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The Eastlake Boulevard Extension Phase 2 project provides an example of how a small community facing rapid growth challenges was able to effectively collaborate with other local governments to improve regional mobility and tap into TRZs as an innovative transportation funding tool to deliver a critical transportation project.
The Eastlake Boulevard Extension Phase 2 project was jointly funded by the Town of Horizon City, using municipal TRZ revenues, and El Paso County, which used vehicle registration fee (VRF) revenues. The Town of Horizon City and El Paso County partnered with a regional agency, the Camino Real Regional Mobility Authority (CRRMA), which in turn issued bonds backed by the county’s VRFs to pay for the project. The paragraphs that follow describe the project in more detail and summarize lessons learned that could be of interest to other local governments facing similar situations or challenges.
The Town of Horizon City is located approximately 20 miles southeast of the City of El Paso in El Paso County, Texas. The town has grown very rapidly in the last two decades, its population increasing from 5,233 in 2000 to 16,735 in 2010 and reaching 19,741 by 2018, according to the U.S. Census estimate. Horizon City’s general fund revenue budget for 2020 was approximately $10 million, and its largest revenue source is the property tax. The town covers about 8.7 square miles and is mostly landlocked, abutting the City of El Paso and the extraterritorial jurisdictions of the City of El Paso and the City of Socorro.xxxix
In the face of these geographical and financial constraints, Horizon City has turned to strategic planning and management and has been forced to consider innovative funding to meet its transportation infrastructure and mobility needs. Horizon City developed and adopted its first comprehensive plan, the Vision 2020 Plan, in 2011. The Vison 2020 Plan also included the town’s first Major Thoroughfare System Plan. In 2020, a new comprehensive and strategic plan, Shaping our Horizon: 2030, was adopted, along with amendments to the Major Thoroughfare System Plan. In 2014, the town adopted its first Capital Improvement Program (CIP), which included $15 million for infrastructure projects and issued certificates of obligation to fund local projects. Since then, Horizon City has continued to invest in infrastructure with a combination of local and Federal funds and a 2018 CIP debt issuance totaling $13 million to fund park projects(14). The town’s most recent CIP totals $117.7 million of funded and unfunded projects.
In 2013, the Texas Department of Transportation (TxDOT), El Paso County, CRRMA, Horizon City, and the City of Socorro partnered to develop the El Paso County Comprehensive Mobility Plan (CMP). The plan, endorsed by the El Paso MPO, presented a long-term mobility vision for the El Paso region and outlined objectives, strategies, and policy measures to achieve this vision(15). The 2013 El Paso County CMP consisted of a set of 16 multimodal projects, including pedestrian facilities, spread throughout El Paso County (see Figure 5). The plan included accelerating projects outside the boundaries of the City of El Paso to meet connectivity and growth requirements to the Town of Horizon City and its neighbor to the south of I-10, the City of Socorro (see projects 9, 10, 11, and 12 in Figure 5). The total estimated cost of the 2013 El Paso County CMP was $406 million, and the funding package included $260 million in Federal and State funds, $132 million in county VRF revenues, $9 million from the City of Socorro, and $5 million from Horizon City(15).
The Eastlake Boulevard Extension Phase 2 (referred to as Eastlake Widening Project #11 in Figure 5), was the project to which Horizon City dedicated its contribution. The project was critical for the town, as it significantly improved the town’s access to I-10 and connectivity to the City of El Paso, as well as to its neighboring City of Socorro. The project consisted of reconstructing and widening the existing Eastlake Boulevard from Darrington Road to Horizon Boulevard from four to six lanes, and initial estimates were for approximately $19 million(15).
Figure 5. The 2013 El Paso County CMP.(15)
After reviewing different options to generate its local match contribution to the El Paso County CMP funding package, Horizon City decided to try a relatively new transportation funding tool for Texas local governments: a TRZ. To determine the TRZ boundaries, local officials considered two different buffer sizes around the proposed corridor within municipal limits. The first buffer considered all properties within a ¼-mile distance from the centerline of the corridor, and a second considered all properties within a ½-mile distance from the corridor’s centerline; this ensured all parcels were within the project’s influence area. Future tax increment revenue projections were conducted for each buffer size to determine which buffer size would most likely generate the revenue required to support the local match, without significantly impacting the town’s general revenue fund and its ability to meet other capital and operating needs. After reviewing the revenue projections and assessing the characteristics of each buffer size in terms of amount of developable land and associated real estate risks, the ½-mile buffer was selected as a TRZ baseline. Subsequently, local officials reviewed in detail the parcels included within the buffer to identify any strategically located parcels that would be excluded from the TRZ in order to preserve the ability to provide targeted property incentives for businesses to locate within the zone.
The Horizon City Town Council approved the creation of TRZ No. 1 in November 2012. The Town Council designated the TRZ to include all parcels within a buffer of approximately ½-mile on either side of the roadway, which included 2,104 parcels and a total extension of 1,939 acres (see Figure 6). About 40 percent of the TRZ acreage was zoned as residential, with most of the remainder being vacant and zoned as either commercial or agricultural(16). Based on the amount of potentially developable land, the construction of the Eastlake Boulevard Extension Phase 2 was expected to create a significant amount of growth, which would in turn generate the TRZ revenues needed to pay for the town’s share of the project cost.
In the spring of 2013, an unexpected change in ownership of a large parcel within the TRZ (a private golf course) created a situation that led the Town Council to rescind TRZ No. 1 and adopt a new TRZ with revised boundaries. The Horizon Regional Municipal Utility District (HRMUD), a local government unit that provides water utility services to Horizon City, acquired the golf course to facilitate disposal of its treated wastewater. The change in ownership from private to public meant that the parcel became exempt from paying property taxes, creating the need to revise TRZ revenue estimates. After rescinding TRZ No. 1, the Town of Horizon created TRZ No. 2 with slightly revised boundaries and adopted it by ordinance in December of 2014.(17) TRZ No. 2 was expected to generate revenues to finance up to $6 million in project costs, approximately the amount needed by Horizon City to meet its cost share for the Eastlake Boulevard Extension Phase 2.(11)
Figure 6. Map of Horizon City TRZ No. 2 and Eastlake Boulevard Extension Phase 2.(16)
The Eastlake Boulevard Extension Phase 2 project relied exclusively on local entities and local funding, which allowed the project to move rapidly from design through construction (11). Starting in 2015, a series of interlocal agreements were signed between and among the 2013 El Paso County CMP partners. First, El Paso County and CRRMA signed an interlocal agreement providing CRRMA with access to the county’s VRF receipts to issue bonds and tasking it with developing (i.e., designing and building) a slate of the county’s 2013 CMP projects(12).
In November 2016, Horizon City signed a three-party interlocal agreement with El Paso County and CRRMA(13). This agreement provided for the development and financing of Horizon City’s local share of the Eastlake Boulevard Extension Phase 2. The agreement committed CRRMA and El Paso County to fund Horizon City’s share of project costs using county VRF receipts. The town committed to repay CRRMA principal and interest using TRZ No. 2 revenues over a period of 18 years. The town also committed to acquiring the right-of-way for the project. The county funded its share of the project using VRF receipts. Finally, CRRMA served as the vehicle to issue bonds backed by the county VRFs and as the clearinghouse to reimburse the county for the portion of the VRFs using revenues from Horizon City’s TRZ No. 2(11).
This unique arrangement allowed Horizon City to move from project planning through design and construction in less than 5 years. The project was completed under budget and 9 months ahead of the original schedule. The TRZ financing plan was partly responsible for this for two reasons. First, the town avoided issuing its own TRZ revenue bonds, which would have been more costly because of the risk associated with the real estate market. Second, the town did not need to pursue a TxDOT SIB loan, which would have delayed the project due to the Federal review process(11). The milestones below provide a comprehensive picture of the project timeline:
Additionally, the development agreement with a single executing agency, CRRMA, and the accelerated schedule enabled El Paso County and Horizon City to benefit from project cost savings (11). While the initial estimate called for a project cost of just over $19 million, the actual cost to complete was $16.7 million, resulting in savings of about $2.3 million. Table 1 and Table 2 below provide the initial and final cost estimates for the project design and construction as well as the funding breakdown between El Paso County (77.3%) and Horizon City (22.7%)(11).
| Item | Estimated Cost |
County Portion |
Horizon City Portion |
|---|---|---|---|
Engineering & Environmental |
$2,269,525 |
$1,754,343 |
$515,182 |
Construction |
$16,785,565 |
$12,975,242 |
$3,810,323 |
Total Estimate |
$19,055,090 |
$14,729,585 |
$4,325,505 |
The Eastlake Boulevard Extension Phase 2 project is an example of effective cooperation among local government agencies to improve regional mobility and transportation infrastructure. El Paso County and the Town of Horizon City were confronted with an urgent need to improve their transportation infrastructure, provide connectivity to the rest of the El Paso metropolitan area for its rapidly growing population, and generate economic development. The town’s leadership saw an opportunity to advance its economic goals through the transportation investments envisioned in the 2013 El Paso County CMP. Despite being a small and young community, Horizon City took the bold step of using a relatively new funding tool, a TRZ, to negotiate a unique funding and development agreement with other local entities to make the project happen(19).
However, this process was not easy and required forging partnerships and developing trusted relationships with other local entities. It also required implementing management processes and tools, such as a CIP, to manage its growing capital improvement project portfolio. The CIP allows the town to better understand and effectively plan the Eastlake Boulevard Extension Phase 2 project financing agreement, in addition to its growing list of other capital projects(19).
As the town developed the Eastlake Boulevard Extension Phase 2 project, the local government encountered and addressed both internal and external challenges, resulting in other lessons learned for the future. Table 3 describes these challenges, how the town addressed them, and summarizes the lessons learned(19).
| Challenge | Description |
Lesson Learned |
|---|---|---|
Internal Challenges |
||
Introducing new funding concept to policymakers |
Introducing the concept and specifics of TRZs, a then little-known funding source, to the city council was an important step, since the council would have to vote in favor of directing the increment to fund the specific transportation project. The 2013 CMP originated externally to the council; therefore, Â bringing the plan to the city council required planning and coordination to successfully present the concept of value capture and its specific application to the project. Project leaders also coordinated with town finance. |
Allow plenty of time for ongoing discussions with policymakers and key municipal staff, particularly when the municipality is new to the funding source. It is important that policymakers feel comfortable with the concepts and have enough time to explore different scenarios and ask questions about funding projections and project development. |
Determining zone size |
Determining the right buffer size for the zone is usually a balancing act for municipalities. The zone should be adequate to cover contingencies that may arise as the TRZ-funded projects are developed; however, if the zone is too large, the municipality could include properties that are not directly benefited from the TRZ transportation improvements. The town, in partnership with Texas A&M Transportation Institute, developed the most appropriate buffer for the situation. That is, the buffer size that best balanced the following goals: (1) all parcels were within the project’s potential development influence area (i.e., up to 2 miles in some cases); (2) the municipality’s tax base within the zone was not too big compared to its total tax base (i.e., it does not compromise its general revenue fund); and (3) the buffer was large enough to support the required local match. |
Sizing the zone appropriately requires the CIP managers to work with the municipalities’ financial staff and team to analyze the zone’s projected revenues. |
External Challenges |
||
Coordinating with external partners |
As the first agreement of its kind, coordination with El Paso County and CRRMA under the 2013 Comprehensive Mobility Plan was critical. Staff and Horizon City policymakers met with county leaders and county management repeatedly to discuss the project, the town’s commitment to its funding share, and the three-party agreement and participating parties’ responsibilities. |
Communicating with partner agencies is critical to project success. Designating a team to lead those discussions fosters collaboration and helps ensure that conversations are consistent and ongoing. |
Right-of-way acquisition |
The town committed to securing the necessary right-of-way for the extension. Three distinct property owners were involved, and the town worked to secure either rights-of-way or permanent easements. It was critical to work with property owners and utility companies in order to maintain the project’s schedule. |
Negotiate with property owners as early as possible in the project development process to reduce delays in right-of-way acquisition. |
Changes in property designation |
While the TRZ’s financial analysis anticipated land use could change to commercial, the models did not anticipate that a significant change from private to public ownership would occur, yet it did. The golf course sale from private ownership to the HRMUD was material enough for the tow that the town determined the best approach was to recalibrate the financial analysis and re-establish the TRZ so the golf course, now a public property, was no longer included in the zone. Fortunately, the timing of the project was not negatively affected by the creation of TRZ No.2. |
Expect the unexpected and be prepared to deal with it. |
xxxix The extraterritorial jurisdiction of a municipality is the unincorporated area that is contiguous to the corporate boundaries of the municipality.
