Min 03/23/1964 614
Wichit4 Texas
Memorial Au,3it6rium bldg.
M�arch 23, 1964
Items 1 4 2 The Board of Aldermen of the City of Wichita Falls# Texas, met in special session to
hold a public hearing on the above date in the Council Room of the Memorial Auditorium
Building at 7:30 o'clock P.M.P with the following members present:
John J. Gavin Mayor
J. Winston Wallander
Dr. D. Clifford Burross
0. D. McBride Aldermen
Dr. Al T. Witcher
Roy V. (Pete) Claytor
Don Wade
L. Jack Davis City Manager
H. P. Hodge, Jr. City Attorney
W. B. Hicks City Clerk
The invocation was given by Alderman Claytor.
/3 Mayor Gavin now stated that the purpose of this public hearing was to give the build-
ers and developers an opportunity to have their views on the city's reimbursement policies
heard by the Council. He also stated that before hearing any of the developers and build-
ers present, he would like to ask Mr. Jack Davis, City Manager, to give the Administration's
recommendations on the present policy. Mr. Jack Davis asked Mr. R. T. Gregory, Director of
Public Works; to read the memorandum which had been prepared after a year's study, and
clearly stated the staff's recommendations on the present reimbursement policy. (copy
attached.)
Mr. Otis Nelson, Attorney, was recognized and took the floor as representative of sev-
eral of the builders and developers present to discuss their views on reimbursement con-
tracts between the City and developers. He cited as an example supporting their views, a
suit in San Antonio in regard to the furnishing of water and sewer service to areas being
developed*' Mr.. Nelson also presented two briefs on this subject, and read several excerpts
from these briefs, and stated that he had been furnished information by Mr. Lam that
roughly $109,00&,000.00 had been spent by developers of residential areas in Wichita Falls
in the last 15 years. Mr. Nelson further stated that he would like to request that passage
of an ordinance changing the policy on reimbursement contracts be delayed at least 30 days
until a decision could be rendered in the court case in San Antonio.
Mr. Gene Stephens was recognized and took the floor to further relate some of the
home builders' views. Mr. Jack Davis., City Manager, made a rebuttal to Mr. Stephens'
statements, and clarified several questions regarding reimbursements.
Mr. Dub Dennis was recognized and stated that lie was appearing strictly for himself,
and in his own interest, and related some of the history of reimbursement contracts. Mr.
Dennis then read the preamble to a report of a study made two years ago on the inequities
of both utility reimbursements and reservation of park land by developers. He also read
excerpts from an actual reimbursement contract. Mr. Jack Davis asked several questions of
Mr. DennisP and made several points regarding the information related by Mr. Dennis.
Alderman Burross at this time made several points regarding these agreements between
the City and developers. Mayor John Gavin now remarked that he thought it was important
that the Planning Commission had requested that the Council make a policy-decision regard-
ing reservation of park lands and utility reimbursement contracts. Alderman Burross then
made several statements and discussed policy regarding both problems.
At this time, Mr. Bill Thacker, Chairman of the Planning Commission, was recognized
and took the floor to relate that the Planning Commission is seeking direction from the
City Council, and that since this is a matter of city finance, it was felt that these
matters were beyond the scope of the Planning Commission.
At this time Judge Nelson spoke to Alderman Burross and clarified a point of his
presentation.
Mr. Lam was recognized and gave his views and related some of his experience regarding
development of new areas. At this time Mayor Gavin stated that he should have mentioned
previously, but had failed to do sot that no present contract or area presently under de-
velopment would be affected under the proposed ordinance or resolution changing the city's
policy on utility reimbursements and dedication of park land. Mr. Lam urged that no action
be taken regarding a change in policy until the court case in San Antonio had been settled.
Mr. Dennis asked Mr. Jack Davis a question on the operation of the ,water department
on 75% of the revenue from the areas covered by reimbursement contracts, which Mr. Davis
graciously answered.
615
Alderman Claytor also had some questions regarding utility reimbursement policy.
Mayor Gavin now made some explanatory remarks as no one else desired to be heard, and
the hearing was nearing its close.
Alderman Claytor stated that they had heard the views of the developers and home
builders, and that he would like to hear how the general public felt on this issue.
A complete recording of this hearing is on file in the office of the City Clerk.
Moved by Alderman Claytor that the meeting be adjourned.
Motion seconded by Alderman Wade and carried unanimously.
The Board of Aldermen then adjourned at 9:38 P.M.
PASSED AND APPROVED this the day of 1964.
�Iayor
ATTEST:
City Clerk
March 23, 1964
TO: City Council
FROM: Jack Davis, City Manager
SUBJECT: public Hearing on Reimbursement & Park Dedication Policy of Wichita
Falls.
The concern of the City Council was attracted to the policy governing
utility reimbursement contracts in February, 1963, when a group of land developers
asked the Council to meet with them to discuss mutual problems, At that meeting,
the developers proposed a number of changes to existing policies which involved
additional participation by the City in the cost of land development in addition
to a short term reversion clause in park dedications, Subsequently, the Council
requested that the City Manager and his staff completely review the policies con-
cerned and make recommendations for any appropriate changes. A thorough study
has been made, although some delay was experienced in awaiting the results of a
more comprehensive review 1)5 Hhe entire subdivision regulations by the Texas
Municipal League,
Present policy requires the City to enter into a contract with each land
developer to refund to the developer 25 percent of the revenue collected from
connections to water and sewer lines installed by the developer until 50 percent
of the cost of such lines has been paid or 10 years has elapsed, whichever occurs
first, Park land, or its equivalent in cash, is required to be donated by the
developer in the amount of one acre for each 30 residential units,
Staff recommendations which resulted from the past year's study are as
follows:
I. it is recommended that the policy of the city paying a part
of the cost of development of residential subdivisions be
discontinuedc Wherever utility lines of a size larger
than that necessary to serve the development is required by
the City, it is recommended that the difference in cost be-
tween the sizes required and that necessary to serve the
development be paid by the City. It is recognized that the
City has not in every case in the past discharged its full
obligations in this respect. it is therefore recommended
that the City's obligations for cost of oversize lines be
mado the subject of a contract between and mutually satis-
factory to the City and to the developer at the time the over-
size requirement is made and if the City is not financially
able to assume such obligations that no such requirement be
made,,
page #2
II. It is further recommended that no requirement be made for
dedication of park lands, but that the City shall purchase all
needed park land at the fair market price for raw land- The
City shall also pay the pro rata share for all development costs
assignable to the park land so purchased, including half the
cost of abutting streets and pro rata costs of utilities necessary
to serve such park land.
The above recommendations were made after careful study and consideration of
the following points:
1, The reason for the City assuming a part of the cost of land develop-
ment no longer exists In the ten year period following World War
II a serious housing shortage existed in every city and various in-
ducements were offered to land developers and home builders in an
effort to encourage building to meet this shortage� Such inducements
included the lowering of construction standards, easy credit, and
assumption by the taxpayers of a portion of the cost of development
of land. In some cities this included the construction of streets
and draina�, as well as paying a varying portion of the
cost of utility lines. it is an understatement to say that a housing
shortage no longer exists, so that a continuation of such a policy is
neither financially feasible nor necessary.
2 Sustaining a policy of sharing the cost of land development is a
drain on municipal finances that no longer can be afforded, The
City of Wichita Falls has paid, in the last three years, an average
of $104,000 per year in utility cost reimbursements to private land
developers, a sum of money which represents about five cents of the
tax rate and which would finance approximately $2 million worth of
bonds, This would be enough to construct the Central Fire Station,
Police Station, Library, and renovate the Municipal Auditorium- The
squeeze between rising municipal costs and lack of adequate sources
of municipal revenue require that utmost efforts be made to be certain
that every cent of municipal expenditure is a wise one and is necessary
for the welfare of the City�
a Since this policy went into effect in 1951 the city has assumed
an obligation to the various subdividers in the amount of
$2,205,311.49 for both water and sewer extensions. As of March
1, 1964, a total of $1,006,202,87 has already been paid.
b., There is an outstanding balance in the amount of $1,199,108.62,
Even if the Council were to stop this policy immediately it
would take ten years to pay the present obligations.
3. This expenditure is an unfair and unequal distribution of the cost of
government. The homeowner in a subdivision covered by a utility re-
imbursement contract pays only 75 percent of his water and sewer
charges into municipal funds; the rest is paid to the developer in
the form of reimbursements. All other citizens, on the other hand,
Page #3
pay the entire sewer and water bill toward the cost of providing
such services or other governmental costs. it would certainly
be wholly impractical to apply different rates to utility customers
to equalize this situation�� In areas not covered by refund policies
a property owner pays his full share of the cost of utility lines by
paying a pro rata charge for service-
4. The trend in most other cities is to discontinue the sharing of land
development costs. At least one has written a prohibition of such
practices into its charter, other cities in this vicinity do not
pursue such a policy on grounds that they cannot afford it. Actually,
the greatest growth in the 1950's occurred in cities where there exist
the highest subdivision standards and fiscal policies. There are
exceptions to this. A check of the growth rate of cities during the
1950's will prove that presence or absence of a refund policy did not
effect their growth�
Of the top 15 cities in Texas those giving refunds to subdividers
grew an average of 38 . 1 percent during the 1950's while those not
giving refunds grew an average of 88,2 percent in the same period,
Growth cor,,e,, or _� _ 'L,I,r a number of reasons, none of them connected
to a city's subdivision standards and related fiscal policy.
5. It is believed that the existence or lack of a cost sharing policy
has little or no effect on the cost of housing,. The payment of re-
imbursement contracts depends entirely upon the speed and extent of
the construction, sale and occupancy of houses within the develop-
ment The resulting uncertainty of return is such that the full cost
of utilities must be and is included in the sale price of each lot
along with other development costs. Discontinuance of such reimburse-
ments would therefore add nothing to the sale price of the lot, particu-
larly in a market as competitive as today's market- F.H.A. and other
lending agencies do not take such reimbursements into account when
establishing a loan value on the lot.
There have been numerous allegations made that the price of housing
is higher in Wichita Falls than other cities in Texas. It is be-
lieved that there is much truth in this contention. It is therefore
recommended that the City of Wichita Falls join with the Chamber
of Commerce and Wichita Falls Home Builders' Association in ascertain-
ing the difference in housing costs here and elsewhere and the cause
of such difference. it is possible that knowing the cause may help
us in reaching a solution to it-
6, The point has been made that utilities other than those owned by the
City make extensions into new developments without cost to the developer.
A privately owned utility is a monopoly regulated by the State. The
courts have consistently held that such regulated utilities must be
allowed a reasonable return on their investment, usually between 5 and
7 percent. Such privately owned utilities are therefore able to make
such investments with assurance of recovering their outlay regardless of
the risks involved, Municipally owned utilities, on the other hand, re-
page #4
ceive no such guaranteed profit. All municipal operations are
non-profit by definition, since they belong to all citizens.
Some cities charge for some services but not others, depending
upon the share of municipal costs borne by taxes. The practices
of municipal utilities must therefore stand the test of what is
best for all the citizens of the community.
7. it is firmly believed that the City Government should take a cordial
attitude toward industry, realizing that no city in a location such
as that of Wichita Falls can prosper or even exist without it. How-
ever, a distinction must be made between basic and non-basic industry.
Basic industry is that industry whose entire income is derived from
sources outside the influence of the city in which it is located.
Examples of such industry are Sheppard Air Force Base and Walker-Neer
Manufacturing Company. All money entering the local economy from
such an industry is new money which would not otherwise have entered
the local economy. A non-basic industry is one which derives all of
its income from within the city in which it is located, thus adding
no new money to the local economy. Industries may also occupy Posit-
ions at any point between these two extremes. Nothing is added to the
economy by ---he of a non-basic industry, since its sole reason
for being in a particular location is to satisfy a pre-existing demand
for a service or product. Certainly if such a demand exists it will
be met, since the satisfaction of a demand inevitably results in pro-
fit, The home building industry falls into the non-basic category,
since it adds no new money to the economy but simply satisfies a pre-
existing local demand. Where no demand exists, none can be created
by the industry itself. The declining market for homes over the past
three years would indicate strongly that refunds alone will not create
this market for homes. It takes new people and these people come here
only when there are new jobs available.
This distinction should also be made between land development and home
building. While the land developer may, by multiple company ownership,
also engage in the home building business, the two are separate and
distinct, The land developer buys raw acreage, improves it with streets,
utilities, and other improvements. He then subdivides it into lots
which are offered for sale. The price of the lot includes land cost,
improvement cost, overhead and profit. The speculative home builder
buys a lot from the land developer, constructs a house upon it, and
then offers it for sale,
The city Council has set a policy of fair and equal treatment as its
primary goal. Recent agreements with industrial Development, Incorporated
set out the provision that Arrowhead Industrial District will pay its pro
rata share of utility costs with the City of Wichita Falls bearing the
cost of oversize mains� No portion of the utility cost within Arrowhead
is reimbursable. We believe this to be a fair policy for all citizens of
Wichita Falls. The greatest contribution which can be made by the City
of Wichita Falls is to insure competent, efficient and economical govern-
ment for all segments of the public, industry and private citizen alike.
Page #5
8. In applying the recommendations made to the dedication of park land,
it is recognized that certain inequities now exist. Some developers
have already donated park land in an amount in excess of that necessary
to satisfy the requirements of land developed, while others have not
yet satisfied such requirements. It is therefore recommended that
contracts be entered into forthwith with such developers which would
(a) reimburse the developer for park land donated in excess of require-
ments and (b) provide for donation of sufficient land to satisfy the
requirements of subdivisions already approved.
The present administration re-affirms its faith in this community and its
inevitable growth. Such growth can take place only by the efforts of every citizen
to create a climate favorable to the attraction of basic industry, with the reali-
zation that growth based upon a sound economy will be of benefit to all, including
non-basic industry such as the butcher, the baker, and the corner drug store as well
as the home builder and the land developer.
14
CITY OF WICHITA FALLS
REIMBURSEMENT ANALYSIS
March 23, 1964
ORIGINAL CONTRACT INDEBTEDNESS BY YEAR
DATE WATER SEWER TOTAL
Prior to
10-1-52 $ 332,129.21 $ 5,258.24 337,387.45
1952-53 124,348.75 33,343.21 157,691,96
1953-54 6,193.61 81,967.77 88,161.38
1954-55 100,845.65 99,289.57 200,135.22
1955-56 24,626.21 33,505,52 58,131.73
1956-57 158,034.54 25,426.95 183,461.49
1957-58 72,368.98 66,448.00 138,816.98
1958-59 108,380.13 38,503.24 146,883.37
1959-60 65,354.97 165,816.17 231, 171.14
1960-61 -., 266,748.13 489,833.66
196-11 -62 11,662,90 475.94 12,138.84
1962-63 83,705�55 37,465.32 121,170.87
1963-64 23,373.48 16,953.93 40,327.41
$1,334,109.51 $871,201.99 $2,205,311.50
REIMBURSEMENTS PAID TO DATE
Prior to
10-1-52 $ 154,292.21 $ 2,440.46 $ 156,732.68
1952-53 34,034.86 1,270.46 35,305�32
1953-54 25,988�41 2,400.55 28 388.96
1954-55 44,356.23 4,555.85 48:912.07
1955-56 45,377.24 53403.00 50 780.24
1956-57 65,267.65 7,122�71 72:390.36
1957-58 71,937 .67 8,362.39 80,300.06
1958-59 72,045.92 14,249.41 86,295.33
1959-60 71,077.05 17,089.75 88 166.80
1960-61 78,591.17 18,212.71 96:803.88
1961-62 95,454.62 24,390.70 119'845.32
1962-63 73,426.95 21,856.95 95,283.90
1963-64 (5 months) 35,208.76 11,789.19 46,997.95
$ 867,058,74 $139,144.13 $1,006,202.87
Amount of Refunding
Contracts $1,334,109.51 $871,201.99 $2,205,311.50
Payments made to 3-1-64 867,058.74 139,144.13 1,006,202.87
Balance of Liability 467,050.77 732,057.86 1,199,108.63