May 4th, 2011
Border war: San Marcos, Kyle tussle over territory

The two concept plans show different versions of the proposed LaSalle Municipal Utility District between San Marcos and Kyle. The top image was distributed to city leaders in San Marcos; tthe bottom image is the version floated in Kyle. CLICK IMAGES FOR LARGER VIEW

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by BRAD ROLLINS

San Marcos City Council members on Tuesday laughed at a request from neighboring city of Kyle to give up 1,160 acres of future territory where an aspiring developer envisions a massive subdivision stretching from Interstate 35 to Texas 21 just north of Yarrington Road.

The LaSalle Municipal Utility District, as currently conceived, would span 1,758 acres and include more than 7,500 living units for a potential, eventual population of 10,000 to 15,000 people — a number that would increase Kyle’s current 30,000 population by half. But in the course of preparing to ask permission from the Legislature for creation of a municipal utility district and sign a development agreement with Kyle, Mike Schroeder, an Austin-based representative of LaSalle Holdings Ltd., discovered that nearly 70 percent of property involved in the deal rested in the San Marcos, not Kyle, extraterritorial jurisdiction.

Ownership of more than 1,160 acres between Kyle and San Marcos is in question. CLICK IMAGE TO DOWNLOAD PDF

The confusion stems in part from what parties describe as a gentleman’s agreement in 2005 between former San Marcos City Manager Dan O’Leary and former Kyle City Manager Tom Mattis that Yarrington Road would serve as the dividing line between the two cities. That understanding was reiterated verbally as recently as last year when the LaSalle developers met with James Earp, then Kyle’s interim city manager, and former San Marcos Mayor Susan Narvaiz, Earp said. But the agreement was never put in writing and, with a nearly complete turnover in elected leaders and city staff in the intervening years, that informal compact is, from all appearances, meaningless in 2011.

“That’s the conversation we had and that’s the conversation that got repeated” over the years, Earp said. “It’s not really fair for me to say that an agreement was struck because there was never anything in writing. There was no council action – it doesn’t have the force of the councils endorsing anything – but the people in those meetings agreed that there needed to be a common boundary” and Yarrington Road would be that boundary.

Kyle Mayor Lucy Johnson and council member Russ Huebner met with San Marcos Mayor Daniel Guerrero and council member Fred Terry last week and Johnson came away with the impression that Guerrero would seek to have his council give up its claim to territory north of Yarrington Road. Kyle is arguing that having such a clear demarcation makes sense as both cities grow alongside the Interstate 35 corridor. Some officials have suggested that Kyle might be willing to cede valuable property it lays claim to along the Blanco River west of the interstate.

But when Guerrero off-handedly suggested the possibility on Tuesday, his council colleagues were not having any of it.

“What is it she’s offering?” council member Chris Jones said as laughter broke out in the chamber.

“Let them release their ETJ to us,” Kim Porterfield said.

For good measure, council member Ryan Thomason added, “If they weren’t dead broke they could buy it from us.”

Earp said the cities would have to redouble their effort to reach an agreement on the disputed territory. He said, “I know San Marcos and Kyle want to work together and they have a good working relationship and have been partners on many levels. We’re just going to have to sit down and talk it over.”

Municipal utility districts, by definition, operate almost as a separate city with their own authority to issue debt to build roads, water and sewer facilities and other infrastructure. MUDs also have taxing authority and typically levy higher property taxes than do most city governments. The city in whose ETJ the development lies would eventually be able to annex the property after the MUD’s debt is retired.

“The homeowners pay MUD taxes and maybe the taxes are little bit higher,” Schroeder said in San Marcos on Tuesday and, answering a question from Porterfield, said that means 10-15 cents per $100 more in property value than San Marcos’ tax rate of about 53 cents per $100. (In fact, he has told the Kyle council that the estimated tax rate for property in the MUD would fall in the 80 cent range).

“But the people who are going to live there are going to get to make that choice and they’re going to get something for it. They’re going to have facilities that they’re not going to have in a small community,” Schroeder said.

All this is taking place against the backdrop of a May 11 deadline to submit local bills for consideration in the Texas House. Caught between the two expansionist cities, Schroeder conceded to the San Marcos council on Tuesday that it was unlikely he would get lawmakers to approve construction. Instead he said he will pursue an alternative MUD process through the Texas Commission on Environmental Quality.

Said Schroeder, “I would love to have the chance at the Legislature but I’m realistic about where we are. I’m aware that we’re asking for something that probably is too short of a timeline.”

DOWNLOADS

» City of San Marcos memo on ETJ dispute [pdf] » LaSalle MUD concept plan – San Marcos version [pdf] » LaSalle MUD concept plan – Kyle version [pdf]