The Diamond J Development agreement and finance plan for the municipal management district received enough votes to pass the Midlothian city council members on Tuesday, but there are several additional steps that must be taken by the Sept. 1 deadline.
The agreement passed the city council by a vote of 4 – 3, with council members T.J. Henley, Jimmie McClure and Mike Rodgers opposing the agreement. The council voted 5 – 2, with Mayor Bill Houston and council member Wayne Sibley opposing, to table appointing a board of directors for the management district with instructions to city staff to clarify the qualifications to be on the board.
If a city-approved board of directors for the district does not meet and approve the development agreement before midnight on Aug. 31, the state approval for the district expires and the developer will have to ask the state legislature to approve the district again during its next session in 2017, said Mayor Pro Tem Joe Frizzell. The city council is planning to hold a meeting before Sept. 1 to reconsider the board of directors, he said.
Diamond J, a 1,169-acre development proposed by ECOM Real Estate Management is located along Midlothian's eastern border with Waxahachie, between Walnut Grove Road and Mid-Way Regional Airport. The project also provides for commercial space next to U.S. Highway 287.
The management district is authorized to levy taxes on the property in the district and sell general obligation bonds to pay for public improvements on the Diamond J Ranch property, according to a previous Midlothian Mirror article. The funds from the district will finance an additional fire station, parks and community amenities in the development, according to discussion at previous meetings.
The amended agreement passed by the council gives council members the ability to protect future Diamond J Ranch residents, said council member Ted Miller.
“It was a decent agreement and our staff and lawyer thought it was a decent agreement and didn't think we could get a better one if we fought it, but we could end up in court if we fought it,” Miller said, referring to the ruling handed down by the Texas Supreme Court during earlier litigation between the city and ECOM over the development. “In the original draft, we had no control over it. We have to protect those residents.”
Amendments to the agreement included requiring any bonds issued by the district and the tax rate to repay any debt be approved by the city council, said Frizzell. The original agreement would have allowed the management district to tax residents up to $1 per $100 of property value in addition to the tax rate already set by the city, and take on as much debt as the bank would allow.
“To me, that $1 was unreasonable,” Frizzell said.
The revised agreement also protects the city if the district's bond issuance tips the city's bond amount over the tax exempt status limit, Frizzell said. The city can deny district bonds that would push the city over the limit, and if emergency situations made it necessary to issue more than the limit, the district would pay the city back for its part of the excess, he said.
“In my mind, the draft we got last night answered all the questions and gave the city what we wanted,” Frizzell said.
But other council members did not feel comfortable passing the agreement because of information they felt was missing or they felt they did not have enough time to review the agreement.
Two portions of the development agreement were passed by the council, McClure said. The development agreement had been presented to the council several times since June and city manager Chris Dick, attorneys on both sides, and ECOM officials had been working through changes to the document to protect the residents of the development and minimize the district's effects on the city's ability to issue bonds, she said.
“I might have voted for it if that was the only thing,” she said.
But the financial plan presented to the council members along with the development agreement was confusing and many parts of it were unsupported, McClure said.
“This is a big deal, especially when they have the ability to tax and issue bonds above and beyond the city's rate,” she said. “It may just be because of my financial background, but that was a key part of the discussion for me.”
There were also issues regarding when the revised document was submitted to the council, Henley said.
“I voted against it because we received the changes from ECOM at 5:45 p.m. the night of the council meeting,” Henley said.
The city council meetings began at 6 p.m.
“There has been a pattern of changes handed to us at the last minute and I did not feel staff and council had enough time to review them, especially considering it is such a large piece of property. We are talking about potentially doubling the size of the city,” Henley said.
Henley, McClure, Rodgers and Frizzell said they voted to table the appointment of board members because they wanted to ensure appointees on the list provided by ECOM meet the criteria to be on the board.
Two of the proposed board members had possibly been on the city council while the Diamond J Ranch Development was moving through the process to be approved, according to board members during the meeting. Boyce Whatley is a former Midlothian mayor and Jamie Wickliffe is a former council member, council members said.
The time and date for the special meeting to discuss the board of directors had not been set by press time. It might be set for Monday, Dick said.