in Houston, Texas
Special districts, special favors: An insider network of favors surrounds these proliferating governments in Texas
Monday, Oct 29, 2012, 09:13AM CST
By Steve Miller

For decades, Texans have relied on special districts for services that local municipalities can’t provide. Water to an isolated settlement. Crime prevention in a region that can’t afford full-service cops. Flood control in susceptible areas.

But the web of special districts is at times marked by self-dealing and relationships greased with campaign cash, which passes from the firms and developers who make a living off the districts to the lawmakers who authorize them.

These deals result in government that is not always for the people by the people, but instead is driven by special interests --- lawyers, lobbyists, and management firms --- that make huge profits on the backs of residents.

For example:

  • A consultancy for special districts, Municipal Accounts and Consulting, is owned by attorney Joe Schwartz, whose law firm Schwartz Page & Harding handles the elections and management of several special districts, which give their business to Municipal Accounts.

Schwartz’s office said he sold the limited partnership to Mark Burton, a certified public accountant who was the registered agent of the operation when it began in 2002. Texas Watchdog was unable to locate any state records confirming the sale. The company has an address of 1300 Post Oak Blvd, Suite 1600, in Houston. Schwartz’s law firm occupies the 14th floor.

In 2007, Huffines Communities landed the big fish in the form of Viridian Municipal Management District, which sold bonds for millions of dollars in roads and infrastructure and has broad taxing powers to build everything from playgrounds and amphitheaters to signs and monuments.

The legislation creating the district was sponsored by state Rep. Paula Hightower Pierson, D-Arlington, in April 2007. Eight months later, Hightower-Pierson received a campaign donation of $5,000 from Robert Kempel, president of Huffines, the first of three donations he would make to her through 2010. One fawning story pegs the total public “contribution” at $337 million, “if all goes as planned.”

  • In late 2006, state Rep. Hubert Vo, D-Houston, received campaign donations of $500 each from Hawes Hill Calderon and Allen Boone Humphries Robinson. Four months later, in March 2007, Vo and state Sen. Rodney Ellis, D-Houston, carried a bill creating the International Management District, which would become a client for both firms. Hawes Hill manages the district, and Allen Boone is a mega law and lobbying firm which handles legal affairs for districts across the state including International.

After the 2007 session, Vo received additional donations, $2,500 in August from Hawes Hill and $500 in September from Allen Boone.

Vo has since received one donation from Hawes Hill, $1,000 in May.

Perhaps even more cozy is the building on Bellaire in Houston that houses the offices of the International Management District; records show that it is owned by ERA Investment, a company registered in 1997 by Vo and his wife, Kathy.

David HawesDavid Hawes

David Hawes, of Hawes Hill Calderon, said the space for the district is donated by Vo, saving the district the $600 a month it was previously paying in rent.

The building was purchased in 2004 by Vo’s company although his financial disclosure for 2007 does not state his interest in the building at 11360 Bellaire. Vo did not return a call asking for a comment.

One of the largest district management firms in the state, Hawes Hill Calderon has been a major player in the explosion of special districts in the state. The Houston-based firm is an efficient and effective team of professionals, handling everything from security to graffiti removal for businesses often located in tough neighborhoods.

“Cities do what they can, but they can’t do everything,” Hawes said. “If I can provide security to drive into these district centers and help, it’s a service to the commercial community.”

Hawes said that in one district, they were able to cut burglaries of businesses by up to 70 percent in a given period.

For graffiti abatement, the city often cites a business if it does not clean up the spray paint in a given time period.

“As a business owner, if you have someone managing the removal, you avoid a fine.”

At the same time, Hawes Hill has contributed to the campaign funds of lawmakers and elected officials who authorize the districts.

“It’s become a cottage industry. There are people making their entire living off these special districts,” said Martha Wong, a former Republican state lawmaker from Houston.

She pointed to Hawes Hill, which wanted her to support a special district in the Montrose area to provide extra publicly-funded services such as police patrol and litter pickup.

“They wanted to me introduce legislation for their management district, but I found out there was a big resistance to it,” Wong said. “My goal was to have 75 percent of the landowners approve it and to make sure every land owner in that area was notified.”

Martha WongMartha Wong

Wong refused to carry the bill because of the overwhelming opposition.

“When you work it out and the neighborhood agrees, I’ll carry it,” Wong recalled telling the district organizers.

The organizers got a more sympathetic hearing from Ellen Cohen, Wong’s successor in the House, who sponsored the bill creating the Montrose Management District in 2009.

Today, that district is being sued by landowners who claim they submitted a lawful petition to dissolve the district’s mayor-approved board, but the board denied the petition’s validity.

Wong said special districts are “good for specific projects, but that’s all they really need to be used for.”

Yet the districts continue to bill residents and business owners for web services, landscaping, advertising; it’s a potpourri of services that often border on questionable, like the branded jump ropes the folks in Brays Oaks Management District ponied up for last year.

Residents of Brays Oaks in June 2011 also paid $5,000 down on the  $20,000 lobbying bill for Allen Boone Humphries during the legislative session.

The number of lobbyists for special districts exploded in the early 2000s, jumping from 412 in 1999 to 2,271 in 2004. The number has since fallen, to 610 in 2012.

Trey Lary, uber-lobbyist to special districts and a lawyer with Allen Boone Humphries, received between $50,000 and $99,999.99 for his services to Hawes Hill Calderon in 2005, records show. Three other Allen Boone lawyers worked for Hawes Hill that year, including Joe Allen. All made in the $50,000 to $99,999.99 range.

That year the Legislature created the Greater Sharpstown Management District. The contract to manage it went to Hawes Hill.

Hawes, himself a lobbyist, in 2009 represented the Harris County Improvement District #10B and Harris County Improvement District #6 -- later known as the Five Corners and Montrose management districts -- as well as some investment groups.

Hawes also lobbied for INCAP Financial Group, which was in the final stages of creating the Dallas North Oak Cliff Municipal Management District in Dallas. Hawes Hill is the manager of that district.

Right now, there are lobbyists working on special district issues for the upcoming session, which begins in January.

Jody Richardson, a veteran lobbyist with Allen Boone Humphries, has helped create special districts since 1982. She has spent time every month this year since February lobbying for special districts, according to her filings with the Texas Ethics Commission.

special district webs of influence

She attributes the increase in special districts in Texas, up 25 percent in the last 30 years, to land development becoming more “sophisticated.”

“The consuming public wants stuff,” Richardson said. “They don’t just want a house. They want a house in a master planned community, with hike-and-bike trails and amenities. All of that costs the developers money. And they need to put them in place to attract homebuyers.”

As far as the campaign donations from district firms to lawmakers, Richardson said looking at it as trading favors is “simplistic.”

“The reason those lawmakers carry those bills is because that land is in their district,” she said. “If you think a senator or a representative is going to sell his soul for $500 or $1,000 or $2,000, then you must not respect your government very much.”

Richardson sees only a “network of specialists” that cater to the needs of a demanding district system, businesses that are filling a market demand.

Phillip Savoy, of Austin-based Murfee Engineering Co., said in a hearing regarding districts last year that his group has “built an entire engineering business on putting together the process to create these districts. We have found a mechanism to allow communities to expand their infrastructure. Without putting the tax burden on the whole community, it goes to the people who live in the [municipal utility district].”

* * *

Perhaps the granddaddy of special district largesse is state. Rep. Jim Murphy, who earns a six-figure salary to manage Westchase District in Houston. His deal as general manager calls for a monthly fee of $22,491 in addition to other payments for consultancy and an upfront payment of $7,711.

He was first elected to the statehouse in 2006, a Republican from the Houston area and the owner of District Management Services, a sort of one-stop company that manages the affairs of special districts much the same way as Hawes Hill.

But instead of relying on lobbyists to advocate for Westchase, Murphy, who was voted out in 2008, handled the job himself.

In April 2009, state Rep. Scott Hochberg, D-Houston, carried a bill to give broader powers to Westchase, such as the ability to receive money from tax increment finance zones. It authorized the board of the district to change the number of voting directors, “provided the board determines that the change is in the best interest of the district.”

It also gave the district broader powers to tax for services, including infrastructure.

When it came time to hear testimony before the House Ways and Means Committee, there was one witness to testify for the bill: Jim Murphy, who was now a registered lobbyist for special districts and authorities. The bill was signed by the governor in June 2009.

Murphy was re-elected in 2010. In April, as Murphy struggled to retain his seat in the primary against challenger Ann Witt, the district became an issue.

The Witt campaign unveiled a web site and sent out a mailer outlining the numerous Westchase contracts handed out to Murphy donors, including Rehak Creative Services, whose owner, Robert Rehak, has donated at least  $7,000 to Murphy’s campaigns since 2005.

Other contract-holding contributors include Phonoscope, BMS Management and Brown & Gay Engineers.

“Double Dipping. Skirting the Law. Bilking Taxpayers. Rewarding Cronies,” a banner at the bottom of one page of the mailer claimed in fairly standard attack ad format.

Murphy did not return a call for comment.

Rehak sued Witt for defamation, claiming Witt’s connecting of dots constituted an unlawful act. A district court judge in Harris County quickly dismissed the case, granting attorney’s fees to Witt. The decision is on appeal.

Witt’s daughter, Ellen Witt, was managing the campaign and felt she had found a wedge issue that would boost her mother’s chances of winning.

It didn’t work. Ann Witt lost 59 percent to 41 percent.


Ellen Witt, former deputy attorney general for legal counsel in the Office of the Attorney General of Texas, feels people aren’t aware of the power of special districts.

The districts often do a poor job of posting their public meetings, she said, and usually use a .com URL rather than the .gov that is used with other taxpayer-funded operations.

For example, for a district outside Denton, public meeting notices are posted to a fence post.

“People don’t understand that these are government entities,” Witt said. “For people to hold government accountable, they need to know that a group is a government entity to begin with. Many of these are operating under the radar. And they don’t seem to want the public to know they exist.”

Indeed, even though taxpayers in a municipal utility district in North Texas had paid off the district’s debt in 2010, the board continued to meet and tax residents. It took a court order and an election to undo the district, which, as far as some residents were concerned, had done nothing to let the public know of its existence.

“We had no idea there was a board that met every month,” said Mary Arceneaux, a resident of the district in Corinth, near Denton. “They had meetings, they were spending our money, they had elections, and we never did find out. That’s how they kept the same people in there on the board for 15 to 20 years.”

Most legislation creating districts names the initial board members. Those members sometimes remain in place for years due to a power structure that can leave little room for new voices.

In the Montrose Management District, two-thirds of the board members are donors or supporters of Mayor Annise Parker, who presides over the City Council, which in turn approves board members.

Once the districts are created, they’re hard to rein in.

Not even the governor could stop a move in 2007 to change the power structure of the Buffalo Bayou district in Houston. Democratic state reps. Garnet Coleman and Ellen Cohen co-authored legislation that reduced the number of board members from 31 to 9. The measure passed, but Gov. Perry vetoed it, pointing out that the amendment would not only decrease the number of board members but also name nine directors “without the approval of the local governing body.” Today, the board has nine members, anyway; three of those named in the vetoed legislation are among them. The other 22 spots are left vacant.

Over the years, lawmakers have reviewed internal, mostly academic reports on special districts that have confirmed their majority view that districts are a good thing. The most this 2002 Senate committee report could muster is that “there was not adequate oversight regarding certain activities by certain special districts … specifically, the ability to divide or convert to another type of district.”

critical, geeky analysis in 2007 from Fordham Law Review offered a candid look at the problems of districts.

This 2008 assessment by the Texas Senate Research Center offers a dry, academic look at districts, posing few questions but conceding they are an “invisible” layer of government.

A 2001 series in the Dallas Morning News, Government by Developer, exposed a number of questionable elements of the districts. Among them: The moving of money between developers and the lawmakers that author bills creating districts, the relationship between lawyers, lawmakers and developers and the practice of hiring voters to elect a board that suits the power structure of the district.

All three strategies are still rampant. For the third, one need only look as recently as 2010, when a 30-something entrepreneur, Alan John Lesselyong, moved into a FEMA trailer to elect officers and approve $400 million in bonds for a Denton County district.

Lesselyong was the sole voter in the district. He was de facto election judge, from the polling place set up behind the trailer.

Legislators have vowed to look into possible problems with the system of special districts, but so far, done nothing.

State Rep. Dennis Bonnen, R-Angleton, claimed in 2010 that the voter residency laws were “something that needs to be looked at.” Addressing residency laws could make it more difficult for some districts to be assembled.

But when pressed last month about it, Bonnen said he was going to be busy with other things in the upcoming session.

State Sen. Jane Nelson in 2011 tried to convince her colleagues to address the hiring of voters for special districts, giving a half-hearted plea in a hearing.

In 2001, though, Nelson, R-Flower Mound, had co-authored a bill creating the Frisco Square Management District in what has become one of the ritziest of north Dallas suburbs.

Nelson declined to speak to Texas Watchdog.

Susan CombsSusan Combs

State Comptroller Susan Combs, eyeing a higher office bid and with great fanfare, recently announcednew web site that allows residents to track the taxing entities in and around their area, including districts. The site was applauded by the conservative Americans For Prosperity group.

Combs considered in March lobbying for a moratorium on the creation of special districts, although she has little jurisdiction in that regard. Nonetheless, she told the Fort Worth Star-Telegram last month that she now favors a more political - albeit likely results-free - path of talking with lawmakers.

Combs declined to talk with Texas Watchdog.

Wong, the former state legislator from Houston, said the whole special district process needs to be addressed in the legislature. “People have tweaked the rules” over the last few years, making it easier to create districts.

Austin is the only place that can change the situation that some feel has gotten out of hand, making taxpayers pony up millions that used to be part of the risk taken by an entrepreneur, a developer, even a lawyer.

“Legislators need to do a better job of letting people know that these are government entities,” added Ellen Witt, the former AG’s office lawyer. “I don’t know why more people haven’t raised this issue with their representatives. “

Contact Steve Miller at 832-303-9420 or

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Real estate insiders on board approving $37 million in development tax breaks for downtown Houston
Monday, Sep 24, 2012, 09:04AM CST
By Steve Miller
Houston skyline

The Houston management district board that approves $37 million in property development tax breaks is packed with insiders from the local real estate community, including two people connected to major developer Hines as well as at least two who are already city vendors.

The city council voted last month to allow the Downtown Management District to decide who can receive tax breaks for developing inner-city living spaces.

Of the 27 board members on the Downtown Management District, which was created legislatively in 1995, 12 have real estate ties, and a company operated by board member Kenny Meyer owns property in the district.

Others with ties include Leslie Ashby of Ashby LLP, whose firm handles real estate litigationFrank Staats, a vice president with Moon Acquisition Holdings, a national development and real estate holding company; and Paul Layne, whose former employer, Brookfield Properties, was paid $7,218 by the city of Houston in February, shortly before he left Brookfield.

Meyer manages a number of properties downtown within the district boundaries. He had expressed interest in the area a few years ago before he was on the board, with buildings owned by one of his other companies, FKM Partnership, searching for tenants.

John Mooz is an executive with Hines, one of the area’s largest developers. Stewart O. Robinson, a real estate fixture in Houston, left Hines in December 2010 and now runs SOR Real Estate Advisors. The city paid Hines Reit 2800 Post Oak, on offshoot Hines company, $67,000 between June 2010 and June 2012, records show.

Mike SullivanMike Sullivan

The ties between board members and the industry receiving tax breaks “underscores my opposition to this,” said Mike Sullivan, the lone city council member to oppose handing the tax break process over to the district.

The city council voted in August to allow the board to deliver up to a $15,000-per-unit tax rebate to developers of 2,500 residential units within a specified zone. The rebate will be paid from future property taxes and assessments. See the outline of the arrangement here and information from the district’s site here.

“These are tax dollars that will be rebated,” Sullivan said. “There are better uses for $37 million.”

The district takes in more than 2,000 properties appraised at more than $7.6 billion.

Bob Eury, the Downtown Management District's executive director, said that the process for selecting developers who may receive the rebate is “tightly prescribed. … Obviously, this is really first come, first serve, and we have conflict-of-interest policies, so obviously the board members can’t participate in anything that they will directly benefit from.”

Anyone receiving the benefit of a public money abatement will have to “meet the critera defined by the city council,” added Andrew Icken, chief development officer for the city.

The plan was crafted under Chapter 380 of the Texas Local Government Code, which permits municipalities to pay for economic development. It was created in 1989, when the state, with 16 million people, was about 36 percent smaller than today’s 25 million. A 1987 statewide vote that allowed the creation of economic development programs allowed the legislation.

In Fort Worth, this type of arrangement is considered anathema: “This incentive may only be used as a gap financing tool of last resort,” reads that city’s assessment of Chapter 380 arrangements. “The use of this incentive is for projects facing extraordinary impediments to development and offering significant positive impact to the community and surrounding neighborhood where the project is located. Limitations on how this incentive is used are predicated on the source of the funds and terms and conditions of the award to the City and the project.”

The city of Arlington uses a checklist of benefits for the city and administers the program itself.

The city of Austin handed tech giant Apple an $8.6 million tax incentive earlier this year under a lengthy 380 agreement. The city lists its 380 beneficiaries here.

Dallas used a 380 to lure, well, Dallas.

The city of Houston in 2010 granted three companies 380 agreements: Ainbinder Heights, for development in the Washington Avenue area, InTown Homes for Memorial area development, and Dean Foods.

Icken said that the city has executed 14 such contracts now, and contends that Houston’s are among the more stringent. View the list here.

“Some cities give money up front or simply give grants through this program,” he said.

The 380 deal with Ainbinder turned into a protracted legal battle after a nonprofit filed a lawsuit against the city and Ainbinder. The action attempted to halt any 380 agreements by the city, claiming the city was “failing to provide sufficient controls to ensure that 380 agreements are not abused as either an end run around bond finance procedures or as political favors returned to well connected developers.”

The city prevailed.

Under the arrangement between the city and the Downtown Management District, the district will enter into agreements with the developers, calculate the funding to be remitted to the developers and send those calculations to the city for payment.

Sullivan pointed out that the original use of the 380 provision in the state was to spur development in areas that need a boost, “but the downtown has historically done well.”

Bob EuryBob Eury

Eury contends that the city of Fort Worth’s definition of the 380 agreement  - “extraordinary impediments” - fits perfectly in the affected area around the George R. Brown Convention Center.

“It’s expensive land,” Eury said. “The whole way it is designed is to stimulate this area. It’s a front door for Houston.”

“Extraordinary impediments” to Ickens as well?

“I would not choose those words,” he said.

Among the locations on the district’s development project list are a city-owned warehouse at 1002 Washington, which was purchased by the city in January 2011 to be converted to its permit headquarters. The list, though, shows no indication that the interests of its board members are being appeased.

Contact Steve Miller at 832-303-9420 or

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Special districts can levy ‘maintenance tax’ after debts are paid, more in Q/A with state oversight agency
Monday, Sep 10, 2012, 10:23AM CST
By Steve Miller

The oversight of special districts in Texas is often unclear even to the officials who must navigate the landscape. Most of the time, the fallback agency for information regarding utility districts is the Texas Commission on Environmental Quality. It has the power to approve applications for certain districts related to water, usually presented by developers, and it provides administrative guidance once the districts are established.

We sent an agency spokeswoman some questions. The answers came back in good shape. Check it out.
Question: Who has jurisdiction over districts like development districts, tax increment finance zones and public improvement districts?
Answer: The municipality or county which creates the development district, tax increment finance zones and public improvement districts has jurisdiction over the district or finance zone. The Texas Commission on Environmental Quality (TCEQ) has no jurisdiction over development districts, tax increment finance zones, and public improvement districts.

Q: What is the procedure for dissolving a municipal utility district (MUD) or any other district under the auspices of the TCEQ?
A: The procedures/criteria for the dissolution of districts can be found in 30 Texas Administrative Code, Sections 293.131 – 293.136, which are derived from the Texas Water Code Chapter 49, Sections 49.321 – 49.327. The TCEQ’s authority to dissolve a district is limited to districts that have been inactive for at least five years and that have no bonded indebtedness.

Q: Is there any administrative authority and/or oversight of MUDs provided by TCEQ?
A: Although the (Texas Water Code) grants the TCEQ a continuing right of supervision, the extent of this supervision is limited, and does not include the regulation of a district’s daily operations. Issues related to the daily operation and the management of a district are under the authority of the district’s elected board of directors. However, TCEQ staff does assist district board members and/or their consultants to understand the complex and varied laws and regulations under which a district must operate.

Q: Can a utility district operate and tax without any outstanding debt to manage? Can a utility district continue to tax if management of the infrastructure it built is handled by a city or other municipality?
A: Yes, a district can issue a maintenance tax for the operation of the district even if the district has no outstanding debt.  Yes, a district may continue to collect a tax if the management of infrastructure is handled by another entity.  Decisions regarding a district’s operation and taxes are under the authority of the district’s elected board of directors.

Q: What is to prevent a district with no more administrative or management tasks left from refinancing bonds or issuing bonds for something other than it was created for?
A: General Law districts must follow Chapters 49 through 66 of the TWC. These statutes describe the powers and duties of each type of district and establish requirements that these districts must follow.  Additionally, most districts must obtain TCEQ approval before issuing bonds.

Q: How many utility districts have been dissolved since 1980? How long does it usually take for the process to be completed?
A: Based from TCEQ’s water utility database, there have been 681 districts dissolved since 1980. If a dissolution application filed with the TCEQ is complete, staff can process the application within 180 days.

Q: The Corinth MUD #1 taxed residents in 2010 even after its debt had been retired and the city managed the water and sewer system. Is that done in accordance with code? Is that being done anywhere else?
A: Decisions regarding taxation of district residents are under the authority of the district's elected board of directors. The TCEQ is not aware of this occurring anywhere else.

Contact Steve Miller at 832-303-9420 or

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Government finished the job yet continued to tax North Texas residents
Monday, Sep 10, 2012, 10:13AM CST
By Steve Miller
water pipe

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 RuggierePaul 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

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Water district manager in San Angelo area fired after admitting ‘personal use’ of district credit card, FBI seized docs
Thursday, Aug 30, 2012, 12:58PM CST
By Curt Olson

A Tom Green County water district terminated Manager Yantis Green, who is a prominent Republican official in the San Angelo area, in late July because he admitted personal use of the water district credit card.

The actions in late July led to the FBI seizing documents from the Tom Green County Water Control & Improvement District No. 1 earlier this month, the San Angelo Standard-Times reports. The water board’s website still identifies Green as district manager.

The revelation comes following documents the newspaper received via an open records request. Green, who also is a Tom Green County commissioner, was supposed to be the delegate from U.S. House District 11 at the Republican National Convention but did not attend. Green admitted “personal use” of the water board’s credit card in a July 23 letter that compelled the board to fire him, the newspaper reports.

“I will begin repaying the O&M account with my whole paycheck from the 15th of the month beginning in August. It will take a while,” Green’s letter states, according to the Standard-Times.

Documents did not reveal what the amount was, but the newspaper reports Green, who served as district manager 10 years, earned $1,500 a month. Green’s termination was effective July 26, and the FBI arrived on Aug. 1 to obtain records. The water district, which has an office in Veribest, manages water supply to farmers east of San Angelo from a canal. The board serves about 117 farms over 15,000 irrigated acres, according to its website.

The water district changed accountants this year, and the new one required credit card statements and supporting invoices. The water board held an emergency meeting July 23 to cancel the credit and debit cards and insist everything be paid by check.

A second emergency meeting two days later ended with Green’s termination. He wrote his penitent letter on July 23 attempting to make things right. Green wrote that he gave the auditor information in a “feeble attempt to cover up my own mess, and all I did was make it worse.”

"I didn't sleep very well for a few days; I'm just not a good liar. My faith tells me that when I commit an offense, I need to admit it to the people I have offended and make it right. That's what I'm doing now. Again, I'm so sorry for my actions and I will do what is right to fix this issue.”

Green has served as a Tom Green County commissioner after being elected in 2010. Some commenters at the newspaper site are calling for his resignaton from that post.

Contact Curt Olson at or 512-557-3800. Follow him on Twitter @olson_curt.

Keep up with all the latest news from Texas Watchdog. Fan our page on Facebook, follow us onTwitterand Scribd, and fan us on YouTube. Join our network on, and put our RSS feeds in your newsreader. We're also on MySpace, Digg, FriendFeed, and tumblr.

Illustration of 'wallet and credit cards' by flickr user 401(K) 2012, used via a Creative Commons license.

Influence from behind the scenes: State Sen. Tommy Williams aided lawyers filing voter fraud complaint in Woodlands residency case
Thursday, Aug 23, 2012, 10:02AM CST
By Steve Miller
state Capitol

State Sen. Tommy Williams played a key role as attorneys tied to the Woodland Road Utility District pushed for voter fraud charges against seven Woodlands residents who sought to usurp the sitting board of the district.

In an email on Sept. 15, 2010, Williams provided a step-by-step guide on filing a complaint to James Stilwell, the lawyer for three ousted board members, who accused the Woodlands residents of violating state residency laws to skew a vote in the district to remove them.

“A few moments ago, I concluded a conference call with the attorney general’s office on the voter fraud in the 23 June township election,” Williams said in an email to attorney Stilwell and Bruce Tough, a local lawyer and a Woodlands Township board member.

Both Tough and his father, Coulson, are political donors to Williams, a Republican who represents The Woodlands.

Williams personally shepherded the complaint to the AG’s office, email records show.

While Williams asserted that it was a case of voter fraud, at the time of the September email, no charges of voter fraud had been announced.  In a December 2010 email between Ann McGeehan, director of elections at the Secretary of State’s office and Clete Buckaloo, director of law enforcement at the AG’s office, McGeehan refers to them as “alleged illegal voters.” By then, in an email to Williams’ office, Stilwell was referring to the case as the “RUD criminal investigation.”

The charges were announced with the indictment in March.

Tommy WilliamsTommy Williams

Williams in the September exchange offered the use of his legislative director, Jason Baxter, in “making sure this is handed off to the right person,” offering that Baxter could “walk it over and put it in the right person’s hands at the SOS office.”

On the same date, Stilwell emailed Williams, advising him that he had sent a package of documents to him and to state election officials regarding the voter fraud allegations.

“Many thanks for all your help…” Stilwell signed off. It was five days after Stilwell sent his complaint to the Secretary of State’s office.

Williams, along with state Attorney General Greg Abbott, has received tens of thousands of dollars in political donations from Schwartz, Page, & Harding, the law firm that handles day-to-day legal matters for the road utility district.

The accused voters were among 10 who registered at a hotel within the district north of Houston in order to vote in the May 8, 2010, election for the RUD board.

The coup was initially successful with the incumbents voted out, but a state district judge later ruled that the 10 voted fraudulently and handed the election to the incumbents.

Williams was also in possession of court documents generated in the case, according to the state Senate Secretary’s response to an open records request.

Among the items provided to Texas Watchdog were the original request for voter information for the 10 from lawyers for the ousted board members, court reporter transcriptions from hearings in a lawsuit filed by the temporarily unseated board members of the district against the newly registered voters, and the brief filed by the incumbent board members with the state appellate court that is part of the appeals file.

Several of those indicted earlier this year on voter fraud charges have alleged that Williams was working with the utility district to prosecute them.

A lawyer for one of the indicted individuals said the involvement of Williams, if true, shows that “big business is running the show.”

“That has been our concern all along,” said Kelly Case, who is representing Adrian Heath, who spearheaded the move to register at a hotel in the utility district after reading a Texas Watchdog story about voters registered to a vacant lot and a federal building. “We had thought that Williams had been pushing this along.”

Case said that “it seemed odd” that the attorney general’s office would take up the case “on his own.”

Williams declined to comment.

“We support the vigorous enforcement of our elections laws,” he wrote in the Sept. 15, 2010, email, to lawyers for the board members.

Stilwell did not return phone calls.

The next hearing in the case is schedule for November. The charges are a third-degree felony.

Contact Steve Miller at 832-303-9420 or

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Hidalgo County water district - flagged by auditors for spending that exceeded revenues - approves staff pay raises
Wednesday, Aug 08, 2012, 09:54AM CST
By Steve Miller

At first blush, a South Texas water district’s 10 percent raise to employees who haven’t seen such a thing since 2003 is an ‘it’s about time’ prospect.

When the entity giving out the raise was found in a state audit released three months ago to have spent more than it took in since at least 2008, the raises for 10 employees become more significant, even though the estimated cost will be a paltry $25,000.

The audit of the Hidalgo County Water Improvement District No. 3 was a scathing review that alleged the district paid more than $106,000 to companies with links to District 3 President and General Manager Othal E. Brand Jr. The district operates without a conflict-of-interest policy. Brand recused himself in votes involving his business interests, according to a report in the McAllen Monitor.

The raises will be covered by a 33 percent increase in water rates, which was approved in July on the heels of the audit and its allegations.

At the time the increase was approved, Brand said it would raise about $300,000 and cited the audit as the spur for the higher rates.  In addition to the pay increase, the district hopes to hire two more administrators, Brand said.

Contact Steve Miller at 832-303-9420 or

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Woodlands residents tangle with powerful forces over alleged voter fraud in utility district election
Tuesday, Jul 10, 2012, 09:11AM CST
By Steve Miller

When seven voters in a suburb north of Houston set out to upend an election there, they didn’t realize the powerful contingent they were upsetting.

The Woodlands voters are being prosecuted for fraud in a 2010 election for claiming residency at a hotel in the Woodlands Road Utility District. The district is supported by well-heeled developers and represented by a law firm that’s donated tens of thousands of dollars to state campaigns including that of Attorney General Greg Abbott, whose office is prosecuting the case.

Records show that Abbott has received $14,500 in campaign contributions since 2002 from the law firm Schwartz, Page, & Harding, which handles legal affairs for the Woodland Road Utility District as well as Woodlands Township and several other districts in The Woodlands.

The legal complaint to the state that led to the indictment in March of the alleged illegal voters was submitted not by local legal authorities but by James Stilwell, an attorney representing the sitting board members of the Woodland utility district.

Stilwell outlined the alleged infractions in a Sept. 10, 2010, letter to Ann McGeehan, director of the elections division of the Texas Secretary of State office.

Stilwell cc’ed the secretary of state’s general counsel and Mike Page of Schwartz, Page, & Harding. But he also cc’ed several others with no apparent connection to the case, including state Sen. Tommy Williams on the complaint, as well as state Rep. Rob Eissler and Bruce Tough, chairman of The Woodlands Township. Williams and Eissler’s districts include the utility district.

An Abbott spokesman said the case was accepted on the referral of the Secretary of State.

Stilwell did not return calls or emails.

The Williams campaign fund has received $25,500 from Schwartz, Page, & Harding since 2003. Eissler’s campaign has received $19,000 from the firm since 2002.

A lawyer representing one of the indicted voters, Kelly Case, said he will explore any involvement by Williams, “once we depose him or subpoena him to testify, as we are planning to do.” Williams did not return calls or e-mails for comment.

Case claimed that the charges were filed despite the reluctance of Montgomery District Attorney Brett Ligon.

“...Ligon refused to prosecute these cases as he did not feel that they were criminal violations,” Case said. “He continues to maintain that position. I suppose that after not being able to convince Mr. Ligon to file charges, that Stilwell sought satisfaction elsewhere.”

Brett LigonBrett Ligon

Ligon, though, said his office, hindered by its relatively small size, took statements and handed the case to the voter fraud division of the AG’s office, which did its own investigation. In an interview, Ligon said he grappled with the notion of “state of mind” residency that the state uses in most cases.

“The secretary of state’s office said it comes down to state of mind,” Ligon said. “That is very difficult to pursue.”

Abbott has made strong statements in the past about the need to police voter fraud and his commitment to doing so.

His office has prosecuted numerous cases of voter fraud, mostly South Texas cases of vote harvesting in the Hispanic community.

Abbott in April claimed the need for the state’s voter ID law to be upheld by the feds, citing 57 election fraud prosecutions beginning in 2012.

Of those, most have involved illegal possession of another’s ballot, and a number of the cases fell under the broad charge of illegal voting, which can involve anything from voting while ineligible to voter impersonation.

The Woodlands voters were indicted in March, accused of illegal voting by registering at a hotel within the boundaries of the RUD and using the hotel as their home address. The Woodlands seven were frustrated at not having a voice in the special district, which has issued $75 million in debt since its formation in 1991.

In the district’s first election, they were hoping to gain enough votes to remove the sitting board members. They relied on previous statements from state election officials that claimed the residency requirement can be determined “by the voter.” Joined by three others who were never indicted, they won the election and removed three sitting board members by a 10-2 vote. The results were later overturned by a sitting judge in Montgomery County.

The utility district board until 2010 met in an 11th floor room at 24 Waterway, a building owned by Woodlands land baron and multimillionaire developer Dirk Laukien, who was one of two voters, along with his wife, Kate, casting votes that allowed the three sitting board members of the district up for re-election to remain in light of the judge’s ruling.

The Laukiens were the only registered voters in the district prior to the failed registration of the Woodlands activists, according to an email six weeks before the election from Page to Adrian Heath, the leader of the rogue voters.

The 11th floor office is also the registered address for the Woodlands Development Co PAC, which has delivered $2,500 to state Sen. Williams since 2007.

Suite 1100 is also the address listed over the last several years for a number of power broker companies in the development game around The Woodlands.

The Woodlands Operating Co. was registered to the address briefly in 2009, state records show. Richard Derr, who is treasurer of the PAC, represented the operating company at district meetings for years. Derr, in fact, made suggestions on projects to the board, according to meeting minutes.

The RUD wrote checks in 2008 and 2009 to the Woodlands Land Development Corp., which records show is managed by an operation called TWLDC Holdings GP, L.L.C. which also listed on state records in 2010 its address as 24 Waterway, #1100.

Case said he believes that Abbott’s office “is trying to fit a round peg into a square hole. ... Either that or someone with a political ax to grind has made this their cause.”

Contact Steve Miller at 832-303-9420 or

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Trophy Club utility district official must disclose interest in tech contract
Wednesday, Jun 27, 2012, 09:55AM CST
By Steve Miller
computer keyboard

The board of the Trophy Club Municipal Utility District No. 1 ruled Tuesday that its president, Nick Sanders, must file a conflict of interest statement because of his ownership in a tech firm that maintains the town’s software program.

The decision stemmed from a complaint by a resident, Jim Budarf, who was defeated by Sanders for a spot on the utility board in May.

Sanders’ company, Combined Computer Resources, provides support at $1,200 a year for the software that he donated to the town in 2003.

Sanders, who was mayor of the town from 2005 to 2009, contends that the fee was paid by Trophy Club rather than the MUD, although both entities use the software.

“Basically, they found him guilty of violating the ethics ordinance,” Budarf said of the decision.

“It was anticlimactic,” Sanders contended. “The board decided it did not want to censure me or reprimand me, or think that it had any grounds to remove me.”

He added that he will halt the support fee for the software at this point, further reducing his exposure to any allegations of impropriety.

Contact Steve Miller at 832-303-9420 or

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Woodlands voters who registered to motel indicted on voter fraud charges
Monday, Mar 12, 2012, 12:38PM CST
By Steve Miller

Seven Woodlands men who used a Texas Watchdog story as the crux of their actions in hopes of unseating three local utility board incumbents have been indicted on voter fraud charges by the state Attorney General, the Courier of Montgomery County reports.

The seven in May 2010 checked into a hotel in the Woodlands Road Utility District, establishing themselves as “residents,” relying on published reports that ascertained that voter residence in the state of Texas is can be determined “by the voter,” according to Randall Dillard, a spokesman for the Texas Secretary of State's office. He was quoted in a Texas Watchdog story involving nine voters registered to a DEA building in north Tarrant County.

The Woodlands residents won, but were sued by the ousted board members, who prevailed in a court case in Montgomery County.

We later blogged about a Houston Chronicle piece on 14,000 voters in an RV park outside Houston who were registered to vote in Polk County, yet did not live there.

Contact Steve Miller at 832-303-9420 or

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KTRK: On Big Screens for Billionaires, Comptroller Susan Combs Silent
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