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.

Houston and Conroe's share of the booty, actioned upon by Project Planning and Development Committee

By agreement with Houston and Conroe, we share 1/16 of 1% of sales taxes collected here with these two cities collectively in order to be "free". This has seemed reasonable from day one. There should be no big issue with it. The reasonableness comes from the fact that we enjoy the amenities of Houston and Conroe, using the roads they maintain, and other services (parks, garbage pickup at public sites, etc) that they provide. A city always uses some of their sales taxes for capital improvements, but they are restricted in what projects are eligible.¹. Houston's general sales tax is 1%. Ours is 2%. They also have a 1% transit sales tax, so their total tax is 2%, the state maximum - same as ours, 2%. So if Houston had annexed The Woodlands, we would be paying 1% sales tax from all stores to Houston for their improvement and use, which would include The Woodlands area, apportioned as they would have seen fit to whatever projects they see fit. We assume we would also be paying 1% transit tax also, but that was never determined. Conroe has a 2% general sales tax. So 1/16th of 1% does seem to be quite a reasonable cost for being free from annexation. We are The Woodlands and control our own destiny.

We have a committee in The Woodlands Township to administer our role in this part of the two municipal contracts. That is called the PROJECT PLANNING AND DEVELOPMENT COMMITTEE. That recommends which projects the Township supports to execute with the funds we provide. What seemed like a rubber stamp when the committee made its recommendation earlier this year, probably was just that, a rubber stamp to Houston's proposed projects.

This year, Houston listed projects directly from the eligible list as a starter to this process. We agreed to the list. We actually agreed as residents when we voted "yes" for the Township. We as a government agreed to them via this committee's recommendation. A few of the projects are a little obscure as to our benefit, but the scope of the expenditures does not have to include our specific interests. Benefactors are those who live in the region, not residents within The Woodlands, although we are of course direct benefactors from some projects such as the extension of Hardy Tollway. Houston does not in fact have to even seriously consider our thoughts on these regional projects. They do it as a courtesy but as a requirement of the contract. This makes me wonder why we even bother to review them and maybe we don't. Yet I cannot help but think if we came up with a reasonable project, the city would consider it amidst the others. If we are astute on this matter in the future, we would seek ideas to add to Houston's and Conroe's project lists that would influence the northern area's interests. Although at this time, we need not be very involved in choosing projects, the time will come when we should be participative.

For the time being, we can continue to agree to the cities' projects, being a rubber stamp, since the improvements will be made there, not here and we have actually agreed upon them anyway at the onset of a new government. All current eligible projects for the Houston/Township agreement were listed in an attachment to the agreement with Houston.

So the booty this year is $16 million to Houston and $320,000 to Conroe. This money has already been paid to those municipalities by financing a short-term bond at 5.25% that can be discontinued at any time, when we want to buy a long term bond at a better rate. The Township managed a good financial arrangement where it has excellent flexibility. Hopefully, our economic environment will become more stable within the year and money for long term bonds will be readily available again.

For your additional reference, I have included the pertinent text referencing these projects, extracted from the signed agreement with Houston. I thought about summarizing them since they are written in typical legal jargon, but decided not to "interpret" the text. Have fun of you want to go take a run through the text!

²Eligible Projects
Eligible Projects for purposes of this Agreement shall mean and include any program or project described in Section 43.0754(d) of the Act, and such other similar projects or programs as may now or hereafter be permitted by law and mutually agreed upon in writing by the Representatives. All of the Projects listed in Exhibit “B” attached hereto are Eligible Projects.
Section 3.2. Selected Projects. Except as otherwise provided in Section 2.10(b) above, and after giving consideration to the sufficiency of funds on hand in the Regional Participation Fund, and the likelihood that any alternative or additional sources of funding may be or may become available in the foreseeable future from gifts, grants or contributions or payments by others, the Representatives shall endeavor in good faith to periodically select one or more Eligible Projects (the “Selected Projects”) for funding and implementation pursuant to this Agreement, with priority given to the Projects listed on Exhibit “B”. If the Representatives are unable to agree upon the selection of Eligible Projects, then the selection proposed by the Representative of the City shall be deemed to have been adopted, subject to the right of any other Representative to invoke the dispute resolution procedures of this Agreement to determine whether such selection complies with Section 43.0754(d) of the Act. The Projects selected by the City Representative shall be conclusive unless the arbitrators determine that the City has abused its discretion by selecting a Project not included on Exhibit "B" or in Section 43.0754(d) of the Act.
Section 3.3. Project Reconsideration. If, for any reason, binding obligations in the amount of the lesser of $100,000 or 10% of the estimated Project Costs of a Selected Project (other than a Project listed on Exhibit “B”) have not been made or incurred within eighteen (18) months after the selection of the non-Exhibit “B” Selected Project, the Project Manager, upon request of a party, shall provide the Representatives with a report detailing the reasons for such delay and the anticipated constraints upon and time requirements for successful implementation of such Selected Project. Upon receipt and review of such report, the Project Representative for any party may request that such Selected Project be suspended and that the selection and continued implementation of such Selected Project be reconsidered. If implementation of such Selected Project in the foreseeable future is not reasonably expected, and if suspension and reconsideration of such Selected Project has been requested by any Representative, implementation shall be suspended by the Project Manager as soon as practicable pending such reconsideration. Within 30 days of suspension of implementation of a non-Exhibit "B" Selected Project, the Representatives shall apply the procedures set out in Section 3.1 and 3.2 to determine whether the Project will be reinstated as a Selected Project and with what priority.

Other References

• Handbook of Texas Online - History of Sales Tax in Texas
• ¹Texas Comptroller - Local Sales and Use Tax
• ²Houston/Township Agreement

Conroe School District - 2008 Rezoning Controversies for Mitchell, Deretchin, Coulson Tough and Galatas

Here in Indian Springs, as well as adjoining villages, we face an issue with school zoning and feeder systems. After passing a bond issue last fall to increase capacity, there is a controversy on how to proceed with rezoning the elementary schools, a necessary consideration for capacity change. A group of interested residents in this and neighboring villages have put their energy into studying the proposal and petitioning the ABC (Attendance Boundary Committee) committee in CISD to not rezone the schools, as has been recently proposed. Today and tomorrow the ABC committee presents their conclusions to the parents of these schools. "If the ABC’s newest “Combined Scenario 1” is put in place, overcrowding problems are shifted to Mitchell in just two short years."

Changing zones affects many different things - busing, whether a child can ride a bike to school, friends, and graduation years (to higher level school). It even affects the rationale for moving into a neighborhood. As mentioned earlier in our blog supporting the election bonds in 2008, there are principles which govern the construction of buildings and the use of temporary facilities in the schools. Administrative governance using those principles is a best practice. Now the residents are questioning why there seems to be an effort to deviate away from those principles. They say they are under a time crunch to dissuade the ABC committee from recommending going forward with one option for rezoning Deretchin and Tough. Indeed there is a time critical consideration. A process is being followed that includes parents, and there are parents on the ABC committee from Deretchin and Coulson Tough. The process includes meetings with parents to communicate the results but does not appear to have a means for dissenting parents to affect the outcome.

"They want to move 300 students from Deretchin to Tough and move 400 Tough students out to Galatas and Mitchell. We believe that students should be moved out of Deretchin to Galatas and Mitchell." notes Jennifer Reitmeyer, a resident of Indian Springs and one of the leaders of this movement. She goes on to say, "With the passing of this referendum, Coulson Tough will add an additional 8 classrooms to the school. With the new addition, the capacity, according to the ABC, is 1185. Current enrollment at Tough is 1295. If you do the math, that means we will be at 109% capacity!". She notes the statement of Dr. Stockton, directed to me personally, 'I read in your article that you asked Dr. Stockton about contingency plans should there be a change in the actual growth. His response was, partly, “Actually, we do not consider a campus over capacity until it reaches 125% of the building capacity.”'

She along with several others have petitioned ABC to redirect their efforts to an alternate proposal which would better serve the district. "Many of the scenarios presented by the ABC at the original forums moved children out of Coulson Tough to then move children into Coulson Tough from Deretchin. That just did not make sense to many of the parents. The majority of the people we spoke to agreed that moving the least amount of families would be in the best interest of everyone involved. So our main objective was to present the committee with ideas that impacted the least amount of children while maximizing use of CISD facilities. Another concern of many parents was the bond referendum that was passed in May. Many feel that it was presented as the solution to overcrowding at Tough. Nothing was said about rezoning back in the spring before the referendum was passed. This whole issue of rezoning took a lot of people by surprise because they thought overcrowding was not going to be a problem at Tough once the eight classroom addition was built."

The data for the ‘United We Stand’ petition was collected by Deanna Clark and Jennifer Reitmeyer. The signatures were collected by scores of concerned parents and taxpayers. It was amazing to see so many families come together and work so hard! We had 676 people sign the ‘United We Stand’ petition. These words are really at the heart of the petition from which I quote: Our students and families would rather all stay at our school with a few “portables”, lovingly named “Tough Town”, which easily meets the goal of “providing for the education and welfare of all students…” rather than be forced into a new school and new school configuration after seven years. The newest and undeveloped areas within the Deretchin feeder zones make the most sense to convert, if necessary, to K-4/5-6, since fewer families will be affected by the reconfiguration and those that will be affected have only been there a short time, in most cases less than a year or two. Many of our families purchased our homes based on a having a CISD K-6 Flex school configuration, for the sake of our children. Many of our children and their siblings have attended Coulson Tough since its inception in 2002; strong roots develop into strong academic performance! We OPPOSE rezoning the Coulson Tough School feeder zones. The most recent response of this group is presented here just before the meeting with parents today. As the proposal has have shifted over the past couple of weeks, many of the parents not on the ABC committee are frustrated that they are not being heard and fear a poor decision is imminent.

Total number of students at Mitchell after rezoning:

School Year	5th Grade	6th Grade	Total	% Capacity
2009-2010	637	591	1228	102.3
2010-2011	667	637	1304	108.7
2011-2012	672	667	1309	111.6

It appears that very little attention has been paid to the effect the rezoning plans will have on Mitchell in just two short years! Mitchell Intermediate will be overcrowded as soon as this rezoning occurs, at 102.3% of building capacity. As well as looking at the current student census, you must also consider how the upcoming classes will overload the capacity of Mitchell to an even greater extent. Mitchell will be at 108.7% of capacity only 12 months after its newly rezoned students are moved in, and at a 111.6% just 24 months if this “massive student shuffle” is allowed to occur in the current Tough-Deretchin feeder zones. For CISD to ask those families to be rezoning yet again is not efficient nor is it fiscally responsible to the public.

Other Resources

• "Parents upset about rezoning options" - Courier of Montgomery County
• Parents still against Tough rezoning option - Courier of MOntgomery County
• CISD zoning process and goals
• CISD Rezoning Scenarios