M/I, Meritage team up to fund $7.6M bridge to growth in a Texas town

A new public-private partnership in Central Texas solves for a common stumbling block for homebuilders, who face having to balance home price affordability with the public infrastructure investments their projects often require.

On Friday, the City of Buda, TX, located about 15 miles south of Austin, held a ribbon-cutting ceremony for a $7.6 million bridge that will link a new subdivision, The Colony at Cole Springs, with the city’s main commercial corridor.

M/I Homes and Meritage Homes, the two homebuilders involved with the 496-home master-planned community, each shared half the cost of the bridge, which will traverse over a creek that runs through the town.

Sush public-private partnerships aren’t new. Homebuilders and developers have partnered with cities for years to deliver roads, bridges and utilities that benefit longtime residents and newcomers alike. However, with builder margins and buyer affordability both already stretched thin, this kind of homebuilder-funded public investment can add an extra layer of complexity for homebuilders already navigating a tough market. 

Derek Baker, Austin Area President at M/I Homes, told HousingWire TBD that there’s no getting around this tradeoff. Infrastructure commitments and affordability work against each other on every project. The key is finding the sweet spot where the two can coexist at a price point the market can accommodate. 

“We’re trying to balance providing the benefits of improvements like a bridge and additional streets, while also providing affordable housing half a mile from downtown Buda. It’s really kind of a balance. Some things are required by the city, and some things we will do on our own. Every community is different,” Baker said.

A deal years in the making

In Baker’s experience, early collaboration with city officials to understand what sort of public investments will be required is crucial, given that each city is different. By working together from the start and finding common goals, both sides can avoid surprises and create developments that enhance a community’s livability. 

“It’s important to get involved and have an open mind and an open dialog early on in the process, so there are no surprises later on,” Baker explained. 

The development agreement in Buda, finalized in 2020 after initial discussions began around 2018, required M/I Homes and Meritage Homes to help fund significant public amenities and infrastructure. In addition to the bridge, improvements included upgrades to a main road leading to the new subdivision, a new traffic signal and improved access to a local creek and parkland. 

The agreement also authorized the creation of a municipal utility district (MUD), which helped finance the project’s infrastructure and land reclamation costs through additional property taxes paid by residents. 

The infrastructure investment is part of a broader transportation and utility program designed to accommodate growth in the western portion of Buda. It upgraded undersized and flood-prone roads, and the new bridge provides an additional route for traffic from the roughly 500-home community, helping reduce congestion through downtown. The bridge also makes downtown accessible on foot in about 10 minutes and improves emergency access, with the city’s main fire station located nearby.

Bryan Crouch, Austin and San Antonio area manager at Meritage Homes, said the number of homes planned by the builders helped support the investment. 

“The scale of Colony at Cole Springs made this level of infrastructure investment possible. A nearly 500-home community allows partners to share costs and deliver meaningful improvements with a long-term vision while preserving affordability,” Crouch explained. 

For a growing city like Buda, public-private partnerships like this are crucial to the city’s growth. Buda City Manager Micah Grau, in an interview, said that the city worked with M/I Homes and Meritage Homes to ensure that the investments were financially feasible. 

“They’re accessing tax breaks and benefits through the city with the MUD bonds that they issue, and we also implemented a tax increment reinvestment zone where we’re kicking back 40% of property taxes from the project to help pay for the improvements,” Grau said. 

The partnership with the builders, Grau explained, was necessary for the city, which wouldn’t have been able to fund the project on its own. 

“We have a limited ability to take on major infrastructure projects. Most of our major projects have to be funded through a bond that our voters come and approve, and then that would take years of work. The partnership with the builders in this case allows them to move out on those projects quickly and get them built,” Grau said.

Ultimately, the bridge is intended to support existing small businesses and continued growth and expansion in the city’s downtown core.

“The [bridge] would not have happened without the development partnership,” Grau added.