BUDA, TX (Nov. 23, 2009)—A state appeals court last week turned back Buda citizens who hoped to vote down a land use change, saying a city council decision clearing the way for US Foodservice to locate in the eastern extraterritorial jurisdiction (ETJ) is not subject to referendum.
The land use change approved by the city council in June permits light industrial activity within 95 acres of ETJ located in Sunfield Municipal Utility District (MUD) No. 1. Opponents of the land use change say it will lead to more pollution and less sales tax revenue for the city than retail uses would have generated. Proponents of the change say the city would benefit greatly from the 157 jobs in 10 years US Foodservice said it would create. US Foodservice said it pays its warehouse personnel and truck drivers anywhere from $45,000 to $55,000.
Funded by a family with land holdings near the site, a group called BudaFirst formed to oppose the land use change. Representatives of the group gathered 788 signatures from voters wishing to put the land use change up to a referendum, exceeding the requirement for signatures from 20 percent of the registered voters. However, Buda city attorneys advised the city council that the change wasn’t subject to referendum, and the council voted, 6-1, in September to decline such an election.
In October, Former Buda Mayor Jim Hollis and Buda realtor Christopher Juusola filed the suit in the Third Court of Appeals in Austin. The suit did not name BudaFirst.org as a plaintiff.
“The Appeals Court decision appears to validate the soundness of the advice offered by Buda’s legal team,” Buda Councilmember Ron Fletcher said. “Because BudaFirst has previously expressed a willingness to appeal as high as the Texas Supreme Court, I cannot offer further comment at this time.”
Neither Hollis, Juusola, their attorney, nor BudaFirst were available for comment.
The council’s June decision to allow light industrial uses within 95 acres of ETJ was essentially an update to a land plan created by the second amendment to the Agreement Concerning Creation and Operation of Sunfield Municipal Utility District No. 1. The council’s June land plan change constituted the third amendment to the MUD consent agreement. The City of Buda, Sunfield MUD No. 1 and 2428 Partners, LP, are the parties to the MUD consent agreement, which went into effect in May 2003. 2428 Partners owns most or all of the land in the MUD.
Texas Court of Appeals Justice Diane M. Henson ruled that the council’s approval of Amendment 3 – the land use change – was not an action subject to a referendum because it was not “legislative in character.”
In her ruling, Henson cited a 2001 appeals court case (Humphrey v. Balli) as evidence that Amendment 3 is not referendable. The judge in Humphrey v. Balli ruled that an action is appropriate for the initiative and referendum process only if the subject matter of the proposed ordinance is “legislative in character” and if the action has not been excluded, either “expressly or by necessary implication,” by “general law,” or by the city’s charter.
“Amendment No. 3 is not legislative in character because its resulting land use designation for property in the City’s extraterritorial jurisdiction could only be accomplished through an agreement between the City and the landowner, rather than by legislative act,” Henson said. “The temporary nature of the agreement underscores our conclusion that Amendment No. 3 was not legislative in character. In determining whether an ordinance is legislative in character for referendum purposes, ‘legislative’ relates to subjects of a general or permanent character, as distinguished from those subjects which are transitory, temporary, or routine’ (City of Austin v. Findlay).”
The MUD consent agreement expires when the MUD has paid off all its bond debt, or 20 years from 2003.
US Foodservice proposes to build a 500,000-square-foot regional headquarters and distribution center on 40 of the 95 acres of ETJ land within the MUD, near the intersection of Turnersville Road and CR 118. Without the light industrial land use designation in the 40 acres, the US Foodservice facility could not be legally built there.
US Foodservice spokesperson Howard Falkenberg declined Friday to indicate when the company would buy the 40 acres it needs for its facility.
“We are pleased the appellate court agreed that the city council’s action is not subject to referendum review,” Falkenberg said.
In 2005, the City of Buda entered into a limited purpose annexation agreement with Sunfield MUD No. 1. The agreement allows the city to collect sales taxes within the MUD. Fletcher said city officials were hoping to get substantial sales tax revenue via the agreement to retire some of Buda’s bond debt for work on the Main Street East extension from the north end of the city to the east side of Interstate-35. Buda Councilmember Sandra Tenorio recently said that one reason Sunfield MUD No. 1 allowed the city to dictate land use and collect sales taxes within its jurisdiction is because the MUD wanted the city to extend road improvements on Main Street east of Interstate-35 into the MUD.
As of Oct. 1, Buda projected owing $4.78 million in Certificates of Obligation (COs) issued for projects relating to the Main Street East extension, not including $1.8 million interest. Buda’s total debt amounts to just more than $21.7 million. Fletcher said recently that there has “basically been no commercial development (within Sunfield MUD No. 1) at all.”
Buda City Manager Kenneth Williams said in August that the US Foodservice facility would generate $100,000 in sales taxes annually to the city. Buda’s annual sales tax income increased from $774,000 to $1.4 million immediately after Cabela’s opened in 2005. After Wal-Mart opened near Cabela’s a year later, the city’s sales tax revenue increased to $2.3 million.
Fletcher, who, along with Tenorio, voted in June against allowing light industrial uses in the 95 acres, recently estimated that the land could have accommodated “two or more” big box stores. Tenorio cast the lone vote on Sept. 15 against disallowing the referendum.
US Foodservice months ago asked the Hays County Commissioners Court to fund construction improvements to Turnersville Road and CR 118. On Aug. 4, Hays County commissioners voted 4-1 to direct county staff to draft a tax increment reinvestment zone (TIRZ) agreement whereby the county could fund $1.8 million (including debt issuance cost) in road improvements using ad valorem taxes collected within a specified boundary encompassing at least the proposed US Foodservice facility. US Foodservice offered to pay the difference if the property taxes generated within the zone over a certain period of time are not sufficient to pay for the debt on the roads.
US Foodservice officials have said their proposed facility would generate $2.7 million annually in property taxes. The city will not collect property taxes within Sunfield No. 1 at least until the MUD pays off its bonds, which probably will not be until 2037.
Hays County Judge Liz Sumter (D-Wimberely) cast the single vote against drafting the TIRZ agreement. Hays County Precinct 2 Commissioner Jeff Barton (D-Kyle), who represents the area in and around Buda, is considering a run for county judge in the 2010 Democratic primary against Sumter. Though all commissioners voted to draft a TIRZ document, most still have to approve it, and no such agreement has yet appeared on the court’s agenda.
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