Saturday, November 03, 2007

Another diversion of tax dollars with 'bait and switch' tactics.

New financing plan stalls needed road work

Private developers haven't come through as hoped

November 03, 2007

By Marty Toohey
Austin American-Statesman
Copyright 2007

Construction of three stretches of major east-west roads approved by Travis County voters in a 2005 bond referendum has stalled, mainly because Travis County tried a complicated new way of paying for them.

The county expected developers and landowners to pay half the cost of building the roads. But the private interests never came through. As a result, plans to extend Wells Branch Parkway near Pflugerville and Howard Lane in northeastern Travis County have bogged down. Most of the $7.4 million approved for the roads has been diverted to another project.

In addition, plans to build a section of Slaughter Lane in South Austin have been held up because they hinge on money from numerous landowners.

The county's top officials say the roads are needed, particularly the sections of Howard Lane and Wells Branch Parkway. The county is going to ask for federal money to finish the projects, but most county officials say they don't expect much. That would probably leave the county with three choices:

• It could leave a decision on Howard Lane and Wells Branch Parkway until the next bond referendum, which will probably take place in 2009 or 2010.

• It could set aside millions more for the projects. That would require a type of bond sale that voters would not need to approve. Because of rising construction costs, that could cost as much as twice the amount that voters approved — and would still hinge on contributions from the private sector.

If private interests do not agree to pitch in, the county could pay their share as well — a step that could triple the price tag because of rising construction costs, but one that some county officials say they must consider.

"While it's never pretty to ask voters for more money to finish a project," said County Commissioner Sarah Eckhardt, whose precinct includes Wells Branch Parkway, "I think the reasons for the change in numbers are exceedingly reasonable."

Sal Costello, a critic of Central Texas road planning, disagreed. He said that the 2005 ballot language led voters to believe that those roads were going to be built with developer help and that voters will be less likely to support future bond projects "because of this kind of bait and switch."

The Wells Branch Parkway and Howard Lane extensions were among the bond package's seven "public-private partnerships," in which the cost would be split about 50-50 between the county and private interests who stood to benefit from the roads being built.

The partnerships, which are done around the country, are a mechanism intended to save taxpayer money. But they add a level of complication and uncertainty: Developers usually do not make ironclad agreements before a bond vote for fear of weighing down their projects with debt for roads that the government may not actually build.

Four of the 2005 projects were completed without serious snags. But the deadline for striking a deal for the Wells Branch Parkway and Howard Lane sections passed almost a year ago. And a piece of the Slaughter Lane project has yet to move forward.

The county anticipated that possibility and included a backup plan in the bond proposition to shunt unspent bond money into extending Braker Lane's eastern edge. The money has been diverted to that project but has not yet been spent.

While that was always the plan, neither the ballot language nor educational pamphlets made that clear to voters.

They also did not explain what would happen if expected private-sector money did not materialize.

The county wanted developer Sari Khayyal to pay for half of the Wells Branch Parkway section. Khayyal said the deal fell apart because of miscommunication from the start. The county wanted to run the four-lane road through the middle of his 922-home Fossil Creek subdivision, on which construction has not yet begun.

Khayyal said the county used a timeline that was faster than what he had agreed to. He also said the county badly underestimated the cost of expanding a portion of the road to the west as part of a separate venture. That left Khayyal worried that his property would have only a small, two-lane road to the west and a dead end to the east.

The county said the two-lane road was a short-term solution that would eventually be expanded and that the dead end will eventually be extended to the Texas 130 toll road.

Khayyal said the confusion was compounded by a downturn in the national housing market that caused Fossil Creek's home-building company to leave the project.

"We would have been sticking our neck out a bit too far" by partnering with the county, Khayyal said. "I think everybody's intentions were in the right place, but I think the economics of the situation just threw it off."

The Howard Lane plan encountered a similar problem. It relied on the cooperation of several property owners. No developments are now being built on their properties. Dallas businessman Keith Stone, who owns the largest tract, did not returns calls for comment.

The Slaughter Lane extension is more complicated.

The $5.3 million approved by voters is split between two sections. One will give access to Goodnight Ranch, and that developer agreed to split the cost, putting each side on the hook for about $3 million. A second section, further east, was funded with the idea that the county would later ask numerous property owners to participate.

The county is still negotiating with them. Because of rising construction costs, a total project cost that was once estimated at $10.6 million is now closer to $16 million.

The county is about to ask the Capital Area Metropolitan Planning Organization to funnel federal dollars to Wells Branch Parkway and Slaughter and Howard lanes, but most county officials don't expect much, especially considering that other projects will be included in the request.

The county commissioners say they would be comfortable using money the county collects through property taxes to finance half of the Howard Lane, Wells Branch Parkway and Slaughter Lane sections.

That would leave the county hoping that the property owners and developers decide to participate after all.

Some county officials say the roads may be needed badly enough to consider footing the entire bill. "If the private developers fall out, we may have to replace some of the money," said Commissioner Margaret Gómez, whose precinct includes Slaughter Lane. Eckhardt agreed.

County Judge Sam Biscoe and Commissioner Gerald Daugherty said they would not support replacing private money with taxpayer dollars. "If we did," Daugherty said, "you could have people who agreed to participate saying, 'Heck, I'll just wait you out.' "; 445-3673

Where they stand

Travis County included seven public-private partnerships in the 2005 road bond package. Developers and landowners who stood to benefit from new stretches of road were asked to pay approximately half of the construction cost.

Four projects are on schedule:

Decker Lake Road

Decker Lane

Parmer Lane

Pecan Street

One has a piece that has not moved


Slaughter Lane

Two are stalled:

Howard Lane

Wells Branch Parkway

Ballot language

For the 2005 bond proposition:

No. 1

The issuance of $65,225,000 of road bonds and the levying of the tax in payment thereof
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