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First two MUD applications filed under new city policy

Tuesday, March 29, 2011 by Elizabeth Pagano

A month after passing a new policy, City Council will soon have a chance to test its stance on Municipal Utility Districts.


Austin Water Utility’s Bart Jennings last week outlined two Municipal Utility District applications, the first submitted since the adoption of a new district policy on MUDs. The new policy changed the city’s decades-long opposition to the creation of MUDs in an attempt to have some say in their development.


Jennings recommended that Council consider resolutions expressing support, modification or opposition to the proposed district legislation in an April agenda, due to the brief time remaining in the current legislative session. The next Council meeting is April 7.


The city hopes that by negotiating with developers over the creation of MUDs they will be able to obtain extraordinary benefits such as land use controls, improved public transportation facilities, environmental improvement, and affordable housing. Additionally, the MUD policy lays out certain requirements which include utilization of the city as the water and wastewater service provider, compliance with the Green Building program, an equivalent or greater district tax rate to the city, and a lack of impairment of future annexation by the city.


“The bottom line is that these limitations are sought to prevent the creation of a city within a city and to restrict powers of the districts so that they are less likely to create conflicts against the city, or its interests,” explained Jennings.


Pilot Knob and Rio de Vida have both filed legislation to create districts. Both developments are about 2,000 acres, and are located in the extra-territorial jurisdiction within the city’s desired development zone.


Jennings analyzed the proposed districts’ compliance with the new policy. In his overview, he explained that neither district’s plans completely conform to the MUD policy, though negotiations with the city have yet to take place.


One of the proposed districts, Rio de Vida, is a “Super MUD,” and included tentative conceptual plans for a mini-convention center, among other things.


“I think traditionally, when you are talking about MUDs, you’re talking about single-family neighborhoods. This is an entire community, not just homes, but potential hotels, offices, businesses, retail,” said Mayor Pro Tem Mike Martinez.


Jennings highlighted Rio de Vida’s “additional district powers, revenue sources and water and wastewater services provided by both the city and Hornsby Bend Utilities,” as areas that are not in line with the city’s MUD policy.


Council Member Chris Riley asked about the potential fiscal ramifications for the city.


Though the exact financial implications for the city have not been assessed at this stage, Jennings explained what this could mean. “Essentially what happens is the city is subsidizing the extension of infrastructure in Hornsby Bend CCN (Certificate of Convenience and Necessity), without either gaining the infrastructure or the associated revenues from that. That kind of expense can be in the millions,” said Jennings. For example, for Circle C, it was $14 million in outstanding debt that water and wastewater utility took on…The amount varies based on where we are when the city decides to annex, but it is in the millions of dollars, typically.”


Council Members Laura Morrison and Riley expressed concern about Pilot Knob, which proposed a cash donation to the city in lieu of meeting affordable housing requests.


“Are we bringing to the table the priorities, and the values and the guidelines that the Council has already adopted?” asked Morrison.


“We really need to be thinking in terms of how this fits within our framework for the Comprehensive Plan.” said Morrison. “That specifically addresses affordable housing and needing to make sure that we have varied housing types and affordability in all parts of town. It raises for me a bit of a concern about having, potentially, no on-site affordability within the development, rather just doing a contribution that would push it somewhere else.”


Jennings assured the Council that MUDs were required to be in alignment with the Comprehensive Plan, but was unable to speak specifically about plans at this stage. “We haven’t gone into negotiations,” said Jennings. “We didn’t want to do that until Council had given us direction related to each of these.”


“I think it’s a really critical element of this whole discussion. This is sort of laying down some big pieces of our future city, and so I think getting it right, especially in the area of affordable housing, is really critical,” said Morrison.

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