Leander sets up Oak Creek subdivision for two types of development incentives
On Oct. 29 construction began on the new Oak Creek project that is Leander’s first public improvement district, or PID.
Leander City Council on Oct. 16 approved two sets of incentives for Oak Creek, which is located at the southwest corner of San Gabriel Parkway and US 183. It will include 151 acres and 624 houses from three builders, PID consultant Rick Rosenberg told City Council.
Oak Creek is also one of the first projects in the city’s transit-oriented development, or TOD, district. Oak Creek developer Sentinel/Cotter Leander LLC can access up to $3.9 million in financing from city bonds for public infrastructure within the PID and also seek about $4.2 million in reimbursements according to terms of the tax increment reinvestment zone, or TIRZ, located within the TOD.
How a PID works
A PID is a special district intended to finance public portions of a new development—including roads, water and sewer lines, entrance gateways, fountains and landscaping—which can later become property of a city. Without the PID financing mechanism the costs of the development’s public improvements would fall to city taxpayers, Rosenberg said.
For the Oak Creek PID, the city of Leander will issue about $5.2 million in 30-year bonds. The bonds will provide $3.9 million for the project’s construction, with the difference going to interest and other costs.
At first the PID developer makes annual bond repayments to the city. If the developer fails to pay the bonds, bondholders can foreclose on the property and take full possession, city bond counsel Tom Pollan said. Once homes are built, property owners in the PID pay a fee to the city until the bonds are fully repaid, Pollan said.
City staffers said the bonds will not affect the city’s tax rate. Rosenberg said the deal has more security and market value than similar PID deals in Central Texas.
Before the Oak Creek developer can obtain the $3.9 million generated from the city’s bond sale, it must independently fund $4.2 million worth of public improvement projects, such as scenic bridges and entrances, fountains, ponds and trails that are designed to improve the subdivision’s aesthetics. Sentinel/Cotter also agreed to add $6 million worth of landscape enhancements to Oak Creek, including a roundabout, bridge treatments and trails, to gain the city’s PID financing.
Within the city’s TIRZ a developer who adds specific infrastructure that improves the property’s value can seek reimbursement from a portion of city and county property tax revenue that directly results from the improvements. Sentinel/Cotter is eligible for up to $4.2 million in TIRZ reimbursements for certain water infrastructure and other public improvements.
City Manager Kent Cagle said Oak Creek’s developer can only seek TIRZ reimbursement after spending money on the public infrastructure improvements. The incentives offered in the TIRZ are available for another 18 years, he said.
“Oak Creek is a quality development, and it has some development aspects we’ve been asking for,” such as house garages that face separate driveway alleys rather than the neighborhood streets, Cagle said. “That development is so close to the train station. We wanted it to be as walkable as possible. And we think that’s going to be a big selling point.”
Since 2004, City Council members have aimed to attract dense urban retail and restaurant development within walking distance of the Capital Metro Red Line Station and ultimately form a new downtown tourism district for Leander. With about 2,300 acres, the TOD includes the train station, Old Town Leander southwest of Old FM 2243 and US 183, and the proposed Austin Community College campus northeast of Hero Way and Mel Mathis Parkway.
“We start to see the value of us being [with] Cap Metro and being by this rail station,” he said.
Cagle said observers in Leander should be impressed by the finished Oak Creek project’s beautification.
“[We] can’t wait to see it done so we can show it off to other developers,” Cagle said.