ARGYLE — The Town Council agreed to an 11th-hour request by developers to create a municipal utility district as they put together a complicated, high-stakes package of agreements meant to build a regional sewer line along Interstate 35W.

Argyle was the first to agree to the sewer project’s final terms during its regular meeting Tuesday. The council’s vote to sign a four-party contract with Flower Mound, Northlake and the Trinity River Authority to build the line was all or nothing.

Northlake and Flower Mound will take up the agreement next, with the authority’s board scheduled to vote on the project June 25. Had Argyle leaders delayed any longer, Flower Mound would have built its portion of the line without them, Town Attorney Matthew Boyle told the council.

The vote came after years of negotiations, because all parties knew they could save a significant amount of money by working together.

However, neither Northlake nor Argyle has enough tax base to participate in such a large-scale project, costing $22 million and opening up the western side of the county to significant development.

So developers of two large-scale subdivisions planned for that area, Belmont and Canyon Falls, with both commercial development and 7,000 homes, offered to pay the way for Argyle and Northlake. In exchange, both cities agreed two years ago to allow the developers to form special taxing districts to recover their development costs.

The original agreements did not provide for municipal utility districts. Instead, they specified that Belmont and Canyon Falls seek out one of three kinds of special taxing districts — either a water control and improvement district, which requires legislative ap­proval; a freshwater supply district, which requires county commissioner approval; or a public improvement district.

Belmont developers formed two freshwater supply districts last year, but Canyon Falls has formed no districts. Casey Mc­Ginnis, the principal of two investment groups involved in that development, was not able to secure legislative approval for a water control and improvement district during the last legislative session. Last fall, the Texas attorney general ruled against public improvement districts for the project.

Attorney Clay Crawford, who helped Belmont set up its freshwater supply districts, told the Town Council on Tuesday night that Denton County commissioners had not agreed to freshwater supply districts for Canyon Falls and that was the reason Mc­Ginnis asked for a municipal utility district instead.

County Judge Mary Horn said Wednesday she had no idea why developers would assert that, since Canyon Falls never came before the Commissioners Court for a vote.

“He hasn’t talked to me,” Horn said. “He might have talked to the commissioner [Andy Eads] who might have had some problems with it.”

Eads, commissioner for Dis­trict 4, where Canyon Falls lies, said he’d met with McGinnis more than a year ago to talk about forming a freshwater supply district, but he knew the developers were looking at other options, too.

“We have not received a formal application,” Eads said. “The county never declined their application. We never did.”

Argyle Mayor Greg Landrum said he felt the agreements were as good as they could be and that the Town Council simply needed to trust that everyone had negotiated in good faith.

Council member Joe Phelps questioned the last-minute change, asking how the developers would benefit using a municipal utility district over a freshwater supply district.

Crawford told the council that developers could use municipal utility district money to build some of the roads but couldn’t use freshwater supply district bonds to build roads.

Boyle said that negotiators for all parties had made many compromises and he felt no one walked away from the table with the agreement they set out to secure.

Phelps also questioned whether an updated contract that reimbursed Argyle for legal and engineering expenses incurred to prepare the agreements — the council approved nine contracts in all — showed that Canyon Falls was behind with payments so far. But both Boyle and Argyle Town Administrator Lyle Dresher assured the council that the reimbursements would be current shortly.

Representatives from the developers, the three towns and the Trinity River Authority met last week and hashed out the nine inter-related agreements.

Previous agreements made between Argyle, Northlake and the developers failed to satisfy the river authority because they provided no cash, only taxing mechanisms on acres of farmland. The new agreements provide both cash payments and letters of credit to back the authority’s investment-grade bonds, Boyle said.

“A hard-headed negotiator would ask for all $22 million in cash, up front,” Boyle said. “But that’s not reasonable.”

Instead, Boyle and other negotiators had the project roll out in phases, so that if one of the developers defaults, Argyle isn’t liable.

“The most you’ll have to pay is the annual membership [in the authority], which is about $37,000 per year,” Boyle said.

But, if the project craters, Ar­gyle will probably have to wait a long time for another chance to expand its sewer capacity.

“It’s going to be a broken Hump­ty Dumpty and it will be very hard to put it back together, ever again,” Boyle said.

Staff writer Dan X. McGraw contributed to this report.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is pheinkel-wolfe@dentonrc.com .

Argyle, Flower Mound and Northlake have joined the Trinity River Authority in order to build a $22 million sewer line along the west side of the county. Developers have said they will pay for Argyle and Northlake’s portion of the four-party agreement.

Here is a timeline of the negotiations, which began in earnest two years ago. 

June 2006

• Canyon Falls developers submit a petition to Argyle and Northlake, asking for consent to form either a water control and improvement district or a freshwater supply district to pay for the developments.

August-September 2006

• Six people moved onto about 1,000 acres of farmland south of Robson Ranch, including several area college students who moved into two mobile homes set up on Old Justin Road by Realty Capital Belmont. After moving in, the six people established permanent residency, petitioned for municipal annexation into Northlake and were poised to vote in upcoming elections, including a future election to establish freshwater supply districts on the land.

November 2006

• Developers of both Canyon Falls and Belmont reach agreements with Argyle and Northlake, securing consent to the formation of special taxing districts in their extraterritorial jurisdictions, in exchange for those districts paying their way into a sewer expansion project, known as the Graham Branch Interceptor Line, with the Trinity River Authority.

February 2007

• The Trinity River Authority refused to issue bonds for the project, saying that the special taxing districts do not provide sufficient backing for its investment-quality bonds.

June 2007

• County commissioners hold a public hearing to establish freshwater supply districts for the Belmont subdivision, but delay calling the election until the Argyle school district holds a hearing.

• Canyon Falls developer Casey McGinnis fails to secure a water control and improvement district in the Texas Legislature. McGinnis tells local officials he intends to pursue a freshwater supply district.

July 2007

• Argyle school district holds a hearing on the formation of freshwater supply districts for Belmont, based on Belmont’s plans to construct 3,000 homes, dedicate land for two school sites and form an education foundation to help pay for the construction of those schools. County commissioners approve the formation of the Belmont districts. Eventually, both Belmont and Canyon Falls developers agree to donate land to the Argyle school district and North­west school district for school sites.

September 2007

• Developers petition Argyle and Northlake for the creation of public improvement districts (PID) inside the proposed Belmont and Canyon Falls subdivisions, which could have created one of the higher property tax burdens in the state.

November 2007

• Three voters approve the creation of Belmont Fresh Water Supply District No. 1. Four voters approve the creation of Belmont Fresh Water Sup­ply District No. 2.

December 2007

• Developers withdraw their petitions for public improvement districts, after learning that the attorney general ruled they cannot oversize the sewer line and pay for it with PID money.

• Town leaders in Argyle and North­lake announce that they are looking for other ways to pay for the sewer line, including seeking $8 million to $10 million in federal grants.

• Flower Mound leaders announce they will start construction of their portion of the line, without Argyle and Northlake, if necessary, by early 2008.

January 2008

• Belmont petitions to annex an additional 66 acres into its development.

February 2008

• Construction of the Graham Branch sewer line originally slated to begin.

Future

June 2008

n Final deadline for Argyle and Northlake to secure funding and execute agreements with Trinity River Authority to become a part of a regional line.

June 2009

• Construction to begin.

June 2010

• Completion.