Whether Public Improvement Districts (PIDs) are the right tool to manage the growth of new development will be the topic of a Kyle July 1 public meeting
Cities throughout the country have successfully been using PIDs for 30 years to assist in the creation of residential and commercial developments in a cost-effective manner. With several high quality mixed-use master planned communities in negotiation with Kyle, the city is preparing a formal policy to guide its use of PIDs.
In light of the challenges resulting from the badly executed PID at the Bunton Creek development, it’s important to explore the merits of this proposed policy. My perspective is that of a consultant whose firm has successfully assisted many communities with implementing PIDs and is currently working on more than 30 PID projects in Texas.
The benefits of PIDs include:
• No city funds are used;
• The city has absolutely no liability or moral obligation to pay for any PID bonds that are issued;
• The city retains all of the tax revenues (property and sales) generated from new development;
• The proposed PIDs will only be used for new development with no impact on existing Kyle residents or businesses;
• The creation of a PID has no impact on any resident or business except those who choose to live within the PID boundaries;
• PID funds can only be used for public improvements and infrastructure, which are given to the city after construction;
• The city controls which improvements are paid by the PID and the disbursement of all PID funds.
PIDs are attractive because they:
• Accelerate the development of high quality projects which might otherwise be delayed or not built;
• Attract highly qualified developers;
• Generate economic benefits from incremental taxes, utility revenues and permit fees;
• Permit the city to impact the nature of a proposed development, without liability or cost;
• Ensure that “development pays for itself” – as only the owners of the project are assessed, not existing taxpayers. The use of a PID does create an additional assessment on property, similar to a property tax, but it is important to note:
• All PID costs associated are known at the time that a home is purchased within a PID-financed community;
• These costs will not vary with the value of the home, unlike MUDs;
• All PID obligations can be prepaid without penalty at any time by a homeowner. Without a PID, it is likely that homes within a planned community would be more expensive because the developer must pay up front the costs of infrastructure, or, should the city choose to fund the infrastructure costs itself, all taxpayers in Kyle would bear the costs through higher property taxes. To ensure that future PIDs in Kyle avoid a repeat of the Bunton Creek PID, the city is preparing a PID policy designed to ensure:
• Full and open disclosure of PID assessments to all prospective buyers within a PID;
• Upfront deposits from developers to cover all costs that may be incurred by the city in its processing of a PID application; and,
• That professional management firms administer all aspects of each PID for Kyle, at the PID’s expense.
There have been suggestions that Kyle should focus its PID efforts on improving existing neighborhoods, not new development. This is a misunderstanding of how PIDs are used in most cities and is not the focus of the current policy. PIDs cannot practically be used to fund improvements in existing neighborhoods, because of restrictions in Texas law.
The bottom line is that the proposed Kyle PID policy offers the city a way of generating significant economic development benefits and the public infrastructure needed for new projects without any cost to its current residents.
Rick Rosenberg is the Managing Principal of DPFG, Inc., and consults for PID projects, including in the Kyle area.