PRESENTER: Presenter
Jean Drew, AICP, CNU-A, Planning and Development Services Assistant Director
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SUBJECT: Title
Discuss and consider a request for the City to consent to the addition of 19.993 acres into the existing Lone Oak Farm Municipal Utility District (MUD) within the City’s ETJ in Guadalupe County, located on the south side of FM 758, approximately 1,400 feet west of the intersection of State Highway 123.
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DEPARTMENT: Planning and Development Services
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COUNCIL DISTRICTS IMPACTED: Outside City Limits
BACKGROUND INFORMATION:
Case #: CS21-0394
Applicant/Owner: NB Dean 32, LLC (Richard Beach, Manager)
1286 River Rd.
New Braunfels, TX 78130
(830) 660-8043 richard@pinnacleoversight.com
Staff Contact: Matt Greene
(830) 221-4053 mgreene@nbtexas.org
The Texas Water Code (Chapter 54) and the Texas Local Government Code (Chapter 42, Section 42.042) (see resource links) outline the procedures for the creation of Municipal Utility Districts (MUDs). A MUD is a political subdivision of the State; they are one of several types of special districts that function as independent, limited governments of their own. The purpose of a MUD is to provide a developer an alternate way to finance infrastructure, such as water, sewer, drainage, and roads (typically through bond sales). Managed by a board of directors elected by the property owners within the MUD, the MUD can then levy its own taxes and fees on the future property owners within the development to repay their debt. MUDs are generally desired by developers when the subject properties lie beyond the physical reach of utility providers and/or outside utility company Certificates of Convenience and Necessity (CCNs).
When a proposed MUD lies within the boundaries of a city’s Extraterritorial Jurisdiction (ETJ), the respective city must give its consent before the MUD may be established. Consent by the municipality allows the developer to initiate proceedings to create the MUD through the Texas Commission on Environmental Quality (TCEQ). For their consent, cities typically expect superior development to what would occur without the MUD. If a city does not consent within 90 days, state statute allows the property owners 120 days to work directly with utility providers. If there is no resolution, the state authorizes the applicant to appeal to TCEQ.
Consented to by the City and subsequently approved by TCEQ in 2019, the existing Lone Oak Farm MUD comprises approximately 320 acres of former farmland on the edge of New Braunfels’ ETJ in Guadalupe County. It is master planned as the Navarro Subdivision (see attached) for the development of approximately 1,469 single-family residential lots and 2 commercial lots. The property is not located over an aquifer recharge, transition or contribution zone, nor are there any known sensitive environmental features nearby. Three units of the subdivision have been recorded and are under construction. Water service is provided by Crystal Clear Special Utility District and sewer service is provided by City of Seguin Utilities.
The applicant has indicated their intent for the Lone Oak Farm MUD is to remain in existence only as necessary for infrastructure financing. After financing is paid off, the District would serve no purpose and cease to exist through either the board of directors dissolving it, or if the City of New Braunfels elects to annex the property. The utility companies providing the service to the Lone Oak Farm MUD would assume ownership and ongoing maintenance of the infrastructure after the Lone Oak Farm MUD dissolves.
ISSUE:
The contiguous subject property the applicant is requesting to be added to the existing Lone Oak Farm MUD is situated on the south side of FM 758, approximately 1,400 feet west of State Highway 123 (see attached maps). A master plan of this tract was approved earlier this year with the name Jaro South Subdivision (see attached Jaro South Subdivision Master Plan); proposed for the development of 120 single-family residential lots.
The following actions from Envision New Braunfels are related to this requested MUD expansion:
• Action 1.3: Encourage balanced and fiscally responsible land use patterns.
• Action 6.5: Utilize public/private partnerships to guide growth and investment.
• Regional Planning:
- Balance resources in an equitable manner that does not lead to disinvestment in existing New Braunfels.
- Assure the long-term fiscal health of New Braunfels, and that policy decisions do not create an undue fiscal burden on the City or others.
- Ensure that the policy provides guidance for decisions made by utility providers, so they can aid in achieving Envision New Braunfels.
• The subject property lies within the Freiheit Sub-Area near existing and future Market, Civic and Outdoor Recreation Centers.
FISCAL IMPACT:
The Lone Oak Farm MUD allows the cost of utility infrastructure improvements to be financed over time through bond proceeds and repayment by the homeowners, rather than up front from the lot sales price. If the cost of utilities were included in the lot sales price, the applicant indicates the lot prices would not be competitive, impacting the viability of their project as presently planned.
If the City were to annex the property within a MUD prior to expiration of the MUD, the City would assume any remaining debt of the MUD.
Recommendation
RECOMMENDATION:
Approval with conditions. Staff supports the City consenting to the applicant’s petition to add an additional 19.993 acres to the Lone Oak Farm Municipal Utility District with the following conditions as recommended with consent of the original MUD:
• All facilities to serve the land be in accordance with plans and specifications approved by the City of New Braunfels, including inspections, as applicable;
• The district may only issue bonds for the purposes as outlined in Chapter 54, Section (e) of the Texas Water Code; and
• For any territory proposed for future expansion of the MUD that lies within an area of Seguin’s ETJ, the MUD board of directors shall voluntarily request said area be placed in New Braunfels’ ETJ. Any exchange of ETJ boundaries between New Braunfels and Seguin must be addressed with an Interlocal Agreement.
Resource Links:
• Chapter 54 of the Texas Water Code:
WATER CODE CHAPTER 54. MUNICIPAL UTILITY DISTRICTS (texas.gov) <https://statutes.capitol.texas.gov/Docs/WA/htm/WA.54.htm>
• Chapter 42 of the Texas Local Government Code:
LOCAL GOVERNMENT CODE CHAPTER 42. EXTRATERRITORIAL JURISDICTION OF MUNICIPALITIES (texas.gov) <https://statutes.capitol.texas.gov/Docs/LG/htm/LG.42.htm>
Attachments:
• Area Reference Map
• Aerial Map
• Applicant’s Petition
• Jaro South Subdivision Master Plan
• Navarro Subdivision Master Plan
• MUD Exhibit
• Draft Resolution