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 …

The likely demise of the Mountain City ILA

Last night’s elections for the Mountain City City Council may have secured the final nail in the coffin of a proposed agreement between Mountain City and Kyle involving, to put it simply, selling water for land.

I’m going to try make this explanation as bare bones as possible and, in doing so, I will, admittedly, being omitting a lot of details, but the situation is basically this. A developer proposed the construction of a trendy residential district it called Anthem on property located in Mountain City’s Extraterritorial Jurisdiction (ETJ). In order to provide water for the subdivision, the developer reached an agreement with an outfit known as Electro Purification which proposed to drill wells near Wimberly in an area that was not regulated by any water district. Residents around the proposed drilling feared those wells would drain water from their water supplies and they took their complaints to county and state government officials. The result was legislation enacted that placed the disputed area under supervision, having the effect of limiting the amount of water Electro Purification could extract from their wells. As a result, Anthem still had no water source.

So the City of Kyle decided to saddle its white horse and ride to the rescue. It told Mountain City it would provide the water needed for Anthem if Mountain City would cede jurisdiction of the Anthem property to Kyle which, probably sooner than later, would annex the territory into its city limits. There was more to the agreement than that and, originally Hays County was part of the deal, throwing in some free road reconstruction for Mountain City, but recently I have heard that the county is out of the deal and the city of Dripping Springs has become the third party.

The populace of Mountain City was sharply divided over the proposal. (The populace of Kyle, as usual, didn’t seem to care one way or another.) I don’t want to say the Mountain City population was "split," because that would infer there were as many Mountain City residents for the ILA as there were against it. My feeling, from attending a couple of town hall meetings and one city council meeting, was that there were far more people against the deal than there were those for it. I didn’t realize just how overwhelming those numbers were until I saw the results of last night’s elections, which basically was a referendum on the ILA. Those that are against the ILA are divided into two camps. The first, under no conditions whatsoever, wants to cede any land to Kyle — they insist a "buffer" must be maintained to protect them from Kyle. The other camp just thinks Mountain City is not getting enough in return for ceding the property. (Back when Kyle Mayor Todd Webster was not afraid to talk with me, he said right after the ILA was proposed that, had he been in Mountain City’s shoes, he would oppose it.)

Last night’s Mountain City City Council election featured five candidates all running for three positions on the council — the top three vote getters would win. Three of the candidates — incumbent Lee Taylor, Suzanne Halam and Ralph McClendon Jr. — had either expressed dissatisfaction with the ILA or said they hadn’t reached a final position on it. The other two — Eva Brown and Thomas W. Brown Jr. (wife and husband) — were solidly in favor of it. The Browns, together, tallied only 8.8 percent of the votes cast. That’s not 8.8 percent each, but 8.8 total: 5 percent for Thomas Brown and 3.8 percent for Eva Brown. That’s astonishing. From where I sit, the folks in Mountain City spoke loudly, clearly and resoundingly about how they feel about the ILA and they don’t want it. And since any proposed agreement would have to be approved by the Mountain City City Council, I can’t see how this deal has any future.

Conversation with Mountain City mayor about that semi-forgotten ILA

That interlocal agreement among the cites of Kyle and Mountain City along with Hays County was the subject of some intense debates and lively meetings back in June, but it seems to have faded from the public interest of late.

So I asked someone for whom I have a lot of respect, Mountain City Mayor Tiffany Curnutt, what's the latest on the deal. Here is the gist of that conversation.

Kyle Report: Is it dead?

Mayor Carnutt: No, it’s still in negotiations. We’re still working on it.

Kyle Report: Do you think an agreement might be reached?

Mayor Carnutt: To be determined. I think we are coming to a version that can be proposed to our council but I can't guarantee that it will pass.

Kyle Report: What is the status of Anthem now that the ILA appears to be, at least, stalled?

Mayor Carnutt: It's been a work in progress and hasn't actually stalled. However, we haven't put a new version out there for our council and residents to review yet since it almost had to be completely rewritten after the first draft was provided by the county and I think we all knew it would take some time. Especially since Mountain City doesn't have full time legal resources. Also, we are taking our time with it to be sure that we take everything into consideration for the future of Mountain City. So this also takes time and we wanted to be sure that the version proposed is something presentable to our council and residents, though it may require additional tweaking or modifications once proposed

Kyle Report: What action, if any, is Mountain City prepared to take on this matter?

Mayor Carnutt: We haven't put the item on the agenda to take action at this point. We will wait for the next version to complete before we put it back on the agenda. And we also want to be sure that our residents and council all have ample time to review. We have some great resources in the city and they may catch something that we didn't."

The mayor added that Mountain City’s next city council meeting is scheduled for Tuesday, Oct. 12, "We haven’t created a final agenda for this meeting," the mayor said, "but the action item may be incorporated if it’s presentable prior to then."

It is worth noting that the ILA is scheduled to be a part of the proposed executive session at Wednesday's Kyle City Council meeting.

Mountain City votes to continue haggling over “sale” price

Update and correction: I have updated and corrected this item to reflect the fact that Mountain City Mayor Curnutt did not say the $500-per-lot payment from Anthem to Mountain City should be part of the ILA. She did say, as she pointed out in an e-mail to me, that this would be a part of a separate agreement between Mountain City and Anthem Development. I stand corrected on that point.
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A developer wants to place a comparatively high-end subdivision on land that’s part of Mountain City’s Extraterritorial Jurisdiction (ETJ). Problem is the subdivision has no guaranteed source for water. So the City of Kyle stepped in and said it will extend its water and wastewater lines north to the subdivision, sell the residents its water and carry its wastewater south to Kyle’s wastewater treatment plant. It also threw in a few other goodies. In return, Kyle would take control of Mountain City’s ETJ and eventually annex it into Kyle so the property taxes of those in the subdivision can help pay for the infrastructure extensions. To sweeten the deal for Mountain City, Hays County jumped in and said it would pay to build new roads for Mountain City if Mountain City paid for the materials needed to build them. A document was prepared reflecting all this and that document is called an Interlocal Agreement (ILA).

That’s a simplified synopsis of the deal, but it hits the important parts.

The residents of Mountain City, however, don’t like the deal. Not one bit. And, as evidenced by a town hall meeting held a week ago last night, these residents are divided into two camps: One that doesn’t want to give up the ETJ under any conditions and a second that is willing to give it up, but not under the provisions as outlined in the current ILA. It was that second group that showed up last night at Mountain City’s City Council meeting that ended with the council unanimously approving a motion to continue negotiating with Kyle and Hays County for what it feels is a better deal, although neither Mountain City Mayor Tiffany Curnutt nor Mayor Pro Tem Phillip Taylor wanted to express confidence that an agreement will ever be reached.

The residents who attended last night’s council meeting do not view the action Mountain City might take as trading its ETJ. They call it "selling" the land in question and they are after a better sale price. In fact, Mayor Curnutt said she and Taylor met with Kyle City Manager Scott Sellers, Hays County Commissioner Will Conley, Anthem developer Clark Wilson and others for "about an hour" yesterday to discuss with them "If we were going to sell – I think that’s a good term – the ETJ what would make it worth our while."

To that end, she said, an attorney representing Mountain City will, in Mayor Curnutt’s words, "take first stab" at drafting an entirely new ILA which will be presented to Kyle and Hays County officials. She did not refer to this pending new document as a take-it-or-leave-it proposal, however, just the next step in the negotiating process.

Now I’m not an impartial observer in this discussion. Because I am a resident of Kyle, I want what’s best for the city in which I live and my observations on last night’s discussion are going to be filtered through that lens.

For example, I’m going to mention one of the last ideas broached last night first and that is the ILA should state if, for any reason, the subdivision, presently known as Anthem, doesn’t come to fruition, the ETJ would be returned to Mountain City. On the surface, that might sound reasonable, but there’s a chicken-egg question going on here. I will argue that once Kyle begins constructing the water and wastewater lines extensions, the ETJ remains in Kyle’s possession regardless of the fate of Anthem. Besides, the owner of the property says development is going to take place on that land, whether it’s called Anthem or Antler or Antares or Antebellum or Antediluvian or Antepenultimate or even Anticlimax. Something’s going to be constructed on that land and soon and, whatever it is, it will need water. Now, if Anthem becomes a no-go before construction begins, I see no reason Mountain City can’t reclaim its ETJ, although I would hope Kyle leaders become reluctant to enter into any further ILAs over it. Let Mountain City deal with it.

Another provision Mountain City wants as part of a revised ILA is that only that part of the ETJ that will be occupied by Anthem would be part of the deal. That would mean, as someone explained it to me last night, that instead of a 10-foot wide swath of land separating the city limits of Mountain City and Kyle, there would be a 50-foot separation, a separation Mountain City said it would like to use for a hike and bike trail. That one sounds rather reasonable to me.

"We may have to incorporate some language to the effect if signs or other structures are built they would have to fall within Kyle’s requirements as well," Curnutt said. "For example they don’t allow the pillar signs. So they don’t want any 70-foot pillar signs. So we would have to mutually agree on whatever signs are placed there."

Then she mentioned something that I had a problem with and that’s the development agreement that currently exists between Anthem and Mountain City.

"If Kyle were to adopt the development agreement as it stands or perhaps make it more stringent – whatever that means – but if they’re going to do that, it has to be outlined," the mayor said. "It may be better for them but we don’t consider it better." For example, she cited, Kyle Mayor Todd Webster "had mentioned all the homes in Plum Creek … are not our standards of masonry. Hardy plank, in our own minds, is not considered masonry. So that was one thing we talked about. Hardy plank is not going to work for us."

She also said the "timing was really weird" on when the property would be annexed. She said, according to the terms of the ILA as it is presently written "Basically, the minute we sign the ILA then the development agreement goes away and Kyle can write whatever it wants. So we want some language that says they are going to adhere to these rules when they write their development agreement. We would like to see a draft of that."

Here’s my problem with all that. No city should be allowed to dictate to another city how it should construct homes or the contents of any development districts or anything else about the way that city operates. You can dictate the rules for your own municipality but I have grave concerns when one municipality thinks it

has the right to dictate the rules for another municipality.

She also said she wanted to see maps of where the water and wastewater lines would be located before she would agree to any ILA..

In addition, she said, she wants "clarification" on Mountain City’s ability to "tie in" to Kyle’s water lines. She said she wondered if that allowed Mountain City residents, on an individual basis, to decide whether they would prefer to pay to have access to Kyle water. "That’s pretty much not the case," she told the council and the audience. "It would be pretty much all or none. We would have a main tie-in and the city of Mountain City would be responsible for paying the City of Kyle whether it’s in-city or out-of-city rates. That’s negotiable. Their out-of-city rates are 130 percent of what they currently charge their city residents, which is high to begin with. But just for clarification, it would be one main tie in. It could be used as an alternate source or for something if we ever decided to stop providing water. That’s not at all in the plans, but the City of Kyle would have the ability if we gave them the authorization to start providing water."

Curnutt said Mountain City would have to address what she referred to as extremely expensive infrastructure improvements before it could connect to Kyle’s water supply and will probably have to make those improvements sometime in the future anyway because of aging. "Our water costs are going to go up regardless," she said. "It’s a very old system."

To help defray the costs of these improvements, Curnutt wants an agreement with Anthem that stipulates Wilson will pay Mountain City $500 for every lot sold in Anthem, which, of course, is strictly between Anthem and Mountain City. 

Mountain City, for some reason known only to it (perhaps it has to do with the possible increase in traffic on its streets), wants all entrances and exits to Anthem be located on RR 150, with another one possibly located on the northeast edge of the project, away from Mountain City, and that there be absolutely no street connection whatsoever between Anthem and Mountain City. According to current plans, there is only one way in or out of the subdivision but, from what I’m hearing, the project is big enough that state law requires at least two, because, if one was blocked for any reason, there would need to be a way for emergency vehicles to access the area. The problem is, however, the area of the project that fronts 150 is relatively small, meaning the two access points would have to be so close to each other to result in major traffic problems along that stretch of 150, particularly when you consider that stretch of highway is scheduled for major renovation, i.e. widening, as part of the area’s transportation plan.

To give you another idea, of how clueless elected officials around here are when it comes to PIDs, Mayor Curnutt said Wilson is, of course, working on a PID to present to the Kyle officials. When someone asked her what a PID was, she replied it was a "Public Infrastructure District." Yipes!

There also seems to be some disagreement about what Plum Creek plans to do with the land it owns north of Kohler’s Crossing and east of 2770, basically across the street from Mountain City. According to a Plum Creek web site, this area, known as Uptown, will eventually contain "mixed-use multifamily development, restaurants, retail and office uses, the central administration offices of the local school district, a new City of Kyle library, and urban civic space in the form of plazas and an amphitheatre." Taylor, however, swore to the audience last night Uptown is not zoned for multi-family.

That’s the highlights of the discussion on the one item that was on Mountain City’s council agenda last night. Fortunately, I got to hear it when I did because, knowing that Kyle officials don’t believe in open, transparent government as much as Mountain City seems to, I’m willing to bet all mention of Monday’s meeting from Kyle’s point of view will be discussed in executive session.

After the meeting I asked both Curnutt and Taylor whether they were confident that an ILA would ever been signed. "As long as it was agreeable to all parties concerned," Taylor said. I basically repeated my question by asking, on a scale from one to 10, how confident they were a document could be written that "was agreeable to all parties concerned." They both replied, in unison, "I don’t want to go there." That, to me, did not exude a whole lot of confidence on their part a deal would ever get done.

So there’s that.

Mountain City, at least, knows Robert's

I will have more on this tomorrow, but the Mountain City City Council tonight unanimously approved continuing to discuss terms of a proposed Interlocal Agreement among Mountain City, the City of Kyle and Hays County concerning a subdivision planned for a water-starved area of Mountain City's ETJ. But what I found extremely interesting after attending my first Mountain City council meeting is that, unlike Kyle, its council knows exactly how to follow Robert's Rules of Order when discussing and voting on an agenda item. Perhaps Mountain City's mayor Tiffany Curnett can let Kyle Mayor Todd Webster know how it's supposed to be done during their ILA discussions. That would help keep the Kyle City Council from looking so goofy.