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Planners split over Villa Muse ETJ release request

Thursday, February 14, 2008 by Austin Monitor

Members of the Planning Commission could not reach a decision Tuesday night on whether to support a request from the developers of the planned Villa Muse film studios and mixed-use complex to release their project from the city’s extra-territorial jurisdiction. The commission split 4-4 on the request, sending the item on to the City Council with only a recommendation that the Council seek creative ways to make the project work.


While the Commission did not support the release of the project from the ETJ, it also did not oppose it. “We kind of expected this,” Hiten Patel with Villa Muse told In Fact Daily. “We went into this process understanding what the policy document was from the city….and within the confines of the actual policy, these boards really don’t have a lot of latitude. The reality is we don’t fit.”


The city’s policy for releasing land from the ETJ generally requires it to be surrendered to the jurisdiction of another municipality, and that is not what Villa Muse is seeking. “It’s not an unexpected outcome. We’re excited about going into the next phase with the city staff. The City Council’s resolution did ask the staff to ask, ‘How does it work within the ETJ?’, so we want to understand that as well.”


City staffers recommended against relinquishing regulatory control over the land in northeast Travis County. The request, said Virginia Collier with the Neighborhood Planning and Zoning Department, did not comply with current city policy. “The applicant’s justification for the request is that the release will reduce the review and permitting time for their project,” she said. “Compliance with current development regulations is not considered a hardship under the ETJ policy.”


Commissioners also brought up concerns about the provision of emergency services and utilities, construction within the flood plain, and water quality controls. A majority of the project site is within Austin Energy’s service area, although a small portion is could be served by the Bluebonnet Electric Co-Op. Water and wastewater would be provided by the Manville Water Supply Corporation and the Hornsby Bend Utility District. Travis County Sheriff’s deputies would handle law enforcement, and fire service would be provided by Travis County ESD 12 (known as the Manor Fire Department).


Most of the commission’s questions focused on the amount of time the project would be outside the city’s jurisdiction and the need for making a decision by March 6. “I’m also concerned about recouping the cost if we release this land… at some point later on, after it’s been paid off, we could obtain it back…but at what cost would that be? I do like the concept,” said Commissioner Paula Hui. “It seems like you do want to help Austin…and it seems like there is a great demand for what Villa Muse would be offering.”


The developers are requesting a guarantee that their project not be reannexed into the city for at least 30 years. The development’s financial advisor, Patel, said that time frame was necessary to allow the developers to repay the cost of financing their own streets and infrastructure. Those roads would be financed by issuing long-term bonds, and payment on that debt would effectively add more than one dollar to the tax rate paid by property holders within the development. Combined with the school taxes for the Del Valle ISD, Travis County, and other jurisdictions, the total tax rate would likely reach more than $3.40 per $100 of property value.


“If the City of Austin were to come in and annex, they would add their taxation of 40 cents, plus or minus,” Patel said. “At that point, we really are well beyond the market for property. People won’t want to live there because the taxes are so high. So the issue comes down to…what is the feasibility of issuing bonds with the prospect of annexation by a city? Basically, our financial advisors have advised us that is a deal-breaker for the debt markets.”


Commissioners also objected to the speed at which they were being asked to make a recommendation. Developers want an answer from the City Council by March 6 in order to satisfy their outside investors. “I think this is something that most citizens of Austin would like to see happen. But at the same time, you’ve got us in one of those awkward positions where it’s almost like blackmail,” said Commissioner Saundra Kirk. “Every now and then we get a case that’s like this…where what you want is so preeminent, that there’s a little bit of a ‘hand at the throat’ to see whether Austin will give in to this. I’d hate to see us lose this project, but at the same time my question…is how did you back yourselves into such a timeline that it ends up being something where the city of Austin has to give up our rights?”


Market conditions within the film industry are spurring the rapid development of the ground-breaking multi-media studios, according to one expert not affiliated with the project. “I’m afraid I’m actually responsible for the push on this timeline,” said Bob Hudgins, Director of the Texas Film Commission. “We are losing our work-force, our infrastructure at such a rapid rate that three years from now, if we haven’t done significant things to alter that, our production community will be at a point where we won’t be able to recover.”


Texas is competing for film, television, video, and interactive production business with other states and other countries. As more and more productions flock to those locations, many of which offer dramatic tax breaks and other incentives, Austin’s experienced film and television professionals are following suit.


“The status of these other states is growing in an exponential way,” he said. Hudgins also warned that Austin could find itself struggling to retain its status in the industry “if we’re not on the ground within three years with something that is very, very competitive with these other facilities that are going up in New Mexico and Louisiana.”


That status, said representatives of Villa Muse, spurred their quick action on their multi-billion dollar project. “We’re losing business to Louisiana and New Mexico on an increasing basis and that’s just what we know has happened in the last four years. We’re really losing time to have competitive facilities on the ground,” said Gary Bellomy of Austin-based Land Design Studio, who is working on the project. “We’re not aware of any ETJ PUD or any other fast-track process that can deliver the permits in a schedule that works with us getting open two years from now. Speed and predictability of process are paramount.”


Commissioners were enthusiastic about the project, but reluctant to endorse a special exemption for the developers. A motion to recommend that the Council deny the request in accordance with the staff’s recommendation failed on a vote of 4-4, with Commissioners Perla Cavazos, Saundra Kirk, Jay Reddy, and Dave Sullivan supporting the staff’s position. An opposing motion by Commissioner Mandy Dealey to recommend a 15-year release from the ETJ, along with an agreement to return the land to the city’s ETJ and eventually annexation, also failed on a 4-4 vote. The Environmental Board previously recommended against releasing the land from the ETJ. The request is scheduled to go back to the Council at its first meeting in March.

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