By BECKY KISER
Hays Post
Work on the travel plaza to be built north of Interstate 70 Exit 157 in Hays is gearing up again after being delayed by the COVID pandemic.
Interest in developing nearby properties is also gearing up.
City staff and the owner of four parcels along 55th Street near 230th Avenue, BBJ, LLC, have worked out the terms of a pre-annexation agreement that governs the property annexation as well as the construction of infrastructure to serve future development.
"While this is a little bit different than your normal pre-annexation agreements, we think this is very advantageous for us (Hays)," Toby Dougherty, city manager told city commissioners last night.
"Part of that intersection has already opened up for development and this opens up the other half of it for retail development.
"At this time we would have a lot of development potential up there which would hopefully help us out with sales and property tax revenues," Dougherty said.
The city's general fund is financed primarily by sales taxes.
All four tracts of land are currently outside of the city limits. One tract, the Doonan Peterbilt dealership, was developed several years ago and only the dealership is served by a city waterline.
City water and sewer infrastructure do not exist to serve the vacant properties for future development.
With the Exit 157 travel plaza development, the infrastructure was put in to serve the property to the west and the north, and the intersection was rebuilt.
The city initiated discussion with the owner of the undeveloped properties about a pre-annexation agreement, according to Dougherty.
The property owner, BBJ, LLC, would agree to immediately plat and annex tracts one, two and four - the undeveloped properties.
"The city of Hays would then solicit proposals for the extension of water and sewer mains to serve all of the developable properties.
"The city would pay 100 percent of the cost of the water main. The city would split the cost of the sewer main with BBJ.
"Within three years, BBJ agrees to annex tract three, which is the Doonan Peterbilt dealership, into the city limits."
Although BBJ supports annexation of the Peterbilt property into the city, it could be prolonged by a couple of circumstances, Dougherty pointed out.
"When the dealership property was built, they had a CID (Community Improvement District) that was approved by Ellis County. There's an extra two cents that's being collected out there in sales tax.
"The property owner is worried about getting the sales tax too high - to be non-competitive."
Dougherty estimated the CID has been effective for six or seven years and said it will still be on for some time.
"Obviously for the city, we want those other three properties developed so they also generate property taxes and sales taxes."
There are two considerations that will allow the dealership annexation - tract three - to be extended.
"If one of the other undeveloped tracts is developed in a commercial manner within that three-year period, then the city agrees to push back tract three annexation to five years. We're getting what we want anyway, so we can give him two more years to collect that sales tax before he annexes in.
"The other consideration is if the infrastructure comes in at a cost that is significantly lower than we budgeted, then we agree to push it back one year. Because we have an investment. We have a return on investment. The property owner has a return on investment.
"Otherwise, it's a three-year annexation and we move forward."
When the Peterbilt dealership is annexed into Hays, the city commission will become the governing body that controls the CID.
"The property owner wants the consideration that they can come in front of the commission and ask for the CID to be lowered, possibly from two cents to one cent.
"I don't know why you'd be against them lowering their own CID sales tax but BBJ wants the consideration on record that you would entertain a request," Dougherty said to the commissioners.
"You can't obligate future commissions to make that decision but you can say that would be your intent."
Commissioners had no questions about the pre-annexation agreement and will vote on the request at the January 29 city commission meeting.