Flooding victims: Who’s in charge?
Cinco Ranch homeowners question if utility districts can deal with disasters
As Hurricane Harvey drenched the Houston region, Scott Drawdy made a risky decision. He skirted a police barricade, plunged into waist-high floodwaters in Cinco Ranch and swam to his house through a stew of human waste, gasoline and oil.
It was Sunday, Aug. 27, and he was determined to start stripping out soaked carpets and dry wall.
After the floodwaters receded, Drawdy had a new mission: He wanted answers. He wanted to know why the local sewage treatment plant had crashed. He wanted to know when it would start up again. He wanted to know whether his local government could have done more to prevent the flooding.
That led to another question: Where was his local government?
As Drawdy discovered, Cinco Ranch, a masterplanned community 25 miles west of downtown Houston, is governed by a patchwork of municipal utility districts — MUDs for short — obscure entities that sell bonds and collect taxes to pay for water systems, sewage plants, roads and other infrastructure.
The closest thing to a mayor for Cinco Ranch is G. Timothy Lawrence, 74. He’s a semi-retired businessman and president of the board of the community’s main MUD. He and his four fellow board members
set the property tax rate and hire lawyers, engineers and financial advisers. Yet he has never lived in Cinco Ranch and did not set foot there during the flooding. His home is a 20-mile drive away, in the Royal Oaks section of Houston.
Drawdy and many of his neighbors had never heard of him.
MUDs have proliferated in the Houston suburbs, helping to power the region’s runaway growth, because they offer developers an advantageous way to fund infrastructure. In unincorporated stretches of suburbia, they have evolved into permanent mini-governments largely invisible to the taxpayers they serve.
The devastation wrought by Harvey has stirred fresh questions about whether MUDs and similar special purpose districts are sufficiently transparent and accountable, and whether they’re capable of putting the public interest ahead of developers’ interests — particularly in protecting neighborhoods from flooding.
Typically, MUDs are created at the initiative of developers, who pick their initial board members, lawyers and other professional advisers. The districts sell bonds to reimburse developers for infrastructure costs. Residents pay off the debt through property taxes.
MUDs usually do not have websites, nor any physical presence in their communities. In Cinco Ranch, which is divided into 16 separate MUDs, there is no city hall and no civil servants. Water and sewage facilities are operated by contractors hired by the main MUD. That MUD’s board members usually hold their monthly meetings not in Cinco Ranch, but in the offices of the district’s law firm near downtown Houston.
“It’s the difference between paying your monthly bills to a nameless organization with an acronym and a number versus someone you know, who could be held responsible for what happens in a crisis,” said Brandon Rottinghaus, a political science professor at the University of Houston.
When Harvey hit, Drawdy, 51, was vaguely aware that he, his wife and their two children live in a MUD. He knew little about what it did or who ran it.
“All I knew is they sent us a water bill,” he said.
Lawrence, who owns a company that sells promotional pens, caps, shirts and similar items, said the MUDs have done an excellent job of maintaining the quality of life and property values in Cinco Ranch. There is no need to change anything, he said in an interview at the front door of his brick ranch house in Houston.
“All of our districts — and our master district — are doing exactly what they are supposed to do, or otherwise those people wouldn’t be out there living in those houses,” he said.
Lawrence said it wasn’t necessary for him to visit Cinco Ranch during the flooding because he was in regular phone contact with Severn Trent, the private contractor that operates the water and sewage plants. Residents with questions knew or should have known to call the company, he said.
Morgan Stagg, who serves on one of the Cinco Ranch MUDs, thinks residents deserve better. An engineer for Parsons Corp., she has lived in the community since 2004 and is board president of the Cornerstones MUD.
Stagg is pushing for Cinco Ranch to incorporate as a municipality, a move that would dissolve the MUDs. Stagg said the challenges facing the subdivisions, including flooding, can’t be handled adequately by special purpose districts and the homeowners association.
“People truly deserve to have some self-government out here and be able to solve some of their own problems,” Stagg said. “Unfortunately, it tends to take something like (Harvey) to bring it to a head.” BBB
Texas has about 1,800 active water districts, including about 950 MUDs. There are about 620 in Harris, Fort Bend and Montgomery counties alone. The Legislature or the Texas Commission on Environmental Quality can create districts.
Developers and their lawyers effectively control how MUDs are formed, assembling their boards and often handpicking the “electors” who vote to ratify the districts’ existence and authorize bond sales.
In many cases, a mere handful of electors create MUDs and approve hundreds of millions of dollars in tax-exempt bonds to pay for water mains, storm drains, parks and other infrastructure. Without MUDs, developers would have to absorb those costs and price homes accordingly.
Builders say MUDs make it possible to construct affordable homes. Homeowners still end up paying the infrastructure expenses — through property taxes that pay off the bonds, with interest. MUDs set the tax rates.
Cinco Ranch, located in Fort Bend County and a sliver of Harris County, is home to 12,000 families. The first homes were sold in 1991, six years after the Legislature approved the original MUD, called MUD 1. The community was built in phases, and separate MUDs were created for each phase.
The original developers made MUD 1 the “master” district, supplying water and sewage treatment to itself and 10 other MUDs, known as “baby MUDs.” Developers said the arrangement was designed for efficiency, so the other MUDs would not build duplicative utility plants. Property tax revenue flows from the baby MUDs to the master MUD to pay off bonds and cover their share of utility operating costs. (Five other Cinco Ranch MUDs operate independently of the master MUD.)
A hodgepodge of government agencies provides other services. Fort Bend County repairs the roads. Emergency service districts handle fire protection. The master MUD is the closest thing to a local government. Yet only people who live or own property within its boundaries can run for seats on its board.
MUD board members are paid up to $7,200 per year, depending on how many days of “necessary service” they perform. Lawrence, head of the master MUD, collected $6,000 in 2013, according to the most recent available data.
Dean Zieschang, 46, a Cinco Ranch resident, said the system is opaque. The MUD board serving his neighborhood meets on weekdays, when many residents are at work, and usually in the Hous- ton offices of Allen Boone Humphries Robinson, known as ABHR.
He ran for a MUD board several years ago and said he was barred from campaigning in a gated neighborhood for residents 55 and older called Heritage Grand. Zieschang lost by a handful of votes. At the time, all five members of the MUD’s board were residents of Heritage Grand, which Zieschang said bused voters to the polls.
Zieschang, a vice president at Community Bank of Texas, said he wants to run for the master MUD board because it makes decisions that affect most Cinco Ranch residents. He said board membership should be barred to those who live outside the community.
“We have a large enough, diverse enough, and educated enough group of residents to make that happen,” Zieschang said. BBB
On Saturday, Aug. 26, Tim Schauer and his wife, Angie, were home in Cinco Ranch’s Saddlebrook Crossing neighborhood, watching TV news reports on the flooding. They decided to move valuables upstairs from the first floor. The next day, the street flooded outside their home.
By Tuesday, the situation was desperate, and they decided to evacuate on foot, pulling their two dogs behind them on inflatable rafts. Half a mile from their home, the water was up to their chest. The couple and their dogs were saved by volunteer rescuers in a boat.
Of 8,700 homes in Cinco Ranch, about 790 — 9 percent — sustained flood damage from Harvey, according to a preliminary estimate by the homeowners association. The South Wastewater Treatment Plant was swamped in 5 feet of water. The plant, which serves 2,223 homes and more than 500 businesses in two of the MUDs, was not fully operational again until Sept. 8.
But Schauer, president of the homeowners association, said he isn’t convinced that scrapping the special purpose districts is the right response to the flooding.
“We inherited the neighborhood after the developer finished and moved on, so nobody who lives in this neighborhood helped design this screwy network of MUDs,” said Schauer, a lobbyist.
“It would be nice if we had a single county government that did everything, but I don’t think that’s realistic because if one county government tries to do everything, they are going to do everything mediocre. I’d much rather have specific boards designated and directed to do specific things,” he said.
A Cinco Ranch MUD board member, who spoke on condition of anonymity, said the MUD boards should discuss how to work together to mitigate flooding. The board member said the wastewater plant, completed in 1986, should have been built on higher ground, with levees. The plant is adjacent to Barker reservoir, which puts it at risk of inundation during extreme storms.
Severn Trent, the company that operates the plant, referred questions to the master MUD’s law firm, ABHR. The law firm said in a statement that the plant “met all applicable design and site requirements” and is outside the 100-year floodplain.
ABHR said there were no “known releases of raw sewage” during the storm but that untreated waste appeared to have overflowed from collection systems that serve the plant. The MUD board has commissioned an analysis to determine whether its treatment facilities can be modified to withstand “extreme weather events,” ABHR said.
The law firm specializes in representing MUDs. The Chronicle reported last year that ABHR ranked first in campaign contributions among law firms that do water district work, contributing $1.4 million since 2001 to legislators who have sponsored water district bills or served on committees that approve them.
Drawdy, who owns a firm that fills online orders for vitamin and supplements, said he wants the Cinco Ranch MUDs to work with a regional drainage district to find ways to prevent flooding. His expectations are measured.
“They are probably completely adept at dealing with water when you turn on the spigot and when you flush the toilet,” he said of the MUDs. “When there is a disaster of this magnitude, they are as clueless as the rest of us.”