CaseyJones
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hxxp://watchdogblog.dallasnews.com/2014/01/senate-candidate-don-huffines-says-hes-against-taxes-more-government-his-business-has-created-both.html/
UPDATED: 4:18 p.m. Friday
Don Huffines told the crowd he wasn’t a politician. But the Dallas developer had decided to run for the Texas Senate because he had a “high degree of frustration.”
Donald "Don" Huffines is running for the Texas Senate's District 16 seat in Dallas. (Huffines campaign/Facebook)
“We can continue down the road of more government, more regulations, more taxes, more spending — and we’re going to end up like California,” he said at a Republican primary debate Tuesday.
“I believe in limited government,” he added. “I believe in freedom. I believe in the power of the individual. And I believe in no taxes. I believe it’s your money. You ought to keep that.”
Huffines left one thing unsaid. His real estate business has financed its work by creating government districts that taxed homeowners for millions.
Two of Huffines’ Denton County subdivisions were part of a 2001 series that I wrote with Brooks Egerton called “Government by Developer.” In it, we found Texas housing developers like Huffines had won hundreds of millions of dollars in taxing authority from voters and elected officials to whom they provided homes, jobs or other benefits.
That authority came through special-purpose government districts. These districts were put into law decades ago to give residents in Texas’ far-flung outposts a way to fund infrastructure like roads and water lines. They would call elections and vote to tax themselves. The taxes would repay construction bonds.
Our investigation showed that developers in fast-growing metro areas were using taxing districts to finance large, new bedroom communities with Olympic-size pools, man-made lakes and clubhouses. Districts gave developers more upfront capital with less financial risk should the projects fail.
Subsidizing projects
We found that developers drew district boundaries to include their unoccupied land and exclude neighbors whose property would be impacted. New “residents” would then move into mobile homes that appeared out of nowhere inside the boundaries.
People in these three trailers were the voters in elections that formed a government taxing district in Denton County near ones that aided Huffines' company. (File/2001)
The newcomers were often employed by the developer or given free or significantly reduced rent, we found. Once they lived there long enough to qualify legally to vote, they cast ballots to form the district and authorize taxes and bond sales. The elections had as few as one lone voter and no more than 10.
Some of the “residents” then left. Others stayed a little longer to act as the districts’ board while construction ramped up, though they understood little about governance.
A Texas comptroller report, we noted, had questioned the transparency and accountability of the taxing districts. The agency referred to them as “hidden government.”
Huffines, who co-owns Huffines Communities with his twin brother Phillip, wouldn’t talk to us for our initial stories in 2001.
Other developers acknowledged the process for forming districts seemed peculiar. But they insisted it was a long-accepted practice that helped build quality housing in areas unserved by cities.
Huffines’ districts
In Huffines’ case, his business sought in the early 2000s to build on farmland along U.S. Highway 380 between Denton and the Collin County line.
In 2001, attorney Clay Crawford ran a board meeting for Denton County Fresh Water Supply District No. 10. District President Richard Dew, seated, did not speak during the short session. Dew lived rent-free in a trailer in the district, which supports Huffines' Savannah subdivision. (File/2001)
Providence Village was envisioned as a smaller subdivision of mostly starter homes in the $100,000 range. Savannah was about four times as large, with homes topping at around $300,000. Both had amenities like water parks, gyms and fishing lakes.
Elections that created the subdivision districts had only a handful of “residents” who got free rent, we found. Those residents empowered the districts to issue bonds totaling about $280 million combined, financial records show. Those voters also became district board members.
For our “Government by Developer” series, we attended a board meeting for the district serving Savannah. It’s known as Denton County Fresh Water Supply District No. 10.
The meeting was around dinner time one workday in the back of a steakhouse along U.S. Highway 380. Lawyers and developer representatives ran the meeting, with the trailer dwellers/board members saying next to nothing. In fact, a photo caption we published at the time specifically noted that the guy elected district president didn’t speak at all.
Board members for other districts we quoted acknowledged that they knew very little about the matters they were voting on.
Since then, the two Huffines districts have used at least $70 million of the bond proceeds approved by those early “residents” on roads and utilities, financial records show.
Thousands of homeowners now live in Providence Village and Savannah. They pay property-tax rates of $1 per $100 in valuation — equal to the highest in Denton County. The rate generates about $2.5 million for each district annually. Most of that goes to repay the bond debt, state data show.
In comparison, the tax rates for Denton County municipalities range between 15 cents and 85 cents. The city of Dallas’ tax rate is around 80 cents. Plano’s rate is just under 50 cents.
Buying government
Our reporting in 2001 found other questions about how the Huffines company acquired government status. For a project in Frisco, it bought a district from another developer.
The transaction worked this way:
The other developer, Chris Bright, who built the massive Castle Hills golf-course development near Lewisville, annexed the Huffines’ land into his existing district for a fee. Then he spun it off as a new, free-standing district of its own. No election was required.
The city of Frisco caught wind of this and sued. Annexing land inside its boundaries was illegal, Frisco said. The Huffines later dissolved the district to settle the lawsuit.
Frisco’s city manager at the time dubbed the transaction the “amoeba effect.” After our reporting on it, the Texas Attorney General’s Office, led by John Cornyn, acted to halt the practice.
‘Against all taxes’
That history brings us back to this week’s primary debate (video here).
Incumbent Sen. John Carona addresses Huffines' use of government districts during primary debate. (Go to around 33:20 mark of video.)(D.D. Johnston/GOP Precinct 2056)
Near the end of it, Huffines again told the audience, “I’m against all taxes.” His opponent then brought up the taxing districts.
“You make your living in the land development business by creating municipal district taxes on every subdivision that you develop,” incumbent Sen. John Carona said. “So apparently you don’t like taxes, except for those you create.”
Huffines didn’t directly address his creation and use of taxing districts in his response.
“John, you’re the legislature. The legislature creates districts [too],” Huffines said. “I create cities before they’re cities. My communities are extremely successful. Everyone stands in line to live there. They’re success speaks for themselves. You have personally created hundreds, if not thousands, of utility districts, MUD districts, being in the legislature. You voted for them.”
I’ve left messages with Huffines asking how he reconciles his political platform with his business practices. When I hear back, I’ll let you know.
UPDATED, 4:18 p.m. Friday: Huffines’ campaign manager, Matt Langston, responded to the e-mail I had sent the candidate. The statement was similar to what Huffines said during the debate. It read:
“The irony is that John Carona has voted to create or expand 64 MUD [municipal utility districts] districts last year. It sounds like Mr. Carona was for it before he was against it.
“Huffines Communities builds unique communities that would not exist without MUD districts because they are usually deemed to be blighted or otherwise undeveloped. However, the people that buy those houses know about the district ahead of time because they are buying the home there. People, in fact, buy these homes because of the infrastructure and amenities that are provided through the district.”
I asked Langston a follow-up question but haven’t received a response yet: “Are you saying Huffines Communities wouldn’t be able to build with its own financing apart from having a district?”
