Road Rage

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

The money borrowed by the districts repays Centex, and all of the taxes that are collected repay the debts. Roads are deeded to a municipality such as Lewisville as soon as they are finished so the road district isn't responsible for the upkeep.

Sitting in the neighborhood's meeting room, which is not far from the swimming pool maintained by a homeowners' association, Fortune says the residents in 1998 were largely rebuffed in their efforts to "find out what was going on" in the road district.

More residents started showing up at meetings. They asked the RUD to delay issuing the new bonds for about a month, until after a real election could be held. In 1998, there were 307 houses in the road district and four houses in the levee district.

Developers say that without their influx of cash, the whole Vista Ridge Mall area never would have been developed the way it is today. Area homeowners are upset because they say they didn't know the area was mired in debt when they agreed to buy.
Peter Calvin
Developers say that without their influx of cash, the whole Vista Ridge Mall area never would have been developed the way it is today. Area homeowners are upset because they say they didn't know the area was mired in debt when they agreed to buy.

"We said, 'Look, we understand you guys are prepared to make a decision, but we're new here. We're residents. We're the people who could vote,'" Fortune says. "'We want to understand what's going on and we're asking you to wait.' They chose not to do that."

Pound says he doesn't recall the specifics of the decision but believes the road district board had a "window of time" to approve the bond sale. The board issued $4.5 million in bonds.

Shortly after, the majority of board members was replaced in an election that Fortune says attracted "something like 75 percent" of the district's eligible voters.

"We felt like we needed representation," Fortune says. "We needed people who didn't have a vested interest in leaning one way or another."

Centex told the new board to find a new meeting place, Fortune says.

"After our meeting when we were sworn in, Centex said you guys are no longer welcome to have these meetings in our offices," Fortune says.

In the fall of 1999, Centex came to the board and asked the district to issue another $4.5 million in bonds. Centex representatives said that a 1997 agreement entered into by the previous board requires that the road utility district issue bonds whenever the developer asks and for whatever amount the developer asks. Although the agreement was drafted by the district's lawyers, the language in the 1997 agreement changed an original agreement that gave the road directors some discretion in the terms of debt payments to one that leans heavily in favor of Centex, the lawyer Scott says.

"The '97 agreement was actually so slanted it allowed the developer to decide when to pay and how much to pay," Scott says.

The new board refused to issue any more bonds because of questions related to the right of way and the amended agreement, so Centex sued. In the lawsuit, Centex claims it is rightly owed the money for roads and the highway right of way. The lawsuit, filed in Dallas County early last year, names the road utility board and some other big property owners in the district who also questioned the bonds. Scott says the district board was trying to figure out a way to pay, but the increasing taxes were not in line with what residents were told. The debt wasn't new, Centex says, but money the district owes for road construction ($3 million) and the right of way for Highway 121 ($6.5 million).

"Our tax rate is supposed to be going down. The taxes have been going up for 14 years. We want to think about this. We are trying to stay competitive around here," Scott says the board was reasoning. "We are trying to pay you guys. We owe some bills. We know that, but we can't drive the tax rate much higher. So they turned around and sued."

The lawsuit, which was filed by Vista Properties (a.k.a. Centex Development Co.) against the road district board, E-Systems Inc., Carbon Development, and others, is in the pretrial phase with no court date set. Joel Reed, an attorney with Centex Development Co. in Dallas, says the reality is that the entire Vista Ridge development would not have been possible had the developers not put up the money and created the special districts. He says the heart of the dispute with the road district is not disclosure of debt to homeowners but the outstanding debt itself.

"Our goal as a company, we are involved in home building. We want to take care of homebuyers. We are not out to jack up tax rates. We're just asking the district to repay the obligation they made. We'll find reasonable ways of making that repayment happen, but it needs to happen," he says. "The dispute is sort of silly because at the end of the day they are going to have to pay us back, and board members will have wasted a bunch of money fighting us for no good reason."

The buyer has the responsibility of doing homework on a purchase and should insist on receiving closing documents a few days in advance of the closing date, he says. He also recommended buyers let a lawyer review the documents.

"The fact that homeowners bought homes and if some of them were not adequately disclosed, that's a shame and that's not the way it should be, and certainly they have every right to be upset about that," he says. "But, they enjoy the benefits of what was done there."

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