2018-190 Cole and Hunter Ranch Master-Planned CommunitiesDate: December 21, 2018 Report No. 2018-190
1
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Cole Ranch and Hunter Ranch master-planned communities in southwest Denton
EXECUTIVE SUMMARY:
In October 2018, representatives from Cole Ranch and Hunter Ranch contacted City staff to
discuss a coordinated 6,500-acre master-planned development. Both Cole and Hunter Ranches
are located within the city limits and are designated as Master Planned Community Districts
under the Denton Development Code. A project of this size and scale requires significant public
infrastructure such as water, wastewater, drainage, and road facilities, which would be paid for
up front by the developers. The developers have asked the City of Denton to consider the
establishment of a special district – either a municipal management district (MMD) or a Public
Improvement District (PID) – to enable them to recapture a portion of the cost of construction of
the public infrastructure.
BACKGROUND:
History and New Proposed Project Coordination
Cole Ranch is an approximately 3,400 acre property located west of I-35 West and in the path of
the southernmost portion of future Loop 288. The City of Denton annexed Cole Ranch in 2006,
and it was classified as the Cole Ranch Master Planned Community district in 2008 (Ordinance
2008-030). Cole Ranch is represented by Stratford Land.
Hunter Ranch is an approximately 3,100 acre property located directly south of Cole Ranch and
east of Robson Ranch with acreage on both the west and east sides of I-35 West. The City of
Denton annexed Hunter Ranch in 2001. Hunter Ranch received a Master Planned Community
district classification from the City of Denton in 2008. (Ordinance 2008-286). Hunter Ranch is
represented by Hillwood Communities.
Under the Denton Development Code, the Master Planned Community (MPC) District is
“intended to accommodate large-scale, unified, comprehensively planned development that
conforms with and enhances the goals and policies contained within The Denton Plan. This
district is intended to provide an alternative zoning district and development process to
accommodate substantial development for residential, commercial, professional, recreational,
industrial or other activities, including combinations of uses appropriately requiring flexibility
under controlled condition not otherwise attainable under conventional zoning districts.” Each
MPC application must contain the following:
Date: December 21, 2018 Report No. 2018-190
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A conceptual/schematic plan designed to aid in the preparation of the MPC zoning
document and development standards document;
A zoning document which establishes standards for the MPC and addresses land uses,
densities, setbacks, building heights, lot coverage, and a development plan map;
A development standards document setting forth a detailed set of standards and
confirming compliance with the Denton Development Code Subchapters 13-22 and/or
identifying the alternative development standards associated with the content of each of
those subchapters. Standards include items such as maximum gross density, minimum lot
area, maximum building height, design standards, building materials, etc.)
In October 2018, representatives from Cole Ranch and Hunter Ranch contacted City staff to
discuss their new approach of a coordinated master-planned development versus the prior
approach of the two developing independently. The developers believe this approach will capture
efficiencies in planning, design, and construction as well as result in cohesion between the two
properties. The following is a summary of the project basics:
Approximately 6,500 acres total
Estimated $982 million in total project costs for infrastructure and amenities
Estimated 40-year buildout
15,717 single family units
5,090 multi-family units
424 commercial acres
101 industrial acres
Although initial development plans were completed for both Cole Ranch and Hunter Ranch as
part of their MPC processes, the developers are now working on a new shared vision for the
coordinated project. Assuming Council supports the developers’ request for a special district,
which is critical to facilitating the necessary public infrastructure, their goal is to create a new
master plan by summer 2019. The developers provided City staff the following broad outlines
for the revised master plan:
Community character and amenities that will be developed with stakeholder input and
will be unique to Denton
Large natural open spaces with hike/bike trail connectivity
Diverse neighborhoods with a range of high-quality housing types and prices
Activity-focused programming that brings residents together
4 elementary schools, one middle school and one high school
Retail centers
City staff, bond counsel, and financial advisors have held eight meetings to date with the
developers to gather information needed to assess the fiscal and service provision impacts of the
Date: December 21, 2018 Report No. 2018-190
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proposed development and to make certain the City’s interests would be protected. All
discussions have been fact finding to ensure that staff has a thorough understanding of the
following before the City Manager agreed to bring this request to Council: the project’s
financing plan; how current and future residents will be protected; how to ensure the City’s bond
indebtedness is not affected; providing for adequate water and wastewater capacity; and ensuring
the project is synched up with future I-35 West and Loop 288 improvements and other regional
road plans.
Developer Request for a Special District
A project of this size and scale requires significant public infrastructure such as water,
wastewater, drainage, and road facilities. The developers have asked the City of Denton to
consider the establishment of a special district – either a municipal management district (MMD)
or a Public Improvement District (PID) – to enable the developer to recapture a portion of the
cost of construction of the required public infrastructure. Under either an MMD or a PID, the
developers will front the cost for the public infrastructure improvements and would be
reimbursed by the special districts. Of the estimated development costs of $982 million, $485
million would be eligible for reimbursement.
An MMD must be created through the Texas Legislature, which is convening in January 2019.
The Representative and Senator serving Denton will not carry and submit the MMD creation bill
without the approval of the City in the form of a Council resolution. If the MMD legislation
passes the Legislature and the City ultimately does not give written consent to the MMD, the
MMD could not activate. Stated another way, the MMD legislation would be non-binding and
gives the City the option, but not the obligation, to create an MMD. Should the legislation be
passed, staff estimates a several-month process to work through a number of development-
related issues prior to bringing an MMD ordinance forward for Council consideration. The
MMD legislation is time-sensitive since the next opportunity to bring it forward would be in the
2021 Legislative session.
Municipal Management District vs. Public Improvement District
Under both the MMD and PID options, existing City residents do not pay for the new
infrastructure: the cost is borne only by those specifically benefitting from using the new
infrastructure. For both types of districts, the City must approve the plans and specifications for
all public infrastructure prior to starting construction.
One important consideration of which special district to use is what entity issues the debt to pay
for the new public infrastructure and carries the obligation on its books. The City does not issue
the MMD debt, whereas the City issues bonds for the PID debt. Below is a comparison of debt
for each type of district:
Date: December 21, 2018 Report No. 2018-190
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Municipal Management District Public Improvement District
MMD issues the bonds and the debt City issues the bonds and the debt
Debt for water, sanitary sewer and drainage
facilities must be approved by the Texas
Commission on Environmental Quality
City Council issues debt; Texas Commission on
Environmental Quality does not approve debt
Debt cannot be issued until assessed value is
increased per the Denton County Appraisal
District (DCAD) at a 10:1 value-to-lien ratio*
Debt may be issued to finance public
infrastructure without the guaranteed value to
support the debt; City’s PID policy calls for a 3:1
value-to-lien ratio*
Debt “stands alone.” Issued by District per
parameters set by City
Debt is issued by City from “special revenue”
source, being assessments levied by District
District is a separate political subdivision,
therefore, no City credit is used or affected
District is a zone or area within the City,
therefore, City credit could be impacted if
assessments do not meet projections
New public infrastructure cost paid from tax
bonds, which generally result in lower interest
rates
New public infrastructure cost paid from
assessment bonds, which generally result in
higher interest rates. Assessments have a second
priority lien to taxes. Generally there are
financial market-driven reserve requirements
Board levies annual tax Council will set or approve annual assessments.
Usually, supplemental assessments are needed
over large master planned communities, as a
first-time PID assessment is usually not
financially correct.
DCAD separately lists out MMD taxes, very
transparent
PID assessments are not separately listed out on
DCAD websites since they are not a tax, rather
they are commingled with City debt obligations
which artificially inflates the City’s debt position
Taxes tend to reduce as debt pays off and value
increases
Assessments are fixed at time of imposition for
their duration
Must file annual audit prepared by independent
3rd party auditor
Audit of expenditures is part of the City audit
*Value-to-lien ratio is appraised value to bond size; or, the assessed property value must be at least ten times the
principal amount of the bonds sold under an MMD or at least three times the principal amount of the bonds sold
under Denton’s PID policy
Another difference between the two districts is control. PIDs are solely managed by the City
Council; MMDs are managed by a separate elected Board of Directors. Five directors would
manage the MMD and are elected by voters inside the district. Through the Development
Agreement, the City and developers can agree for initial board members to be appointed by the
City. In a PID, the Council either appoints the PID Board or the City Council serves as the
Board. Generally, it is harder to separate PID operational and financial issues from City issues,
which can lead to Councilmembers dealing with complaints directly as opposed to referring to
the Board of the separate MMD.
Date: December 21, 2018 Report No. 2018-190
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The City would control every aspect of a PID, but the City also can exercise control over an
MMD and remain “arm’s length” for fiscal responsibility. For example, the legislation could be
drafted so that:
The City must approve all plans and specifications for public infrastructure.
The City can impose specific limitations on district bond issues:
o Limit the term of each bond issue to no longer than 30 years
o Require a Development Agreement with the developers
o Limit sale of bonds to only finance water, sanitary sewer, drainage and road
infrastructure
o Require that construction of public infrastructure not commence until all plans are
approved by City
o Require that district will not allow construction that would result in water or
wastewater flows that exceed permitted limits
o Require bond applications to be filed with the City at the same time they are filed
with the Texas Commission on Environmental Quality and files copy of the
Preliminary and Final Official Statements with the City
o File annual audit with the City
o District cannot annex property into its boundaries without prior City consent
o District shall permit City to make inspections of its books and records during
regular business hours.
CONCLUSION:
If Council is interested in supporting the developers’ request for legislation to create the MMD,
staff would bring back a supporting resolution for consideration in early February. There will be
a work session on this topic on January 15, but if any Councilmember desires a briefing prior to
that date, Caroline Booth can coordinate that request.
Next Steps
Council work session on January 15 regarding the project
Drafting of a term sheet outlining the City’s requirements of the developers.
After the term sheet is agreed to, the developer would sign an escrow agreement to fund
an in-depth review of the fiscal and legal impacts by the City’s consultants.
Work session with Council on draft MMD legislation and a resolution of support.
Individual consideration of resolution of support.
ATTACHMENT(S):
Exhibit 1 – Cole Ranch/Hunter Ranch Map
Exhibit 2 – Cole/Hunter Ranch Development Projections
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Exhibit 3 – Developer presentation excerpt
STAFF CONTACT:
Caroline Booth
Director of Economic Development
(940) 349-7751
Caroline.Booth@cityofdenton.com
Development Assumptions
•Residential: average home price of $350,000 before inflation;
•Commercial: an average value of approximately $1,433,243 per acre after vertical construction before inflation;
•Industrial: an average value of approximately $862,488 per acre after vertical construction before inflation; and
•Multifamily: a weighted average value per unit of approximately $80,570 before inflation;
No Inflation on
Property Values | 1
Collection
Year Tax Year
Single Family
Lots
Constructed
Single Family
Homes
Constructed
Commercial
Acres
Industrial
Acres
Multi-Family
Units
Combined
Residential
Value
Combined
Commercial
Value
Combined Total
Projected Value
2023 2022 1,000,000$ -$ 1,000,000$
2024 2023 400 - - - - 28,000,000$ -$ 28,000,000$
2025 2024 800 400 - - - 168,000,000$ -$ 168,000,000$
2026 2025 1,300 800 - - - 315,000,000$ -$ 315,000,000$
2027 2026 1,800 1,300 - - - 490,000,000$ -$ 490,000,000$
2028 2027 2,400 1,800 - - - 672,000,000$ -$ 672,000,000$
2029 2028 3,000 2,400 - - 288 882,000,000$ 25,920,000$ 907,920,000$
2030 2029 3,600 3,000 - - 288 1,092,000,000$ 25,920,000$ 1,117,920,000$
2031 2030 4,200 3,600 25 - 976 1,302,000,000$ 119,340,000$ 1,421,340,000$
2032 2031 4,800 4,200 25 - 976 1,512,000,000$ 119,340,000$ 1,631,340,000$
2033 2032 5,400 4,800 55 - 1,484 1,722,000,000$ 199,935,034$ 1,921,935,034$
2034 2033 6,000 5,400 99 - 1,484 1,932,000,000$ 263,322,556$ 2,195,322,556$
2035 2034 6,600 6,000 99 - 1,884 2,142,000,000$ 293,322,556$ 2,435,322,556$
2036 2035 7,200 6,600 153 - 1,974 2,352,000,000$ 378,435,090$ 2,730,435,090$
2037 2036 7,800 7,200 165 - 2,626 2,562,000,000$ 447,465,103$ 3,009,465,103$
2038 2037 8,400 7,800 190 - 2,626 2,772,000,000$ 481,527,632$ 3,253,527,632$
2039 2038 9,000 8,400 215 - 3,278 2,982,000,000$ 571,707,632$ 3,553,707,632$
2040 2039 9,600 9,000 215 - 3,278 3,192,000,000$ 571,707,632$ 3,763,707,632$
2041 2040 10,200 9,600 240 38 3,786 3,402,000,000$ 681,732,258$ 4,083,732,258$
2042 2041 10,800 10,200 278 38 3,786 3,612,000,000$ 733,507,301$ 4,345,507,301$
2043 2042 11,400 10,800 297 38 4,438 3,822,000,000$ 812,074,823$ 4,634,074,823$
2044 2043 12,000 11,400 348 101 4,438 4,032,000,000$ 939,386,485$ 4,971,386,485$
2045 2044 12,600 12,000 348 101 5,090 4,242,000,000$ 992,066,485$ 5,234,066,485$
2046 2045 13,200 12,600 379 101 5,090 4,452,000,000$ 1,037,741,492$ 5,489,741,492$
2047 2046 13,800 13,200 379 101 5,090 4,662,000,000$ 1,037,741,492$ 5,699,741,492$
2048 2047 14,400 13,800 379 101 5,090 4,872,000,000$ 1,037,741,492$ 5,909,741,492$
2049 2048 14,700 14,400 404 101 5,090 5,061,000,000$ 1,075,241,492$ 6,136,241,492$
2050 2049 15,000 14,700 404 101 5,090 5,166,000,000$ 1,075,241,492$ 6,241,241,492$
2051 2050 15,300 15,000 424 101 5,090 5,271,000,000$ 1,105,241,492$ 6,376,241,492$
2052 2051 15,600 15,300 424 101 5,090 5,376,000,000$ 1,105,241,492$ 6,481,241,492$
2053 2052 15,717 15,600 424 101 5,090 5,468,190,000$ 1,105,241,492$ 6,573,431,492$
2054 2053 15,717 15,717 424 101 5,090 5,500,950,000$ 1,105,241,492$ 6,606,191,492$
2055 2054 15,717 15,717 424 101 5,090 5,500,950,000$ 1,105,241,492$ 6,606,191,492$
2056 2055 15,717 15,717 424 101 5,090 5,500,950,000$ 1,105,241,492$ 6,606,191,492$
2057 2056 15,717 15,717 424 101 5,090 5,500,950,000$ 1,105,241,492$ 6,606,191,492$
2058 2057 15,717 15,717 424 101 5,090 5,500,950,000$ 1,105,241,492$ 6,606,191,492$
2059 2058 15,717 15,717 424 101 5,090 5,500,950,000$ 1,105,241,492$ 6,606,191,492$
2060 2059 15,717 15,717 424 101 5,090 5,500,950,000$ 1,105,241,492$ 6,606,191,492$
2061 2060 15,717 15,717 424 101 5,090 5,500,950,000$ 1,105,241,492$ 6,606,191,492$
2062 2061 15,717 15,717 424 101 5,090 5,500,950,000$ 1,105,241,492$ 6,606,191,492$
Combined Cole & Hunter Ranches
Cole / Hunter Ranch
Presentation for the City of Denton 12.5.18
Regional
Context
3Cole / Hunter Ranch
Local
Context
6Cole / Hunter Ranch
Drone
Imagery
8Cole / Hunter Ranch
The Vision
Cole / Hunter Ranch
Open Space
and Trails
12Cole / Hunter Ranch
Preliminary
Development
Plan
11Cole / Hunter Ranch
13Cole / Hunter Ranch
Character
Vision
Cole / Hunter Ranch
Aspirational Comps
Cole / Hunter Ranch
Cole / Hunter Ranch 15
Cole / Hunter Ranch 16
Cole / Hunter Ranch 17
Cole / Hunter Ranch 18