Sherman approves Municipal Utility District for Heritage Village

Michael Hutchins
Herald Democrat
US Highway 82. near North Travis

A new 440-acre development cleared a early financing hurdle this week when Sherman leaders OK'd a financing method for the project. Sherman city council members voted unanimously Monday to consent to the creation of a Municipal Utility District in west Sherman.

The utility district will help developers finance utilities for a portion of Heritage Ranch, a proposed 440-acre mixed use development near the intersection of U.S. Highway 82 and Travis Street. Developers for the project previously said the development would feature a mixture of residential and commercial uses with a arena-style entertainment venue as the anchor.

The new district will allow developers to offset the cost of utility and infrastructure improvements by placing a tax on development within its borders.

"We've been in discussions with the developer for a while on  creating a Municipal Utility District," City Manager Robby Hefton said. "It is another mechanism that allows the developer to recoup a portion of their costs of public infrastructure development through creating a property tax levy on the property within the geographic boundary."

Covenant Development President Ryan Johnson said the district would not encompass the entire development, and it would only cover about 175 acres of residential area. 

The MUD is created and put in place by the state legislature following a successful request and the consent of the council. The district differs from other funding mechanisms, including Public Improvement Districts, that the city has used to assist in funding larger developments.

Unlike a PID, which requires local approval, the Municipal Utility district requires state legislature approval along with consent of the city. The PID also places a flat, one-time fee on homes and other construction to finance improvements rather than a property tax.

With the city's consent, Hefton said the city is taking no obligation of debt or financing in the Heritage Ranch development, making it low risk. Hefton voiced approval for the project, noting that while other MUDs may have had difficulties in the past, the project will avoid these pitfalls as it will be required to meet city regulations.

"MUDs historically have a bad name, but the reasons they have are mitigated by the fact this will be within the city," he said.