• December 21, 2014

Killeen council to vote on MUD Tuesday

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Posted: Sunday, March 3, 2013 4:30 am

Negotiations over establishing a new taxing entity in Killeen’s extraterritorial jurisdiction drew deep divides in the Killeen City Council’s views on urban planning.

The council plans to vote Tuesday on a consent agreement, which would give local developer Bruce Whitis the political capital he needs to establish Bell County Municipal Utility District No. 2 through the 83rd Texas Legislature.

Municipal Utility Districts allow developers to finance water, sewer and transportation infrastructure through elected boards that levy property taxes from district residents.

Bell County MUD No. 1 exists near Belton.

According to the proposed consent agreement between Whitis and the city, Killeen plans to sell water, sewer and solid waste services to the district.

If MUD-2 is built as planned, it would be the largest real estate development in Bell County, with a total build-out of 4,500 new homes in a four-mile-long property just south of the Killeen city limits.

Regardless of the MUD, Killeen plans to annex the area — located at the intersection of Chaparral Road and West Trimmier Road — in the next 15 to 20 years.

Big-picture progress

Last week, council members wrangled over who should pay — the city or the developer — for the $3.5 million water tower that city staff said will be needed if MUD-2 is built.

Scott Osburn, city attorney for public works, said Tuesday, “The impact of this development is directly related to the demand for this (elevated water tank).”

The council ultimately agreed to build the tower, so that the city would not lose the potentially lucrative water revenue it would generate from the district, but only after a tense debate over land use.

Council members’ fears ranged from the doom and gloom that sequestration would stall the project, to fears that growing too fast would hurt the city’s image in years to come.

“You can’t tell the future, but do you just stop everything and wait until the future happens?” Mayor Pro Tem Michael Lower said during last week’s negotiations.

Councilman Jared Foster, who had been silent for much of the negotiation, responded in the spirit of the city’s comprehensive plan, a long-term urban planning document adopted by council in 2010.

“No,” Foster said, “but you could let the city grow in accordance with the comprehensive plan that we’ve already adopted.”

Council has amended the comprehensive plan five times in the last eight months.

“Demand for housing in Killeen is not going to go away,” Foster said. “We might even find a situation in which we will develop the land south of town the way that we said we wanted to and not according to the design standards of this MUD.”

The future land use map in the comprehensive plan calls for large lots to be developed south of the city, a vision not reflected in the MUD-2 plan.

Foster said that the planning document was created to prevent infrastructure problems, such as the daily traffic jams at the intersection of Trimmier Road and U.S. Highway 190.

City Manager Glenn Morrison said the consent agreement between the city and the developer is a planning document.

Assessing risk

Much of the MUD negotiations, to which council has devoted more than two months, has been a study of the financial risks to the taxpayers in the long- and short-term.

The city has no obligation to annex the property.

All of the infrastructure inside the development would be paid for by district taxpayers, allowing the developers to get the project off the ground.

As the city waits for the district to pay off its debt, Killeen would be able to collect water revenue from the residents without the normal up-front cost of building water infrastructure.

When the debts are paid, the city could annex the land and take over the infrastructure at no cost.

“The MUD is accepting to put in some infrastructure that we can utilize in the master plan,” said Steve Kana, Killeen’s director of water and sewer utilities. “It’s not exactly where we’ve got it drawn, but we can work with that.”

Most of the infrastructure investments outside of the development — but required by the homes — would not be necessary until the project is well under way.

The city would not have to build the elevated water tower until 1,500 homes are built — an estimated seven years into the project.

At that time, the city estimates it will have generated $3.6 million in gross water revenue from the project, said Martie Simpson, the city’s interim finance director.

When the project is totally built, the city will have collected $26 million in accumulated water revenue.

Some council members saw the wait for these projects as a way of minimizing the risk of the venture.

“I think it is an opportunity where the city doesn’t assume much risk,” Councilman Jose Segarra said.

“When you get to 1,500 homes, the city will have generated a lot of money; it’s pretty much a wash.”

As the city continues to grow southward, the city will eventually have to build infrastructure over the same ground as the proposed MUD-2, except with city funds instead of through the district.

Segarra said the city could use the money it saves through the MUD for capital improvement projects that solve some of the problems Foster had suggested.

“With us not having to spend the city’s tax dollars on these things, we will be able to focus on things like that,” Segarra said. “It is a risk but it’s their risk, not the city’s.”

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