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Vista Properties-CS 890225COPPELL MUNICIPAL UTILITY DISTRICT NO. 1 8300 DOUGLAS, SUITE 800 DALLAS, TEXAS 75225 (214) 691-9448 Mr. Alan Ratliff City Manager ,,.o. Box CITY MAblAGI'-{'.R Coppell, TX 75019 Dear Mr. Ratliff: Following the District Board meeting on February 23, the District's Utility Committee, Engineer and I met with you and Messrs. Morton and Nelson to discuss the District's position regarding the basis on which water and sewer facilities can be provided to that portion of the Vista Ridge Project which has requested to be annexed by the District with the approval of the City. The following is a summary of those discussions. The District has carefully reviewed the Vista Ridge request both from the standpoint of facilities to serve that land but also with regard to the water and sewer facilities needed to serve all land within the City of Coppell north of Denton Creek. This has, of necessity, required reviewing the Magnolia Properties Project imalediately west of Vista Ridge in that 130 acres of that Project have already been annexed by the District and we have a pending request to annex the remaining 70 acres of that Project. In that the District has no facilities north of Denton Creek and in light of the fact that the District's trunk sewer interceptor line west of Samuel Blvd. cannot serve the area North of Denton Creek, this was a very involved and complicated matter. Both Vista Ridge and Mangolia have been most cooperative in providing a great d~al of engineering data and in demonstrating a willingness to work together and with the District to reach mutual agreement in this matter. After carefully reviewing and considering all of the various factors involved, the Board of Directors has informally indiated to Vista Ridge that if the City approves their request for annexation to the District, that the District would be favorable to an annexation subject to and conditioned upon the following terms and conditions: Vista Ridge will provide the funds necessary for the District to construct the trunk water and sewer lines, and the major water and sewer lines required to serve the 212 net developable acres in the Vista Ridge Project. Those facilities plus lines already in place that would be a part of the overall water and sewer system to serve that area are shown on the map which was left with you. The value of any FOR'G ,i !3 i> -2- useable existing major lines will be determined by independent appraisal. These trunk and major facilities constitute the only facilities which are eligible for reimbursement. Vista Ridge has agreed to waive any reimbursement for any drainage facilities. Based on the waiver of drainage reimbursement plus waiver of any reimbursement for any facilities other than those stated, Vista Ridge has requested the District to waive any annexation fee and the District is in agreement to do so. Vista Ridge must earn reimbursement of the costs of eligible facilities. When the assessed valuation of taxable property within this portion of Vista Ridge (excluding its present assessed valuation) is sufficient to produce ad valorem taxes equal to the annual debt service on District bonds issued to reimburse Vista Ridge, the District will make the reimbursement. Thus, the District is out no funds until such time as the Vista Ridge Project will support the debt required to serve that area. If Vista Ridge does not earnback the costs of eligible facilities, it forfeits any right to reimbursement as is the standard policy of the District for all Projects. Based on prior District policy regarding major, long-range developments (generally over 200 acres), the reimbursement period will be six (6) years. Trunk facilities designed and sized to serve areas other than Vista Ridge are 100% reimburseable; other facilities are 50% reimburseable. The District believes that the annexation of this area will greatly benefit the District and its taxpayers, and the City is respectfully urged to give its careful consideration to this matter. In order to fully understand the District's position in this matter, a few comments might be helpful to the City. These can be summarized as follows: 1. The District normally issues bonds and pays for the contruction of trunk facilities. The developer does not advance the money and is not required to earn reimbursement. Most of the facilities involved in this Project are trunk facilities. 2. The trunk facilities are designed to serve all area in the City north of Denton Creek. 3. The District's existing trunk sewer interceptor line is not of sufficient size west of Samuel Blvd. to serve any area north of Denton Creek; the combination of Vista Ridge and Magnolia is sufficient to feasibly build what in effect is the enlargement of the Distric's interceptor west of Samuel Blvd.; without Vista Ridge, it is not possible to serve Magnolia and the area west of it without the District selling bonds in advance of an increase in taxable values for the area -3- north of Denton Creek. Unless the City substantially participated in the cost of the trunk line, District taxes would have to be increased if this method was used. 4. Vista Ridge seeks to earn reimbursement for only the specified facilities; the total reimburseable amount is estimated to be about $662,000. For 212 net useable acres this is only about $3120 per acre. This is only about one- third of the costs for water, sewer and drainage facilities which the District has experienced in existing developments in the District. The reason for this is that only trunk and major facilities are included; the elimination of drainage and the usual water distribution and sewer collection lines substantially reduces the costs. Thus, the potential debt per acre is only a fraction of what is usually experienced, and yet the potential, estimated value of the development is much higher than usual due to nature of the development. What this means is that we estimate that development of less than 20% of Vista Ridge will produce sufficient assessed valuations to qualify for reimbursement. That means that the remaining 80% of the assessed valuations of that development will required no debt retirement. This is the lowest ratio the District has seen; existing developments in the District generally required development of 67%, or more, of each Project to qualify for reimbursement, leaving only about 33% of the assessed valuations free from debt repayment. 5. The concept allows for the cost of trunk facilities to be shared by Vista Ridge and Magnolia, thereby reducing the front-end costs for them and reducing the cost to the District if reimbursement is earned. Magnolia and Vista Ridge have agreed to share the cost of common facilities (based on the ratio of net developable acres). The terms and conditions prescribed would make the annexation of the Vista Ridge area in Coppell very favorable to the District and ~o its taxpayers. We understand that an article in a local newspaper reported that the annexation of the Vista Ridge area would increase District taxes; contrary to this rumor, the annexation could not result in an increase in taxes because Vista Ridge would have to stand on its own valuations just like every other area in the District has stood on their valuations. In fact, as indicated in paragraph 4 above, District taxes could only decline if Vista Ridge is annexed. We do not presume to tell the City what to do, of course, because there are undoubtedly many issues involved in the Vista Ridge annexation by the City that the District is not involved in. However, viewed strictly from the District's standpoint, it is a matter which could be of significant and substantial advantage to the District and its taxpayers. This information is being submitted for and on behalf of the Board of Directors of the District with the hope that it will be helpful to the City Council in its consideration of this important matter. If you have any questions, please feel free to call me at your convenience. PWP:bs cc: Board of Directors Yours very truly, District Counsel