Need to pass a tax measure so you can develop land? Try reusable rent-a-voters

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The Woodlands

They’ve run out of rent-a-voters in the Houston suburbs.

Developers for years now have been using the technique: Move in a few voters to an area of raw land, house them in trailers just long enough to qualify them to vote. Have them vote to create a municipal utility district and then approve millions of dollars in bonds – to be paid back by future residents – to finance the infrastructure needed to develop the land.

Now, developers apparently have decided it is cost-effective to use the same voters repeatedly, wherever the developer has a new project and needs someone else to pay for things like parks, roads and other amenities.

In this year’s May 4 election, Mark Rizkallah and his girlfriend Kirstin Stiles voted to approve $600 million in bonds for the future residents of Montgomery County Municipal Utility District (MUD) #158.  Such districts are formed as residential developments.

The year before, staying at a different address, the couple signed off on another district’s ability to tax future residents’ real estate at the rate of $1.50 per $100 of appraised value.  They also elected a five-member board of directors for the MUD.

Another pair of voters have elected boards and approved bonds in other Montgomery County districts in each of the last three years.  In the last election, Nick Harrington and Brandon Adkins signed off on $909 million in bonds and re-elected three board members to a district in Conroe. The pair in 2018 also approved $616 million in bonds for a development in nearby Spring.

“We need more neighborhoods, and if we voted ‘no,’ the development would either be postponed to another year or halted,” Rizkallah, a real estate agent, told The Texas Monitor. He said he pays “fair market rent” on the trailer he stays in and that he also pays for utilities that are sometimes piped into his place via a single wire from a nearby telephone pole.

Such voters stay in the dwellings for several months leading up to an election, making sure to change their address on voter registration forms in time to be able to legally vote on a particular MUD issue.

“That’s on us to make the changes,” Rizkallah said. The developer arranges for the mobile home to be placed on the land and covers the $150 housing permit.

After an election, “Sometimes, they will say ‘Hey, we’re not going to develop yet’ and they give us an extra six months on the lease,” Rizkallah said. Otherwise, if the development is moving quickly, they have to vacate. In return for the moving around, he said, they get to live in an isolated area that provides solitude and little hassle.

“We get reasonable rent and a pretty big place,” Rizkallah said. He’s refused to move before, he said. “There was one way up north in Conroe and we said no.”

The bonds approved by roving voters are issued to cover the costs of development. The bonds are then repaid via a levy based on property value when new owners move in.  When the bonds are paid off, the levy is supposed to be dropped, although in rare cases it has been continued long after the bonds have been paid off. It’s not clear where the extra money went, in those cases.

The rent-a-voter practice has been criticized as a tool for developers to use people who are beholden to them to get MUDs created, bonds sold and infrastructure costs laid off on future residents who don’t get a say in the matter. The board members initially elected — usually five candidates for five positions, with zero campaigning — often have an interest in the development, or at least, like the real estate agent Rizkallah, the potential for making some money off the plan.

Supporters of the rent-a-voter practice, which dates back to the 60s, say that the speed of population growth and land development in Texas makes such a system necessary, with the assurance that future residents will pay off the bonds in exchange for utilities, parks and whatever services the developers chose to put in.

“In doing this, we help establish restrictions,” Rizkallah said. “It makes sure that the people who live in their neighborhoods pay only for their neighborhood, not some place miles away.”

Montgomery County records show Airia Development put a $15,000, three-bedroom mobile home on an otherwise empty 312-acre tract in October 2018, enough time for Rizkallah and his girlfriend to satisfy Texas’ six-month residency requirement when it came time to create a MUD.

For years, the housing for such traveling voters in Montgomery County has been arranged through a group called Stingray Services, now Jaylerton Properties.

In an ad several years ago, Stingray claimed expertise in the arrangements used by developers.

 “Stingray Services specializes in providing turnkey voter trailer installation services and election services. We have completed over 70 trailer installations in Texas over the last 10 years and have supported nearly 100 elections,” read one ad, since removed from the Stingray website.

The ad noted that the company has worked with “a host of major developers and engineers.”

Jaylerton board member Tina Daugherty did not return a call seeking comment for this story.

In 2017, state elections director Keith Ingram sent a letter to the attorney general’s office, suggesting the AG look into “allegations of criminal activity in connection with the creation” of three districts, in response to complaints from several individuals in Montgomery County.

“The complaints allege that voters were paid to reside in and vote for the creation of three municipal utility districts, as well as to pass bonds in the districts,” Ingram’s letter said.

Such complaints are vetted by several people at the secretary of state’s office before being passed along to the AG, said agency spokesman Sam Taylor.

“The people here decide if there’s enough evidence there to warrant turning it over to the attorney general’s office,” Taylor said. His office lacks the authority to pursue it further.

But the AG’s office is unwilling to consider rent-a-voting as illegal conduct.

The office did mobilize in 2010, though, when a group of 10 Woodlands voters checked into a hotel inside a road utility district in the Woodlands to vote in a district election.

Several of them were later charged with election fraud by the AG’s office, and one spent several months in prison.

The state’s case was based on residency: “Defendant voted in the May 8, 2010 Woodlands Road Utility District Board of Directors election, when he knew he did not reside in the precinct in which he voted,” the indictment stated.

“Why can the state prosecute them but not the rent-a-voters?” asked Hugh Coleman, a Denton County commissioner who has crusaded against what he considers special treatment of big-money developers and their practices in creating special districts.

Every legislative session, lawmakers create dozens of utility or road districts for developers, using what has become boilerplate language. That language includes requirements for voter approval on any taxing ability given to the district. It just doesn’t spell out how many voters are required.

For instance, this year a bill authored by state Rep. John Zerwas, R-Richmond, would create a utility district in Fort Bend County, if that action is confirmed by district voters, who also have to approve any tax-backed bonds.

It also permits contracts approved by those voters to be modified by the board without any further voter approval — a blank check to the developer-appointed board.

Another bill, SB 239, proposes that the directors of special districts with a population of over 500 be required to hold their meetings within the district.

Lawmakers last session approved creation of 50 special districts in 19 counties.

For years Coleman has traveled to Austin to talk with whoever will listen about reforming the model for building developments, insisting that developers should take the risk in paying for land improvements.

“That usually just ends up with someone trying to challenge my seat in Denton County,” he said.

The reason is that developers are protected by lawmakers.

A report released in December by the House Committee on Special Districts ridicules articles that are critical of the process.

Titled “the MUD conspiracy theory,” the report notes that “the real conspiracy is the media’s attempt to sensationalize non-stories to encourage citizen outrage. Angry people don’t think. They don’t reason. They just accept whatever the media hands out as fact. And that’s a problem that is much larger than the misunderstanding of the MUDs.”

Steve Miller can be reached at [email protected].

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