Buda tables agreement for residential development

BUDA — At the April 16 meeting, Buda City Council tabled a proposed development agreement for a 98.96-acre residential development, known as The Reserve. This comes after the council postponed the project at an earlier meeting on April 2.

Located between Cole Springs Road and Old Black Colony Road, the proposed development would have more than 230 single-family lots, parkland and open space.

Along with the development agreement, a municipal utility district (MUD) and annexation request are also being considered. Developers for The Reserve have filed a petition with the city, seeking the creation of Buda MUD No. 2 in accordance with state law to finance infrastructure related to the development, according to agenda documents.

MUD financing would allow for the following major enhancements, according to applicant Elliott Jones:

• Cole Springs realignment and extension to FM 1626 and the North/South Collector: $10,504,585

• 8.6 acres parkland greater than code ($645,000 at $75K/acre)

• Trails and parkland improvements: $706,238 greater than code

• Density (2.3 homes/acre); Executive Housing

“This MUD is a financing vehicle. We're using it to absorb as much of the cost burden as we can to construct this infrastructure,” Jones said. “However, being mindful of the tax rate our consumer will pay, since buyers tend to purchase based on payment, and taxes are a component of the payment, we're cautious not to set that tax rate too high either.”

The MUD has a proposed tax rate of $0.75 per $100 of assessed valuation. The development agreement caps the total bonds issued to $25.2 million, unless otherwise approved by the city council, according to Jones.

“Of course, the city can dissolve the MUD at any time it determines it is beneficial to the city and the city would then assume any remaining debt,” Jones continued. “Since this project is already in the city limits and paying city taxes, presumably the city would not dissolve the MUD until the debt is paid off, but once it is, that is kind of the anticipated fade of the MUD that it would be dissolved and there would no longer be a MUD tax.”

Another component of the project includes project right-of-way acquisition costs, which according to city manager Micah Grau, are between $500,000 and $700,000 out of the project’s total cost of $34 million.

Council member Matt Smith questioned if the developer would be able to pay for the right-of-way acquisition.

“We throw all these numbers out. This gets really frustrating because one number we never see is the margin … We throw all of our numbers, everything is above board, the taxpayers pay for it [and] we bend over backwards for these projects. They are beautiful projects, by the way, never had a problem with that,” Smith said. “It’s exactly what we asked for, except when it comes to one piece of it, which is a sticky wicket, that is the city comes in and says we are going to condemn or eminent domain, or use whichever phrase you want to use, and acquire it. That’s when you guys say, ‘No, no, $500,000-$700,000 is too much on a $34 million project' where we don’t know what your margins are, if you can afford it or can’t afford it.”

“I know why you want to avoid it, same reason why we want to avoid it. I just think that, at minimum, you guys could at least pay for it,” Smith continued. “I mean it's part of the project. I don’t understand that part.”

Jones responded: “I can’t fund it. It’s just the bottom line. I showed this to council at the last presentation. The financing is a percent of the budget for Colony compared to Reserve, you might recall that. Colony is 55%, this project is 48%. Ultimately, there is a breaking point with everything. We are putting as much cost on a project with 233 lots as we can. It would require increasing a tax rate or being part of the TIRZ, and I don't want to increase the tax rate, and I don't think the city wants to include us in the TIRZ.”

The council tabled the proposed development to continue negotiations with the developer about the right-of-way acquisition. The Reserve will come back to the city council at its next meeting on Tuesday, May 7.

To listen to the full discussion, and view the agenda documents, visit bit.ly/4aK9ibr.