City Commission Explores Special Assessment Financing for Magnolia Hills Estates Addition No. 3
During Monday's City Commission Meeting, Commissioners discussed a request to grant authorization for City staff to prepare a Special Assessment Engineering Feasibility Report for Phase I of Magnolia Hills Estates Addition No. 3.
Background:
This request pertains to the utilization of special assessment financing for internal subdivision enhancements in Magnolia Hills Estates Addition No. 3, situated on the west side of Holmes Road north of Magnolia Road. This marks the initial phase of a two-step special assessment financing process. Approval of this request solely empowers staff to compile an engineering feasibility report and does not entail the creation of a benefit district.
The residential subdivision progression comprises various stages:
- Zoning
- Preliminary and final platting
- Infrastructure design plans preparation
- City Commission approval for special assessment financing and feasibility report preparation (Step 1)
- City Commission endorsement of a benefit district petition and authorization resolution (Step 2)
- Construction of streets and utility lines
In 2016, the City Commission introduced an additional step for subdivisions with frontage on perimeter streets not meeting City standards. Developers may either upgrade the road as part of their project or negotiate a development agreement with the City. The Magnolia Hills Estates Addition No. 3 developers have indicated financial constraints in upgrading Holmes Road to City standards.
Holmes Road, a gravel road falling short of City standards, requires significant improvements. The developers, unable to bear the entire cost, sought a Development Agreement with the City in 2019. A benefit district was formed, with Magnolia Hills, Inc. responsible for 31.4% of the $2M projected cost for Holmes Road improvements.
The Planning Commission recently greenlit the final plat for Magnolia Hills Estates Addition No. 3, comprising 112 lots. Conditions include responsibility for public improvements, underground utilities, sidewalks, and coordination for mailbox locations.
The City Commission, on January 9, 2023, approved the rezoning of the area extending east to Holmes Road, changing it from A-1 (Agricultural) to R-1 and R-2. The Mayor was authorized to sign the proposed final plat of Magnolia Hills Estates Addition No. 3.
Previously, the City Commission had approved Resolutions of Advisability and Authorization for Phase I of Magnolia Hills Estates Addition No. 2 and Phase II, along with other developments.
Special Assessment Review Process:
The City follows a two-step review process for special assessment financing. The current petition, submitted by Magnolia Hills, Inc., aims to secure approval for Phase I of Magnolia Hills Estates Addition No. 3, involving 23 lots.
Review Factors:
Several factors are considered in evaluating improvement district projects, including capital costs, market prices of lots, projected sales rates, and the ratio of special assessments to lot prices.
Debt/Financial Management Considerations:
The proposed development would increase the City's total net debt by approximately 1%, staying within the 36% debt limit.
Available Residential Building Lots:
The City has several subdivisions with vacant lots, and there are currently 29 vacant buildable lots on the market.
Fiscal Note:
Special assessment financing involves municipal bonds issuance, with the developer required to provide financial security. Historical data indicates successful recovery of assessments without major delinquencies.
The City Commission motioned to authorize staff for the engineering feasibility report and Resolution of Advisability for Phase I of Magnolia Hills Estates Addition No. 3, securing a 4-0 approval with Mayor Hoppock recusing himself.