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City of Austin Annexation of River Place MUD
In December 2008, the City of Austin (City) issued a notice of intent to annex River Place MUD (the District). The City is required by statute to provide a three-year notice of proposed annexation to the prospective Municipal Utility District (MUD). Under this scenario the District could have been fully annexed into the City as early as January 2012. The District employed a commonly used method for postponing full purpose annexation by negotiating what is commonly known as a Strategic Partnership Agreement (the SPA). The SPA delays the annexation process and establishes terms and conditions for the District to convert from a MUD to a Limited District. The SPA was approved by both the District and the City on August 27, 2009 and became effective September 7, 2009.
Under the terms of SPA, the City assumed responsibility for all of the water and wastewater assets owned and operated by the District on October 1, 2014. This is when the City began billing the residents of River Place utilizing the City current water and wastewater rates. As you know, there is a major difference between the rate structure of the District and the City. The biggest difference in the rate structure (at least as it pertains to water) is that the District used a three tiered rate structure whereas the City uses a multi-tiered structure. Additionally, the District’s rates were maintained at a relatively lesser amount when compared to other utilities in the area including the City. There have been numerous complaints from residents of the District indicating that they would prefer to once again receive water and wastewater service from the District because the City’s water and wastewater rates have increased their bill 2, 3 and even as high as 4 times from what they were paying. However, the SPA does not allow for this and the City will continue to own and operate the water and wastewater facilities. They are and will continue to be responsible for the billing of the water and wastewater services.
Our next trigger date is December 15, 2017. This is the date that the City will complete the annexation process. There are significant changes that will take place after this date. At that time the District will automatically convert from a Municipal Utility District (MUD) to a Limited District. The final approval of the Limited District is subject to a vote by the residents of the Limited District (the same people as the MUD residents). This vote will take place during the General Election in May 2018. A simple majority of the votes cast by the District residents is all that is needed to approve the Limited District.
Some residents have inquired as to the differences with creating the Limited District versus allowing the City to assume the functions of the Limited District. There are four major differences that the residents of the District will experience if the Limited District is approved. First, the Limited District would be responsible for the operation and maintenance of the District’s parks (Sun Tree Park and the Woodlands Park) rather than the City. If the City assumed maintenance responsibilities for the parks, the City has said it would maintain our parks at the same level as other parks within the City’s park system. If the Limited District assumes responsibility of the parks, they will continue to be maintained at the current level.
Second, the Limited District will own and maintain the Nature Trail. If the City takes over this responsibility, City staff has informed the District that it would probably shut down the Nature Trail system because it could not afford to maintain them. Should the Limited District maintain the trail system it will be at a level similar to the trails’ current maintenance. Third, the District determined that the Limited District would continue to provide contracted solid waste services (trash hauling and recycling services) for the residents of the Limited District. If the Limited District is not approved this service will be provided by the City. At present, this would mean an increase in cost to the residents over what the District’s contractor currently charges the District.
Finally, in order to provide the services mentioned above, the Limited District would be authorized to levy an ad valorem tax to all residents of the Limited District. It is anticipated that this tax would be similar to the current M&O tax that each resident pays to the District. Approval of the Limited District would mean that the Limited District would levy a tax in order to maintain the parks and trails at the same level as they are now, which many residents have stated is a benefit to living in River Place.
Should the residents not approve the Limited District in May 2018, the Limited District will automatically be dissolved within sixty days and the services that were provided by the Limited District will be assumed by the City. Any unused Limited District funds at the time of dissolution will be transferred to the City of Austin.
Information regarding the annexation of River Place MUD and the formation of a Limited District