Citizen group opposes apartment complex 1

4/19/12 EDITOR’S NOTE: Developer Bonner Carrington’s president, Stuart Shaw, has verbally informed City of Dripping Springs Planner Jon Thompson that he is willing to pay the full amount of taxes that would be due for the new Cypress Creek at Ledge Stone apartment complex. A controversy has been brewing over the proposed complex since February. The following story was written just before this afternoon’s potentially game-changing update. An updated story is forthcoming next week, when the developer is expected to submit a proposed development agreement to the City, which will trigger a civic review to include at least one town hall meeting for public input.

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The bell appears to have been rung publicly this week to signal the start of Round One in what has the potential to be a prize fight between multi-million dollar development company, Bonner Carrington, and a growing group of concerned Dripping Springs residents.

The citizens group opposed to the Cypress Creek at Ledge Stone apartment complex proposed by Bonner Carrington, is largely comprised of residents from the Ledgestone, Belterra, HighPointe, and Polo Club neighborhoods. The group is spending its time, money, and energy to rally more widespread support for their opposition to the 244-unit complex slated for Four Star Boulevard, between Trudy’s Four Star Restaurant and the Ledgestone subdivision on Highway 290 West.

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“We are not opposed to growth,” said opposition organizer Teresa Scott, a local realtor and resident of Ledge Stone.

“Growth is here and more is coming. Affordable housing? Yes. Multi-family housing? Yes. But not the kind with restrictions that will also exclude a lot of people out here,” added Scott. “And definitely not the kind that doesn’t provide an additional guaranteed tax base to support the infrastructure needed for the increased growth.”

Scott says the developer’s business model of building income-restricted complexes with federal funding that relies on tax credits will amount to tax-free housing that is not restriction-free. In other words, the developer is looking to be exempt from paying local taxes annually on a multi-million dollar project that would also add students to an already budget-strapped school district, while putting in place a “high quality, multi-family housing community” that will also be off limits to the majority of people with children already in DSISD schools, should they find themselves ever needing more affordable housing within the district.

The first punch

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In a move clearly calculated to land the first blow this week, this mailer went out to Dripping Springs residents from the developer, who has met more than once with the opposition group leadership and has now targeted responses to their arguments directly to residents in the vicinity of the proposed project. The mailer invites residents  to “get the facts and more information about the proposed apartment home community” online at: CypressCreekLedgeStone.com

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The citizens group took a swing the next day by manning residential intersections in communities like HighPointe, dressed in yellow tee-shirts to hand out their “Tax Exemptions Hurt Dripping Springs” postcards. The cards promote a petition being circulated by the group, and points residents to their blog for more information on their position at: DSOurBackyardOurFuture.blogspot.com

The first round of sparring will end this week on Thursday night, at the DSISD school board meeting. The opposition group is on the agenda to officially address concerns to the school board and has put out a call to the community to attend the meeting and voice concerns about the apartment complex project. The meeting starts at 6:00pm at the DSISD administration board room.

The development company, Bonner Carrington, presented its position on the proposed project at last month’s school board meeting on March 22nd. At that meeting, DSISD superintendent Bruce Gearing publicly shared information he has also gathered on his own related to the Cypress Creek Ledgestone project.

“Our job is to stay informed,” said Superintendent Gearing. “We’re part of the political process, no doubt, so there’s a lot of information-finding going on.”

Several school board members spent time questioning the developer at the March meeting about the project as it relates to the school district. The DSISD does not have an official standing in the decision-making processes on the project, however, the board’s ability to influence those processes are considerable due to the potential, perceived impact the project may have on the district budget, its students, and families.

Politics and Public Input

As far as the City of Dripping Springs is concerned, official public input is not yet on the table.

“The developer has not yet submitted a development agreement to the City,” said Jon Thompson, Dripping Springs City Planner. Thompson said that once the developer submits the agreement, the City will get busy vetting the project politically and publicly.

“We will have a Town Hall meeting about this project once the paperwork is in hand and we have had some time to work through it enough to present for public comments and input,” Thompson said.

Despite the lack of paperwork submitted so far, Bonner Carrington president Stuart Shaw has personally been making the rounds in Dripping Springs over the past several months, seeking support on several civic fronts before initiating any processes that might bring public opinion raining down on his parade.

Shaw is often accompanied by Jim Shaw, executive director of Capital Area Housing Finance Corporation, a government funding agency created in 1981 to “assist in meeting the housing needs of low and moderate income families in Bastrop, Blanco, Burnet, Caldwell, Fayette, Hays, Lee, Llano and Williansom Counties, as well as the City of San Marcos.” (source:www.cahfc.org) The two men are not related but have spent a lot of time together visiting with city and county officials, as well as DSISD superintendent Bruce Gearing, and attending school board meetings to present their case for the Cypress Creek at Ledgestone project. This is also not their first rodeo together. Neither has returned calls to comment for this story.

In a letter to the “Citizens of Hays County and Residents of the area near the proposed Cypress Creek at Ledge Stone Apartment Homes,” dated March 5th, Hays County Precinct 4 Commissioner Ray Whisenant stated that he was approached several months prior by both Shaws, who “explained they would either need to be tax exempt or operate under an agreement to provided some form of reduced ad valorem taxes.” Commissioner Whisenant also described a meeting in February at Pioneer Bank, attended by “representatives from the City Council, DSISD, Hays County E.S.D. #1 and E.S.D. #6” along with both MM Shaw and local realtor Mike Schoenfeldt, at which information was given about the project along with the opportunity to ask questions. Whisenant’s letter concludes with his recommendation that the project be presented to the public.

Why Dripping Springs?

City Planner Jon Thompson is quick to point out that the Cypress Creek at LedgeStone proposed apartments project does fulfill a stated need for growth and economic development defined in the 2010 Comprehensive Plan developed by the City of Dripping Springs. That need is essentially identified as affordable multi-family and worker housing, basically non-existent in Dripping Springs.

The 17-acre Cypress Creek apartment complex would offer 1-4 bedroom units at rents between $700-$1300 per month for “moderate income” earners, which would cap somewhere between $32,000-$53,000, although the developer’s mailer states an income level of up to $75,900. The income guidelines are indexed to Austin Area Median Income levels, which are relatively high.

The developer and supporters of the project contend that the moderate income level of housing is critical not only for further economic development (to house workers for employers like Home Depot and HEB) but also for other segments of the local population, like single parents and graduating high school students who go directly into the work force at entry level jobs and want to stay in the area.

Teresa Scott contends that many segments of the population described above may not be eligible to live in the Bonner Carrington project due to income restrictions, especially if there are two or more income-earners in the household. Scott also points out that several affordable multi-family complexes already exist within a 10-mile radius of Belterra, citing complexes like Fox Hill, the Vineyard, Southwest Trails, and Monterrey Ranch as all offering apartment rentals within the same price range. According to Scott, the nearby complexes paid their full share of taxes in 2011. None of the complexes is located in the Dripping Springs city limits or the city’s Extra Territorial Jurisdiction (ETJ).

Thompson says Bonner Carrington’s proposed Cypress Creek at Ledge Stone complex is in the City of Dripping Springs’ ETJ, giving the City “limited purpose” authority over the project. The key relevance of the project’s location within the ETJ is that the City does not actually have the authority to deny the development unless unacceptable variances are requested in the development agreement. For example, according to Thompson, when Belterra was on the drawing board, specific variances for development of the formerly rural tract of land were sought on things like lot sizes and drainage requirements. The variances were negotiated and approved but Thompson says the City would have been able to deny the project based on the variance requests had they not been acceptable.

Pros and Cons

And so it goes, for and against, arguments on both sides backed up by a selective array of facts and in the context of almost unfathomable complexities around school budgets and funding, city limits and extra territorial jurisdiction, federal tax exemptions and related income requirements. It’s a lot of information for all sides involved to ingest, understand, communicate, and then make a decision for action – let alone the public, who will be the most likely affected by the outcome.

Both sides have developed ready, reasonable responses to all the arguments. When the resistance group argues that the DSISD cannot afford to educate the students in the district now, let alone an influx of new students from a 244-unit complex with no tax requirements, others point out that the district will receive $6,500 per student from the feds (that is, provided that each of those students attends school every day of the year, as the $6,500 WADA is based on attendance). And yet others say that the State of Texas estimates an average cost of $11,500 per student per year for their education, which would eliminate the $6,500 per head “benefit” of the added students.

When the group opposed to the Cypress Creek project complains about a perceived rise in crime rates or registered sex offenders, Bonner Carrington is quick to point out that any increase in population will bring increases in these areas. The developer also points out that registered sex offenders already live in the single-family residential neighborhoods around the proposed apartment complex site – where a homeowner could not refuse to sell to a registered offender – and adds that the Cypress Creek leasing office, which will conduct criminal background checks on all resident applicants, is able to refuse a lease to an applicant with that type of record.

On the perception that the new apartment complex’s location will cause traffic snarls and dangers where Four Star Boulevard intersects Highway 290 West, City Planner Jon Thompson observes that the complex could actually be the catalyst for quicker solutions for the traffic problems that already exist, like the installation of a traffic light from TxDOT.

The current group of concerned citizens has also put forward the notion that there will be unsupervised kids running amok in an apartment complex like the one proposed by Stuart Shaw’s company. But Thompson says that Shaw has indicated that the apartment complex’s “Apartment Life” plan includes the installment of a local youth pastor and his wife in an on-site apartment to develop and manage programs and initiatives to engage kids living in the complex, especially any who may seem to need additional support or supervision.

PILOT: Payment in lieu of taxes

Clearly, at the core of the developer’s vision and the opposition’s position is the tax question – to pay, or not to pay? To his credit, Stuart Shaw has definitely been paying attention to the push back and making time to hear residentes’ concerns.

Shaw has met with Teresa Scott and other leaders of the group more than once, and invited them to join him and several civic leaders at an Advisory Group meeting held earlier this week at Flores Restaurant. Attending the meeting in addition to Shaw and his team, and Scott and two of her co-leaders, were the City Planner, representatives from E.S.D. #1 and E.S.D. #6, and resident representatives from HighPointe, Belterra, and the Polo Club.

Early on in the process of promoting his project locally, the developer indicated that he would be willing to set up a privately held PILOT: Payment in Lieu of Taxes. According to City Planner Jon Thompson, Shaw clarified his plan to set-up the PILOT at the Tuesday meeting, and says payments have been worked out to pay what would have gone to taxes.

“There would be three tiers over the next few years with the goal of adding up to the estimated $140,000 per year in taxes that would be paid on a complex valued at arond $7M,” Thompson said. “The developer says he would pay $40,000 with the mortgage and MUD taxes (which are not able to be exempted), once the complex is built (presumably 2014). Another $40,000 would be paid once there is ‘cash flow’ through leasing. A third tier payment of $60,000 would be added annually, once the complex starts to show a profit (currently projected as 2016).”

Thompson says he still has a lot of questions about valuations, indexing to tax rates, payment distribution processes, and the oversight to implement such a plan, which would require City approval. If funding for the project goes through this summer, construction is estimated to begin March 2013, with completion 12-18 months later.

In terms of tax dollars vs. PILOT dollars, Thompson points out that if true tax dollars were collected for the Cypress Creek complex, much of it would potentially leave the district through the state’s “Robin Hood” redistribution of education funds scheme, and none of it could be redirected to any other local taxing entitiy. But with PILOT monies, which are collected and administered privately through a trustee, the annual amount collected is able to be completely directed to the local taxing authorities, which could also independently decide to assign all of the money to the school district, or to one of the Emergency Services or Law Enforcement entities that also need to consider the costs of beefing up resources to service a large, multi-family housing complex.

Teresa Scott says she left the Advisory Group meeting on Tuesday, feeling like she and her team gained a better understanding of Shaw’s proposed PILOT program, which she had previously been trying to compare to PILOT programs he has implemented for other projects.

“At the meeting, he stated that this PILOT will be completely different than any others that he’s done,” Scott said, but added that she’s “not comfortable going on (Shaw’s) word alone.”

“He’s committing to numbers that he hasn’t paid before on a regular basis on his other projects. It was hard to listen to this as a positive without also questioning everything.”

A Bonner Carrington assistant, who also attended the Advisory Group meeting, remarked that the developer team was “cautiously optimistic” following the meeting.  Stuart Shaw has good reason for caution, despite any favorable signs of progress. He has tasted failure before when his Cypress Creek project was struck down in the court of public opinion in Kyle:

http://haysfreepress.com/2011/03/02/council-tables-cypress-creek/

It is not known when Shaw’s team will submit a development agreement to the City of Dripping Springs, which would trigger at least one public town hall forum, and possibly require the developer to submit a local economic impact study. But for Stuart Shaw and Bonner Carrington, the round with TKO potential is the TDHCA (Texas Department of Housing and Community Affairs) hearing tentatively scheduled for June 14th in Austin. That’s where the fate of funding for the project will be decided.

Teresa Scott and company are also arming themselves for that hearing and plan to solicit public attendance and support from interested and concerned residents of Dripping Springs. Scott says the office of state representative Jason Isaac has been helpful to the group in understanding the process and how to effectively interact with the bureaucracy of a state funding agency.

David and Goliath

More than merely a boxing match, the growing Cypress Creek at Ledge Stone apartment complex controversy might be more aptly likened to a coming showdown between a country David and a city Goliath. The developer is well- funded, fully staffed, and experienced at this game. But like young David, the opposition is passionate and determined, and has been busy gathering stones to load into their still-a-long-shot slingshot.

Whether the conflict analogy is of pugilistic or biblical proportions, the next phase starts this weekend in the local public forum of Founder’s Day. Watch for the yellow-shirted neighbors passing out yellow cards along the Midway, and carrying clipboards up and down Mercer Street with pens and petitions to sign.

Teresa Scott’s opposition group and Stuart Shaw’s Bonner Carrington development team do have one very clear goal in common at this point; they are both asking Dripping Springs residents to get informed, stay informed, and to decide for themselves about whether to embrace or reject the proposed Cypress Creek at Ledge Stone apartment complex.

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