By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
Scott says the levee district's expenses are questionable and points to a recent $1.9 million bond issue. The levee district, he says, gave Centex literally tons of clean fill dirt taken from dredged drainage areas. Levee district directors passed the bond issue that would pay to cut a channel that would keep their own homes dry, and they gave the dredged dirt away to Centex, which used it to elevate its properties, Scott says.
"In heavy rain on the overflow, it backs up. There are two homeowners that back up to the original creek, and they're the ones behind the desiltation of this new channel," Scott says. "It directly benefited their property."
Tons of free, clean fill dirt is not easy to find. Scott estimates the district gave Centex dirt that the district could have sold on the open market for some $200,000.
Not only that, but the levee district hauled the dirt to Centex property and graded it, elevating about 127 acres of land and making it suitable for houses, he says. The district (also at no cost to Centex) hauled dirt to a site next to the I-35E/Highway 121 interchange, elevating that site by some 8 feet and making the previously unusable property valuable, Scott says. The hauling jobs were probably worth another $200,000, Scott says.
"They [directors] got themselves on the board, passed a $1.9 million bond election, desilted the channel, and gave the dirt to Centex," he says. "Centex is elevating this property almost 8 feet...That property is well below visibility from the service roads. You bring it up 8 feet and all of the sudden you've just got a bonanza of a pad site for a restaurant, convenience store, filling station. It's worth several hundred thousand dollars."
Scott says the levee district's actions are just another example of how the developers benefited by using what would eventually become taxpayer debt.
Julianne Bremer Kugle, a lawyer for the two levee district directors--the third seat was vacant when the deal was done--responded to written questions related to Scott's allegations. Directors Ben Carruthers and Eugene Eng would not talk to the Dallas Observer directly.
Bremer Kugle said the homes of the two directors did benefit from the $1.9 million bond issue, but those homes were among 40 that were in danger of flooding if the project hadn't occurred. The bond issue was discussed during "numerous" public hearings, she says.
As for the fill dirt, Bremer Kugle says the levee district couldn't find anybody to buy the dirt. By hauling for Centex for free (at a cost to the district of $116,000), the levee district actually saved hundreds of thousands of dollars in hauling and disposal costs, she says.
"The board believes the district saved approximately $626,000 utilizing Centex property," she says.
A Dallas-area construction project manager says it is difficult to say whether the district could have sold the dirt. It depends, he says, on whether the dirt is clean and how far the buyer would have to go to get it. In this case, the fill dirt was both close to Centex property and clean, Scott says.
One government attorney said the arrangement doesn't seem to pass the "smell test" because the proper procedure under Texas law would be to first declare the public property surplus and then to find out if anyone wanted to buy it. If nobody wanted to buy the surplus property, a public entity such as the levee district could then donate the property to a private party. In this case, the levee district directors apparently decided to give the property to Centex after asking "several public and private entities" if they wanted to buy the dirt. Then they used government funds to haul it to private property much to the benefit of Centex. A Centex representative agreed they got the free fill but said the levee district approached them.
Special taxing districts such as the Vista Ridge levee and road districts have been around for decades, and developers are quick to point out that the districts have worked well, with debt eventually retired. But, special use districts have also been the source of headaches for taxpayers who move in. The Las Colinas development north of Dallas is probably the best known of the troubled utility districts in Texas because of a massive debt that reached $650 million as the development floundered. In Las Colinas, developers spent thousands of dollars on what they envisioned as a grandiose commercial and residential area with a monorail, canals, and equestrian center. The Las Colinas project was badly affected by the same economic downturn that cramped Vista developers in the 1980s. When the Las Colinas property values didn't continue spiraling upward, the tax burden became so high that property couldn't be marketed.
An economic downturn like the one that plagued Las Colinas is another thing road and levee district residents such as Cheryl Bass say they fear.
"There is always the question of what happens if the market bottoms out?" she asks. "Therefore your schedule of payments is just shot to hell, and if property values start going down or staying the same, then the tax rate is going to start going up to pay those bond holders back."