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Government - Local

Plano OKs change to Lakewood Club development pact

A two-year-old agreement that a future developer of Lakewood Club would have to spend $11.3 million for a new school was amended by Plano City Council members in a unanimous vote Monday night.

Last month City Attorney Tom Grant held a public hearing before the council meeting opened regarding the agreement which was up for discussion and vote at this week’s council meeting.

The Lakewood Club property is on the west side of the city in the area of Center Street and east and west of Little Rock Road and north of the Plano High School. 

Tom Karpas, director of building, planning and zoning, presented the history on the property before council members took any action Monday. He said this parcel, also known as Unit 6 of the property then owned by British Overseas Properties, consisted of 1,256 acres. Through an annexation agreement, the property could be developed with about 2,710 housing units of ­single-family duplex and townhouse lots, he said.

In the early 2000s, the property owner formed an agreement for Lakewood to purchase the property and he developed the land in neighborhood-sized parcels, the first one of which is known today as Lakewood Springs Club.

“For the Lakewood Springs development on the East Side of the city, Lakewood Homes and the Plano School District agreed that in lieu of paying the traditional school transition fee for each home as it was built, Lakewood Homes would make a lump sum payment to the school district for construction of a new school in his subdivision,” he said. “This was how the Emily Johns School construction was funded.

“With the start of the development of City Acres property, Lakewood and the school district thought this approach could be used again,” Karpas said, referring to a lump sum payment for a school in place of transition fees.

So the pre-annexation agreement was amended to say that in lieu of paying transition fees for each permit issued, when the 300th permit was issued Lakewood Homes would make a lump sum payment of $11.4 million to the school district to be used for a new school in this area, Karpas said.

All went well with the construction of 158 homes in Unit 6 until the bottom fell out of the housing market, resulting in Lakewood Homes going bankrupt.

Karpas said British Overseas Properties, which still owned the majority of City Acres, realized that condition of the pre-annexation agreement was not conducive to either the sale or development of their property.

“So, in 2015, they asked for and received an amendment to the annexation agreement which simply stated that the school transition fees would be paid at the time building permits would be issued,” Karpas said. This resulted in the $11.4 million lump sum fee being eliminated, he added.

However, British Overseas Properties no longer owned Lakewood Club-Unit 6 so the amendment did not affect this property, Karpas noted.

He explained that the current owners understood that no developer would be interested in the property because once he finished his 142nd home he would reach the 300 mark and be required to give the school district $11.4 million for a new school.

He said the current proposal the owners presented to the city council is just like the last one, which allowed them to pay a school transition fee at the time each building permit is issued, in place of the final permit triggering the $11.4 million payment to the school district.

City Attorney Tom Grant had noted at an earlier council meeting that no developer would be willing to build in the area knowing when they built the 142nd house (for a total of 300 homes), they would owe the school district $11.4 million. “If not changed, no further development would ever take place in Lakewood Club,” Grant said.

At the earlier council meeting, Grant said he spoke to Plano School Superintendent Dr. Hector Garcia about amending the agreement. This resulted in school board members taking action on the agreement at their last board meeting by voting to ask the city to change the agreement.

Karpas told council members school district officials knew the likelihood of collecting the $11.4 million “is just about zero.”

“If the balance of the property develops the school district could see at least $13.7 million in permit fees,” he said, basing his figures on the present transition fee which is $5,400 per home. Karpas based this on the eventual construction of 2,542 homes with the builder paying the school district a transition fee that is likely to increase over time.

Several homeowners living in Lakewood Club, who attended an earlier council meeting, told council members they were concerned that the change would affect them in some way.
Grant said no one now living in the subdivision will be affected by the change. It will affect only builders of new homes in Lakewood Club because each one will have to pay a $5,400 transition fee.

Council members voted unanimously to approve amending the agreement.

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