Woodlands Townhall Meeting - Nov 18, 2008

This quarterly meeting is well worth the time to attend. It is one component of the recent changes to provide more opportunities for the public to be informed and engaged in local government activities. Although there was the usual politicking and emotional comment, at the heart of the event was a true town hall meeting agenda. A presentation was made by the new president Don Norrell, formerly of the Woodlands Association, and a discussion by Joel Deretchin (The Woodlands Association President and Jeff Long (Woodlands Community Association President). Residents were given the opportunity to ask questions and there were many. The questions were fielded by the panel of Jeff Long, Joel Derechin, Don Norrell, Nelda Blair; legal issues were fielded by Mike Page. Residents are showing concerns for the future of the community and their pocket books. It was apparent that some folks share common ideals and others are waving political banners. More than anything, I believe residents just want to hear the story direct from those involved in the daily affairs and leadership of the community. All the newspapers in the world don't substitute for face-to-face communication.

Of the more interesting topics from my viewpoint were discussions on cash reserves, taxes, financial management and community services.

We can expect tax rates to be a little higher than we anticipated back in the elections. Instead of the $0.30-0.33 per $100 valuation, we can expect more like a $0.34-0.35 rate. With the rising assessments of homes in a tough economic era, this is of course a concern to the community. So a home with a valuation of $400,000 computes to as much as 400*$.05 = $200, or as little as $.01*400 = $40 more than anticipated. This is only a ballpark number right now since there has not been a thorough study of the issue yet. That won't come until next year.

Cash reserves sit at about $10 million. It is unclear how much is needed for capital and operating contingencies, so part of the tax rate will have this issue integrated until enough cash reserves are in the bank. The decision of WCA to give residents a tax break in 2008 and 2009 has affected this reserve. Combined with operating savings opportunities and with the economy and its associated risks to the community, we are making rough estimates now which cannot be very exact until the budget is put together for 2010 next year. That first year finalized budget by the way, must be sent to the county by September 1st next year so that Montgomery county can plan their 2010 tax collections and send out notices to property owners. Although the community leaders are optimistic about our economy in The Woodlands, should the economy turn sour, there is no contingency plan and if we need higher taxes to get the same services as now, "we have not considered cutting services!" (Nelda Blair).

The TWA (The Woodlands Association) debt has been decreased by $3mm through some book keeping methods. The $8mm debt will be amortized over 8-10 years to spread out the cost to residents. One cent ad valorem tax produces about $1mm annually. Bond financing to pay the 1/16th cent sales taxes to Conroe and Houston brought out some interesting discussion. Residents want to invest in their community but a privately held bond prevents that. This bond is short lived however and designed to provide the opportunity to obtain a better rate for a long term bond later, when the bond demand is lower. Right now, the rates are too high because of demand. In the Spring, we anticipate lower rates and then the conversion of the bonds should be more timely. Residents at that time should consider investing. Our bond rating is very high, A+.

The plan to proceed towards a future permanent governance model is stated to begin in 2012. That would give the community two years to study, propose, educate and vote when the earliest opportunity to vote for the future model comes on May 29, 2014. However, that tosses out a full year of opportunity to get it right. My take on this is to give this very important matter time to develop properly. Start in 2011 instead of 2012. The community wants to understand the issues to their fullest and make the right decision and not be pushed into it by the leaders her who may (in the residents' eyes) have other agendas. Of course at this time, who knows if we will want to change? Many are adamant on the outcome but cannot back their views with true substance, both financially and physically. Aligning community values to government alternatives must be the educated method to achieve what is right for the community. We have to take out the emotional factor.

In 2010, the community associations will be dissolved. The village associations will not. Interactions and representation with the Township are still ill defined. It is relatively certain that each village will continue to have a liaison representative with the service company to work on issues of the village. What is unclear is on how the village associations will formally operate relative to the Township. The presidents of the village associations have decided to have quarterly meetings but they do not want to be legally accountable for what transpires in those meetings. So the meetings are invitational and not open to the public, not subject to the Open Meeting law. If the presidents or president designates play a formal role in the government starting in 2010, they will likely be required to conform to the open meeting act. This communication/service model needs to be fully developed. Although the Town Center is not officially designated as a village, it will in the future also have a place in this process

Of additional interest to us all was a comment by the water authority on our future requirements for surface water. By 2016, we will begin a program to convert to surface water. This will cost residents of Montgomery County $500,000,000. The Woodlands will have to foot 1/3 of that cost. One way or another, that will have an impact on taxes, whether we are a special tax district or a municipality. We are depleting the underground water rapidly and are now under a mandate to reduce that depletion by 30%.

Woodlands Association Dues and Budget for 2009 - a few things every resident should know

At times, we see the advantages of paying for projects and services through taxation rather than through association dues, especially from the governmental position. In that we are in transition from one method to the other, we need to pay attention to the observed advantages of one over the other. We all should be equally concerned about the possible issues that could come from taxation and from taxed being assessed association dues. As a reminder, since we are speaking about WCA in this article, the WCA is the association for Grogan's Mill, Panther Creek and the eastern of Indian Springs. Its residents were promised two years of low association dues because of the excess money in the WCA bank accounts at the beginning of the transition to a township entity. When WCA dissolves in 2010, the residents do not want to transfer the cash over to the new Township. That would be applying past collected dues to the future benefit of all Woodlands home owners. Since the method to be used now is considered logically to be a tax, it would not be right to use the funds for the Township when residents were over assessed in prior years to build bank account padding for a future "rainy day". WCA had been using a higher rate than required to meet financial obligations. So this strategy to return the excess money to homeowners is reasonable to me. Instead of paying so much for association dues, this year we paid a low rate of 14%. Next year we would pay the same low 14% on assessments. However, accounting for the committed expenses by the WCA to be incurred in 2010 after the merger, WCA needed to raise that rate to 16.5% to give the Township about $1.1 million to meet those commitments that need to be paid after the dissolution of the WCA. That will balance the books for the Township during the transition, meeting WCA's obligations described in the transition agreement. WCA will exit its current domain leaving no burden on the remainder villages. I hope this makes sense without visibly doing the math. This 2.5% increase in dues will fulfill a requirement of the transition agreement

On Wednesday night, November 12th, 2008, The WCA board passed this increase but had two conflicting proposals amongst its members. All in all, the resultant accepted proposal was a compromise, because some board members wanted to just cut the accelerated capital projects from the 2009 budget and continue with the 14% assessment rate. The compromise comes as a check and balance measure. Each and every capital project will be reviewed individually in 2009 to make sure the economic climate supports executing the project(s). In other words, if there is a reduction in property value and our assessment base decreases, we may need to cut projects. The board has indicated that it will. Right now, we go forward with the intention of executing the capital budget in its entirety. Remember this! Lowered value is a real possibility. Homes are being foreclosed here. People are beginning to leave their mortgages just like everywhere else. We may be slow to be recognizable victims of the crisis but not immune to these difficult economic times evidenced throughout our nation and world.

So what does 14 billion 320 million 302 thousand 913 dollars have to do with this? That is the 2009 total assessable value in the WCA. If this were a tax, I would probably and simply call it the tax base from property values. But for now, it is merely a means to fairly assess the association dues to pay for all the services and capital projects the association administers. Home value is a critical component of that.

Increases in assessable value as a result of market pressure will likely halt as the economic crisis takes hold here and home values stop increasing 10% per year. Actually, assessment revenue increased a whopping 12.6% for 2009. I for one cannot continue to pay taxes on assessments that are increasing at such an alarming rate. The tax rate must be reduced to compensate for rising assessment value. We should not have inflation of our operations at 12.5%.

In 2010, our dues will all change to a uniform tax rate for all residents in The Woodlands. Of course those taxes will also be computed from the county assessment values. We all remember the promised lower association dues in the form of a Township tax. 2010 should be the beginning of that new method and lowered rates. In the meantime, we in WCA get to enjoy the extremely low rate of 16.5% in 2009, but it will be higher in 2010 as we assume our responsibility as an equal taxpayer in the Township. That means we assume some debt from newer villages. There will no longer be separate entities for paying down debts. As home owners in the Township, we all will equally share in that responsibility starting in 2010.

Its official! Consolidation agreement between Woodlands Association and Township

The transition agreement finally cleared all the hurdles and was signed on February 29th, 2008. This is a key agreement necessary to consolidate some six entities into one governing body. There remains much work to be done and surely we will see complications arise through the process until 2010 when all functions of all entities should be incorporated into the new governing structure. Efficiency should reduce overall costs after all is said and done. Further reading: Woodlands Online

The Woodlands Association Election - Nelda Blair's perspective

Press release of Nelda Blair: If you are one of the 13,000+ residents of The Woodlands who voted FOR one of the November 2007 propositions for new community government, then you will definitely want to vote for SKEETER HUBERT, JEFF LONG and RICH JAKOVAC in The Woodlands Community Association (WCA) elections. Why? This month’s WCA elections boil down to candidates who were FOR the November 2007 ballot issues, and those who were NOT. Period. Quite simply, the other candidates opposed all 3 ballot issues, and worked against our new form of government through The Woodlands Township. In my role as Chairman of The Woodlands Township, I know that the transition from homeowner association rule, to truly community-wide elected government, will take teamwork, dedication and cooperation. Skeeter Hubert, Jeff Long and Rich Jakovac have pledged to stand for what the residents clearly expressed in November: “We want a unified government for our community, protected from annexation by Houston.” Right now, residents can vote early at the Community Associations Building at 2201 Lake Woodlands Drive from February 4th through 15th. Election day is Saturday, February 16th. Get all the details at the web site www.thewoodlandsassociations.org. Please vote for Skeeter Hubert, Jeff Long, Rich Jakovac.

Woodlands Association - Don't forget to volunteer and vote

We have just a few days to place ourselves on the ballot for the 2008 Woodlands Association elections. We need diversity and fresh ideas on our boards. This is a very interesting era for us and there are many personal rewards for helping our neighbors. Please consider being a part of our destiny and volunteer for a position. Also, please vote. Remember if you do not vote, you are empowering others to make the choice for you and have no real reason to complain about anything.

1. Association link for the 2008 election
2. Link to other commentary on the subject