BUDA — During its Sept. 17 meeting, Buda City Council unanimously approved the creation of a Public Improvement District (PID) and a Tax Increment Zone (TIRZ), in partnership with Hays County, to provide the public infrastructure outlined in the development agreement for the Persimmon development.
This comes on the heels of the city council approving the development agreement with Milestone Community Builders, the city of Buda receiving a petition for the creation of a PID from the majority of the project property owners, Bailey Land Investments, L.P. and Armbruster Land Investments and the city entering into an interlocal agreement with Hays County to jointly participate in the TIRZ in June.
The PID — a geographic area that receives specific improvements or maintenance through special assessments on the property owners within the defined area only — covers the entire approximate 774.235 acres of the Persimmon development according to agenda documents. The assessments are based on the proportionate cost of the improvements and debt issuance costs.
“As part of that PID creation process, the city would identify the boundary of the PID. We are identifying the boundary as 774 acres and that’s property that is included within the city of Buda, the city of Buda’s [extraterritorial jurisdiction,] Hays County and Travis County,” presented Patrick Bourne of Sundance Analytics. “The second thing that the council would do as part of the PID creation process is establish a maximum authorization amount or a maximum PID public improvement cost of $250 million. We do not anticipate that [the] maximum amount of those bonds would be issued; it’s just a preliminary amount that’s established at the time the PID is created.”
Key PID terms/metrics, as presented by Bourne, are listed below:
• $2.85 proposed total equivalent tax rate (net of estimated TIRZ offset), which is less than the $3 allowed per the development agreement
• Multiple improvement areas/bond series
• 30-year bond term
• 2% debt service escalation
• 2 to 1 minimum value to lien ration at bond sale
• Create an estimated $177 million in public improvements that will be dedicated to the city — 16% of that will be major infrastructure, along with $46 million of other developer financing Under the terms of the development agreement, the city of Buda agrees to create both a PID and TIRZ to help cover the costs related to public improvements for the project.
“This item is in line with the recently approved development agreement for Persimmon. As part of that development agreement, it contemplated the city creating both a Public Improvement District and a Tax Increment Reinvestment Zone to help finance the public improvements that are required as part of this project, so the roadway infrastructure, drainage water, wastewater, those improvements,” said city manager Micah Grau.
The TIRZ will generate $266 million in incremental property taxes over the 45-year term (ending in 2069), of which the city will retain $125 million. A TIRZ records all taxable value of property within that geographic area and deposits those funds in a Tax Increment Fund (TIF) — revenues in that fund can only be used for improvement projects in the TIRZ.
Bourne said that it is anticipated that the TIRZ will be divided; Subzone A will be the property within Hays County, which is about 708 acres, and Subzone B will be in Travis County, which is about 66 acres of the project.
As part both the development agreement and the interlocal agreement with Hays County, the city agrees to contribute 50% of the city’s ad valorem real property taxes collected for the portion of the Persimmon project located within the Buda city limits and 75% and seventy-five of the city’s ad valorem real property taxes collected for the portion of the development located within Travis County. And Hays County agrees to contribute 50% of the county’s ad valorem real property taxes for the portion of the project located within the county.
This is the third TIRZ established by the city of Buda — the first being the Cabela’s TIRZ, which has since expired, and the second being for The Colony at Cole Springs Road. Similar to that of The Colony’s TIRZ, the city council will serve as the TIRZ board representatives for the city. The TIRZ board will consist of nine members, including all seven city council members and two Hays County representatives; the county has established that commissioner Walt Smith and Development Services Director Marcus Pacheco will serve as the Hays County representatives, according to agenda documents.
Grau said that council’s vote was to create the PID and the TIRZ, but it does not create the finance plan or issue PID bonds: “It’s simply the first step in many steps that will be required as part of this process.”
The next steps will be for the TIRZ Board to analyze the financial and service plan in greater detail, as well as for the city council to issue PID bonds. The authorization and creation of the PID and issuance of bonds does not obligate the city of Buda to provide any funds; all costs of the improvements will be paid from assessments levied on the property within the PID and paid directly to bond holders annually.
For more information on the Persimmon Development or the creation of the PID and the TIRZ, visit bit. ly/3TYEFcj. To listen to the full presentation, visit www.budatx.gov/390/ City-Council-Board-Commission-Meetings–.
