The city of Buda and MileStone Community Builders could be nearing the end of their six-year negotiations regarding the proposed 775-acre Persimmon development as a new state law is set to go into effect Sept. 1 following the 88th legislative session that ended in May.

The development has seen pushback from City Council and residents regarding the current roads and infrastructure that will not be able to accommodate the influx of residents a project of this size would bring. However, the development could still move forward, regardless of City Council action.

The background

The city and the developer have been working on the terms of the Persimmon development for around six years. The development is located in Buda and Austin's extraterritorial jurisdictions, or ETJs, off RM 967 and FM 1626. The ETJ is an area of land generally located outside of a city's limits wherein cities have limited authority.

The City Council has held numerous workshops over the years with the developer to reach a development agreement. However, the development has consistently been met with opposition from the council and residents, and a petition was created early last year to try and halt the project from moving forward.

In September, the council adopted a term sheet, which is not a legally binding contract but an outline of priorities and requirements for the development. However, the City Council tabled the development agreement with the developer in October as the dais was not ready to accept the document as it stood, as previously reported by Community Impact.

Sorting out details

The terms sheet was amended in March with a handful of items neither the developer nor the city would not budge on:
  • The number of homes, lot sizes
  • Timeline for transportation infrastructure
  • Tree mitigation
The city would like for there to be fewer residential units, around 2,250 compared to the proposed 2,800; MileStone have agreed to 2,600 but nothing less as plans for a public improvement district and tax increment reinvestment zone, a PID and TIRZ, rely heavily on homes to generate tax revenue for projects and infrastructure within the development.

PIDs and TIRZs are tools utilized by municipalities to fund development, infrastructure and other projects within the PID or TIRZ boundaries; there is also tax revenue that is funneled into the city's general fund.

City Manager Micah Grau told Community Impact that one of the reasons the city is not budging on the number of residential units is water, an essential necessity, especially as the region experiences rising drought restrictions and scorching weather.

"The city has enough water supply to meet our current population, and we have a limited capacity to serve future growth," Grau said. "This project alone would use up quite a bit of the future capacity that we have as a city."

Additionally, transportation and homes go hand in hand as funding for needed road infrastructure would come from the tax revenue of new homes in the development, but some council members have voiced the need for the roads to come first.

"The houses are the economic engine that enable us to be able to bring the roads to fruition," MileStone founder and CEO Garrett Martin told Community Impact. "We just can't make the economics on the project work."

The developer will build a roundabout at RM 967, which has already been approved by the Texas Department of Transportation, Grau said, but the road connecting to FM 1626 has not been solidified as far yet, which is another hold up for the project.

The options

As a result of the 88th legislative session, Senate Bill 2038 goes into effect Sept. 1, which will allow residents and landowners in an ETJ to leave the city's authority through a petition or an election.

MileStone has already provided the city with "notice of their intention" to leave the Buda ETJ and move forward with Persimmon without the city's input, regulatory authority or utility connections. Pulling out of the city's ETJ also means that the city would be losing out on tax revenue from Persimmon.

Instead of a PID and a TIRZ, the developers have applied to create a municipal utility district, or MUD, through the Texas Commission on Environmental Quality in order to provide utilities to the development.

"If we pull out and set up a MUD, instead of spending that $60 million on roadway improvements, we have to spend those dollars on dragging utilities down from the city of Austin or building our own utility infrastructure," Martin said.

Martin said that, despite plans to pull out of the city's ETJ, they are still willing to honor a deal with Buda and sign onto a development agreement.

"Our request is that they take a vote, consider what we've offered up and then, hopefully, we move the project forward quickly," Martin said.

A development agreement is not on the horizon yet for an upcoming meeting.

"If we cannot come to those terms, we're not going to bring that development agreement to City Council," Grau said.