Montecillo developer granted authority to tax residents, businesses

In a first for the City of El Paso, City Council on Tuesday gave the green light for a developer to have the authority to tax and impose fees on residents and business owners.

The council unanimously approved a Municipal Management District (MMD) for the 300-acre Montecillo development.

The MMD was initially approved by City Council and by the State Legislature in 2011 but needed final approval.

The residents and business owners within Montecillo will still be paying their regular property taxes to the City of El Paso.

But on top of that, the MMD, made up of a private board will charge Montecillo residents and business owners an additional fee and use that money to pay for infrastructure within Montecillo.

“I’ve seen developments in other cities that have used this as a funding source and it’s incredible what you can get out of this,” said City Rep. Michiel Noe.

Instead of the City paying for Montecillo’s infrastructure, the developer will pay for it through the MMD. The MMD will pay for roads, water systems and recreational facilities, among other things.
To pay for the infrastructure, the MMD will be able to impose fees and issue debt.

“That takes it away from the (citywide) taxpayer and makes it their (the developer’s) responsibility,” said Mayor Oscar Leeser.

“They’ll do their own taxing entity, they will be building the roads, their infrastructure and after it’s done the city will do the upkeep on the infrastructure,” added City Rep. Ann Lilly who represents the area.

The developer, EPT Land Communities, has committed to building up to $70 million in infrastructure for the 40-year agreement.

State approval of the management district also gave it eminent domain power.

“if the Montecillo Management district wants to take surrounding property for its own uses, it can under 505 (texas government coe) because 505 gives them that authority,” said government watchdog Lisa Turner.

The City Attorney, Sylvia Firth, said the MMD cannot annex land without the approval of City Council.
“The boundaries of the district were formed by the legislature and the district can only be expanded with the express permission of the city council so there would be no benefit or no reason for them to exercise powers of eminent domain,” she told City Representatives.

To be sure, the City Council added an amendment to the agreement that prohibits the management district from using eminent domain. The MMD hasn’t determined the amount of the fee it’ll impose on residents or business owners within the development.