City Council asks staff to continue PID negotiations
By Christine Bolaños
The Liberty Hill City Council on Monday asked staff to continue negotiations with Liberty Parke developers and opted not to take action on a letter of interest (LOI) for the formation of a Public Improvement District. The LOI states intentions of both parties to work toward formation of a PID and is not binding for either party.
City Manager Greg Boatright said city staff met with developers to get a handle on infrastructure needed to serve Liberty Parke as well as the additional 70 acres to the immediate west of the property.
“We looked at the possibility of taking delivery of water into our system on the west end of our city limits. On that 16-inch line that Georgetown is currently serving the Liberty Hill High School with,” Boatright said. “Tying that into our system and increasing capacity that would help serve Liberty Parke.”
He said the estimate for the improvement was $750,000. He said in a phone conference that occurred a week ago with Todd McCullough, an owner of the development, McCullough told him the developers would be willing to contribute $375,000. In addition, the developers would also contribute $125,000 from their own funds which would be reimbursable through credits when the development starts to take place.
“We had asked for $750,000. They countered back with $375,000 plus the $125,000 that would be credit for the LUEs,” Boatright explained. “I thought the council needed to hear what this proposal consisted of and then get an update because the last time we talked the number varied between $5-6 million and now the latest number is $9 million that they’re wanting to authorize for the PID.”
McCullough then asked to make a clarification.
“That’s not what the total infrastructure that’s going to put in. That’s not the amount of money that the PID is going to issue. The PID is still going to issue between $4-4.5 million. The $9 million is total infrastructure we can put in,” McCullough said.
Boatright asked for further clarification.
“You’re asking our council to act in official capacity as issuing the amount of dollars. You’re saying that the absolute cap is $4-and-a-half million,” Boatright asked McCullough.
“That’s not the absolute cap, but we don’t want to take our tax rate higher than competitive rate. We want to be competitive so it’s right at the $4-4.5 million,” McCullough responded. “But we could have up to $9 million that could be reimbursed of infrastructure costs.”
Boatright said more clarification was needed prior to a council vote.
“Council, I think the $750,000 that we estimated is not an arbitrary number. I think it’s something that is based upon what the need would be to help serve the area and there’s a possibility — this is just something that Todd mentioned the other day in our conversation – is that if there was the opportunity to add additional property that they would want to have that considered in the future,” Boatright said. “You know, adjacent land, that could be annexed into the PID because the PID just like (Municipal Utility Districts) can annex property and it still takes consent of the council.
“I felt we were far enough along and the discrepancy between the $375,000 and the $750,000 that I needed for the council to hear it as a whole,” Boatright continued. “Here’s my honest opinion on what we’re dealing with: What can we negotiate for the city that is a benefit for our citizens that will take the load off our citizens to pay for development because as much as possible development needs to pay for itself.”
He said he feels the negotiation should be at $750,000. “The $375,000 doesn’t get us to where we can do enough to our system to make an impact for Liberty Parke and possibly the adjacent property,” Boatright added. “If the city extends its vote, its credit and makes an investment with its resources then I think we need to negotiate the very best deal we can for the citizens and the city and I think that number is $750,000.”
He said the city has already annexed the land that is Liberty Parke into the city.
“Moving forward, certainly, if we’re going to extend our utilities to additional land that they have under consideration then we would certainly negotiate for that to be annexed, PID or no PID,” Boatright said. “The PID doesn’t really bring anything to the table when it comes to the annexation process. It boils down to does the council want to consider this issue from the standpoint that it’s a benefit to the city or is it not enough of a benefit for us to make that type of commitment.”
McCullough reminded council members a PID is primarily a financing tool.
“What we’re trying to do is keep the nicest subdivision we can get in Liberty Hill. A formation of a PID is not really what it’s going to do for the city. We’re trying to be good citizens and say what can we do to help the city and you’re going to help us as well,” he said.
“The PID really benefits those who pay the assessments. Those who live inside so that really goes to benefit them,” McCullough said. “So we really have to justify to them why we’re spending that money and so if we say we spent $750,000 they’re going to say, ‘Was that all for Liberty Parke?’ It was my understanding in talking with Greg that this was going to benefit other parts of Liberty Hill which we’re happy to do.”
He said developers thought the amount proposed was “fair.”
“It’s a little less, ‘Hey, we’re negotiating back and forth. It’s more, ‘Hey, we’re trying to do something that has to be done within the PID itself. Those dollars need to be spent within the PID itself,” McCullough reiterated. “The objective is to make the nicest community that we can. Keep the costs low so we can get people into the community.”
Council members brought up concerns relating to the $9 million. At its June 8 meeting, the council accepted a bid for purchase of the $10 million City of Liberty Hill Wastewater Treatment Facility revenue bonds, series 2015. By accepting the bid the city promised not to issue more than $10 million in bonds this calendar year. If the city does issue more than that, the interest rate would be up to 2.788 percent.
The city manager said the June 22 item would not be done during this calendar year.
“What we’re asking is not an approval of the PID tonight. We’re not asking for approval of the bond issuance; that’s down the road. What we’re saying right now is, ‘Hey, we’re interested in Liberty Hill. Is the council open to working with us on a PID? So that’s what the letter really is about,” McCullough said, referencing the LOI.
“We need to nail it down. We didn’t want to do something without a lid. We went back to our financial partners and said what can we do and said this is what we can do,” McCullough said. “That letter is showing this is non-binding. This is something the city wants to work towards.”
City Finance Director Amber Lewis asked if the amount provided in the letter of $500,000 total was the final dollar commitment. McCullough said that was a fair assessment. He said the $9 million would not affect the city’s issuance of bonds but rather its rating.
“That’s a big deal,” Boatright said. “It could affect our interest rate by a half a percent. That’s a huge deal for us. That could make a difference in the life of that issuance $100-125,000 easily. Since we’re in the position that we are where we have that $10 million cap issue, plus we are in the private placement when it comes to issuance, that’s where we’re at.”
McCullough adamantly responded: “We will not be issuing $9 million, though. You’re going to issue the $4 million.”
Lewis said the city can’t plan on verbal assurance that only $4.5 million will be issued if the council has approved up to $9 million. “We couldn’t prove to the AG if we had that agreement sitting out there, they would look at us and say, ‘Why are you borrowing $4 million? You have this commitment to let them issue this much debt.’”
McCullough once again reiterated the city is not issuing $9 million. “You can spend the $4-4.5 million dollars on this $9 million. That $9 million is a confusing number. It’s not the debt that’s issued. It’s saying you can spend the dollars against that $9 million.”
Councilman Ron Rhea asked McCullough if he was still open to negotiations with city staff.
“I’m recommending for our staff to negotiate and go back and clear up some of these things to make sure we understand what we’re getting into,” Rhea said.
McCullough said the $375,000 is what developers are paying out of pocket. The other $125,000 would be put up front and then be reimbursed. “We’re trying to get as close to that number as we possibly can.”
Rhea also said city staff needs to get the $9 million debt issue clarified with the AG’s office. Boatright also said the city needs to ensure it can legally prove this would be serving a public purpose, meaning it benefits the city.
McCullough said the city is not actually issuing the debt only approving it. “So if there’s a default on it they won’t come to the city. They go to the developer, the people that own the land.”
However, it would still be a reflection on the city and its credit rating.
“The citizens out there will see this as a city tax. They will look to you and say what are you doing about this tax,” Lewis told the council. “They’re going to see it as you all taxing them and they’re going to wonder why.”
The rest of the council agreed with Rhea and unanimously made the recommendation for clarification and negotiations to continue.
In other council business:
– Lewis distributed budget sheets to city department heads on June 10. They are due back on June 24. She said the county will have values to Liberty Hill by July 25 and then the city can start calculating tax rates. A special meeting will be held in August.
– Liberty Hill Economic Development Director Kirk Clennan gave council members an overview of the first Primary Employers and Real Estate Professionals Network Breakfast. He also mentioned the Austin Chamber has made inquiries concerning “Project Diamond,” a bioscience company that could create about 300 jobs. The company is reportedly looking for 50 acres to build its facility.
– The council directed staff to begin developing a roadway plan that will lead to a future land use plan and annexation plan. In doing so, the council authorized allocating funds associated with development of the plan. “Bringing all these pieces together so we have good solid plans for the future is just a huge step for the city. We worked on this comp plan and now we have the (Unified Development Code Advisory) Committee. We’re finally growing up and it’s really going to be an asset to the community,” Mayor Connie Fuller said.
– After addressing some concerns, the council unanimously approved a form to be utilized for nominating or recognizing individuals who made a significant contribution(s) to Liberty Hill City Park on County Road 200.
– The council adopted lift station specifications outlining general and training requirements and detailing specifications for wet well, valve vault, frequency drives and control panel. City staff explained these are specifications to standardize what is installed. The lift stations give the city more control of flow.