Developer to Move Ahead on $2B in Mixed-Use Projects

AUSTIN-Approximately half a decade after Taurus of Texas Holdings LP acquired a total of 2,300 acres on the area’s far east side, the developer is ready to launch construction on two mixed-use communities. Roads and sewers are the first step for Whisper Valley and Indian Hills, thanks to $40 million in municipal bond financing for the projects’ infrastructure.

The estimated build-out for both projects, which are located along SH 130, is pegged between 30 years and 40 years, with all-in costs topping $2 billion. According to Taurus of Texas’ managing partner Douglas Gilliland, obtaining the municipal bond funding from the city of Austin was the final step in getting the projects off the ground.

“Traditional bank financing, which developers typically use, isn’t available for land development in the current economy,” Gilliland says. Furthermore, he adds, bank financing is more short-term in nature. “Since these bonds are spread out over a 30-year time frame, it gives us the opportunity to pay off costs of development as the projects develop,” Gilliland tells GlobeSt.com.

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The deal, however, wasn’t overnight in the making – back in 2006, the city focused on regulating land use while funding infrastructure along the SH 130 corridor. This led to development of a Public Improvement District, or PID, which allows cities to sell bonds to fund infrastructure improvements in PID-approved areas. The bonds are repaid at tax-exempt interest rates through property owner assessments. The city council approved the debt-issuing PID at its Nov. 3 meeting, making it the first time Austin has used such an instrument for infrastructure improvements.

Whisper Valley, which totals 2,063 acres, is near the intersection of a future Braker Lane extension and SH 130. According to the plan, this development will support approximately 4,800 single-family and townhomes, 2,600 multifamily units and more than 2 million square feet of office and retail space. Indian Hills, at 239 acres, is at Decker Lake Road and SH 130, and will include 1,160 multifamily units and 1.75 million square feet of office, light industrial, commercial and neighborhood retail space.

Though Taurus bought the land some years ago, Gilliland says it’s a good time to launch construction on projects like these. For one thing, he points out, Austin wants to see growth in the eastern section. “These two particular sites have direct access to and frontage on SH 130, they’re close to on- and off-ramps and are easily accessible,” he comments.

Just as important, he goes on to say, is that the on-site infrastructure – consisting of sewer and wastewater treatments and two major roads -- will take approximately two years to complete. During the early development process, Taurus will select developers and home builders for the project. By that time, the economy will likely be headed into recovery mode.

“Austin is one of the strongest markets in the country,” he remarks. “By the latter part of 2013, we should have a market that is somewhat pent up, and we think those locations will be appealing, especially to families looking for homes in the mid-$100,000s to mid-$300,000s.”

Gilliland adds that Taurus will handle some of the vertical commercial development itself, and will also ask other qualified developers to submit plans. “As we begin to move into that stage in which we’re actually developing,” he notes, “we’ll sit down and begin to educate the builders and developers as to what our plan is, and start to make our selections in 2012.”