Councilman Rich Refutes Mayor’s Claim

March 20th, 2017 by

This is an open letter from Aubrey councilman Chris Rich, place 2.

Why I got Involved

When the City entered into the Development Agreement for Jackson Ridge a few years ago, the city’s goal was to expand its water system into the ETJ.  At the time, that was a solid plan that had no known issues in carrying it out.  The developer petitioned to de-certify from Mustang’s CCN and then requested Aubrey to be the water provider.  So, the city doesn’t currently hold the CCN, but the city has the ability now to be the CCN holder in Jackson Ridge.  As other developments came online, the plan was to follow the same model and ultimately, Aubrey would have been the water provider to all of its ETJ.

    • Since the Jackson Ridge de-certification, MSUD has acquired federal debt, not allowing it to decertify other areas that it holds the CCN for.  While there is still a way to accomplish this process, it involves litigation.  Aubrey taxpayer dollars shouldn’t go to pay for this litigation and Aubrey can’t force the property owner into this expense either.
    • As a result of this change in the situation on the ground, the next two large developments, Sandbrock and Regatta, both decided to go with Mustang as their water provider.  
    • This locked Jackson Ridge as an island out in the far southeast corner of the ETJ.  
  • So as an elected official for the City of Aubrey, I had to look at the situation and determine if it still made sense for Aubrey to try still and be the water provider for this one development.  I quickly found that I was alone in figuring this out.  The Mayor and some of City staff were not interested in even entertaining the idea that the best option might be for Mustang to be the water provider because it would give up water revenue for “hundreds” of years into the future.
  • Shortly after that, I learned that Aubrey being the water provider in the ETJ was such a priority that the Mayor sent a letter to DR Horton, the builder in Regatta, saying that if they weren’t interested in obtaining city services, then we (the city) wish them the best of luck in the ETJ.  So it was decided, without City Council input whatsoever, that the city would rather collect no money at all from all of the homes being built in this development if they could not receive water revenue.  This is a loss of almost a hundred million dollars in tax revenue.  It has been repetitively stated that tax revenue isn’t enough to provide police, fire, and library services to the residents of this development.  But with them being in the ETJ, the city would still most likely be the provider of these services.  The staff has since been directed by council to bring back what this development coming into the city would look like financially.  Those discussions with DR Horton are still ongoing.

Mayor’s Statements

The Mayor Claims that the City Financial Advisor and consultants can’t render an opinion on the negotiation when they have been excluded from the meetings

  • Financial Advisor – Was brought in early in the financial talks.  FA has supplied 6 financial analysis sheets over 4 months, most recent being 12/20/16.  When recently asked if he were going to provide any further analysis, he said: “No, I am not preparing a new analysis for the Jackson Ridge Project or an analysis for Winn Ridge.”  Thus proving, there have been no changes to the numbers since December.  All initial conversations with the Financial Advisor were over the phone, where he expressed that there could be a feasible way to look at this scenario that made sense for the city.  When asked to attend a meeting with all parties involved, he was directed by the Mayor NOT to attend.  Through discussions with the City Attorney, he was later allowed to attend but only attended via phone conference.  The Mayor and City Attorney attended in person.  The Financial Advisor’s trustworthiness came into question when he started adding numbers on top of his original numbers to make his scenario appear better.  I also personally heard him say to the Mayor, “Janet, my allegiance is to you, I will help you in whatever you need.”
  • Legal Bond Counsel – Has been in attendance since day 1
  • PID Administrator – Has been in attendance since day 1
  • City Attorney – Was appointed by City Council to be a part of the subcommittee and after attending one meeting stated he saw no reason for him to attend future meetings.  He has been sent all documents for legal review.
  • Finance Director –  Was appointed to the subcommittee, but when asked a question at Council Meeting on 2/21, stated that he rather not be involved.
  • Public Works Director – Is part of the subcommittee and I had early discussions with him for his opinion on the matter, and he has had multiple conversations with the Mustang SUD Board Director.
  • City Administrator – I had a conversation with him early on about his opinion on the matter.  Has been there for administrative support when needed, but really not included due to divisive position it puts him in when the Mayor and Council are asking opposite things from him.  

Mayor states that “The City of Aubrey is a business. The three most important things in any business are Revenue Stream, Revenue Stream, Revenue Stream.”

  • The City, while at it’s best operates like a business, is not a for-profit business.  We are not in the business of making money.  But with every possible revenue dollar coming in, we also have to look at the costs and risks associated with it.
  • I’ve have been accused of working to build a developer and Utility District when I should be building a City.  This Council’s job is not to build a city.  Its job is to provide a clear, no-nonsense, understandable path for the citizens of Aubrey to build the city they want and assist them in accomplishing that through the permit, platting process and not over-regulating through ordinances such as the Subdivision Ordinance.
  • My priorities are Personal Property Rights, Government Transparency, and Financial Accountability.  Every taxpayer dollar being expended should be scrutinized.  

Mayor states that one-time fees paid by the builder are a hidden tax on the home buyer and questions the legality of these fees.

  • There is a $1500 per home fee and a $2637 “roadway fee.”
  • These fees total $4137 per home.
  • If the City, the Developer, and the builder contractually agree to these fees, then there is no question of their legality.
  • No matter what fee the builder pays to the city, they can only sell a home for it’s appraised value and/or fair-market-value.  Builder paid fees are not considered.  
  • This $4137 per home fee is being questioned on what it passes to the home buyer, but the $8000 Roadway Impact Fee per home that the City would rather collect is not being questioned.  
  • The impact fee is limited to being used on roadway projects inside Zone 2 (Jackson Ridge, which will have no roads to use it on since all roads are already included in the project)
  • The one-time fees have no restrictions on use and would be in the general fund so they can be used on whatever the City deems a priority like roads in the main part of town or on failing sewer systems.

Water Rates will increase

  • The City had a water rate study done, where they adopted a rate plan that planned for aggressive water rate payer growth.  The planned rate increases were based on Jackson Ridge, Sandbrock, and Regatta all being Aubrey water rate payers.  The water rate consultant admitted that since Sandbrock and Regatta had already decided to not be Aubrey ratepayers, the whole study needed to be redone since Jackson Ridge only made up about 20 percent of the planned ratepayers.  The rate study determined what rate increases would be necessary to cover the $5 Million bond package for the addition of a water tower inside the main part of the City.  None of the ratepayers in any of these developments would have ever seen a drop of water from this water tower.  Since the Council used ratepayers that didn’t exist at the time and ultimately didn’t become ratepayers, it’s a good thing that the first 5 years of payments on the bonds were included in the bond.  This allows for some leveling out and reductions in the inevitable increases that will be coming due to actions taken in the past.  Any other growth or addition of ratepayers in the vicinity of our current system would alleviate this increase.  Plus, the City could plan to take some of the extra revenue gained from the proposed deal and pay down some of the bond in order to reduce or eliminate future rate increases.  

There will be upward pressure on our property tax rates.

  • Under either scenario, the city would have to provide police, fire, and library services, because the development is inside the city limits.  But with the new option, there’s more money available to do this with.  

Council Member assigned to subcommittee only attended one of the three meetings in the last four months.  

  • The subcommittee was created at the end of December, so it’s only a little over 2 months old.
  • I did attend every meeting that I could work around my normal work schedule.  While the City is a high priority for me, my job that supports my family is a higher priority.  
  • I also attended numerous meetings prior to the creation of the subcommittee with City Staff, City Consultants, The Developer, Mustang, City Bond Counsel, and City PID administrator.
  • Mayor stated that I attended two private meetings with the developer.
    • I met with the developer privately one time as did all council members that did their due diligence.  All other meetings with the developer, I was accompanied by Bond Counsel and/or PID administrator.  
    • Prior to my involvement in this matter, the Mayor attended numerous meetings with the developer, both alone and with other City Staff and consultants.  The developer and MSUD made requests to the Mayor for the City Council to consider action related to possible new risks to the City.  Council was never briefed on these discussions or requests.  

Summary

  • The City’s Financial Advisor believes that, with Aubrey staying the water provider in Jackson Ridge, the City will Net $49,222,504 over the 30 years, based on an average water bill of $140 a month and that the City could win a court battle for $11,160,000 in Roadway Impact Fees, that could cost between $500,000 and $1,000,000 in legal fees for litigation, when there was never an agreement in place to pay them.
    • Removing the Impact Fees results in a Net Revenue of $38,062,504.  
    • Using the water rate of $96, which is more inline with what Aubrey rate payers actually pay, results in a Net Revenue of $29,984,574.
  • Based on my research, with input from all parties involved, that if the City were to turn the CCN in Jackson Ridge back over to Mustang SUD, the City will Net $53,486,957 over 30 years.  This is based on an average water bill of $96 and it puts the Upper Trinity Obligation risk on Mustang and not the citizens of Aubrey.  This also eliminates any litigation risk involved with the Roadway Impact Fees.  
  • Looking at both scenarios with the least amount of risk, the proposed deal could net the City about $23.5 Million over the current deal.

 

Map depicts how Jackson Ridge is an island and it’s water/sewer infrastructure would be a completely separate system from the main part of Aubrey.