Marble Falls signs agreement for 1,966-home Thunder Rock development
Thunder Rock, a proposed 1,073-acre development at the corner of U.S. 281 and Texas 71 in Marble Falls, would include 1,966 single-family homes, a sports complex, and 75,000 square feet of commercial space. Courtesy image
Another large-scale development, Thunder Rock, might be underway near Texas 71 and U.S. 281 in Marble Falls. The City Council signed an agreement approving three separate resolutions to push the development forward during its Tuesday, Sept. 1, regular meeting. Thunder Rock is a 1,073-acre mixed-use development that would be built over eight phases.
According to plans presented at the meeting, the development would ultimately consist of 75,000 square feet of commercial space, a 26.3-acre sports complex, and 1,966 homes upon completion of all eight phases. The first phase of construction includes 40- and 50-foot lots — 259 total homes — as well as sports fields and a recreation center. Residential lots in future phases could be as large as 60 feet, including ranchettes.
The council unanimously approved resolutions that would create a Public Improvement District and a Tax Increment Refinancing Zone for the Thunder Rock development. Councilors also declared an intent to initiate the PID bond process. The date for issuance of those bonds will be on or before Jan. 15, 2021.
Creating both a TIRZ and a PID to fund development improvements is developer Centurion American Development Group’s standard approach, Marble Falls Assistant City Manager Caleb Kraenzel said. A public hearing will be held Tuesday, Sept. 15, before taking final action on implementing the TIRZ.
“The inputs of how much the TIRZ increment is, and how much they ultimately borrow with the PID, those vary from community to community,” Kraenzel said. “But the basic structure is the same in any of the communities they work with.”
The Thunder Rock TIRZ is the second created in Marble Falls, the first being the downtown area TIRZ. A TIRZ allocates a portion of increased ad valorem taxes collected that result from a designated area’s increase in property tax values. In this case, half would go to the city and the other half to improvements in the zone. This would occur over a 41-year term with a maximum revenue cap of $124 million total.
“Once they formulate the TIRZ, the longer they sit and they don’t have that value go up, they’re in essence losing money because they’re not getting money back,” Kraenzel said. “The TIRZ term, once it starts, it’s set. So, they are incentivized by the TIRZ structure to get the ball rolling.”
Improvements authorized under the PID petition include street, roadway, and sidewalk improvements and the creation of playgrounds, walkways, and lighting features. These are paid for through PID revenue bonds, which are repaid with the assessment revenue collected from PID property.
“In the case of Thunder Rock, they’re proposing a more aggressive PID than is normal because they’re saying we will take an increment of the TIRZ funding that’s created and leverage it to pay down the assessment on the PID side,” Kraenzel said.
Thunder Rock joins the Gregg Ranch development being built near the 281-71 intersection. When Gregg Ranch was announced, the 242-acre residential development was touted as the first large-scale development in Marble Falls in three decades.
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Why would anyone want taxes to increase?
Public Utility Districts (PIDs), Municipal Utility Districts (MUDs) and Tax Increment Reinvestment Zones (TIRZs) are just a few of the special districts available to Texas developers and municipalities. They are great financing methods that can be used for a range of projects, though a few differences set them apart.
The most notable differences between the three districts are the projects they fund and how they are financed. A MUD, for instance, is used to finance the construction of public infrastructure that does not exist, which is typically utility facilities and roadways. Over time, developers within a MUD can be reimbursed for water, sewer, drainage, and sometimes road infrastructure through property taxes.
A PID, on the other hand, is utilized to make improvements authorized by Chapter 372 of the Local Government Code. Some of the improvements and maintenance projects approved by the state include parking facilities, park improvements, sidewalks, and roadways. However, unlike a MUD, PID projects are paid for through special assessment taxes, which are separate from property taxes.
Projects within a TRIZ are paid for through tax increment financing (TIF), which is a public financing method used to subsidize community improvements to help spur investments in a certain area. A TIRZ is more flexible than MUDs and PIDs when it comes to the types of projects it can finance. For example, a TIRZ can finance new public utility facilities in addition to area improvements.
Governance
Another notable difference between the three districts is how they are governed. A MUD, for example, is considered a political subdivision of the state and is overseen by the Texas Commission on Environmental Quality (TCEQ). Texas law allows five members to sit on the board, which are typically residents of the MUD, though they are still subject to TCEQ supervision.
A PID and TIRZ are both components of a city and governed by a city council. City council has the authority to create an advisory board for either special district, but final decisions on the establishment, cost, assessment and budget must be made by members of the city council.