by BRAD ROLLINS
The Kyle City Council gave its blessing last week to a 445-acre, 1,400-home subdivision which could spring up east of Kyle in the next few years if the developer can navigate the bureaucratic gauntlet necessary to form a municipal utility district.
EB Windy Hill L.P. will petition the Texas Commission on Environmental Quality for permission to form a MUD, a quasi-government entity that has taxing and eminent domain authority similar to that of a city government, said principal Don Walden, an Austin-based developer whose eight previous MUD projects include the Shady Hollow subdivision in south Austin. In remote areas too far removed from established utilities, MUDS are often used in emergent Texas suburbia to fund the infrastructure needed to serve a planned development.
In a development agreement negotiated by the city of Kyle and the developers, the Crosswinds subdivision will be built to city standards including minimum lot sizes, street specifications and parkland dedication. When debt on the vertical construction is paid off by the future residents of the subdivision — usually after 20 years or more‚ the land can be annexed by the city which will, in theory, essentially gain a large swath of already developed territory. The developer also agreed to contract with the city to conduct home inspections and to run its retail water service to residents.
“Really, short of just telling him ‘no,’ the developer has done everything in his power to meet the standards of the city and accept our terms,” City Manager Lanny Lambert said.
Council members, discussing the project at various times in recent months, aired a number of concerns. Monarch Water Supply Co., a subsidiary of SouthWest Water Co. frequently the target of its customers’ derision, has the Certificate of Convenience and Necessity to provide water service to the area. Council members said they were worried about taking action that would expose future homeowners to the service problems associated with Monarch.
“My hope is that this developer is able to get Monarch to ramp up and improve the quality of their services. But I have concerns in that area,” council member David Wilson said.
Council member Russ Huebner, who represents much of eastern Kyle, was among the early skeptics of the project, saying at a March workshop that the city was creating future headaches for itself. At the most recent discussion, however, Huebner said he was satisfied with the arrangement in which Walden buys water wholesale from SouthWest and the water system is administered by Kyle on behalf of the MUD.
The council voted 5-2 to consent to formation of the MUD with members Diane Hervol and Jaime Sanchez dissenting. For all the handwringing, however, council members may not have had much of a choice. State law requires cities to either provide utilities upon a developer’s request — in this case, wastewater — or release the developer to find the service somewhere else.
“Given our inability to provide that service, I think a MUD is their only option and probably our only option,” Wilson said.
The MUD may grow. Walden has an option to buy 100 acres adjoining the property his company already owns. As part of the development agreement, Walden agreed to an arrangement that would release 20 acres of commercially zoned property on Windy Hill Road for city annexation years before the residential portion of the development would be absorbed by the city.
Walden has said he is aiming for a MUD tax rate in the low-80 cents per $100 range to pay off infrastructure expected to cost $18 million to $26 million, depending, among other things, if Walden has to build a new wastewater treatment plant. Another option is to tie into Shadow Creek’s wastewater system across the road.
In today’s market, the homes would sell in the $175,000 to $225,000 range, Walden said. But getting TCEQ approval to form the MUD will probably take at least a year and construction may not start for another year after that, he said.
