Why does larger scale residential development seem to always fail in Lago Vista, TX?

Beautiful hill country, miles of lake front, a golf course, an airport, unique locally owned businesses, great schools, wonderful neighbors and a short drive to big city amenities – it’s been called a virtual paradise.

Yet one only needs to take a drive around Lago Vista to see the numerous relics of grandiose development schemes long abandoned or sitting stagnant for years, and the foundations for future failures that can even be identified from Google Earth.

Montechino, Riviera, Lakeside at Tessera, Firefly Cove, Turnback Ranch – all examples of big dreams that have or will soon turn into nightmares. How did that happen?

ANSWER: Poor City Council Decisions

Most recently, two acronyms Council keeps voting again and again to create are responsible for these doomed endeavors: PID’s and MUD’s.

PID’s have become unsustainable monsters thru economic revolution. Why any City Council would vote to establish a PID, saddling future homeowners with tens and even hundreds of millions of bond debt for assets they don’t own on top of property taxes and HOA fees demonstrates a lack of foresight.

The Tessera model only enjoyed sales in the beginning years because entry prices were lower and prospective buyers weren’t informed of the PID until AFTER closing. Turnback will struggle with a disadvantage right out of the gate because of new State PID Disclosure laws.

The net, long term result of those misinformed and misguided Council votes? The inherent structure of the PID’s the Council voted to create runs counterproductive to market forces. It increases individual lot costs to the point homebuilders can’t build a marketable product at a profit.

So they don’t, and they pull out. Leaving an eyesore visible from space. Don’t agree? Keep an eye on Tessera and Turnback.

That brings us to MUD’s. Some Council members mistakenly believe MUD’s are as bad or worse than PID’s (yet they have and continue to vote FOR them). They will tell you that they cost more over time because it’s a property tax that doesn’t go away, and that PID’s are “only” for 30 years.

That’s a fool’s argument. What they don’t tell you is that conventional MUD’s are established OUTSIDE of city limits so they can build their own water and sewer infrastructure. They are overseen by the State and governed by a board of directors comprised of homeowners.

While they do pay a MUD tax that decreases every year as the facilities are paid off, that cost is offset by the savings realized from NOT having to pay City property taxes. They also bill and keep the revenue provided from selling water and wastewater services, paying for the M&O of those services.

But some Council members managed to screw that up by voting to establish a MUD that is INSIDE the City Limits. A MUD that owns no water or wastewater facilities yet pays MUD taxes AND City taxes, receives no water/wastewater service revenue but instead pays it to the City, and will see higher development costs due to requirements the Council tacked onto the MUD agreement. Again, the net result? Increased difficulty for homebuilders to sell homes at profitable price points and increased carrying costs for future homeowners, putting downward pressure on home sales.

Whether PID or a MUD, some Council members will defend their YES vote by claiming it’s up to future homebuyers to buy into these inevitably doomed financing structures. That defense completely ignores the long term impact of failed developments on the rest of Lago Vista and contributes to the growing inventory of economic eyesores scattered throughout this beautiful City.

 

Before you vote for any particular candidate for Lago Vista City Council:
Ask them if and why they would vote for PID’s and MUD’s inside our city limits.