The Austin Chronicle

Austin Knows Best

City's Newest Children Rebel With More Lawsuits

By Kayte VanScoy, December 26, 1997, News

illustration by Doug Potter

Several of my neighbors said they felt a cold chill right about noon on Friday," jokes Ken Rigsbee, foreman of the Circle C Homeowners Association committee on annexation. High noon on Friday was the hour Austin's annexation of the four Circle C municipal utility districts (MUDs) took effect, and it will long be known as the hour that launched a thousand lawsuits. After the council's December 11 decision to pass the Circle C annexation on first reading only, rumors went flying that the council was ready to back off its aggressive annexation stance. Five minutes after the council meeting was called to order on December 18, however, those rumors were put to rest. Even before the usual pleasantries of the prayer, the song, and the reading of the agenda, councilmembers finished off Circle C's annexation in a unanimous, and some might say joyous, vote.

Their speed was in deference to Mayor Kirk Watson's family emergency -- his father Don Watson lost a seven-year battle against cancer that day, and the mayor left immediately following the vote. But the council's stance was only strengthened by its speedy action. Stipulating that the dissolution of the MUD boards would take effect Friday at noon, council went above and beyond tactics taken in any other neighborhood where the official annexations have been put off for several weeks or even months.

"It has to do with all the legal maneuvering and the fear that they would `poison pill' us," says Councilmember Daryl Slusher of the city's quickie annexation. The Circle C MUDs "are the only ones suing us, and they're suing us repeatedly."

Circle C, in its various manifestations -- as Phoenix Holdings, FM Properties, Circle C Land Corporation, Circle C MUDs, and the Circle C Homeowners Association -- was already involved in no less than four lawsuits against the city over everything from the Save Our Springs water quality ordinance to challenges on the constitutionality of Circle C's self-made Southwest Travis County Water District. By Friday, the new lawsuits were starting up.

First things first, of course, and that means money -- a cool $28 million to be exact. Although the city put in water and sewage pipes stretching from Austin out to the development in 1982, other infrastructure improvements, including the network of pipes connecting the main lines into individual homes, were paid for by the developers. Maintenance and use of the lines were regulated by the MUD boards, which have held the responsibility for paying back the construction costs -- until now. Annexation means the MUD boards are immediately shut down -- shifting responsibility for the MUDs' debt to the city. And payment of that debt, according to the developers, should have been made even before annexation took place.

Section 43.0715 of the Texas Local Government Code clearly states that the developer gets its money for things such as infrastructure debt "simultaneously" with annexation. However, what lawmakers meant by the word "simultaneously" is apparently up for grabs. "The law seems to provide [that the city must pay] as a condition preceding annexation," says Roy Minton, legal counsel for Circle C Land Corp. (Circle C Land Corp. claims $22 million of the $28 million sought from the city for infrastructure costs in the lawsuit. The other $6 million, Minton says, is owed to Phoenix Holdings, a residential developer which also has a stake in the project.) If the city had paid up, Minton says, Circle C would not be challenging annexation based on the alleged violation of the code.

The city's position is that in similar cases across the state, such payments have been made after a period of time during which the payer -- the city in this case -- has a chance to study the developer's billing methods. "Traditionally [the cost] has ended up being about half of what's claimed," says Slusher, adding that the city has every intention of paying Circle C whatever it is owed for the infrastructure.

But as Rigsbee points out, money is not really the issue for Circle C. It is annexation in general which troubles homeowners, and they're fighting it tooth and nail. As predicted in this column on November 6, Circle C is now joining up with East Austin minority groups to challenge the annexation for alleged violations of the federal Minority Voting Rights Act of 1974. The suggestion that East Austinites would team up with suburbanites was pooh-poohed by both the mayor and Slusher back in November. Nevertheless, in a suit brought to challenge the dissolution of the Circle C MUD boards based on Section Five of the Act, the League of United Latin American Citizens (LULAC), El Concilio and Gavino Fernandez, the Black Citizen's Task Force and Dorothy Turner, and Sisters 'N The Hood and Velma Roberts have teamed up with Hispanic Circle C residents Jane Perez and Rachel Salinas-Johnson.

In one of life's little ironies, joining the plaintiffs' legal team is local voting rights attorney José Garza, the brother of Austin's own City Manager Jesus Garza. (That ought to make for interesting conversations at the family dinner table on Christmas.) Also on retainer are Rick Gray, counsel to the Circle C Homeowners Association, and Judith Castro of LULAC.

Back in November, José Garza promised to challenge the city's annexation based on the Act as soon as it impacted voting patterns in the city. The Act prohibits the city from deliberately unbalancing minority voting strength through any actions, including annexation of areas with large white populations. To ensure that cities maintain minority voting strength, any changes in voting systems must be approved by the federal courts or by the U.S. Dept. of Justice as soon as they affect voting patterns. This means the city will eventually have to run its annexations up the federal flagpole for approval, but the city had intended to wait until local elections were held next September.

Garza says that as soon as the city dissolved the Circle C MUD boards, it impacted elected bodies; therefore it is required to seek federal approval for its annexations. And Garza says when that review happens, the city is "going to lose." Karl Bayer, the city's outside legal counsel on the Circle C lawsuits, says, "It's conceptually hard to understand how the dissolution of the four MUD boards, who don't have any minorities on them, affects voting rights in Austin."

The Circle C annexation falls into Garza's long-term interest in replacing Austin's at-large election system with what he believes is a more equitable single-member district system. Garza says that Austin already has the most oppressive system possible for minority voters -- an at-large election of numbered seats with a majority vote requirement -- and he says that adding 30,000 mostly Anglo voters to that system will further dilute the voting power of Austin's minorities, and will no doubt be challenged by the feds. "In my estimation, I don't think the city can complete these annexations without a modification to the election system," he predicts, suggesting that single-member districts are the only system that would make such annexation possible.

Slusher counters that Garza's predicted outcome is unlikely. "There's a fairly small difference between the actual [minority] makeup of the city now and [minority] makeup of the areas to be annexed," he says, suggesting that the city's annexations will have little effect on current voting patterns.

The latest round of legal-ese is destined not to be the last word. As the chill winds of annexation blow through Circle C this holiday season, Rigsbee is already promising that the homeowners are gearing up to find new ways to fight the city. "Our commitment now is to try to become good citizens of Austin and start doing our community thing," he says, referring to efforts by Circle C to form alliances with other recently annexed areas. "We may establish a [political action committee]," he suggests. "It's just a matter of addressing what we need to do as responsible citizens." In other words, look out, Green Council. Here come the MUDs.

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