Legislators Aim to Make Developers Pay More of Texas Counties’ Service Costs

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City-like subdivisions continue popping up in rural areas
By Paula Lavigne

The Dallas Morning News

RISMEDIA, Jan. 19 ? (KRT) ? As city-like subdivisions continue popping up in rural areas, some North Texas lawmakers are working on legislation that would make developers pay more for county services such as roads and police and fire protection.

The concern is that a proliferation of rural subdivisions will either force county officials to raise taxes or leave counties strapped for money to provide adequate service to thousands of new residents.

Developers say neither scenario is likely because new subdivisions generate additional property tax revenue for the county. And, they say, the developments are likely to attract retail stores and businesses, which generate property and sales taxes for county coffers.

But state Rep. Jodie Laubenberg, R-Parker, says she — along with state Reps. Larry Phillips, R-Sherman, and Ken Paxton, R-McKinney — will create a bill that would require approval from county commissioners to build a rural subdivision.

The bill would apply to developments being created within a municipal utility district, or MUD, in the unincorporated areas outside the growth boundaries of cities. To get their projects approved, developers would have to agree on a method by which they would pay the county more money to support the extra services, Ms. Laubenberg said.

“That’s what I’m trying to change so down the road, once the development is finished and the developer is gone, the county isn’t left strapped trying to take care of basically small towns with no ability and very little resources to do that,” she said.

Not all rural developments are in municipal utility districts, but developers often use the districts when they want to build a subdivision with multiple homes per acre. It’s less expensive for the developers, which they say keeps housing costs down. Residents of the special districts pay an additional property tax to essentially reimburse the developer for the cost of water, sewer and drainage systems.

MUDs and other similar special taxing districts have caught rural residents, county officials and small towns off guard. They have brought high-density development into rural areas accustomed to the one-house-per-acre minimum.

Currently, developers get approval through the Texas Commission on Environmental Quality to create a MUD, and they’re not required to submit a plan to the county about how to pay for public safety and roads.

One key backer of the legislation is Dallas bond lawyer Ray Hutchison, husband of U.S. Sen. Kay Bailey Hutchison. Mr. Hutchison has already worked on rural agreements between developers and county and city officials in Collin County.

He’s suggested that developers pay for extra services through a one-time assessment on the lots in their subdivisions. The payment would be based on whatever they and the county agree will be the demand for services from new residents.

Ms. Laubenberg said the legislation probably wouldn’t specify how to pay for the services but would bring both sides together to work it out. She and Mr. Paxton tried to pass similar legislation in the 2003 regular session, but that bill died in a House committee. Legislators from the Houston area, where the districts are popular and welcomed by county officials, opposed the bill.

Tim Green, a prominent Houston land-use lawyer and municipal utility district expert, said he doubted legislators would succeed on their second attempt.

“I cannot see them getting passed through the Legislature a county’s ability to prevent the creation of MUD,” he said. “The districts exist for the purpose of providing water, sewer and drainage, and the county provides none of those services.”

Mr. Green estimated that more than 100 of the districts have been created, are being created or are planned in North Texas. One developer, Don Huffines, said he doubted the county and state officials’ assertion that the districts cost the county more to provide services.

Building houses on 1-acre lots actually creates more sprawl and requires more road maintenance than a compact subdivision, he said.

Mr. Huffines said he’s not opposed to finding a way to pay for services, and his Denton County developments have paid contracts with the Sheriff’s Department for extra police protection.

He said that if elected officials are concerned about serving these new subdivisions, they should pursue legislation that would allow municipal utility districts to directly levy taxes for police and fire protection and roads.

“I think most developers would be for that,” he said. “Then we wouldn’t have to interact with the county.”

Other legislative options are on the table, said Collin County Commissioner Joe Jaynes. One of those is a county impact fee, which the county could charge the developer per home to pay for a variety of services. Cities already have the ability to charge impact fees. That idea is supported by the Texas Conference of Urban Counties, a coalition of 37 counties representing about 80 percent of the state’s population. The conference also supports the efforts to require MUD developers to work with counties on services, said Executive Director Don Lee.

Mr. Jaynes and Ms. Laubenberg said they don’t want to drive up the cost of building to prevent growth. They said they wanted to work with developers to ease the transition of rural areas.

“We fought these guys last session,” Mr. Jaynes said. “That didn’t do anybody any good.”

? 2005, The Dallas Morning News. Distributed by Knight Ridder/Tribune Business News.

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