When the Turnbo Ranch subdivision breaks ground later this year, the city of Killeen will need to find money — millions — for infrastructure projects that were part of a 2014 agreement between the developer and a previous city council.
Among the projects are one road improvement, the construction of a large above-ground water storage tank and a potential second road project.
Depending on the developer’s interpretation of the start time, one of those projects could be required to begin as soon as June 2019.
But as the city continues to crawl out of a budget crisis in the summer of 2016, Killeen officials may have to get creative in their funding choices.
Per the city of Killeen’s 2013 agreement with Killeen developer Bruce Whitis and his development company, WB Development, the city of Killeen is contractually obligated to follow a timeline to approve millions in infrastructure improvements to accommodate the district and the city’s expected growth to the south.
The agreement specifically outlines two major projects in which the city will need to invest in the coming years, one project that the city may have to undertake and rough timelines for when each project must commence and be completed.
The first project is the extension and expansion of Chaparral Road, currently a two-lane country road that runs between State Highway 195 to the west and Stillhouse Hollow Lake Road to the east.
According to the agreement, the city is contractually obligated to expand the road from two to four lanes — a project estimated at approximately $20 million, according to the city’s transportation capital improvements program developed in 2015.
Josh Welch, of WB Development, said the developer will reimburse the city for the improvements from SH 195 to the northern boundary of the development.
David Olson, the city’s director of public works, said the use of the new project will be 50/50 between city and development residents when the subdivision is fully built out.
Despite that, the agreement between the developer and the city secures $4.1 million in repayments from the subdivision’s governing district, which taxes its residents, leaving the city responsible for nearly $16 million for the full project.
Killeen Director of Public Information Hilary Shine said the difference in reimbursement costs is tied to the city expanding the scope of the project at a later date.
“That figure was calculated based on the portion of the Chaparral improvements necessary to support the MUD,” Shine said. “The segment of Chaparral, about half the length, is associated with the MUD, but the total improvements planned exceed what is necessary to support the MUD itself.”
The developer is contractually obligated to begin repaying its portion of the project to the city on an annual payment plan that will begin once its segment of the road project is completed, according to the contract.
It won’t be soon.
The payments are calculated by multiplying $1,500 by the number of annual water and wastewater utility connections made over the course of a year — meaning the developer pays dependent on the rate of growth in the district, and the city will recoup only after years of development.
Shine said the city was seeking federal funding for the project through the Killeen-Temple Metropolitan Planning Organization, a regional partnership to promote local growth projects. David Olson told the council in January the project scores well for potential federal matching funds.
A potential city-involved project is the extension of Trimmier Road south of Killeen into the new development.
Olson said the project is currently a developer expense, but there’s a catch: The developer is responsible for contracting with a traffic engineer, who will recommend right-of-way dimensions for the road. If the city — which will look to annex the district once it is fully built out — desires different dimensions, the city is obligated to pay the cost of “oversizing” the road.
The city has yet to conduct its own traffic analysis of the development to determine oversizing needs, Olson said.
Olson said in January the city would also need to address the section of Trimmier Road leading north from Chaparral Road to Stagecoach Road to accommodate the influx of new vehicles from the development into the city center.
The estimate to widen that stretch of road and install bike lanes is more than $6 million, according to the transportation program.
WATER STORAGE TANK
Finally, the city is responsible for the construction of a 1-million-gallon water storage tank to provide adequate fire flow rates into the development.
Olson said the city elected to upgrade that to a 3-million-gallon tank to provide for further growth in the area at a projected cost of $5.2 million with line connections. The city’s agreement says the developer must pay $1.25 million back on the project.
HOW TO PAY?
So how will the city fund those improvements — particularly when infrastructure needs could boom to $70 million citywide in the next few years?
During a Killeen City Council “budget priorities” workshop in January, Olson said the city was currently in the process of determining funding for the road projects.
Shine said April 24, “We are exploring all funding options to uphold our responsibilities in the agreement.”
Killeen City Manager Ron Olson said funding Chaparral Road could present issues due to language in the contract that does not stipulate how the project will be funded.
“The building (Chaparral) is more of a challenge because the commitment has been made without clear provisions of how that’s going to paid for and that’s still to be determined,” he said. “I can see a couple of potential pathways to get that done, and we’ve got time to work through more specifics.”
One of those options could be a new bond package taken before Killeen voters — but council members are already waffling over a property tax rate that is one of the highest in the city’s “benchmark” group and devotes 40 percent of its revenue to debt service.
Another infrastructure bond package could skyrocket the city’s $252 million in outstanding debt and continue to constrain tax revenues that pay for operational expenses in the city.
Another stopgap option could be a transportation utility fee — a monthly fee on households and businesses to recoup infrastructure maintenance and debt service costs — but that was voted down by the council in September.
The city voted to continue its implementation of developer impact fees — one-time fees on building permits to help pay for capital improvement throughout the city — in March, but the council has been reticent to discuss any transportation fee.
According to a presentation given to the council in June, the utility fee could recover around $7.5 million in debt service payments for transportation improvement projects.
However, the city contractually cannot impose any form of impact fee on residents in the Whitis development, so the complete weight of any new fee would fall on Killeen residents and businesses alone.
The city cannot wait long to make a decision.
The consent agreement with WB Development appears to say the city must commence the Chaparral Road improvements on the sixth anniversary of the agreement’s effective date — Aug. 8, 2013.
Ron Olson said his interpretation of the contract was that the project wasn’t mandated to begin until the development reached 1,000 residential utility connections — which could be years down the road.
In the worst case scenario, the city has nearly 2½ years to decide on a funding mechanism for the improvements, with four more opportunities to bring a bond package up for a proposition vote.
The construction on the above-ground storage tank is not required to commence until the development reaches 1,500 utility connections, which the city estimates the district will reach in 2026.
The city of Killeen is not the only government entity planning to accommodate the new development.
According to Killeen Independent School District spokesman Shannon Rideout, the school district’s boundaries currently encompass around one-third of the new development.
Rideout said the district’s current strategic facilities plan shows the nearest schools that would serve the development are Alice W. Douse Elementary School, Charles E. Patterson Middle School and Ellison High School, but students could be rezoned to new campuses at a future date.
During an April 11 board of trustees meeting, KISD Chief Financial Officer Megan Bradley presented an updated strategic facilities plan that includes opening a fifth high school by the 2021-22 school year to ease overcrowding at the school district’s other facilities.
The proposed new high school could be located on a plot of land owned by KISD near the corner of Chaparral and Featherline roads. The land was sold to the school district in 2005 by local businessman Bill Yowell, who died Feb. 6.
Before the new high school opens, the school district will be tasked with accommodating the development that has a scheduled build out of 200 homes per year, according to city estimates.
However, the school district benefits from the fact that it will collect property tax revenues from the new development — a luxury the city will not have until it annexes the development, potentially 20 years down the road.