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Lajitas proposal draws a crowd

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Posted: Thursday, February 3, 2011 9:11 am

A standing-room-only crowd learned Monday morning about an entity that Lajitas Capital Partners wants to create in southern Brewster County - and the crowd mainly wanted to know how it would impact their property and/or taxes.

Lawyers representing the Lajitas Resort owners explained to Brewster County Commissioners Court and the audience, made up primarily of numerous Terlingua- and Lajitas-area property owners, why they want legislation to create the Lajitas Municipal Utility District.

A similar bill two years ago died before it could be voted on, and numerous parties in Brewster County strongly opposed the measure. Among complaints and concerns were what kinds of taxes the Municipal Utility District (commonly called a MUD) could impose, how they would affect the county's hotel/motel tax - and the Brewster County Tourism Council, which depends on that tax - and powers of eminent domain.

This time, the lawyers for Lajitas Capital Partners said they want to start off on the right foot by getting the Commissioners' Court and citizens' blessings. The latter wasn't so easy, gauging by the questions tossed at the lawyers by some South County residents, who mainly complained about not learning about the MUD issue until just a few days ago. The lawyers conceded they could have done a better PR job.

The attorneys - Ron Freeman of Austin and Ron Holmes of Dallas - explained to the court and audience just what a MUD is and does: Mainly, it is a governmental entity that can issue bonds to pay for infrastructure, assess taxes and, in some cases, seize property by eminent domain.

Freeman emphasized that the Lajitas MUD would include only the 19,000 to 25,000 acres owned by Lajitas Capital Partners, and area residents' property would be included in the district only if the residents petitioned for annexation and the MUD's board of directors approved the annexation.

Primarily, the lawyers said, the MUD would be able to issue bonds to pay for infrastructure - water, sewer, power, roads - in and around Lajitas Resort. But it could issue bonds only after gaining enough property values to back the bonds, and that means selling more lots and building more homes.

Some property owners near the resort - but not part of Lajitas Capital Partners property - voiced concerns about being surrounded by or annexed by the MUD. But the attorneys said they wouldn't be affected and couldn't be annexed unless they wanted to be.

Commissioners and some audience members wanted to know why Lajitas Resort owners wanted to create a MUD.

Holmes, the Dallas lawyer and an expert on MUDs, said that Texas has more than 1,000 special utility districts, the vast majority of which were created to help developers put in infrastructure where cities and counties couldn't afford to. Bottom line, he said, a MUD helps get financing (issuing bonds) so the developer can recoup some of his/her investment in a development's infrastructure. As it stands now, infrastructure makes up only about 500 acres of the Lajitas Capital Partners' estimated 20,000 acres, and that's occupied by the golf resort.

The lawyers were questioned about the impact of the MUD being a taxing authority and what kinds of taxes it could impose.

Freeman said bonds would be the primary source of paying for infrastructure, while a property tax would be levied to pay off the bonds. As the legislation is written, the MUD also could authorize sales and hotel/motel taxes, but they would be added to current taxes, not replace them. Commissioners were still concerned over the tax issue, and the Lajitas property lawyers said they could forgo sales and hotel/motel taxes if the Commissioners Court wanted them to.

Commissioner Kathy Killingsworth and County Judge Val Beard questioned some language in the proposed legislation, but then all parties agreed that the county's attorneys would work with the Lajitas lawyers to rework the language and bring a new version back to Commissioners Court for review.

Beard also wanted to know what responsibility the county would have for maintaining roads within the resort/MUD boundaries. But the Lajitas attorneys said that the utility district would be "a very good tool" to maintain the roads.

The county judge also asked Freeman and Holmes if they had talked with members of the Brewster County Groundwater Conservation District board of directors about water resources, data and monitoring in the Lajitas Resort area. The lawyers conceded that they hadn't talked with the GCD, and Beard suggested they do that immediately.

One issue that drew several questions from the audience and commissioners concerned the MUD board of directors.

Killingsworth wanted to know who could/would vote for directors, and the lawyers said only registered landowners within the district. They also told the court that the initial board would be made up of five people appointed by the Legislature, then that interim board would immediately hold an election. The attorneys also emphasized that the board cannot be controlled by Lajitas Capital Partners.

One Lajitas-area resident asked the attorneys what would happen if this venture and/or the MUD proposal fails.

Freeman responded, "If the Municipal Utility District is up and running, that means state regulators have decided there is enough property value available to meet obligations. For instance, if a developer goes bankrupt, the utility doesn't go broke. ... What you need to ask is, ‘What would happen if the resort went bankrupt and you didn't have the municipal utility district.'"

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