City Delays Public Improvement District policies
Original article posted by Austin Business Journal
The Austin City Council on Thursday postponed indefinitely a resolution to establish a policy and general criteria under which it will consider developers’ requests to create public improvement districts.
The Austin Business Journal incorrectly reported on Thursday that the measure passed.
In a public improvement district, or PID, the city enters into a public financing partnership with a developer in connection with a specific development project to issue bonds to pay for millions of dollars of capital improvements and infrastructure, such as roads, water and wastewater. The bonds are repaid through assessments on property owners in the PID, while city officials have oversight of development in the PID and control over aspects such as zoning.
The policy would have provided that private developments must confer “extraordinary benefits to the public” in exchange for PID bond financing. Such benefits could include affordable housing, open space, environmental improvements, public transit, and enhanced infrastructure or other public facilities.
The city began crafting a broad PID policy after the developer of two proposed developments on the State Highway 130 corridor, in a rare move, asked the city for a PID earlier this year.
PIDs are more attractive than other public financing mechanisms that have been more actively used in the past, such as municipal utility districts, because they allow the city to control the issuance of debt, says Pat Murphy, assistant director of the city’s Watershed Protection and Development Review office. Since the bonds are backed by the developer and not by the city, the city does not incur risk.
PIDs haven’t been used extensively in Texas because of legal hurdles and complexities created in the past over misinterpretation of the state’s PID-enabling statutes, attorneys say. The city has two PIDs, a downtown PID and an East Sixth Street PID.
Outside Texas, there were $5 billion in PID bonds issued last year, according to Bank of America.
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