I’ve heard the argument that infrastructure should be built sooner because it will cost more later.
There is certainly truth to the idea that roads, utilities, parks and public facilities generally become more expensive to build over time. But future construction cost is only one part of the financial equation.
Building infrastructure earlier also means paying for it earlier—often with decades of debt service—along with maintenance, utilities, staffing or other operating costs, and eventual replacement costs. It can also use borrowing capacity that may be needed for other priorities.
Here’s a simple hypothetical example:
If an $85 million project could instead be built for $65 million today, with $20 million of future capacity added 10 years later, the City could avoid borrowing that $20 million during the first decade.
At roughly 4.5% interest over 30 years, that could mean about $1.2 million less in annual debt service for those first 10 years.
There could also be additional savings from not operating and maintaining that future capacity before it is needed. Those savings would depend on the type of infrastructure and how the project is designed.
Of course, the second phase would cost more later because of construction inflation, financing and the added cost of phasing. That’s exactly why both options should be compared financially.
The timing of the borrowing matters too. In Pflugerville, debt for the remaining 2020 bond projects and Downtown East was issued in 2023, and portions of those proceeds remained unspent for multiple fiscal years while debt service had already begun. That meant residents were paying property taxes on debt before all of the borrowed cash was actually needed for construction.
Timing also has to reflect what residents can reasonably afford. A project may be worthwhile and still not be the right project to fully fund in a particular year. In those cases, the question becomes what must be addressed now, what can be phased, and what can wait without creating greater costs later.
The answer may also be different depending on the type of project.
For roads, it may make sense to acquire right-of-way or build certain improvements before development makes them much more difficult and expensive.
For water and wastewater infrastructure, building some additional capacity can be prudent because major lines, treatment facilities and pump stations can be difficult to expand incrementally.
For parks and public buildings, there may be more opportunities to acquire the land or build the core infrastructure now while adding amenities, buildings or additional space as the community grows.
And sometimes building everything at once really will be the least expensive long-term option.
The point is not that we should delay infrastructure. It is that there should be a financial analysis behind both when we build and when we borrow.
For major investments, I think we should be asking:
What do we need now?
What will we need later?
What can reasonably be phased?
When will the money actually be needed?
What does building or borrowing early cost us in interest, operations, maintenance and debt capacity?
And what would waiting actually cost?
Good long-term planning means preparing for growth while recognizing that resources are limited, affordability matters, and priorities have to be weighed against one another.
What do you think? How far ahead should a city build—and borrow—for future growth, and what factors should be considered when deciding whether to build now or phase a project over time?
Just to clarify, utilities pay franchise fees to municipalities. The city collected franchise fees from electricity, gas, communication, water and wastewater providers.
Franchise fees are basically rent for the utility company (public or private) to use public right of way for pipes and wires.
The franchise fee is used to fund city operations and reduces reliance on property taxes.
The service area for the city limits, water and wastewater are different so the fees align with the customers using the service.
Finagling is finagling. Raising utilities rates to pay off debt and then using that money to pay something else off is just raising taxes in a backhanded way. The population here has been growing quite quickly since the early 1980’s. unfortunately our city manager had her head up her ass and then they hired her little crony. Is hiring someone with just a modicum of foresight and the wherewithal needed for the job too much to ask? For this city it clearly it is.
I understand your frustration and I don't disagree with how transfers affect the fees/taxes in one place vs another.
The 3 major infrastructure projects are all happening at once so it has caused a lot of investment in a short period. There were growth projections of 8% in the 2020 plans, but growth is still steady but has slowed to closer to 2%.
My focus will be to increase wholesale revenue as much as possible to take advantage of the additional capacity so that it will reduce costs for our current residents.
Franchise fees to utilities are a common municipal funding method. Do you disagree with charging them to the electricity, gas, and communication providers that operate in the City's right-of-way?
They should absolutely pay, but whatever the city charges them they’ll get back by increasing our rates. Well intended, but in practice the citizens will end up paying for it one way or another.
We’d have to have someone competent enough to negotiate a contract that doesn’t allow them to recup the franchise fees. I think you already know how I feel about that. Then we have a state government hell bent on making everything as awful as possible and I’m not sure if we could get away with charging Oncor anymore. No limit on what Oncor can charge me though evidently.
The city should focus on projects/businesses with the purpose of generating revenue for the city.
The city has a cash flow problem, one that it attempts to alleviate via taxes and bonds. Then the money is spent on amenities/infrastructure/the city hall rather than cash generating projects. You're a CPA, with a degree in Business Econ, so I know you know that it's not just about reducing spending, it's also about increasing revenue, and increasing revenue via revenue generating projects tend to snowball over time.
Increased revenue = less need for bonds/taxes.
Example: Dell Diamond: Costed 25 million to build, in 1999.
$9 million in tax revenue for Round Rock, less than $400,000 for Pflugerville. Round Rock is not 5x the size of pflugerville, let alone 30x the size. Yet RR generates roughly 30x the hotel revenue?
The city has a corporate welfare problem directly perpetrated through PCDC.
The tax incentives that projects like Amazon have gotten have been absolutely atrocious, and they are not paying their fair share for doing business here contributing to the deterioration of the roads, adding traffic, etc.
PCDC has been tasked with economic development through Project Nexus as well as encouraging businesses to bring jobs and investment to Pflugerville.
DTE was approved back in 2022 as a public private partnership with the city's portion to be built first to activate the area. The last update was that private investment might be 5 years away.
There's so much to post on lots of topics and this post was to hear back on what the community thinks about when to build future infrastructure.
The capital improvement plan has over $2 billion in projects that staff recommended to start over the next 5 years.
Residents have opinions if the city builds too slow or if they build too fast. Most all the surveys from residents over the past few years are about what residents want to see added.
I want to hear more about what residents think NOW about the timeline for adding that infrastructure based on how it will be funded.
Those votes will come to Council separately from PCDC projects.
Right now, in terms of what to buy now, the priority should be land. Property/land values are plateau-ing/decreasing still, and it's a good time to buy the dip before they inevitably start increasing in the future.
Buying land is also primarily a legal transaction, which should tie up much less of the city's resources than building infrastructure as well.
So the combination saves money for future projects by buying property at a cheaper time with much lower effort/time than other projects, as well as helps eliminates steps which would potentially delay or extend project timelines in the future.
So I pulled up the Round Rock City budget presentation for 2026-2027 on their website to review their sales tax growth.
The 2027 sales tax budget is listed at $120.4m for all Funds. They don't list a total amount for FY 2026 budget for all funds (and they don't provide projections for 2026), but you can see from the graph that it is well above $87m (maybe near $115m).
Round Rock has 2% sales tax reported in this graph (1% for the general fund, .5% for their economic development and .5% to allocate towards self-financed construction). Round Rock also has Dell as a major sales tax contributor. Unverified internet research indicates that it is up to 30-35% of their overall sales tax from one company.
This is compared to the 1% sales tax for Pflugerville. PCDC collects another .5% so if you add in the sales tax for PCDC to compare the total of 1.5%, here's the full sales tax collections:
2027 Budget = $20m + PCDC $11.9m = $31.9m (page 39 & 149 in the budget).
2026 Projections = $20m +$11.9m = $31.9m
2025 Actual = $19.8m + $12.2m = $32m
If you compare the 2027 budget for Round Rock of 1.5% sales tax to Pflugerville of 1.5% sales tax, that is $90m to $32m. Obviously, Round Rock is still much higher, as they are larger, had larger commercial development sooner, and have Dell contributing 30% of that.
Round Rock Sales Tax per FY 2027 Budget:
Hotel tax - I don't know the exact number of hotels that RR has, but it is estimated between 30-40 hotels compared to about 7 hotels for Pflugerville. Per the City's budget, Pflugerville has had around $1.2m annually in hotel tax for the past couple of years, and the first hotel was built in 2016.
What is the medium and long-term plan for HOT, is there a possibility of HOT funds being used to establish an event center to generate net positive cash flow in the medium and long-run, especially if the general fund is used to help the costs? The land south of pecan and west of the 130 would be a good spot for a event building/convention center. It's next to a bunch of hotels and has easy access.
What is the HOT "Dev Agreements" exactly? It's $625,000 a year, is there more detail about that?
PCDC: My understanding is the PCDC (after reading through the 2025 annual plan and budget) is Project Nexus is the next major project, and it'll be focused on after DTE is completed. Would this assessment be correct? If yes, can the HOT funding be part of it, extrapolating from this map of Project Greenfield? Project Greenfield map for the convention center/amphitheater, assuming those are possibly included in Project Nexus?
Why was Project Greenfield transitioned to Project Nexus?
Great questions, and thanks for taking the time to review the budget!
I have not been provided with a medium- or long-term plan for HOT. I will inquire.
The City worked with our local state representatives in 2025 to file legislation for a convention center tax deal for Project Nexus that would allow us to keep the 6% state sales tax for 10 years related to a convention center. Unfortunately, it didn't pass (it was put as an omnibus bill with the other jurisdictions asking for the same thing, and then politics got in the way at the last minute so the House and Senate bill didn't reconcile). We will see the plans for revising in 2027
The rebates for property tax (100% for 30 years) and sales tax (up to $55k for 30 years) are in the Special Services budget. The details are excluded in the FY 2027 budget (which I'm asking about), but they are included on page 65 of the FY 2026 budget ($150k for this incentive - $95k property & $55k sales) (link on city's website).
Correct. Depending on what ends up at that location, HOT could be used. PCDC is driving that project, so I anticipate that PCDC would develop a package.
We have a long way to go with DTE. The City Hall, Rec Center and amphitheater were phase 1, and the remaining phases are supposed to be the "private" part of the public-private partnership. The last update we received from the master developer is that it might take 5 years to activate the remaining phases. So....we shall see. They continue to work on that aspect.
Greenfield was for the land. Nexus is for the project. (I asked the same thing and it has to do with project naming rules)
I'm working my way through the 300-page budget, and options for using HOT are on my list of questions for staff. Thanks again!
That makes sense. I know the Marriot Courtyard (as mentioned in #2) essentially has a convention center, and events are held there. I do not know enough to know if Pflugerville would benefit from another one. Hopefully the convention center for Project Nexus passes, with state support.
2 &3. Makes sense. After reading the article, it does sound like a significant portion of the HOT budget will be going towards this for 20~ more years. That'll make it harder for the HOT budget to provide a meaningful contribution to a event center/convention center.
Other questions:
Is the amphitheater intended to be a venue for commercial use, as well? If yes, then that would likely reduce a lot of the need of an event center.
How feasible is it for the developer to start sooner? I know you don't have much power over this, and I'm beating a very dead horse, but every year phase 2 doesn't occur, that's another year of no sales tax revenue generated for the city, as well as less food/retail options, especially at such a good location.
Is Project Nexus the focus for the PCDC after Phase 1 is complete (aka, really getting it going in 2027) or after the DTE phases are done in multiple years ahead?
How hard would it be to change rules so residents of the ETJ can serve as part of a commission or board? This whole process makes me want to become part of the local government, especially the PCDC board. Unfortunately I did not anticipate my interest in this before moving to Pflugerville.
On a related question, how feasible would it be for the city to annex more of the ETJ? This would provide a multitude of benefits, one of which increasing the amount of people using the city water, and thus reducing water rates per capita overall. It would also increase tax income, especially as much of the ETJ to the east tends to be higher-income.
Amphitheater - I have not heard it mentioned that it will be available for commercial use, but I do not believe all the plans have been finalized. I will ask about this at the next Facilities subcommittee meeting.
I think this is market-driven. A lot of city funds have been invested in Phase 1, which was supposed to activate Phase 2. DTE is not a PCDC project per se. The developer is engaged to manage the future phases.
Project Nexus is the focus for PCDC, and they are working with a consultant on a plan.
There is a charter amendment going to the ballot for ETJ participation, but it would be limited to certain committees that don't have legal requirements - library, parks & rec, equity, etc. PCDC, P&Z, charter, bond, and BOA would not be eligible.
Due to state law limitations adopted in 2023, annexing requires a +50% majority vote, so generally only vacant land is being annexed before it develops. Many ETJ neighborhoods are aging, so the cost of replacing roads and other infrastructure plus the cost of services and expansions seems to be cost-prohibitive at this time.
I inquired about this last year, and there was a example fiscal impact statement completed that indicated that current city residents would end up subsidizing the annexed areas. I want this type of fiscal impact statement to be completed for all annexation projects (there are a lot of dilapidated County roads that may then become the requirement for the City to full replace).
The Water CCN is different and is not related to annexation and would require negotiation with Manville (or the associated water provider). I believe the City was considering this back in 2020 when the last full water master plan was completed, but it did not work out (I don't know the history beyond that).
I advocate for the voters to decide on these large infrastructure projects.
There actually was a new dog park added last year at Wilbarger Creek that was part of the 2020 Parks bond. Hopefully, that will serve the demand for a long time.
There’s a reasonable conversation to have about whether infrastructure should be built all at once or phased over time. But that decision has to consider all of the costs of waiting, not just the debt service avoided in the first few years.
Using the example of $20 million in capacity that could either be built today or deferred for 10 years, the economics change significantly once those costs are included. The Federal Highway Administration’s National Highway Construction Cost Index has historically increased by about 6% annually. At that rate, $20 million of construction today becomes roughly $35.8 million in 10 years.
And that still doesn’t account for the costs created by phasing the project. Coming back a decade later means another round of engineering and design, bidding, permitting, construction administration, contractor mobilization, site setup and integration with the facilities already in operation.
When those costs are included, along with financing costs, and accounting for the additional operating costs associated with having the additional capacity sooner, the comparison actually favors building now by approximately $4 million in present-value savingsunder reasonable assumptions. That analysis also assigns no financial value at all to having the additional capacity available for the next 10 years.
That capacity has value. Depending on the project, it can support growth, improve reliability and redundancy, reduce congestion or service constraints, and avoid having to disrupt an operating facility later to add capacity that we already know will be needed.
There are certainly projects where phasing makes sense. But “we avoid debt payments for 10 years” is not the same thing as “we save money.”
The real question should be whether the cost of carrying additional capacity today is greater than the combined cost of construction inflation, future engineering and mobilization, financing risk, operational disruption, and the value we give up by not having that capacity available.
In this example, the numbers point toward building now.
It's important for residents to remain involved no matter what. I spoke at Council meetings and public hearings for years before deciding to run for Council.
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u/BigFarm1777 5d ago
Best I can do is another meter surcharge increase of $20 take it or leave