The Kyle Report

The Kyle Report

Tuesday, December 13, 2016

City Council to meet Friday to purchase city manager’s residence

The City Council is scheduled to gather in a special called meeting at 9 a.m. Friday to approve spending slightly more than $550,000 to purchase a home in Cypress Forest that essentially will become Kyle’s version of Gracie Mansion with the exception that, unlike the New York City’s mayor’s home, what will become the residence of this city’s current as well as future city managers is designated specifically and strictly as a residence.

Closing costs are expected to add approximately $6,500 to the purchase price.

Friday’s meeting agenda, which should last only slightly longer than the time it takes to casually eat one donut, consists of three items which should sail through without much, if any, debate: 1. A resolution accepting improvements to the Cypress Forest subdivision (and noting that it was accepted at a properly scheduled open meeting); 2. Approving an agreement with Scott Felder Homes to purchase a residence in that subdivision at a cost not to exceed $550,000 plus the closing costs; and 3. An amendment to the city’s budget to appropriate the $556,500 to cover the home’s cost and the closing costs.

Interestingly, the most expensive available home listed on Scott Felder's Cypress Forest website goes for $332,990, which is about $19,000 more than what he lists as his most expensive available plan for a new home in the subdivision. So I'm guessing right now the proposed city manager's residence is going to be a custom home not currently listed (something like this one Felder has for sale in Austin) or one of the higher-priced plans on a larger-than-normal-for-the-subdivision lot.

It turns out, however, according to Mayor Todd Webster "there are several homes being constructed in this ($550,000) range.  It is true that it is at the upper end but it is one of the floor plans they offer there. I expect it to be in the middle to upper range of the executive level homes in the neighborhood at build out. We considered price per square foot more than the overall purchase price but certainly considered both along with investment return."

The reason I don’t think there should be much debate over this item is because, quite frankly, is not only a smart move on the city’s part, but one I expect other city’s to follow in short order. Think about it: 1. The next time the city is in need of a new city manager, the pool of applicants will be much wider and deeper because those applicants will know that one major obstacle — the search for and acquisition of a place to live in a new location — has been removed. 2. The city can afford to adjust the salary demands of any potential city manager because housing costs — which probably amount to at least one third of a person’s personal family expenses — are eliminated from the equation (i.e., the purchase price of the home is more than repaid through lower city manager salaries). 3. The value of the property is only going to appreciate; in fact, it will probably be the most valuable piece of property on the city’s books before long.

Mayor Webster supported these assumptions.

"The city negotiated a price per square foot that is much lower than comparable properties and that made this a very good investment," the mayor told me early Wednesday morning. "Between the lease/reduced salary and very conservative prediction for valuation growth (2.5 percent/year), we expect a return of $240k-plus on the $550k by the end of the eight-year contract term.

"And, I think you are correct that should (City Manager Scott) Sellers leave or retire, the inclusion of housing in the compensation package should make Kyle very competitive for top tier city managers in any future recruiting effort," the mayor added. "The city manager profession is extremely transient, which makes the provision of housing something that should broaden the range and number of applicants in any future search.

"This was a very smart financial investment and a strategic decision that should earn an excellent financial return. Alternatively, we could have taken the traditional approach that would have resulted in a higher new starting base salary for the city manager. I think that approach may have been easier for the public to understand and accept, but it is hands down less advantageous for the city."

One other thing that wasn’t clear when I first learned of the emergency meeting was why this action couldn’t wait until the council’s Jan. 3 regularly scheduled meeting. I originally thought it might have something to do with the expiration date of Sellers’s contract, but Mayor Webster informed me that wasn’t the case. The pressing issue, according to the mayor, is the seemingly innocuous first item on the agenda. Apparently perhaps as many as a half-dozen potential homebuyers were going to be denied the opportunity to close on their purchases in Cypress Forest because a final plat on the first phase of the subdivision wasn’t in place

"The other items were tacked on," Mayor Webster said.. "The other items could have waited if we weren't already going to have a special meeting."


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