Moffett's whopping $113,888 judgment in their recent federal trial falls short of bankrupting Austin, but the Legislature has definitely inflicted some damage and punishment on the city. It remains to be seen, however, whether lawmakers were able to give Moffett everything he needs in order to develop.
In what has to rank as one of the rawest legislative spectacles in Texas history, legislators from Orange, La Grange, San Antonio, and Lake Jackson carried legislation that directly benefits would-be Barton Creek developers Freeport-McMoRan of New Orleans and their aquifer neighbor and affiliate, Gary Bradley's Circle C Ranch. Sovereign entities were carved out of Austin's jurisdiction, where city rules will not apply. Contracts entered into years ago were voided by lawmakers. Recalcitrant Austin City Councilmembers, who would not give in to Freeport, were denounced on the floor of the Texas Senate.
At press time, city officials are still sorting through the wreckage and trying to figure out just what happened. Citizens and officials are appealing to Governor George W. Bush to veto the anti-Austin bills, and lawyers are looking at ways to fight the legislation in court. Some legal avenues seem open. The Texas Constitution prohibits passage of "special or local" laws - laws aimed at one locality or intended to aid private companies or individuals. Some exceptions are allowed, however, and debate over whether the Legislature has successfully wedged the anti-Austin bills into permitted areas will likely be a key legal battleground; legal precedent on the matter is mixed. Furthermore, in their rush to punish the capital city, legislators appear to have forgotten to comply with some of the basics of lawmaking and open government, such as posting and notice requirements in the constitution.
It wasn't all just Circle C and Freeport-McMoRan, either. Bills were passed which affect Austin's powers - and those of other cities - well beyond the Circle C and Freeport dramas. The property rights "takings" bill (SB 14) sets up governments for lawsuits if they pass strong environmental or zoning regulations that decrease the value of the owner's land. A tightening of 1987's HB 4 freezes developers through the eons into regulations in force when they first filed for permits. The city's annexation powers were also weakened, although the most ominous annexation bill failed - that being Travis County Republican Representative Susan Combs' proposal in HB 564 to require an election among residents of any area chosen for annexation. The Chronicle will carry a more detailed accounting of these and other bills next week, but for now let's examine the special Freeport and Circle C bills.
The bills were carried by legislators representing districts from around the state. The water quality zone bill (SB 1016) was sponsored by Senators Jeff Wentworth (R-San Antonio) and Buster Brown (R-Lake Jackson), with Rep. Ron Lewis (D-Orange/Mauriceville) carrying the proposal in the House. Brown and Lewis teamed up on the MUDs bill (SB 1606) and on the water districts fallback bill (SB 1016). The justification for SB 1016 - as it is written into the law - is that Austin has "abused" its right to protect water quality, causing "an economic decline in the city." (This despite the fact that Austin is in one of the biggest economic booms in its history.)
It was a glorious run for what the New Orleans crew likes to call "the Dream Team." Still, the immediate result is unlikely to be bulldozers and development. No, it will be the painfully familiar terrain of still another push for a development agreement with the city. That's because the Legislature, in all its maneuvering, was unable to give Freeport what they need most of all: city sewage service.
The laws could help the company in some ways, and could damage the city in others. They function mainly, however, as leverage mechanisms aimed at helping Freeport in their sewer quest.
The best example of the mixture of pain for Austin and gain for Freeport is SB 1017, Sen. Wentworth's "water quality protection zone" bill. The bill also shows how legislators tried to skirt the state Constitution and target Austin. It applies only to "certain areas" located "within the extraterritorial jurisidiction (ETJ), [but] outside the corporate limits of a municipality with a population greater than 5,000." The municipality must have "enacted or attempted to enforce" three or more water quality or pollution ordinances within the last five years, or any five-year period. In other words, the bill applies only to Austin's ETJ. The language takes special pains to exempt Wentworth's home town of San Antonio. It exempts cities with a population greater than 900,000 that have an ordinance "whose purpose is to prevent the pollution of an aquifer which is the sole or principal drinking source for the municipality." San Antonio passed such an ordinance in January.
What the bill does is allow property owners with more than 1,000 acres in Austin's ETJ to declare their tract a "water quality protection zone." (Owners of between 500 and 1,000 acres can apply to the Texas Natural Resouces Conservation Commission (TNRCC) for the same status).
Once they announce such a status, the property owners are free from all City of Austin environmental regulations. All they have to do is: file the status in county deed records; notify the Austin City Clerk; and submit a water quality plan to the TNRCC. The plan must include a "general description" of planned "land uses" and an infrastructure plan for development. The TNRCC is required to approve the water quality plan unless they determine that it does not "reasonably attain" the rather scant water quality goals laid out in the bill. Also, the bill directly states that, "A public hearing on the plan shall not be required."
SB 1017 specifically lays out the following prohibitions on Austin's powers over water quality zones. "A municipality may not enforce in a zone any of its ordinances, land use ordinances, rules, or requirements including, but not limited to, the abatement of nuisances, pollution control and abatement programs or regulations, water quality ordinances, subdivisions requirements..." The city's powers of eminent domain over the area are also removed, and annexation is forbidden for 20 years, or until 90% of the infrastructure needed for development is in place.
Following the long list of activities forbidden to Austin, SB 1017 makes an exception for one city activity: "technical review and inspections for utilities connecting to a municipally owned water or wastewater system." In other words, the legislature wrote into the law that Austin can provide Freeport with a sewer.
Just in case this wasn't clear, Austin's esteemed Senator Gonzalo Barrientos won approval of an amendment that allows "one or more of the provisions" of the law to be "waived" by the property owners if the property "becomes subject to an agreement entered into after the effective date of this Act between the owner or owners of land within the zone and the muncipality." This means that Freeport can agree to comply with some city laws - if the city approves a development agreement. Being able to apply with only the regulations that one wants to comply with is pretty much the definition of a PUD.
The Barrientos amendment specifically lists as one of the potential parts of an agreement, "the provision of water and wastewater service to the property within the zone." Also specifically listed are: continuing "immunity from annexation" for 15 years; authorization of "certain land uses and development"; enforcement of "certain muncipal land use and development regulations"; and variance from "any watershed protection regulations." All of the above have been features of previous attempts by Freeport to win a development agreement with the city.
Although the bill is fairly obvious leverage for Freeport, it could have consequences beyond that corporation's land. The removal of the power to enforce public nuisance statutes is particularly sweeping. San Antonio, for instance, recently used public nuisance statutes to establish penalties for water polluters, regardless of what development regulations they fall under. The bill paves the way for a series of virtually unregulated nuisance suburbs atop the Barton Springs contributing zone. Like Freeport, however, such developments would face the problem of finding wastwater service, making them sort of wealthy colonias.
Once again, however, the path leads back to familiar terrain - Freeport's quest for city sewage service. They are free to build a few thousand homes - or whatever they can manage with septic tanks and sewage irrigation. They are freed even from the constraints of the weak "composite" ordinance that some of their lobbyists helped develop. But, as Jim Bob Moffett said under oath at the recent federal trial, his single family homes proposals won't work financially without accompanying commercial development.
And commercial development won't work without greatly expanded wastewater capacity.
Freeport's alternatives to sewer are to expand current irrigation, or to use septic tanks. Irrigation to service the level of development they want would require further approvals from the state. It would also mean that more land would have to be set aside on which to irrigate, which means less land for development. And how many people want to spend at least $300,000 for a home and then have sewage sprinklers all around? For that matter, how many people with that kind of money want a septic tank?
No matter what the case with residential septics, it is highly unlikely, if not out of the question, that large commercial projects like manufacturing plants and shopping centers will be built with septic tanks. Those would be some mighty big septic tanks. This leads us back to where the Freeport drama always does, to the need for city sewage service. (They also have at least one more large problem, a $74 million debt balloon payment due in January.)
His Circle C development, which he shares with Freeport since they bailed him out of bankruptcy in 1992, will become a sovereign state, free from all city regulations. It will be governed by a governor-appointed board thanks to HB 3193, by Wentworth and Rep. Ron Lewis.
The Legislature let Circle C out of existing annexation and water quality commitments with the city. Moreover, while Bradley can build as much as he wants, because he's been freed from the constraints of the city's subdivision and water quality ordinances, the Legislature left city subsidies intact. In fact Mary Arnold, former chair of the Water/Wastewater Commission and a MUD bond expert, says the city could end up eating around $5 million of Circle C's agreed "pro-rata" share of the cost of extending water and wastewater lines to Circle C MUDs.
The new district also has the power of eminent domain, can levy taxes, and issue revenue bonds without voter approval. The city is required to provide service to any new development. The district can "extract" and sell water, and is even granted search and seizure powers to ensure compliance with property restrictions. (This, ironically, in a bill from people who frequently howl that property owners must be free to do whatever they want with their land).
Bradleyville must comply with state surface water standards, rather than the ground water standards that would be appropriate over the recharge zone. Technical expert and Lege watcher Mary Arnold fears that this means that polluted Circle C runoff could be drained into a recharge area and still comply with the law. Circle C also gets exclusive control over city-maintained Slaughter Creek Metropolitan Park, meaning, among other things, that city residents could be barred from the city/state-funded bicycle veloway.
Bradley did suffer a setback on the judicial front during the session. A federal judge in Houston issued a $50 million judgment against him and Circle C partner James Gressett, for loan activities prior to the company's involvement with FM Properties. Bradley also suffered one legislative defeat. He and other professional sports team owners were thwarted in attempts to get a new tax structure for stadium financing. Bradley owns a 25% share of the Houston Rockets; after the bill failed, he threatened to move the team to New Orleans.
After a council majority turned down the latest Freeport development agreement on February 23, Austin's Mayor Bruce Todd all but abandoned efforts to fight anti-Austin bills. He was quoted repeatedly in the local daily saying what the Legislature was going to do the city - sort of the political equivalent of wearing a "kick-me" sign. Likewise, Councilmember Ronney Reynolds, who once caddied at Barton Creek County Club's Legends of Golf tournament, unleashed a bitter tirade on the night of the February PUD vote about what was going to happen to the city in the Legislature. Subsequently, he made no visible efforts to fight for the city.
Senator Gonzalo Barrientos is considered heroic by many for his grueling filibusters against the Bradley bill. By the time Barrientos laced up his tennis shoes, however, he had already carried legislation cutting back on the city's annexation powers, micro-managed city affairs with his nickel and dime parking meter bill, and tacked the aforementioned amendment onto a Freeport bill, which the developers will almost certainly use to try and pummel the city into approving a sewer.
Some members of the Travis County legislative delegation put up spirited defenses - most notably Representative Glen Maxey - but the resistance in no way matched the level of attack. For example, no one in Austin launched an offensive against the legislative programs of Austin bashers. The city's bumbling $400,000-plus lobby team (Adams and Zottarelli) was all but invisible. Among other things, the lobbyists totally failed to win any support from other Texas cities, although this could also be blamed on city officials and the stacked deck at the capitol. For example, Houston's lobbyist, Dick Brown, is also a top Freeport lobbyist.
Other lapses are inexcusable. Lieutenant Governor Bob Bullock, the guy who runs the Senate, told the Chronicle that Austin's lobbyists never visited him. Their mission seemed mainly to be providing light-hearted quotes to out-of-town reporters who wrote about the attacks on Austin. City lobbyists made, among other publications, the Houston Chronicle and the Wall Street Journal.
The most spirited resistance came from the citizens group Better Austin Tomorrow. Members including Mary Arnold, Shudde Fath, Mimi Adams, and George Cofer monitored bills, spoke at legislative hearings, and by the end of the session were putting out a daily report on the status of Austin-bashing legislation. They never had a chance, however, to overcome the iron grip that Moffett and Bradley have on the Texas Legislature.
The Bradleyville bill also faces opposition from a coalition of Hays County officials and mayors of several small Hays County towns. They fought the bill during the session, and are now calling on the governor for a veto. Their fears are centered around a provision that allows the Bradley district to pump and sell water, potentially drying up other wells.
Some insiders theorize that Bush might veto the Circle C bill, but sign those benefitting Freeport's Barton Creek property. Though this outcome is by no means assured, it does appear likely that the Freeport bills will be signed. One clue was that they didn't receive the level of opposition during the session that the Bradley bill did - no filibuster, no limp American-Statesman editorials. The same has been true since the bill's passage: The Statesman called for a veto of the Bradley bill, but ignored the Freeport bills. The mayor followed suit.
There is another theory, as well, on the Bradleyville bill: that Freeport wants to use a sovereign, regulation-free, Circle C as a revenue source while their Barton Creek property languishes. (Freeport may eventually try to sue the city under the SB 14, the "takings" bill, claiming their property languished due to Austin's environmental laws.)
The Texas Constitution (art. III, sec. 56) states: "The Legislature shall not, except as otherwise provided in this Constitution, pass any local or special law... regulating the affairs of counties, cities, wards or school districts." "Local" laws, obviously, are those directed at one city or area. "Special" laws refers chiefly to legislation passed for the benefit of private individuals or companies.
According to an "interpretative commentary" in Vernon's Texas Constitution and Statutes (the only published reference for the Texas Constitution), the constitutional prohibition against such laws dates back to when Texas was a Republic. The restrictions were dramatically strengthened after Reconstruction when, according to Vernon's, the Legislature enacted "more than 500 special and private local laws," many of them concerning "the granting of privileges, relief, or benefit to certain individuals, companies, or corporations." Vernon's continues: "Popular revulsion led to the adoption of the present provision in the Constitution of 1876."
In other words, the 1995 Legislature's political forebears were carpetbaggers and scalawags. The Vernon's reference book states that attempts to eliminate special or local laws have been only "partially successful." Localities have often sought localized assistance, and have accepted bills which targeted them through the bracketing of population figures and other methods, as was done to Austin this session. ("No, your honor, this bill isn't targeted at Houston - it applies to all Texas cities of over a million population which have domed stadiums and bayous.")
An obvious hole in the local or special laws section is the phrase, "except as otherwise provided in this Constitution." Legislators are trying to wedge the anti-Austin special laws under Article XVI, Section 59, which allows formation of "conservation and reclamation districts." This section declares "all natural resources" to be "public rights and duties," and that the "Legislature shall pass all such laws as may be appropriate thereto." This section, passed early in this century, is contorted and complex, and case history is mixed. Lawyers will fight out the intricacies if the city challenges the constitutionality of the laws.
On the second front, the conservation and reclamation laws carry notice requirements which the Legislature clearly seems to have failed to meet. The constitution (Article XVI. Section 59 c&d) requires that at least 30 days before such a bill is introduced, a "notice of the intention to introduce such a bill" be published in a "general circulation" newspaper in the city or county affected. This doesn't seem to have occurred.
Also, a copy of the proposed bill must be "delivered to the commissioners court of each county in which said district or any part thereof is or will be located and to the governing body of each incorporated city or town in whose jurisdiction said district..." Officials from the City of Austin, as well as from Travis and Hays County, have sworn documents saying they weren't notified. A publication of notice is also required for "local or special laws." Lieutenant Governor Bullock maintains that the Senate effectively waived itself from such requirements before passing the bills. This will likely be a point disputed in court.
If a local and special legislation challenge were successful, it could result in the laws being thrown out completely. Victory under the posting and notice strategy, however, might be only temporary, but the laws couldn't be reinstated until 1997 unless the governor allows them to be considered in a special session. If that were the case, the anti-Austin, anti-environment laws would have to be passed in the glare of massive publicity, rather than under cover of a legislative session with a full menu of issues on the table.
It's unclear what direction the city will take. Officials avoided comment for this article, and were planning a strategy meeting for Monday, June 5. There is a possibility that they will raise more of a fight than during the session. Even the American-Statesman seems somewhat horrified by what has been wrought, in spite of having stirred the anti-Austin pot for years, and in particular after the latest PUD deal went down in February.
The city is likely to at least challenge the Bradleyville bill in court. Even the mayor promises to sue. A battle could develop, however, over whether to also challenge the Freeport bills.
Another hope is that examination of the 1995 Legislature will reveal just how corrupt they were, leading to a Sharpstown-type scandal that will result in the ouster of a lot of the carpetbaggers and scalawags who attacked Austin. It might be a thin hope, but times are tough.
In the meantime, watch for a renewed Freeport development agreement push in a daily newspaper near you. n