1,200 homes planned on 453 acres west of city
By 11/27/2003 00:00:00
Ferris debates with developer over MUD district
The Ellis County Press
FERRIS - A Dallas-based housing developer, Timberland Companies, plans to build approximately 1,200 homes on 450 acres west of town on FM 664, but he wants the taxes to pay for his costs.
Even though a portion of the proposed development is in the City of Ferris' extra territorial jurisdiction, Tommy Cansler, president of Timberland Companies, said he wants to establish it as a municipal utility district.
A MUD is a special taxing district regulated by the Texas Commission on Environmental Quality to provide water, sewage, drainage services and other infrastructures to residents within the planned development.
Bonds would be passed to reimburse the developer's initial costs.
Property owners residing within a MUD district would be required to pay off the bonds through district taxes, as well as paying the normal school, county and state taxes.
Council members voiced concern the new development will bring in more people quicker than the city can expand its current infrastructure to handle the rapid growth.
Thus putting a strain on area roads, schools, police and fire departments - with no property taxes going to the city.
Being in the ETJ, future MUD homeowners would not have to pay city taxes, until the area is annexed into the city limits.
It could take years for a MUD to be annexed into the city limits because the city would have to wait until the debt is low and property value is high.
'You will want to look at what point it will make economic sense to annex it,' Tim Green, a Houston attorney for Timberland Companies said.
'That will be when it develops significantly out and paid down a lot of it's debt.'
Green said contracts could be worked out between the developer and the city where the city could be paid for providing services to the homeowners.
'I can sit here and tell you there will be benefits to the city. The development is outside the city. There are no financial obligations to the city as a result,' he said
'There are positive ways the city can make money through the development - police, fire, EMS.'
He also said if the city did not provide the needed services or wanted too much money the developer would go somewhere else, such as Rockett, to provide water service to the area.
The lawyer said the city would also benefit from the homeowners paying sales tax on items bought throughout the city.
Tests conducted earlier this year, determined the city had enough water pressure to provide water for the subdivision, according to the developer.
Cansler said MUDs help small cities grow while not burdening them with the responsibility of having to pass their own bonds to install roads, sewer and water pipes to the new developments.
'You get infrastructure that the city has not one dime or cost involved in order to grow your city,' Cansler said.
'In the long term the city ends up with that infrastructure free of charge, if we so desire.'
Mayor Pro-Tem Scott Born said 'But it's not going to be ours for 20 years.'
Cansler said by creating a municipal utility district, he will be able to competitively price his homes in the low 100s, so he can compete with other housing developments being built throughout the region.
Cansler said once the homes start being built the city would be able to attract commercial and industry businesses.
He said businesses are vital to a city, they pay higher taxes than an average residential property owner.
Ferris resident Tony Padilla asked what would happen if the developer could not pay the bonds.
'The simple answer is the creditors look only to the taxpayers located within that property. The do not look to the city, they do not look to anyone other than that,' Green said.
'There are a significant number of economic safety factors that are built in so that the likely-hood there would be a financial problem would be very, very slim.'
He said some developers had problems in the mid-80s when they were starting their subdivisions and the market slumped.
The TCEQ developed a set of very strict and stringent rules on special utility districts after the 1980s, said Green.
Ferris resident Tony Padilla asked if tests had been conducted to determine the traffic impact the district would have on Ferris.
'This is the first step,' Cansler said.
'There's no reason to spend money if it is not approved.'
Cansler said the needed engineering plan had not been conducted yet for the same reason.
Councilwoman Perkins suggested Cansler and Green attend a school board meeting to inform the school district of their intentions to build the homes, so the district can plan for the future.
Cansler said it would take at least two years before the infrastructure would begin.
She informed Cansler it would take more than two years to build new schools to house additional students.
The design plan does include a site for a school - elementary, junior high, high school of the district's choice.
There are at least 10 MUDs currently planned for development in the North Texas region with proposed tax rates of 75 cents to $1 per $100 of property value not including school, county or other taxes.
Texas Department of Transportation records from 2002 showed more than 7,000 automobiles traveled on FM 664 through Ferris per day.
Green said the developer would like to have the approval of the council, but did not need it to build the subdivision.
Born said he would like to consult the city's attorney again before the council made such a decision, because in previous discussions the developer never informed the council the project could be constructed without the city's approval.
'I don't remember saying if we say no then you would do it anyway,' Perkins said.
Land owner Mack McCoy said he wanted to get the approval of the council, but did want to develop the land as soon as possible.
He said city leaders were looking at the situation thinking the entire development would be completed in four to five years, but it would actually take 10 to 20 years.
The MUD will be discussed again on Dec. 1 during the regularly scheduled council meeting.