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Council approves MUDs set up under new policy regulations

Tuesday, March 27, 2012 by Elizabeth Pagano

City Council has approved consent agreements with two groups of proposed Municipal Utility Districts in the city’s extraterritorial jurisdiction.  The consent agreements are the first under the city’s new MUD policy which was approved in February 2011. There will be nine MUDs altogether, four as part of Southeast Travis County and five within Pilot Knob.


The policy was created in an attempt to exert some control over the creation of MUDs – a development model that the city has historically opposed.


By negotiating with developers over the creation of MUDs the city has been able to obtain “extraordinary benefits” such as land use controls, improved public transportation facilities, environmental improvement, and affordable housing as well as demanding 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 promise not to oppose future annexation by the city.

Were the city to oppose the construction of the MUDs, developers would be left with a handful of options that would not require city approval or oversight, such as the construction of traditional developments or gaining MUD approval directly from the Texas Commission for Environmental Quality.

Though City Council ultimately voted to approve both sets of MUDs, Pilot Knob received a unanimous vote, while SE Travis County MUD faced opposition from Council Member Chris Riley. City Council voted 5-1-1 to approve the SE Travis County MUD, with Riley voting against and Council Member Laura Morrison absent.


Riley stated that he did not feel that the Southeast Travis County MUDs met the standards set forth by the recently adopted ordinance for a number of reasons, including the location, which is much further away than Pilot Knob, and lack of internal connectivity.


“Staff has identified that the Pilot Knob MUDs do provide an internal connectivity, but the SE Travis County MUDs lack internal connectivity, largely because they include 135 cul-de-sacs. The MUDs are essentially a collection of cul-de-sacs,” said Riley.


Riley also noted that SE Travis County MUDs would entail “some degree of risk” as the city plans to own and operate a wastewater treatment plant in the area.


Mickey Fishbeck, who sits on the Water and Wastewater Commission, wrote an email to City Council stating that she did not support the creation of MUDs. In the email, she noted that although the wastewater treatment plant was presented as a benefit to the city, “it is not clear that the city should be building a plant on the edge of the ETJ with or without the MUDs,” Fishbeck went on to say that if the development is slower than expected, or fails altogether, Austin Water Utility would end up operating a plant that has few customers.


“This puts the city totally at risk for that asset since there will be no other significant customers other than the MUD developments, according to staff,” wrote Fishbeck.


“The Austin Water Utility prefers for us to operate the facilities,” explained AWU’s Bart Jennings. “They are going to be built to our standards, and so we feel much more comfortable because we will have the ownership of those facilities. (We will) also ensure that the operations and maintenance are more to our present practices.”


Jennings also explained that running service out to the Southeast Travis County MUDs would cost the city “five to six times” the amount of building the plant. He later told In Fact Daily that the first phase of the wastewater treatment plant will cost approximately $8 million.


Riley also expressed concern about the ratio of residential development to commercial development within SE Travis County.


“It’s hard to say exactly what the right mix will be, but what is clear is the mix is very different between the two sets of MUDs. Pilot Knob has a roughly 90.2 square feet of commercial per person. SE Travis County MUDs have less than half of that at 41.5 square feet of commercial per person,” said Riley.


Attorney Richard Suttle, who represents both developments, explained that the two developments were “apples and oranges,” saying, “Obviously, to some extent, the market determines what is the appropriate mix.”


“While SE Travis County may have a little less per square foot, per residence, because of where it is, and where it will fit in to the rest of the Comprehensive Plan, I think the developer thinks its adequate,” said Suttle, who added that City Council would have an opportunity to revisit the MUDs’ design as it goes through the PUD process. “That, in our opinion, is the time that the Comprehensive Plan issues are addressed.”


Now that City Council has approved the consent agreement, the MUDs will form boards and conduct two more public hearings. City Council will then vote on whether to act on limited purpose annexation and a “Strategic Partnership Agreement.” Following that, developers will go through the PUD zoning process, which is anticipated to begin in fall of this year.

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