A conversation with the city about the house of cards known as the Dahlstrom deal

The Dahlstrom land reflects many aquifer recharge features, including this cave.

Item 33 of tonight’s City Council agenda states: "Consider and possible action in regards to an Agreement between the City of Kyle, Texas and the Dahlstrom Family regarding the Consensual Release of Extraterritorial Jurisdiction from Dripping Springs to the City of Kyle." This aroused my curiosity because I was wondering why the city was so anxious to have in its jurisdiction a huge swath of land that could not be developed because it was under a conservation easement. So I approached Assistant City Manager James Earp, who was gracious enough to take time out of his schedule this morning to talk about the deal and he says it all has to do with "connectivity." There is a subdivision, called Anthem, planned for property in Mountain City’s ETJ. The problem is getting water to the homes planned there. Originally the water was supposed to come from wells drilled by a company called Electro-Purification (EP) out of Houston, but that deal collapsed for reasons too complicated to go into here. Kyle said it would provide the water if Mountain City gave the ETJ to Kyle (this provision is contained in something called an Interlocal Agreement [ILA], which also contains a lot more provisions than merely the land for water swap). I call the Dahlstrom agreement a "house of cards," because everything is precipitated on Kyle absorbing land that is currently in Mountain City’s jurisdiction — land, if I read the tea leaves correctly, Mountain City has no plans on surrendering to Kyle.

Regardless, what follows is the transcript of my conversation with the assistant city manager.

Kyle Report: Why does the city want this property?

Earp: So this is the first step in multiple steps of the strategic process to get to the Anthem property, the Anthem property being Clark Wilson’s project that’s on the northwest side of Mountain City. That was one of the key players that was going to be in the EP water deal. We were approached and asked if we would provide utility services to that project so that they would not have to be a partner in EP. We said we would, but Anthem would have to be in our jurisdiction. So, in order to get to that property, we have to connect to it. Currently, we don’t connect either north or south. Although it looks (on a map of the region) like we connect with the Anthem property on the south, we really don’t because Mountain City needs to keep a strip in order to maintain connectivity (to other parts of its ETJ). So that gives us a barrier on the south that we couldn’t punch through. So the only option then was to come from the north. So we approached the property owners (on Anthem’s northern border), the Dahlstroms, and asked them if they would be willing to give us enough property to connect there and thus bring (Anthem) into our jurisdiction. The Dahlstroms’ property goes all the way north to 967 and essentially their response was they wanted to be a partner in helping EP not be a thing, but they weren’t interested in splitting their property into multiple jurisdictions. So they needed time to consider whether they wanted to release all of their property or not. So this is the first step in that process. The Dahlstroms have to agree to release the properties. In order for them to agree to request the release the properties from Dripping Springs, whose ETJ they are in, they wanted assurances from Kyle, which is what this agreement is. Once we get this agreement in place, then the next step would be to go to Dripping Springs with this agreement and a letter of request from the Dahlstroms to be released. Plus a letter from Kyle saying we’ll accept it. And ask Dripping Springs to release the ETJ. If that occurs, we will take that ETJ area and then we will be contiguous with the Anthem property. Then we move into the Mountain City phase where we do the agreement with Mountain City and Mountain City ultimately releases the Anthem project to us. We accept it and now it’s fully within our jurisdiction. That’s why we want the property.

KR: You’re assuming, however, Mountain City will approve the ILA. My interpretation of the recent Mountain City election results is that Mountain City is firmly against agreeing to the ILA. So isn’t all of this unnecessary?

Earp: No, it’s not, because we can’t get to that to that ILA without all these other steps.

KR: What happens if Mountain City doesn’t agree to the ILA? Where does that leave you?



The scenic Dahlstrom Ranch property

Earp: That doesn’t leave us anywhere. We still have done the process we needed to do. The (Anthem) property is going to develop one way or the other. It’s either going to be a MUD or it’s going to be on city utilities. There are a lot of reasons why it is more beneficial for it to be on city utilities. If that property develops as a MUD, there will be a wastewater treatment plant on that property. The Anthem project will have to have its own wastewater treatment plant. That’s a big thing, having a wastewater treatment plant built there. Right now, Onion Creek, which flows through there, would probably be the area that it drains into and that is not something many people on the Onion Creek want to see.

KR: So the City of Kyle has no plans to build a wastewater treatment plant on the west side of I-35?

Earp: We don’t have plans. I suppose that is something that will happen some time in the future, but for the Blanco basin. We plan to connect Anthem to our current wastewater treatment plant.

KR: Do you plan to run any utilities through the Dahlstrom property?

Earp: No. We can’t annex the (Anthem) property and we can’t serve it in our jurisdiction if we don’t connect to it. So we have to connect our ETJ, but not our utilities. Our utilities are either going to run by the (Hays) high school or down by the (Barton) middle school — these two areas are how we’re going to get back to the property. Or we can come up 150 if we have to.

KR: Do you have any additional plans for the Dahlstrom property?

Earp: Yes. So the Dahlstrom property is under a conservation easement so our intent is to market it and show it off and get the word out. It will be opening up, hopefully with their partnership with Hays County as soon as next year. The family wants to be careful about saying it is opening to the public because it’s controlled about how many people can be on the property at any given point in time. But it will be open as a park with some trails and some facilities.

KR: Are you referring to that 384-acre portion the county has already designated as a park in the northwest corner of the property or the entire ranch?

Earp: No, they are not going to open the entire ranch because the Onion Creek splits it in half. So they’re not going to have a way to get across the Onion Creek. Plus, part of the southern part of the property is under lease to Centex Materials. But to my knowledge — and I don’t want to mislead the public, because I don’t know all the details — I know there’s a plan for the northern part of the ranch off of 967. They already have plans with the county that they are working on. My understanding is they hope to be open by the first of the year or the middle of next year.

KR: Were you aware that even as we speak the Hays County Commissioners Court has on its agenda this morning an item to "execute an agreement with Plateau Land and Wildlife Management in the amount of $8,085 for a wildlife management plan for the Dahlstrom property"?

Earp: No, but that makes sense. The county doesn’t have a whole lot of park type resources as far as personnel and consultants and professionals go, so it makes sense to me that they would be hiring out for someone to do a wildlife plan.

KR: If Kyle assumes the property, will the city be assuming what is now a county park and, with it, O&M responsibility for the park?

Earp: Essentially, that would apply if we annexed the property, which we don’t intend to do, at least immediately. I do foresee there being some sort of a partnership arrangement in the future. We’re willing to partner with the county if that means we staff the visitors center. So it would be in our ETJ, just like any other county facility in our ETJ. The county’s the one responsible for operating it, manning it and running it, but, because I think this is going to be such a neat thing for our area to have — we don’t really have, to my knowledge, a conservation easement property that’s protected that you’re allowed to go into and go see. I think it’s going to be something that’s really going to be unique and neat for our community. I think we’re going to want to be a part of that. I just don’t know how that’s going to look yet. We haven’t had any conversations with the county or with the county and the Dahlstroms about that. But that’s something I see happening over the next year or two as we start to build a relationship with the Dahlstroms, in particular.

KR: Any thought been given to constructing, for lack of a better name or description, a conservation/wildlife educational center on the property?

Earp: The only way I can answer that is through the comments I’ve heard the Dahlstroms make, because I haven’t been a party to what they’ve negotiated with Hays County. But they did mention something to that effect, whether it be something like an information kiosk that would teach about the natural flora and fauna and interesting geological features. To what extend, I do not know, but I do know that’s something they’ve been very conscious of and thinking about. I’ve heard the Dahlstroms and/or their attorneys say they were considering having like cabins on site where people could stay and then have that as part of the experience. But there aren’t any immediate plans for that. The immediate plan is to have the information kiosk for visitors to check in and to open up trails and that’s about the extent of what the immediate plans are that I’m aware of.

KR: Is the city going to take over operations of the quarry?

Earp: No. The city will be responsible for the oversight and any type of licensing issues through the state. We would be responsible for those pieces. Right now, Dripping Springs has been doing that because it’s in Dripping Springs’ ETJ. But we’re not going to operate the quarry by any means.

KR: So right now you are telling me there are absolutely no plans to develop the Dahlstrom property if it becomes part of Kyle’s ETJ?

Earp: You can’t develop the property.

KR: You could if you bought the conservation easement.

Earp: Possibly, but that would cost money.

KR: About $350,000, as I understand it.

Earp: Yeah, today. But that’s not the family’s wishes. It’s definitely not our desire. In fact, our motivation was purely just to connect to the south. But, in meeting with the family, they’re the ones that made it clear that while they wanted to participate they didn’t know if they were comfortable breaking the ranch up into multiple jurisdictions anymore than it already is. They already have one little piece that I believe is in Buda or in Austin, one of the two. So they are the ones that told us that this is a bigger deal than you think it is because we really want to see our entire ranch go one way or the other. And we’ve been having those conversations for months, trying to figure out how that would work and how the family wants to see it. For the longest time the Dahlstroms have had more of a relationship with the Buda community than the Kyle community. So there’s concerns and considerations in that regard as well. I do know the property has in its conservation easement they excluded 20 acres on the vary far north on 967 that they could develop perhaps a visitors center or a conference center to go along with the property. Or they could do retail or something. But it’s my understanding from speaking with their attorney, because the impervious cover limits are so stringent that even though it’s 20 acres the development itself could only be four acres, maybe even three.

KR: Are you aware that the Greater San Marcos Partnership’s web site lists that the land on which the Anthem development is supposed to be built is for sale?

Earp: That was brought up at the Dripping Springs meeting. Clark Wilson owns the property. Where the San Marcos Partnership pulls those listings from is from a third party who then gets it from the original listing information. So what you’re seeing is the original listing from whenever Clark Wilson bought the property. I have e-mails from Clark Wilson where he was trying to track down how that information was still making it out to the web site because he doesn’t have it on the market.

KR: So it’s not really for sale.

Earp: It’s not really for sale.

KR: Aren’t you putting the cart before the horse? Shouldn’t you secure the ILA with Mountain City before pursuing this deal?

Earp: Let me tell you about the chicken and the egg conversation. Mountain City has represented they will not consider or take action until Dripping Springs takes action. Dripping Springs says it will not consider or take action until the Dahlstroms request in writing that they be released. The Dahlstroms said we won’t request in writing to be released until we have an agreement with Kyle. So the agreement with Kyle is on the agenda for tonight. That should lead to the letter which should lead to Dripping Springs releasing it which should lead to Mountain City considering it.

KR: Considering it, but not passing it.

Earp: I can’t guarantee, but they won’t even take it up until Dripping has done their part. Dripping won’t take it up until the Dahlstroms have requested that it be released. The Dahlstroms won’t request it until they have protections from Kyle.

So round and round it goes and where it stops …