Even though its debts were paid, a municipal utility district in Corinth in North Texas kept taxing residents, bringing in tens of thousands of dollars.
The district had retired its bonds in September 2010, which paid for water and sewage infrastructure to the town for three decades and were funded by a property tax of 65 cents for every $100 in value, a bill of $1,079 on a $166,000 home. But the district continued to tax residents at a rate of 15 cents per $100 valuation, bringing in $100,000 to the Corinth Municipal Utility District #1 after the services had been paid off.
District board members continued to receive $125 per meeting, according to Corinth City Attorney Debra Drayovitch, and “they paid $900 to rent chairs for those meetings.”
Once aware of the taxation without a cause, the city moved to dissolve the district, and within six months, lawsuits and an election had done the job.
“They said (the district) would last for about 10 years,” said Ruth Brosnan, who moved to Corinth from Long Island, N.Y., in the early ‘80s and was told by the developer of the district levy. “But it just kept going.”
The case is a rare one in Texas, that of getting rid of a special district. The districts are authorized by the Legislature, can be created by a handful of voters -- one or two will do -- and have the same powers to tax and issue debt as cities and counties. The districts tend to have strong political ties and have proliferated over the last few decades.
Today, two specially created improvement districts in Houston are being besieged by disgruntled residents, both bent on their dissolution.
Business owners in Montrose say a new district there was passed by the Legislature without their knowledge.
“I was unaware that anyone in this state dissolved a district,” said Philip Navratil, one of a group of folks who submitted petitions with the Montrose Management District seeking to be rid of the district and the tax of 12.5 cents per $100 valuation it levies on commercial properties.
Some taxpayers in the Five Corners Improvement District allege that a power structure prevents dissenting voices from sitting on the board and are seeking to be excluded from the 10 cents per $100 valuation levy imposed on businesses there.
“But we are watching the Montrose case to see how that goes,” said Royce Mitchell, one of a group of the Five Corners property owners who gather regularly to discuss a strategy for removing themselves.
Both groups can look at Corinth, southeast of Denton, for cues on how to deal with a district management team that clings tenaciously to power. The MUD, as they are called, issued $3.75 million in bonds in 1987 to cover the cost of infrastructure in what was then a very rural area.
When the housing market in Texas took a tumble in the later ‘80s, “we had to pick up the slack on the bonds,” Brosnan said.
District board meetings had always been sparsely attended, so no one noticed when the members kept on meeting at the clubhouse of a local housing development after the bonds were paid.
Paul Ruggiere
“They met the minimal requirements for posting meetings,” said Corinth Mayor Paul Ruggiere, who was part of the city effort to get rid of the district. “But it was the minimal posting, and the average person really didn’t become aware of it right away, that this was not supposed to be going on.”
“Then we found the district was considering using the money to make improvements on a pool and tennis court that was associated with the neighborhood of the district that was its own non-profit organization,” Ruggiere said.
The district’s board vice president Marianne McKinley denied such a thing in November 2010, and Texas Watchdog found no record of any current non-profit connected to the board members.
McKinley promised the district would dissolve at the behest of the city, which had the authority to dismantle it. Council members passed an ordinance that month.
The city also arranged to return the tax money taken in by the district to the taxpayers. Eventually, residents received rebates of around $100.
But the district still didn’t dissolve.
The residents, including at least one city council member, filed open records requests on the district, asking to see minutes and statements, requests that were never filled.
City Council member Bruce Hanson asked for all records of elections held by the district going back to 1990 - the same board had been in place for at least a decade, and residents had never heard of any election - but he never received anything.
The city also filed a temporary restraining order.
The city and residents called the Texas Commission on Environmental Quality, which oversees districts but was no help.
“They didn’t have any answers and didn’t really even seem equipped to handle this kind of thing,” said Mary Arceneaux, a Corinth resident.
The agency doesn’t police expired districts. It simply shutters them if they are dormant for five years. But it has to come to the attention of the agency.
A flack at the TCEQ was vague about the process, and even the agency’s hand in anything regarding the administration of utility districts.
“It doesn’t happen that they are dissolved very often,” said spokeswoman Andrea Morrow. She said that her agency can handle the dismantling of a district, but even that “depends on how they are supplying water to their customers and what they have to do to make sure customers are not left without water.”
The Corinth district did not supply water, just infrastructure.
As far as districts that might be taking unauthorized money or engaging in otherwise unseemly activities, “we handle the rate; we don’t handle the operation of a MUD. … That is something between the board and the ratepayers,” Morrow said.
On May 14, 2011, six months after the city council vote, residents voted to get rid of the district. But folks are still mad about their dealings with the board and the discreet public notice provisions required for open meetings by such bodies.
“We never even knew when they met,” Brosnan said. “One of them didn’t even live here.”
Three of the board members have disconnected phone numbers, and two others could not be reached. Richard Abernathy, a lawyer from McKinney who represented the district, said in an email that he could not talk about the situation but wrote, “It is unfortunate that the city wasted taxpayer dollars forcing an unnecessary election.”
***
Contact Steve Miller at 832-303-9420 or stevemiller@texaswatchdog.org.
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Photo of water pipe by flickr user james.rintamaki, used via a Creative Commons license.
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