An ethically complex vote
A legislator’s action supports special district for developer he works for.
State Sen. Brandon Creighton voted last year for a bill that enabled The Woodlands-based Signorelli Co. to create the Valley Ranch Town Center Management District in Montgomery County.
The management district eventually will sell millions in tax-exempt bonds to pay for streets, water and sewer systems for the town center in New Caney, a “Signorelli community” that is expected to have 1.5 million square feet of shops and restaurants. Valley Ranch also includes a newly opened 8,500-seat football stadium for New Caney ISD and plans for 1,000 multi-family residences.
“It’s almost $1 billion worth of tax base upside and a 5,000-job estimate on job creation,” said Creighton, who doubles as The Signorelli Co.’s executive vice president and general counsel.
Creighton’s vote on a bill that directly benefits his firm is a testament to both a vagary of Texas’ ethics act and the pervasiveness of such special purpose districts as the engine of development in the Houston suburbs.
Signorelli and other major residential and commercial developers are enthusiastic proponents of these districts as efficient means for financing roads, water and sewer systems, drainage networks, parks and other infrastructure in the state’s rapidly-
growing hinterlands. But special purpose districts and their most ubiquitous variant, municipal utility districts, or MUDs, have become so numerous — there are 620 MUDs with taxing powers in Harris, MontgomeryandFortBend Counties alone — that some conservatives are now saying taxpayers need protection from them.
Creighton, a Conroe Republican, was a board member from 2002 to 2006 of a special purpose district that manages the use of groundwater in Montgomery County. He served in the House from 2007 until 2014, when he wonaspecial election to replace Tommy Williams to represent the Senate district that includes parts of Montgomery, Harris and Galveston counties, and all of Chambers and Jefferson. Of the 42 Creighton bills that have become law, 16 involved the creation or expanded powers of MUDs and other water districts, including a 2007 bill that enabled districts in Montgomery County to issue bonds to pay for parks.
The Texas Constitution bars legislators from vot- ing if they have a “personal or private interest in any measure or bill, proposed, or pending before the Legislature.” State law requires them to abstain if they have a controlling interest in a firm or employment that would benefit from a vote they are taking.
Creighton said he is not required to abstain on water district bills benefiting Signorelli because he works for the company as a contractor, not an employee. He has no ownership stake in the firm.
Danny Signorelli, head of the firm, declined to answer questions about its contractual arrangement with Creighton. “While I appreciate your questions, Brandon’s contract with and advice to The Signorelli Company are private matters,” he said in an email. “I am quite sure Brandon’s voting record is fully transparent and speaks for itself.” Choosing to abstain
Creighton is aware that casting votes for bills benefiting Signorelli is ethically complex, choosing to abstain in certain instances.
On the same day that Creighton joined a 30-1 Senate vote in favor of creating the Valley Ranch Town Management District, he abstained on a bill to create another one, the Valley Ranch Medical Center Management District, also sought by Signorelli.
Creighton said he abstained because he was working on a potential project within that proposed district with a Nashville, Tenn.-based company that operates hospitals. He said the project didn’t move forward, but the land’s increased value and interest from other major hospital companies likely means a bigger development down the road.
“I’m a real estate person, so if I am buying or selling property within the MUD or whatever, or I think there’s a potential I might later downthe road, I would consider abstaining although I don’t have to,” said Creighton, who owns the Conroe-based Creighton Realty Partners. “I’ve abstained just because I prefer to.”
Creighton also abstained last year on three bills backed by Signorelli to create Montgomery County MUDs 149, 150, and 151, which were created to finance another of the firm’s developments.
Tom “Smitty” Smith, director of the Texas office of Public Citizen, a nonprofit watchdog group, said the “good news is Senator Creighton is understanding there are certain issues when he has a conflict and should not be voting.”
Smith also said Creighton’s conclusion that he is not required to abstain because he is a contractor, not an employee, “may be technically right.” But Smith called Creighton’s decision to vote in favor of the bill creating the Valley Ranch Town Center Management District “a classic example of how to get around a conflict of interest standard.”
For taxpayers and other citizens, tracking whether lawmakers voting to create special purpose districts are also doing business with them is time-consuming, but not impossible, thanks to a new law that took effect on Jan. 1. It requires firms doing business with governmental entities — including special purpose districts — to disclose contracts on socalled Form 1295s with the State Ethics Commission if those contracts are voted on by a governing body or are worth more than $1 million. Rules of disclosure
Signorelli, for example, disclosed that it has economic development and financing agreements with the Valley Ranch Town Center Management District, economic development and annexation agreements with the East Montgomery County Improvement District, and a development financing agreement with Harris County MUD415.
While Signorelli was not required to disclose its contractual relationship with Sen. Creighton on its Form 1295s, Creighton was required to disclose his contract with Signorelli as a source of occupational income on his own personal financial disclosure form. These forms can only be viewed at the State Ethics Commission’s offices in Austin or obtained through a public records request. (Form 1295s, however, are available online at the commission’s website). The counterargument
Creighton does not hesitate in making the case for special purpose districts, saying they help keep houses affordable in Texas by enabling developers to create MUDs or other districts that can finance infrastructure needed to build homes and high-quality commercial developments. This, he said, enables more people to afford homes in Texas. The counterargument voiced by anti-tax activists is that many MUDs lack transparency, and that the infrastructure costs they finance for developers have to be eventually paid by someone — namely, homeowners, whopay property taxes to the special purpose districts for repayment of the bonds, plus interest, over 20 years or more.
Patricia Morlen and her husband have lived for three years in a section of The Commons of Lake Houston inside MUD 415’s boundaries. Because the district is within the city of Houston limits, they and their neighbors pay both city and MUD property taxes.
In retrospect, Morlen said she would have preferred that Signorelli had paid for the infrastructure costs itself, instead of using a MUD to sell bonds to reimburse it for those costs. Property owners ante up to retire that debt over several years. Morlen said she would have been willing to pay more for her house, an amount which she could have rolled into her mortgage.
“The MUD legislature benefits developers and we have to demand that the legislature protects the people whoare residing within the MUDs,” Morlen said.