Annexation Negotiating Terms Emerging
by NPT Staff
Posted on September 20, 2005
However, the PSB action Sept. 16 to require $894 per residential hookup merely sets a baseline, albeit a strong one, for what is to come next. There are basically three options: to do nothing, and allow developers to set up private utility districts just outside the city limits on land that is likely to eventually be annexed anyway; to come to an agreement with developers over the terms of a voluntary annexation; or to forcefully annex the areas.
Meanwhile, adding to the pressure, another MUD application has been filed to the city, this one from Cesar Viramontes, who owns land just north of Montana. A representative of his was at the PSB meeting to oppose hookup fees, which would be considerably more than for him than for other developers because he plans to develop commercial property, which uses larger hookups and would cost more than the $894 proposed for residential properties, his representative said.
The annexation issue is near the top of the city's priorities. Developers are itching to build on their land just outside the city limits of East El Paso, citing the current demand for housing, the projected need for new homes as thousands of new troops file into Fort Bliss, and their rights as property owners to make money from their holdings.
The City Council Sept. 13 voted against approving a request to allow a private water provider, called a Municipal Utility District, or MUD, to serve an East Side development just outside the city limits. The action merely delays the developers' ability to create the districts, as the developer can seek approval from the state.
The vote against the MUD was 5-3, with representatives Ann Morgan Lilly, Susannah Byrd, Presi Ortega, Steve Ortega and Beto O'Rourke voting against, and Melina Castro, Alejandro Lozano and Eddie Holguin voting for.
The action sets up the next round, during which the city and developers, led by Doug Schwartz of Southwest Land Development, have 120 days to negotiate terms for either service to the MUD or a voluntary annexation. If an agreement is not reached, Schwartz can then go to the state and seek approval for the MUD.
Schwartz has said he would prefer to be in the city limits, but did not want to pay the $2,000 the PSB was recommending. He gave the city a proposal for a development contract that if approved would lead to a voluntary annexation, but said after the PSB action that about halved the fee that he would present the city a new proposal based upon the fee.
"We haven't decided if we're accepting those fees yet but we might accept them depending on the other terms. We will not accept any additional fees," Schwartz said. The PSB fees are just one aspect, he said. "There will still be other issues. One of the council representatives mentioned certain planning items, paving ... it goes on and on what can happen."
The MUD issue puts some negotiating leverage on the developers' side as far as annexation is concerned. In 1999, when the city annexed just under four square miles on the East Side, the developers dropped their request to form a MUD and asked to be annexed instead. Schwartz has said that's a mistake he won't make again, because that gave the city the upper hand, and the developers ended up paying water and sewer connection fees, as well as fees to the city to offset the cost of municipal services.
This time around, the developers have not asked to be annexed, and will not drop their plan to create a utility district.
State law gives more power to the city when the developer initiates the request for annexation, as opposed to the city initiating the process. [Texas Local Government Code]
Some consider Schwartz's position a bluff, thinking they won't want to spend the millions necessary for the infrastructure for their MUD. Schwartz says private companies will do it for free and cost them nothing.
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Newspaper Tree story on the MUD applications [link]
Newspaper Tree story on the opposing sides of the annexation and MUD issue [link]
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