Lago Vista Firefly Cove MUD, 1 vote OKs $260M that owners repay

At the developer's figure of $0.92 per $100 of value, the 2026 tax rate on a Firefly Cove home would rise from about $2.19 to about $3.11 per $100.^9,10,11 The same ballot approved a tax of up to $1.20 per $100 of value to run the district.^4,5 The draft consent agreement we reviewed makes the district solely responsible for its debts, with no financial obligation on the city. The developer agreed to pay the city $2,990,735, and $2,400,000 of that would come out of district bonds that Firefly Cove owners repay. The city agreed to maintain the district's public roads.⁶

As of Oct. 7, 2026, state records called the district inactive and left its bonds-issued fields blank.¹² The county's 2026 tax rate table has no row for the district.⁹

Rates, totals, and example tax bills in this story are our calculations from the cited records.

What is a MUD?

A municipal utility district (MUD) is a state governmental entity that provides utility services to a defined area. A developer often builds the pipes and roads first, and the MUD sells bonds, which are loans from investors, to pay the developer back. The MUD then repays the bonds with property taxes on the land and homes inside it.¹³ Inside a city, a MUD needs the city's written consent, and the Texas Commission on Environmental Quality (TCEQ) creates the district and approves most bond sales.^14,15

The Firefly district's job is narrower, because the city, not the district, provides its water and sewer service.⁶ It matters now because voters have approved up to $260,175,000 in bonds for this district.³

What have we reported before?

Our Oct. 7 story mapped 26 planned development districts (PDDs), which are custom zoning plans for single projects.¹⁶ It reported the council's 4-3 vote on Dec. 19, 2024, to approve Firefly Cove's request for consent to a MUD.¹ It also reported the March 6, 2025, change to Section 5.02, the one-vote bond election, the district's dormant status, and the city's acceptance of the first streets.^2,3,4,7 This story follows the district from its start to today and asks what it could cost a homeowner.

How did Firefly Cove get here?

Firefly Cove is a PDD for a neighborhood along Boggy Ford Road.¹⁷ An older ordinance, Number 07-10-04-04, had called the land Tusikanni Cove.¹⁸ On Sept. 2, 2021, the council approved a new plan for 281.45 acres.¹⁷

Council Member Kevin Sullivan moved, and Council Member David Williams seconded.^17,18 Council Member Paul Prince suggested capping homes under 1,500 square feet at 70, and Sullivan and Williams accepted the change. The vote was unanimous.¹⁸

The ordinance allows up to 280 single-family lots. It also allows up to 45 estate lots, which are larger home sites.¹⁷ Firefly Cove LLC, the developer, held $7,078,134 in taxable value on the city's 2025 tax roll, the ninth highest.¹⁹

How did the council say yes?

On Dec. 5, 2024, Dirk Gosda wrote to Mayor Kevin Sullivan asking for the city's consent to a MUD. Gosda signed as a member and manager of Firefly Cove LLC. He asked that the item go on the Dec. 19 council agenda.¹¹

The letter said the MUD "will cost the City nothing." It also offered $2,390,735 to the city out of the district's first bond sale, for wastewater plant capacity and the city's share of traffic improvements. A city staff memo listed a separate $600,000 for a future water plant upgrade on top of that.¹¹

The council took it up as Item 7 at a regular meeting on Dec. 19, 2024.¹ Kevin Sullivan was mayor then, and Shane Saum, who is mayor now, was a council member.^1,20 The developer's team gave the first presentation.²¹

Gosda told the council, "You have no liability." He said only Firefly Cove owners would pay, because the tax "just raises the tax on our lots and our homes." He also said he "can get by without it, but then I start cutting the amenities back."²¹

Tony Corbett, a lawyer on the developer's team, called a MUD "an independent political subdivision governed by an elected body." He said a public improvement district (PID) is different, "a financing vehicle that's created either by a city or a county." Asked what the city could do if the district defaulted, Corbett said bondholders hold a right, called mandamus, to make the district board levy the taxes.²¹ Mandamus is a court order that makes a public body do its legal duty.

Interim City Manager Taylor Whichard said the neighborhood's internal road network "will not go beyond 33 years." Esther Young, whom a council member called "our financial planner," said the bonds "should not negatively impact your rating," meaning the city's credit rating.²¹

Council Member Paul Roberts said the arrangement "effectively shifts the financial burden of infrastructure development from the developer to future homeowners." He worked out the district tax on a $450,000 home at $4,140 a year. One council member, whom we could not identify from the video, put the increase at "about a 40 percent tax increase" once county, emergency district, and school taxes were counted. Whichard told the council that engineering design and construction management for the wastewater plant upgrade would cost $2.8 million.²¹

Mayor Pro Tem Rob Durbin, who joined by video, said, "I'm probably a no on this one."^1,21 Asked whether the MUD meant no liability for the city, Whichard answered, "We are taking over infrastructure maintenance with this." He added, "So to that degree, there is some cost liability." He then said that, as for the developer's money helping fund city infrastructure, "I don't see why that wouldn't be a factual statement."²¹

Council Member Adam Benefield said, "I'm in favor of the proposition personally." He said the $3 million "essentially gives every citizen within our community a $230 tax benefit." Benefield called the $0.92 rate "a tough pill to swallow" but said "that is their burden."²²

Mayor Sullivan told Roberts that in any development "the homeowners end up paying the cost." Roberts replied, "We're getting it from the future lot owners."²²

Benefield moved to approve the petition and to have the city's lawyers work with the developer on stipulations. The stipulations included no annexation of Drapers Cove, the developer paying the city's legal fees, and public pickleball courts and lake access. They also set $1.8 million for wastewater treatment and $600,000 for road improvements, paid up front at the first bond sale. They added at least $600,000 for the city's water treatment plant upgrade.¹

Mayor Sullivan amended the motion so the city's lawyers would review the document and bring it back for final approval. Council Member Shane Saum seconded the motion, and the council voted 4-3. Durbin, Roberts, and Council Member Paul Prince voted no. The other four members present, Sullivan, Saum, Benefield, and Council Member Norma Owen, formed the majority.¹

On Feb. 6, 2025, Benefield moved and Owen seconded to table the item so lawyers for both sides could reach a consensus. The minutes record a 6-0 vote. Earlier that night, the minutes note, Durbin had left the online meeting for the rest of the evening.²³

The item returned on Feb. 20, 2025, as part of the consent agenda, which bundles routine items into one vote. Mayor Sullivan pulled it from that agenda so the council could act on it separately.²⁴ Mayor Sullivan read emailed comments from two Drapers Cove homeowners who urged the council to reject the MUD.^24,25 Prince moved to let the city attorney answer questions about the agreement, waiving legal privilege where he could do so without hurting the city's position. Roberts seconded, and the motion passed 6-1, with Durbin voting no.²⁴ Benefield told the council that 28 people had asked him to pass the MUD and 13 had asked him not to.²⁵

Benefield said he would not vote yes "unless I have guarantees that the amenities are not potential but are actual." Roberts said, "I still don't support this agreement," but wanted "a viable product without problems" if it passed.²⁵ Prince first called a MUD "a funding mechanism that helps the developer." He then said, "this discussion tonight is kind of moving my mind a little bit."²⁶

Durbin, who joined by video, said he was "going to remain consistent on my votes."^24,26 Benefield then moved to approve the agreement with added amenities, and Saum seconded. The additions included a resort-style pool for Firefly residents and at least eight pickleball courts. On a public boat ramp, the motion called for "a collaborative effort to incorporate a public boat ramp."²⁴

The council approved the agreement 5-2. The minutes name Durbin and Roberts as the two no votes.²⁴ Prince, who voted no in December, was not among them.^1,24

A staff memo said the formal consent resolution had not been added to the Feb. 20 agenda correctly, so it came back on March 6, 2025.¹¹ Section 5.02 of the draft covers who may take over the developer's duties.⁶ Benefield read the changes aloud, including that certain duties would "automatically revert to the developer." Durbin said developers should raise money face to face "rather than through tacking it on and passing it on to the purchaser."²⁷

Benefield moved and Saum seconded Resolution 25-2114, which formally consents to the district. It passed 5-2, with Roberts and Durbin voting no. Benefield then moved, and Owen seconded, to approve the consent agreement "with modification made to 5.02 as discussed." That motion also passed 5-2, with Durbin and Roberts voting no.²

What does the consent agreement require?

We reviewed the draft agreement in the Feb. 20, 2025, packet, and the council changed its Section 5.02 on March 6.^2,6 The records we reviewed do not include the signed version.

The draft limits the district to financing public water, wastewater, drainage, and road costs "and other costs and expenses eligible under state law," plus owning drainage and water quality facilities. The city provides retail water and sewer service, and customers pay the in-city rates. Public roads go to the city once built and inspected, and the city agrees to maintain them.⁶

The developer agrees to pay the city $1,800,000 for wastewater out of the first bond sale. It agrees to pay $600,000 for water out of bond proceeds that would otherwise go to the developer. For roads, it agrees to pay $590,735 within 30 days of the district's creation or to build the work itself. Those three amounts add up to $2,990,735.⁶

Each series of bonds may run no more than 30 years. Interest may not top two percentage points above the highest average rate in a weekly bond index. The district must be able to redeem bonds early, no later than the 10th anniversary. Refunding bonds, which replace older bonds with new ones, must save at least 3 percent in present value and cannot run past the old bonds' last date.⁶

Future bonds need approval from voters who live in the district. New bonds may be issued only to build new infrastructure. The district must notify the City Secretary at least 30 days before it issues bonds. It must also send the City Secretary its tax rate and its yearly audits.⁶

The developer agreed to have the district sign the agreement within 90 days after its confirmation election. The consent is void, with all money and land promises, if TCEQ does not create the district within one year.⁶ State law lets a city's consent limit a district's bonds when the district connects to the city's water or sewer system.²⁸

How did the state create the district, and what did the city take over?

On March 27, 2025, TCEQ received an application to create the district through its fast, 120-day review.²⁹ TCEQ's checklist for the fast review asks for a petition signed by owners of more than half the land's value.³⁰

On May 1, 2025, while that review was underway, Prince moved and Roberts seconded to accept the public infrastructure in Firefly Cove Phases 1A and 1B. The council voted 6-0, and Saum had an excused absence.⁸ Under the resolution, the city "assumes ownership and responsibility for the maintenance, operation, and repair" of the streets, drainage, water, and sewer lines. Staff gave the financial impact as "Unknown at this time."⁷

The draft consent agreement states that accepting facilities does not end the developer's right to be repaid by the district.⁶

TCEQ's order creating the district is dated Aug. 1, 2025.^5,31 The district covers 281.955 acres in Travis County.¹² The county's tax map now includes a district called "Fire Fly."³²

TCEQ reports a five-member board for the district.¹² The election order names five temporary directors appointed by TCEQ. That board ordered the Nov. 4 election on Aug. 11, 2025.⁵

Did the council revisit the MUD?

On Oct. 2, 2025, the council discussed disclosures for another special district, the Tessera PID. Prince said, "I voted for it," and that the council had added amenities to the Firefly MUD that were "essentially" like PID items. Prince also asked the council to discuss its own policy on MUDs. Roberts, who voted against the Firefly agreement, said, "I don't like MUDs," and called a MUD "a taxing authority."³³

The district filed a dormancy affidavit on Oct. 8, 2025, and TCEQ took final action on Oct. 14.^3,31 State law calls a district financially dormant if it has no bonds or other long-term debt and little money moving.³⁴

Who voted, and what did they approve?

The Nov. 4, 2025, election was a joint election run by Travis County. The notice said "all qualified resident electors of the District" could vote.⁵ Under state election law, a voter must live in the area covered by the election.³⁵

The draft consent agreement lets the developer convey land to a person "for the sole purposes of qualifying as a director" without a plat. It also allows a manufactured home "necessary for the creation of the District" on that land before a plat.⁶ A plat is a recorded map that divides land into lots. The records we reviewed do not say who lived in the district on election day.

Proposition A asked voters to confirm that the district exists. Proposition B asked to allow an operation and maintenance tax of up to $1.20 per $100 of value. Proposition C asked for up to $165,000,000 in bonds for water, wastewater, and drainage. Proposition D asked for up to $75,500,000 in bonds for roads.⁵

Proposition E asked for up to $19,675,000 in bonds for parks and recreation. Propositions F and G let the district sell refunding bonds, which replace older bonds with new ones. Their caps are $277,012,500 for water and park bonds and $113,250,000 for road bonds.⁵ Propositions C, D, and E add up to $260,175,000.³

Each of the seven propositions passed with 1 vote for and 0 against.⁴ The ballot also asked voters to elect five directors, and each candidate got 1 vote.^4,5 The same night, Travis County MUD No. 24 also passed each of its propositions 1-0. Shane Saum received 1,862 votes for Lago Vista mayor in that election.⁴

A 2017 Houston Chronicle article reported that four years earlier, between 3 percent and 16 percent of registered voters in Harris County voted on MUD issues. Barton Smith, an emeritus economics professor at the University of Houston, wrote on a water district trade group's web page that MUDs "reduce the cost of development."³⁶

What is inside the $260 million?

The election order carried cost figures from a preliminary engineering report. The order states that report "is not part of the proposition to be voted on and is not a contract with the voters." The water, wastewater, and drainage figure includes a $76,545,013 inflation adjustment for 12 years at 6 percent a year. Across the three cost tables, inflation adjustments add up to about $117.6 million.⁵

Land costs add up to about $42.6 million.⁵ Developer interest, which repays the developer for interest on money it spent first, adds up to about $33.7 million.^5,37 The utility table also sets aside $19,800,000 for capitalized interest, which is bond interest paid out of the loan itself in the first years. It budgets $4,950,000 each for legal fees and for the underwriters who sell the bonds.⁵

The same table lists $8,387,316 for water impact fees and $5,678,160 for wastewater impact fees.⁵ An impact fee is a one-time charge a city collects from new development for water or sewer capacity.

The ballot allows bonds to mature over "a period not to exceed 40 years."⁵ The draft consent agreement caps each bond series at 30 years.⁶ The records we reviewed do not say which limit controls.

The order projects a top interest rate of about 6 percent, for information only.⁵ The developer's June 2024 analysis found bond capacity of $21,435,000 at the $0.92 rate. That analysis assumed 325 homes and is marked "Preliminary - For Discussion Purposes Only."³⁸

The $260,175,000 authorization is about 12 times that capacity.^3,38 Each bond measure sets a maximum amount.⁵

What rules protect buyers and taxpayers?

Before most bond sales, TCEQ must find the project feasible and approve the issue.¹⁵ For a district's first bond issue in Travis County, a TCEQ rule caps the district's "combined projected tax rate" at $1.20 per $100. The same rule asks separately for the tax rates of every other unit that taxes the land, such as the city, county, and school district. Developers must usually pay at least 30 percent of construction costs for water, wastewater, drainage, and recreation, with exceptions. Developer interest is usually limited to two years after the developer's final payment.³⁷

A seller of land in a district must give the buyer a written notice before the sale contract is signed. The district must also file an information form with the county clerk.¹⁵

The draft agreement bars the city from seeking to dissolve the district until at least 90 percent of the public works are built and either bonds are issued or the city agrees to repay the developer itself.⁶ State law lets a city abolish a district by a two-thirds vote of its governing body if the district is no longer needed. If it did, the city "assumes and becomes liable for the bonds and other obligations of the district."³⁹

The city would then have to tax all city property to pay the bonds.³⁹ That is a rule of state law, not a plan by the city.

Where does it stand now?

On May 21, 2026, the council took no vote on Firefly Cove's request to change its plans and sent it back to the Planning and Zoning Commission (P&Z).⁴⁰ The request, case 26-2960, would replace the neighborhood's concept plan and detailed plan with a new one. The applicant said the new plan would reflect the Firefly Cove MUD consent agreement. The applicant also said it would not raise the maximum number of homes.⁴¹

The draft minutes say P&Z voted 4-1 on July 9, 2026, to table the request, on a motion by Chair Lynda Aird and a second by Commissioner Jeff Hewgley. Aird, Hewgley, Gene Harris, and Dave Stewart voted yes, and Commissioner Enrique Lopez voted no. The motion asked for an updated traffic study before the council sees the plan. It also asked for parkland records, noting that "no parkland is depicted on the current plan."⁴²

Members said the Firefly motion in the draft July minutes needed correction, so on Aug. 13, 2026, the commission tabled approval of those minutes. That day, P&Z moved the request to its next regular meeting, with no one opposed.⁴³ Staff had recommended a continuance at the property owner's request.⁴²

At that meeting, a lawyer for Firefly from McLean & Howard said, "All of the public parklands will be owned by the MUD." She said the district must own public parkland "in order for the MUD to get reimbursements for them."⁴³

TCEQ received the district's information form on Sept. 23, 2026, which lists a total district tax rate of $0.92. As of Oct. 7, TCEQ's report called the district inactive, with a dormancy affidavit on file.¹² The county's parcel data for 63 Phase 1A and 1B parcels carries no MUD code we could identify.⁴⁴ The records we reviewed do not say whether any owner has received a district tax bill.

A builder's listing for Firefly Cove homes is marked "Coming soon," with prices from $319,990.⁴⁵

What could it cost a Firefly Cove homeowner?

Six taxing units that we could identify tax Firefly Cove parcels.⁴⁴ Lago Vista Independent School District charges $1.0169 per $100 of taxable value.⁹ The city's 2026 rate is $0.451988.¹⁰ Travis County charges $0.38621, and Travis Central Health charges $0.132863.⁹

Two emergency services districts (ESDs), Nos. 1 and 7, charge $0.10 each.⁹ Together those six come to $2.187961 per $100.^9,10 One more code, 0A, appears on all 63 parcels, and we could not match it to a taxing unit.⁴⁴ Taxable value is a property's appraised value minus exemptions.

A $0.92 district tax would bring the total to $3.107961 per $100.^9,10,11 That is about 42 percent more than $2.187961.^9,10 The $0.92 is the developer's stated maximum and the rate on the district's information form.^11,12

The bond propositions on the ballot stated no tax rate, only that taxes "sufficient to pay the principal of and interest on the bonds will be imposed."⁵ The records we reviewed do not include a tax rate set by the district's board.

On a home with a taxable value of $350,000, the six existing taxes would come to about $7,658 a year.^9,10 A $0.92 district tax would add $3,220 a year.^9,11 That would bring the total to about $10,878.^9,10 Exemptions differ by owner, so real bills will vary.

Two of the developer's three payments, $1,800,000 and $600,000, come from bond proceeds. The records we reviewed do not say whether the developer paid the $590,735 or built the road work itself.⁶

What could it mean for the rest of the city?

The Texas Municipal League, an association of Texas cities, notes in its legal guide to MUDs that a city "may benefit from the developer's fronting of costs."¹³ Here, the draft agreement sends the city $1,800,000 for its wastewater system and $600,000 for its water system.⁶ The election order's cost tables also list water and wastewater impact fees, paid from district bonds.⁵

The $1,800,000 wastewater payment is less than the $2.8 million Whichard gave for the plant upgrade's engineering design and construction management.^6,21 On the other side, the city now maintains the first phases' streets and pipes at a cost the records we reviewed do not state.⁷

The short version

The council voted 4-3 and then 5-2 to let a MUD form in Firefly Cove.^1,2 Voters approved up to $260,175,000 in bonds on a 1-0 vote.^3,4

A $0.92 district tax would take a Firefly Cove home to about $3.11 per $100 in all.^9,10,11 The draft agreement promises the city $2,990,735 in payments or road work, and its cost to maintain the first streets and pipes is unknown.^6,7 The district was inactive on Oct. 7, 2026, and TCEQ must approve most of its bond sales.^12,15

What we could not find

• The signed consent agreement, including the March 6, 2025, change to Section 5.02.²
• Whether the district signed the agreement within 90 days of its confirmation election, as the draft requires.⁶
• Whether the developer paid the $590,735 road payment, and whether the city has received any of the $1,800,000 or $600,000.⁶
• The city's yearly cost to maintain the Phase 1A and 1B streets and pipes.⁷
• Whether the district has set a tax rate or billed any owner, and what code 0A on all 63 parcels covers.⁴⁴
• Which limit controls, the 30-year cap in the draft agreement or the 40-year term on the ballot.^5,6
• Who lived in the district and voted on Nov. 4, 2025.⁴
• Why the records give different land sizes, such as 287.36 acres in the draft agreement and about 211 acres in the P&Z packet.^6,41
• Any P&Z or council action on case 26-2960 after Aug. 13, 2026.⁴²
• A ruling on a resident's April 22, 2024, claim that the Firefly Cove plat missed a 30-day deadline.⁴⁶
• A cap on the district's tax rate in the draft consent agreement. We found none.

What you can do

• Ask the city, through its open records page, for the signed consent agreement and the payment records for the $1,800,000, $600,000, and $590,735.^6,47
• Ask the City Secretary for any bond notice, tax rate, or audit the district has sent under the agreement.⁶
• Ask the city, through the same page, for records of what it spends to maintain Phases 1A and 1B.^7,47
• Ask the district for its board records, because MUDs must follow the Open Meetings Act and the Open Records Act.¹³
• Watch for case 26-2960 to return to P&Z.⁴²
• Residents can sign up to speak at council meetings.²⁴
• If you are buying in Firefly Cove, ask for the district's written notice before you sign, because state law requires the seller to give it.¹⁵
• Look up the creation order and filings on TCEQ's district documents page, and ask TCEQ for copies.³¹
• Ask the Travis County Tax Office whether any Firefly Cove owner has received a district tax bill.
• If you have records about the district, share them on our Share records page.