Council briefed on Mackenzie Trails PID: $6.31 million bond estimate, developer reimbursements and homebuyer credit explained

City staff and outside consultants briefed the Balch Springs City Council on the status of Public Improvement District No. 1 (Mackenzie Trails) at the March 24 meeting, providing an overview of how the PID works, the district’s financing structure and an estimated bond size the council could be asked to approve in April.

Daniel Drea of P3 Works, the PID administrator, summarized the PID structure under Chapter 372 of the Texas Local Government Code, explaining that a PID allows a defined area of land to be assessed for infrastructure that benefits that land. Drea said Mackenzie Trails PID covers approximately 35.24 acres; the service plan and assessment roll were established when the district was created. He described typical PID mechanisms — pay-as-you-go and reimbursement or construction bonds — and said Mackenzie Trails is structured as a reimbursement/construction-bond arrangement.

Andre Ayala of Hilltop Securities, the city’s financial adviser on the project, told council staff estimates show the PID bond likely to be sized at about $6,312,000 when presented for council consideration in April. Ayala said the district was authorized to levy up to $7,000,000 of special assessments in the development agreement; the current estimate reflects updated appraisals and the developer’s pricing. Ayala said the assessment term remaining is 29 years (the first assessment payment was due in 2025) and that the developer (Huffines, which sold the land to Lennar) retained reimbursement rights; bond proceeds would reimburse the developer rather than be general-city debt.

Ayala also summarized the effect of a city-provided buyer credit (a TIRZ/TERS overlay described in the development agreement): the city will contribute up to 60% of certain city property-tax receipts within the PID area to reduce the annual assessment burden on future homeowners. Using the developer’s pro forma and an independent appraisal, staff estimated the fully-developed incremental taxable value of the subdivision at about $60.8 million and additional annual city property tax revenue (net of the city contribution) of about $193,000.

Nut graf: The briefing is informational; no council action was required at the March 24 meeting. Staff and the city’s advisers said they will present the bond offering document for council approval on April 14 and the bond authorization on April 28, with a proposed closing in May if pricing is acceptable.

Key points

- District background: Mackenzie Trails PID No. 1 created Feb. 2021; development agreement executed and infrastructure dedicated; home construction work expected to begin in July 2025 with the first completions in October 2025, per the presentation.

- Financing: The city previously approved a maximum $7,000,000 assessment lien for the PID. Current staff estimate for the bond to be considered in April is $6,312,000. The developer has contributed roughly $2.1 million in infrastructure that is not reimbursable from the PID proceeds, per staff presentation. The city also has approximately $720,000 of assessments already collected that will be used in the bond structure.

- Homeowner impact: Using the presentation’s assumptions, the net PID assessment after the city’s TERS credit results in an estimated annual homeowner payment of about $1,100 per year (the presentation noted that the gross PID rate is 80.3¢ but the city’s credit lowers the net rate to about 32.62¢ under current calculations). The lien runs with the land and may be paid off at any time, and the assessment term expires in 2054 under the current schedule.

- Timing: Hilltop and staff said the council will be asked to approve the bond offering document in mid-April and to consider bond authorization on April 28; closing was projected for May 21 if council authorizes issuance and market conditions are acceptable.

Ending

Council asked clarifying questions about timing and homeowner impacts; staff and advisers said they would return with the offering documents and recommended motions at the April meetings. No vote was taken at the March 24 briefing.