Council directs staff to draft Treviso MUD amendment to remove bond cap, broaden eligible reimbursements

City staff and representatives of Taylor Morrison described a proposed third amendment to the Treviso MUD facilities agreements that would remove the existing cap on total bond sales (about $220 million under the current agreements) and broaden the range of eligible reimbursements consistent with Texas Commission on Environmental Quality (TCEQ) rules.

Staff said the change reflects real costs that have exceeded the 2012 pro forma: longer timelines and higher construction, materials and labor costs. According to the staff presentation, the current facilities agreements show construction costs already incurred of about $103,200,000 and allowed additional soft costs totaling roughly $57,000,000, for a previous overall maximum near $219,000,000. The proposed amendment would add inflation allowances, reimburse $22,000,000 for local roads already constructed, increase eligible soft costs and identified capital for future annexation, and raise the overall capacity to about $319,500,000 under the draft terms presented to council.

Staff emphasized the proposal would retain the current maximum MUD property-tax rate and include several safeguards: TCEQ review of eligible reimbursements, bond-engineer review, independent audit oversight, a minimum savings requirement for refinancing (3%), and a prohibition on extending final maturity dates when refinancing. Staff also said the amendment would shorten some debt terms (a proposed 40-year final maturity rather than longer terms currently permitted) and would target roughly $10 million of additional capacity toward city capital-improvement projects within Treviso.

Nancy Schroeder, vice president of land acquisition for Taylor Morrison, said rising inflation and material/labor cost escalations since 2012 have driven actual costs well above the original projections and that the amendment is intended to "make us whole again" for TCEQ-eligible reimbursements. Schroeder said the project's master-plan infrastructure has already produced improvements staff identified.

Council members asked detailed questions about how this would affect homeowners in the MUD. Staff said district tax rates are set by the districts and that the proposed change "would be static in terms of the actual debt service on the bonds that we're proposing," while also noting that valuations, inflation or maintenance costs could affect rates over time. Council members directed staff to return with draft amendment language and additional details at the Feb. 19 meeting for formal consideration.