By Moses Leos III

As Kyle mulls litigation against the group that oversaw the Bunton Creek Public Improvement District (PID), a newly appointed policy could keep future PIDs from affecting homeowners. 

In a June meeting, the Kyle Council voted 6-1 to move forward with a resolution to form a PID policy. But the council opted to forgo the resolution and hold a formal open house on July 1 with citizens. 

While Bunton Creek Estates resident Larry Jones believes a policy is a step forward, his experience with the Bunton Creek PID leaves him unable to support the financing mechanism.  

“(A PID) suggests that any taxes will be for the people who are moving there. The city doesn’t work that way,” Jones said. “The city is where everyone is in it together and the city council should respect and protect its citizens. Not subdivide into groups.” 

According to Mayor Todd Webster, Kyle’s move toward crafting a PID policy is something city staff worked on for 14 to 15 months prior to his election last June. 

The reasoning stemmed from issues with the Bunton Creek PID, which was created in 2005. 

Kyle’s creation of the PID was meant to finance infrastructure improvements for the subdivision by collecting yearly assessments from homeowners. According to the Texas Property Code, homeowners must be informed of PID assessments upon the purchase of their home. 

Problems arose in what Kyle City Manager Scott Sellers said was, “a sequence of unfortunate events that led us to this point.” 

It began in November 2005 when PID Holdings, Ltd. acquired the interest for the PID and was responsible for collecting assessments. But those assessment collections never occurred, with many homeowners never notified they were moving into a PID. 

In 2014, homeowners attempting to sell their homes discovered liens on their properties, prompting many to voice their outrage to the city. In turn, Webster said the city has a threat of a lawsuit against PID Holdings. 

The city’s lack of a formal policy, along with the city attempting to do it in-house “contributed a great deal to the situation,” in regards to Bunton Creek, according to Webster. 

“I’m confident we are going to resolve this matter one way or another,” Webster said. 

With possible litigation on the horizon, the city began crafting a PID policy meant to “protect the city and citizens from another Bunton Creek PID,” according to Sellers. 

Provisions within the policy include requiring PIDs to be created and reimbursed only if costs are “above and beyond the costs for standard infrastructure required to serve the development.” 

PIDs must also be self-sufficient and cannot require the city to incur costs; they must show a “reasonable attempt” to gain support of landowners within the PID. 

PIDs will also be required to have signage that notifies residents they are within a district. The city has the option to either bring the PID “in-house” or allow a third-party to manage it. 

Supporting the policy were several developers who were in attendance. A representative for Walton Development said, “A PID is a great way to bring quality housing and commercial development into the area.” 

Walton is currently planning the Pecan Woods PID along FM 150 in Kyle. 

Webster advocated for additions to the policy in the second reading. Those provisions could include language that could include a market analysis for setting up a PID. 

“We’ve got to have some assurance that we aren’t wasting everyone’s time and setting up this whole structure that’s not going to be viable,” Webster said. 

Other provisions could include any potential bond debt from outlasting a PID, and require a competitive bidding component for developers so there wouldn’t be “brother-in-law deals.” 

But a policy allowing for more PIDs wasn’t unanimously accepted. 

One Bunton Creek resident said PIDs are “not fair to the citizens of that community.” She urged council members to remember Bunton Creek’s PID was done “illegally” and “unknowingly”.

Council member elect Daphne Tenorio said in a letter Tuesday that she was disappointed in the PID policy and that “the city isn’t ready for this.” 

A developer PID, Tenorio said,“ is not okay” and expenses should be included in the cost of the building, not to taxpayers.

“Making future homeowners indebted to additional cost really equates to taxation without representation,” Laurie Luttrell, speaking on behalf of Tenorio, said.

Hervol, who voted against the measure, said, “[This policy] is the best I’ve seen thus far.”

But she worried about the failure of Homeowners Associations (HOA), which would make the HOA subordinate to the PID. 

While Webster said he is sympathetic to the concerns from those who have had a bad experience, the policy is an important first step. 

“I think this is a financing instrument, that frankly, allows for development to occur in a way that provides for a less of a burden…on existing taxpayers,” Webster said.

Kyle City Manager Scott Sellers gives the pros and cons on PIDs and MUDs

With a variety of acronyms surrounding residential developments in the area, we at the Hays Free Press asked city and county leaders just what they thought of Municipal Utility Districts, Public Improvement Districts and Planned Unit Developments. 

Public Utility Districts – PIDs

According to Sellers, PIDs have been around for roughly 20 years. And while the language surrounding PIDs have changed, Sellers said it’s now “just a financing mechanism.” Currently, Kyle only has the Bunton Creek PID in the city limits. Two more PIDs could potentially spring up in the city. They include the Pecan Woods development on East 150 and the Blanco River Ranch property that is proposed to go along Old Stagecoach Road. Neither development has been granted a PID by the city council. 

Pros 

• Development 

• Within PIDs, developers will pay the cost, usually through a bond, to fund for the building of infrastructure. 

• Assessments done on a per-lot basis

• The lot assessments, Sellers said, come from developers analyzing costs of utilities and toward prepping the lots. Developers take those costs and apportion it on a per lot basis. 

• Lot costs less than traditional development

• According to Sellers, the burden of a lot cost, which could be up to $3,000 to $5,000 more, is spread out over time in a PID. Because it’s spread out over time, he said it allows developers to add amenity centers and public improvements that may not have financial backing. 

Cons 

• Notification 

• Sellers said notification, or lack thereof, could be an issue. In the case of the Bunton Creek PID, homeowners were not notified of a PID assessment until they attempted to sell their homes. Sellers said the developer of Bunton Creek “didn’t do a good job” of notifying residents. Through the new PID policy, Sellers said the city aims to give ample notification. 

• Variation in homeowner tax assessments 

• Because of the additional PID assessment, homeowners in PIDs could pay more in taxes than other citizens in the city. But Sellers argued that many in Texas are willing to pay the extra taxes, which go toward funding items such as amenities. 

Municial Utility Districts – MUDs

MUDs are another financing mechanism used by developers to help with providing infrastructure and services to an area. Two MUDs are on the horizon with the LaSalle and Crosswinds MUD. The LaSalle MUD, which is being developed in San Marcos, will have water and wastewater utilities from Kyle. The Crosswinds MUD has applied to become a MUD on the east side near Windy Hill Road. 

Pros 

• MUDs are their own district, and can function outside of the city limits.

• Properties don’t pay city property taxes until property is finished.

• Bond cost is up front. 

• When paid off, development is often annexed into the city. 

Cons 

• Residents in MUD don’t get city services such as police or fire. 

• Could have wastewater treatment plant in the development. 

• MUD doesn’t count toward a city’s population