No deal: City rejects DSISD’s proposed agreement in Town Center land purchase

In an April 28 Special Meeting, the City of Dripping Springs City Council unanimously voted to reject the Dripping Springs Independent School District Board of Trustees’ Real Property Sales Agreement due to use restrictions by the District. The agreement is over the sale of district-owned property, where the current administration building is located at 510 Mercer St., for use in developing the Town Center Project. The Board unanimously voted to approve the latest agreement during their regular meeting on April 26. It comes after several previous agreements failed.

“I think I speak for all board members that we support the Town Center Project,” Board President Barbara Stroud said. “We have supported it for a long time, and we continue to support it. There have been various events that have occurred over time. It hasn’t changed our commitment to the project… Our goal in conveying the property to the City of Dripping Springs is so that it will be a Town Center… so this agreement does contain written assurances that it will become a Town Center.”

It’s those written assurances, however, that did not sit well with the City Council. According to the April 28 presentation by City Attorney Laura Mueller, the City has always proposed that the land would be used for the following projects: City Hall, Library, possible county satellite office, park area, and possible retail and commercial uses. Mueller said that the City had agreed to pay Fair Market Value (FMV) for the land, minus the costs of the demolition and remediation on the old administration building (which is full of asbestos) with a floor in cost to the district regardless of the cost of the demolition even if it ended up being more than the FMV cost of the property. Additionally, the City was comfortable adding language in the latest agreement that it would sell the land back to the District if it wasn’t going to be used for a Town Center. Council members said they’re disappointed that wasn’t good enough, since the school district is now putting use restrictions on the property and asking that the City commence demolition within 60 days of closing.

“The district isn’t just saying, is this going to be a town center or not… they’re saying it’s going to be a town center, and we expect to see these certain elements or we [District] don’t consider it to be a town center,” Mayor Pro Tem Taline Manassian said. “We cannot support a real estate agreement that restricts the City’s ability to develop the property as it deems appropriate. The City needs the flexibility to adapt as things change… giving up our authority to exercise our judgment on how best to develop a Town Center on property we purchase is not something I can agree to.”

The agreement presented by the District would restrict the use of the property by requiring the City to: Build City Council Chambers and primary administrative offices on the lot where the DSISD administration office is currently located.

Put in a .9 acre or greater park on the lot.

Offer right of repurchase if any portion of the property is sold to a non governmental-entity.

Offer right of repurchase if City does not construct Town Center as described by the District in the Agreement.

Earlier in March, discussions stalled after the termination of the Interlocal Agreement (ILA) between the City, the Dripping Springs Community Library District, Hays County and DSISD. On March 9, the Dripping Springs City Council voted to send notice of termination of the May 2020 ILA. The School District, on March 29, similarly voted to terminate the ILA. As a result, the City and the District continued negotiations to no avail.

“As noted by our continued partnership efforts with the City, despite the termination of the interlocal agreement on the Town Center Project, trustees enthusiastically supported the sale of property for the development of the Town Center Project,” Stroud said. “...the Board was willing to sell the property to the City for the purpose of a centralized hub of governmental offices and facilities, green space and infrastructure. Otherwise, DSISD was not planning to sell the property at this time. While the City’s decision is disappointing, our door remains open for any further discussion, even as DSISD begins its discussion with the Dripping Springs Community Library about making land available for the construction of a new library on the Administration building site.”

The Town Center project is funded using the City’s Tax Increment Reinvestment Zone (TIRZ). A TIRZ is often used by rapidly growing cities to provide critical public improvements, civic infrastructure, and redevelopment incentives, which improve local economies and quality of life without increasing taxes.

The City of Dripping Springs, Drippings Springs ISD, Hays County, and the Dripping Springs Community Library have worked together with the TIRZ board since 2017 to envision a Town Center.

The City and the School District released a joint statement about the project, saying through TIRZ board meetings, public meetings, and a mediation, the vision for the project, as well as a preliminary project plan and financing plan had been thoroughly vetted. The TIRZ partners have worked to create a robust Town Center that would promote economic development and bring new opportunities and benefits to the entire community through improved public spaces. The decisions by both the City and DSISD were made after thorough and exhaustive consideration.

The next steps in the Town Center planning process will be discussed at the TIRZ board meeting May 10.

Below is a timeline of the Town Center plans and negotiations have unfolded. The information has been collected from documents on the City's and District's websites. Recently, City Attorney Laura Mueller made a presentation, which can be found here and elements of it below.

Background related to Agreements on the land purchase

2016 TIRZ Created with Primary Purpose of Town Center including room for the School District, City, County, and Library on School and City property on Mercer Street
 School informs City they will not share offices in the Town Center Project with the other stakeholders
 Selling the district-owned land is discussed in the District's 2018 Bond planning and approval
 April/May 2020 Interlocal Agreement by the above stakeholders to have real estate agreements for the School Property for 11.7 acres (Goal was to have the sale complete by November 2020)
 August 2020 Acreage is changed to ±9 acres for sale excluding the track
 Negotiations continue and draft agreements are exchanged
 Mediation betewen City and School where certain items agreed to (to bring to the boards)
 January 25, 2021 School District approves mediation agreement with edits
 Negotiations between School and City on open issues
 February 9, 2021-April 22, 2021 CC presented possible agreements and sent various options to School District
 March 2021 Libary, City, District all vote to terminate Interlocal Agreement
 Negotions continue
 April 26, 2021 School District approves Real Property Purchase Agreement 
 City presented approved agreement from School District on April 28,2021 and unanimously votes to reject it

Open Issues Prior to April Meetings according to the City

 Exact Parcel to be sold
 A bump on the Northeast corner of the parcel was in our concept plans but not in the April 2020 TIRZ ILA. TIRZ Project Manager has stated that this area is essential for planning for infrastructure.
 Easement across Parade Way
 How to keep an easement that runs under the Track but state that Phases 1 and 1A will not have improvements that are built on the track. We already have a wastewater easement but the school has agreed to expand the easement to right-of-way.
 Limitations on use of Parcel
 In December 2020, the School sent over a provision that limited the use of the property after sale. City informed the School that this was an issue after mediation based on the planning that has occurred with the Town Center since 2016 including a P3 and Market Study. 

School Approvals according to the City

 School approved bump out for fee simple acquisition by the City but did request impervious cover credit
 School approved Parade Way easement including easement document created by City
 Floor on the payment to the School regardless of demolition and remediation costs
 Price is FMV minus cost of remediation and demolition
 Items not in draft:
 Requirement that the project be completed in a certain number of years;
 An objective percentage of governmental v. non-governmental use.

Use of TIRZ Property

City and TIRZ:

 Primary uses are for Library and City Hall with possibility of County.
 Park area that could be partially funded by County grant.
 Plus, possible retail and related commercial uses as proposed in the concept plans.
Proposed: Require that the Administration Property be used for Town Center, list of possible Town Center projects, do not require specific Town Center projects to be on the Administration Property

School District:

 Removed the percentage limitation
 Requires that City Council Chambers, Primary City Offices, and at least .9 acres of parkland be placed on the Parcel

Background on School District's role as related to the 2018 Bond:

According to documents on the District's website, selling the district property for use in the Town Center Project was discussed during the 2018 Bond planning phase. In  a letter to parents on November 14, 2017, then Superintendent Bruce Gearing wrote, "Finally, I would like to clarify the school district’s role in the City’s TIRZ (Tax Increment Reinvestment Zone)/proposed Town Center. We have agreed to work with the City of Dripping Springs to explore the possibility of a central Town Center that would include facilities for the City, DSISD, Hays County, and the Community Library. We would not be a financial partner, but our participation would be critical because district-owned property would be a key component of the project. This concept is in the exploratory stage and as the land owner, we would have to approve any final plans. The TIRZ would not pay for a new DSISD Administration Building, but would be able to pay for some related costs such as roads and utilities infrastructure. The district also could benefit from the potential land lease."

• 05/05/18: Election Held – Bond Proposition Passed by 37 votes
• 05/16/18: Recount of Bond Election Results (Outcome Confirmed)
• 06/18/18: Election Contest Lawsuit Filed by Citizens for Excellent Education in Dripping Springs (CEEDS) citing 51 voters in DSISD living across the Travis County line were not given an opportunity to cast a ballot.
• 08/14/18: Court Ruling Validated Election Results
• 09/20/18: Bond Sale ($110,000,000)

Here are two questions and answers from FAQ on the 2018 Bond, which can be found here.

"How does the proposed Dripping Springs TIRZ/Town Center project work into this plan?"
"Dripping Springs ISD is a partner in the TIRZ/Town Center project. Because most of the land proposed for the Town Center is owned by the district, DSISD’s involvement is critical for the project. If the bond is approved and the administration building moves to the Walnut Springs campus, DSISD would be located on the edge of the Town Center, and remain as a partner with the City of Dripping Springs, the Dripping Springs Community Library, and Hays County. In fact, the DSISD administrative relocation would open up space in the Town Center complex to be used for other purposes."

"Would DSISD sell the property where the current Administration Building is located if district offices moved into the repurposed Walnut Springs Elementary?"
"The district would lease the land, which would be a key parcel if the Town Center project becomes a reality. In addition to use by the city, county and library, there also is potential space  for commercial use, which could generate revenue for the district (and would not be subject to recapture)." 

The next steps in the Town Center planning process will be discussed at the TIRZ board meeting May 10.