On April 9, developers for the proposed The Backyard and The Terrace mixed-use projects filed requests with the city of Bee Cave to create Public Improvement Districts, or PIDs, to finance improvements to benefit Bee Cave residents, such as tennis courts and a splash pad.
A PID is used by developers to finance infrastructure in the area such as streets, utilities, water quality or landscaping, without using a developer's initial investment funds, said bond counsel Tom Pollan at the March 25 Bee Cave City Council meeting.
"I haven't seen a lot of [PIDs], but they are becoming more attractive as the residential market comes back," Pollan said. "It's an alternative to a [municipal utility district] to finance development."
If a city agrees to a PID, bonds can be issued by the city based on the assessed value of the land, he said. The bonds are purchased in the open market and, similar to a loan, the developers make payments annually to the city in order to pay off the bonds, he said. If the developers do not make these payments, the city can foreclose on the property, taking full possession, he said.
Once the bonds are paid off the improvements may belong to the city if the city agrees under the PID terms, Pollan said.
"Using a commercial PID allows [developers] to mortgage land and do the infrastructure in advance," said Christopher Milam, project developer and International Development Management CEO, at an April 21 Bee Cave town hall meeting.
A PID allows a developer to pay for the cost of improvements that benefit a development as opposed to the citizens financing the improvements through taxes, Bee Cave City Attorney Patty Akers said.
Milam said about 63 percent of the PID funds petitioned for will go toward the construction of public amenities.
He said if he receives construction permits within the next two months, he hopes to begin the PID improvements in August.
Generally, PIDs are issued for about one-third or a quarter of the selected area's property value, Pollan said.
Milam asked the city for PID funds estimated at $12,418,692 and $3,967,662, respectively, for The Backyard and The Terrace projects. According to the PID terms, the Backyard and Terrace lands would need to be appraised for $37.2 million and $11.9 million, respectively, to issue the bonds. This would protect the city in the event the bonds are not repaid.
During their March 25 meeting, city council members said they did not want to jeopardize the city's credit rating by having a PID as a potential liability on the books.
"The tradeoff for the city is that all of the public improvements would be funded first, before the building of the actual entity begins," Councilwoman Kara King said. "All of the roads would be built first—that's a huge help."
However, King said she expects the documents to go through many changes before council gives its final approval.
Bee Cave resident Steve Albert said he is concerned that a vote by the city's residents is not needed to go forward with the Backyard and Terrace PIDs, unlike with a Municipal Utility District.
"I think there's a lot of healthy skepticism about which aspects of this project will be successful," he said.
Assistant City Manager Travis Askey said city council has not made a decision regarding the developers' requests. As of May 2, the council was performing a feasibility study to help their decision, he said.
History
In 2013 Milam proposed a movie and television studio development along Bee Cave Parkway where the PID is now being considered. However, Milam said the project grew too large for the original site and the project transitioned to The Terrace and The Backyard sites.
During the town hall meeting, Milam said he adopted The Backyard music venue's culture for the new builds.
"Everything we're doing is integrated into the history of that venue," he said. "[The Backyard] is heavily integrated into the history of Central Texas—with live music, architecturally and in many other ways."
The Backyard
The Backyard plans feature a three-story hotel with outdoor access, a conference center with a restaurant and ballroom, a freestanding restaurant, studios, offices and parking garages, Milam said.
The Live Oak Amphitheater will be reserved for large concerts, and the smaller venue, The Glenn, is designated for private parties, Milam said.
Additionally, the developers are proposing the use of PID funds for public amenities, such as tennis courts and a splash pad at Central Park, parks programming, hilltop gardens, a dedicated green space on the previous Hwy. 71 site of The Backyard, new trails, and a Legends of Texas Music Park.
The Terrace
A residential condominium complex is proposed for the southern end of The Terrace tract with individual units averaging 1,500 square feet at a cost of $300 to $350 per square foot, Milam said. The complex will sit atop an underground parking garage and feature lake views, he said.
The site's northern end will contain three stand-alone office buildings, with two additional office buildings attached to stages, two parking garages and a mill to make props used in television and movie production, Milam said.
Like The Backyard, The Terrace is proposing the use of PID funds to create public amenities, such as a new full traffic lane, landscaped medians, new trails, and a scenic overlook park above preserve land.
Economic impact
The projects represent almost 3,000 new construction jobs and about $1 million in sales tax generated for Bee Cave during construction, Milam said. Once built, the facilities will provide about 3,000, jobs and the projects will generate about $175 million of payroll, $10 million in property and sales tax and about $4.5 million of revenue for Lake Travis ISD coffers annually, he said.
"It's a win-win from almost every perspective," Milam said.
