Road Rage

Homeowners in a Denton County neighborhood wage battle against "taxation without representation"


According to the Denton Central Appraisal District, the road district today is worth about $449 million. The district has 611 homes, two apartment complexes, Vista Ridge Mall, and several corporate property owners. The levee improvement district, which maintains a system of levees that keep district property from flooding, is worth $185 million. The levee district has 649 homes, according to the appraisal district.

Developers were successful in their mission to make the swampy pasture valuable commercial and residential property, but Vista Mortgage didn't get to where it is today without a few problems. The real estate development market took a nosedive in the late 1980s, and the original company filed two bankruptcies, one in 1992 (when the company was called Lomas Realty USA) and again in 1995. During the second bankruptcy, the company became a subsidiary of Centex, which is a giant, nationwide homebuilder and property developer. At least some of the same people who were at the helm of Vista stayed with the new companies. Vista offices never even moved. Records show that the executive vice president and chief operating officer of Vista Properties Inc. in 1992 was F. Charles Emory and that he was chief executive officer for Centex Development in 1999, seven years later. Because he has left Centex, Emory declined to address the issues raised in this report.

The houses in the Vista Ridge area may look like any others around North Texas, but because of huge developer costs, the properties are much more expensive, homeowners say.
Peter Calvin
The houses in the Vista Ridge area may look like any others around North Texas, but because of huge developer costs, the properties are much more expensive, homeowners say.
David Fortune, a Vista Ridge Mall-area homeowner, got himself elected to a special road tax board after he learned that the board was serving developers' interests.
Peter Calvin
David Fortune, a Vista Ridge Mall-area homeowner, got himself elected to a special road tax board after he learned that the board was serving developers' interests.

"Centex just bought Lomas' stock so the guys that were doing the screwing before were doing the screwing after," Scott says.

The bankruptcies allowed the company to discharge debt and reorganize. During the first bankruptcy, the state agreed to let the financially troubled company out of a promise to pay for the $4.4 million Highway 121 bypass construction and the intersection at Highway 121 and Interstate 35E at the southeast corner of the road district.

Denton County's taxpayers ended up paying $1 million, and the rest of the state's taxpayers paid the rest. Developers were still promising that the road district would donate the right of way for the bypass.

"We are prepared to donate 59 acres of right-of-way for the 121 bypass and are completing the construction plans for the 121 bypass/I35E interchange at a cost of just over $600,000," a 1991 letter from the developers to the Texas Department of Transportation says.

So the Vista company says it will donate the property for the road, but that's not because the developers were feeling generous. The state says the right of way had to be donated to the state, or the road district wouldn't have been approved. So, the developers arranged to have the road district buy the land from the company and then donate it to the state--more debt for future homeowners.

David Fortune, a homeowner who is chairman of the district board, says the provision that the road district would pay for highway right of way was added at the last minute to the legal framework of the road district that was approved by the state. Developers added the language after they learned they couldn't charge the state for the property that would become highway right of way, he says.

At the time, developers didn't just say the new road district would buy the highway property, they set a price in 1986 that was $2.25 per square foot, or nearly double what most of the property is worth today, Scott says.

The arrangement meant that the road district would pay $5.4 million for the highway property. The trouble is, the district had no directors yet. It hadn't actually been created, so how could anybody agree to buy anything? Scott asks.

"Last year, Centex paid [taxes] on their unimproved property--not $2.25 a square foot; they paid $1.18," Scott says. "This is after the property has been developed for 14 years."

In 1986, when developers actually deeded the highway property to the state, it was bottomland subject to flooding and was "basically not worth anything," says Joe Rogers, chief appraiser of the Denton Central Appraisal District. Certain sections of the right of way (those with utilities and highway frontage) could be worth up to $5 a square foot today. But, most of the property is in a floodway, which means any value would have to take into account the need to raise it and get utilities to it, he says.

Centex says the road district still owes it the payment for the right of way for the main roadway of the future bypass, undeveloped property that is straddled by three lanes of service road today. Scott disputes the validity of the claimed debt for the main roadway partly because developers didn't claim the property as an asset during either bankruptcy reorganization.

While a bankruptcy allows a company to protect assets, the bankruptcy court must be told about them so that creditors know what they are dealing with, Scott says. The Vista company never mentioned its 1986 plan to recover money for the highway acreage from the district.

"Their original agreement was to donate the land, and they didn't exactly mention this as a receivable that they had coming in the bankruptcy actions," he says.

And then there is the levee district. In 1985, Vista developers formed the levee improvement district with the approval of the Texas Natural Resource Conservation Commission. The levee district owes only $1.9 million in borrowed bond money, but Centex claims to be owed $8.9 million more for improvements, according to a levee district lawyer. Since the levee district is mostly homes, the bulk of the bond debt will be up to homeowners to pay without the help of big taxpayers such as Vista Ridge Mall.

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