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MUDs seeking approval from city commissions

Thursday, January 26, 2012 by Kimberly Reeves

Two municipal utility districts – both created during the last legislative session – are making the rounds of the city commissions before going to Council for final approval to operate in the city’s extra-territorial jurisdiction.

 

Austin, unlike Houston, has never had much success with MUDs—and has a history of fighting such districts. After a long period without a MUD fight, the city began discussion of MUDs again in 2010. Council recently passed guidelines for MUD creation.

 

Those guidelines will apply to the current proposed MUDs: Pilot Knob and South East Travis County Municipal Utility Districts. Both are located on intersections along State Highway 130, an area expected to be a hotbed of development over the next decade.

 

The tally to date is approval from the Environmental Board, Water and Wastewater Commission and Parks and Recreation Board, with a delay at Planning Commission. The Parks and Planning boards heard the proposal for the two MUDs Tuesday night.

 

It is odd, no doubt, that these commissions are approving consent agreements and strategic partnership plans before those documents have been submitted to the various commissions on paper. Still, it has been done, and with the blessing of city staff who have reviewed some of the broader specifics of the cost-benefit analysis for the proposals of the two impending MUDs.

 

“We have to decide whether there is sufficient value,” Chris Yanez of the Parks and Recreation Department told the commission. “In other words, is there sufficient public benefit to the community and property in the MUD, weighed against the cost to the city ?”

 

The biggest problem, from city staff perspective, was judging the potential return on investment given the time frame involved in long-term development.

 

“These projects are largely being developed over decades,” Yanez said. “Over such a long period of time, it’s hard to model costs and expenses, and it’s difficult to quantify the impacts of the benefits and drawbacks in order to evaluate the interests of the city. In this case, we relied on the Council-adopted MUD policy.”

 

The two MUDs, both recommended by city staff, are in different stages of development and have different balances of land uses. One of the biggest values to the city has been open space. In an area with limited park space, the South East Travis County MUD provides 560 acres, or 10 times the required city open space, and Pilot Knob provides 315 acres, or six times the city’s required open space, in its proposal.

 

Commissioners on the parks board seemed to like those numbers, but members also wanted assurances that the city would not assume the cost of maintenance and staff of proposed park land. They were assured that the city would assume the debt of a MUD if the area was annexed, but limited annexation would require the MUD to continue its own maintenance.

 

Discussion at Tuesday night’s meeting also focused on private recreation facilities. Some private areas, such as pools and recreation centers, would be funded by the developer, and those would be maintained by the developer. Unless the MUD chose to buy those amenities, they would remain the responsibility of the developer and homeowners in the area.

 

Yanez admitted the city historically has had bad experiences with MUDs, but the legislation drafted in the most recent session gave Council the ability to pull the trigger on whether a particular MUD would or would not be created.

 

“The enabling legislation requires city consent before these MUDs are operational,” Yanez said. “These MUDs have been created, but they cannot operate until City Council formally consents.”

 

Council also appoints a member to each MUD’s board and those members are term limited, in order to limit the city’s liability, Yanez said.

 

Fiscal obligations on open space and amenities were the focus for board members. For example,Lynn Osgood did not want to see additional obligations foisted on the department if the MUD happened to fail.

The final resolution, in fact, contained language to assure the Parks and Recreation Department would not assume the obligations of the MUD. Additional language was added to suggest that the MUDs, which will most likely be annexed, should conform to city guidelines on distance between development and green space already set out by the city.

 

Carol Lee was the only “no” vote at the Parks and Recreation Board. Lee said she simply did not have enough information to make her decision. The MUDs still await approval from Planning Commission.

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