City Council is advancing with a development concept new to the city—a public improvement district—for the Oak Creek project southwest of San Gabriel Parkway and US 183.
Oak Creek consists of 145 acres that are planned for 446 single-family houses and 106 townhomes. The development would also include 48 condominium units in a gated community that would not qualify for the PID, PID consultant Rick Rosenberg told City Council on June 6.
A PID is a special district authorized under Texas law and is intended to finance a development's public portions—such as roads and water and sewer lines—that can later become city property. After a PID is established, a city council can issue 30-year PID bonds but pledges no city revenue toward the project, Rosenberg said.
A city can use a PID to improve an existing public area, or developers can use a PID to finance public infrastructure, said Tom Pollan, an attorney with Bickerstaff Heath Delgado Acosta LLP who consults with cities on PID issues.
According to the PID service plan provided to the city, the Oak Creek PID would include sewage and drainage systems on West Broade Street and South Brook Drive. An Oak Creek homeowners' association would maintain entrances and walls, ponds and concrete walkways. Those costs would total about $4.02 million, according to estimates from the developer's engineer, Pape-Dawson Engineering.
Unlike a municipal utility district, a PID is not a political subdivision and has no separate taxing authority. Instead a developer asks a city for its properties to be designated part of the PID. The city then issues bonds based on conservative and independent assessments of property values without houses, Rosenberg said June 6. An individual property's future owner then pays property taxes toward the bond repayment. Oak Creek property owners would pay taxes of 23 cents per $100 of a property's value, he said.
Undeveloped Oak Creek property values total $12.6 million, an amount estimated by a third-party appraiser and not the developer, Rosenberg said. Issued bonds would total about one-third of the total land value, and 10 percent of the next year's bond debt would be reserved in a prepayment fund in accordance with Texas law.
The PID concept is new to Central Texas but has been used in other states, Rosenberg said. According to an Oak Creek PID feasibility study, completed PIDs include Whisper Valley and Indian Hills in Austin and Tessera On Lake Travis in Lago Vista.
On April 17, City Council voted to accept a petition to create the Oak Creek PID. After the public hearing ends July 3, City Council will receive final assessments of the property's value, then vote on whether to issue bonds for the PID.
