The Austin Chronicle

Clouds Over Dripping Springs

Questions about vision -- and ethics -- in a town transformed

By Amy Smith, February 22, 2002, News

The Dripping Springs City Hall, just off 290 West, is not easy to find. But if you look for the Dairy Queen on the north side of the highway and then squint to the south, you can track it down -- tucked well off the road, down a narrow, dusty trail, past a tumbledown shed and a herd of goats. A space crunch at the old municipal building forced city officials to scout out a new home, and they settled on this humble, out-of-the-way place on the city's eastern edge. Of course, the property owes much of its charm to its former owner and tenant: the Holy Spirit Episcopal Church, whose entrance sign still welcomes unsuspecting visitors.

Before making the transition to the new City Hall late last year, city officials' first order of business was to separate church and state -- literally. New wall paneling replaced the spot where a crucifix once presided over the congregation, and a couple of portable partitions conceal the pulpit area, where a whiff of righteousness may still linger in the air.

These days, though, a recurring theme in the former sanctuary is not religion but ethics -- a subject made all the more complex because the particular focus of this public scrutiny is the city attorney, Rex G. Baker III. Questions of Baker's potential conflicts of interests have centered on his many influential roles in the community. He is the city attorney, a private attorney, a Hays County justice of the peace, and the president of a title company who dabbles in property development on the side. The sudden public interest in ethics -- and in Rex Baker's multiple roles in the life of Dripping Springs -- has evolved from a swell of whispers among some of the locals, to a subject of public comment and letters to the mayor and council members. Even the Dripping Springs Century-News has dutifully reported the controversy. The points of concern center on Baker's personal ties to the development community, and whether these relationships influence his legal advice to the City Council when considering large-scale development projects -- most of them within Dripping Springs' 75,000 acres of extraterritorial jurisdiction, or ETJ (see "Matter Over Mind," Sept. 21, 2001,

Baker insists his varied interests pose no conflict in his role as city attorney, citing his strict adherence to the Texas Disciplinary Rules of Professional Conduct and Code of Judicial Conduct. "I am subject to both and take that responsibility very seriously," he said, adding that he is one of nine judges who serve on the state bar's Judicial Conduct Committee. When the city retained the services of the Baker & Boldt law firm in 1998, Baker continued, "We informed the city, as we do all clients, that if a conflict ever arises, we must recuse ourselves from that matter. It does not happen often, but it does occur from time to time in all lawyers' practice."

But one local citizen was so irate over Baker's failure to acknowledge his ownership of property under council consideration last fall, he fired off a letter to the mayor. "Why was there no mention that Rex had an interest in the Benney Tract?" he demanded, referring to a preliminary plat for a proposed six-lot development on Baker's property. "Was the average citizen just supposed to notice that Rex came down off the dais? I think it would have been cleaner if he [had] announced his ownership to all present and then stepped down." (The same tract has came under consideration at the city's new Economic Development Corp. -- see "Baker and the Benney Tract," p.24.)

Despite this public criticism of the city's legal team, Baker and his law partner Chris Boldt continue to have strong support from both Mayor Todd Purcell and the City Council. But Purcell has responded to residents' concerns in two ways. He has called for an ethics ordinance for city officials and employees, similar to those on the books in Wimberley and the Village of Bee Cave; it is currently in the early drafting stages and will first be considered by the city's Planning and Zoning Commission. Additionally, the council retained an outside attorney to review two development agreements that Baker brokered for the city and that the council, under then-mayor Wayne Smith, unanimously approved last spring. The newly hired attorney, Austin lawyer David B. Brooks, a municipal and county law expert, will also examine a third development agreement -- with the Temple of Barsana Dham. "We wanted him to use that agreement as a reference because that was the first one we did and it's going really well," Purcell said. "We haven't had any complaints." (Residents say that has more to do with the nature of Barsana Dham -- it's a small-scale development anchored by a Hindu temple -- than with the strength of the development agreement itself.)

But the focus of Brooks' review will be on the two major land deals the city struck with big residential developers -- the Rutherford Ranch and Foster Ranch development agreements. Specifically, Brooks will examine the agreements' compliance with state law, given the limited land-use authority that general-rule cities (those with populations under 5,000) have over their ETJs. Ultimately, Brooks' analyses may settle long-standing debate over whether the city signed on to two good deals or two costly boondoggles. Brooks, who has served as an assistant attorney general under former Texas AGs John Hill, Mark White, and Jim Mattox, declined to comment on the details of his review, but says he expects to complete his findings within the next seven to 10 days.

In addition, the city has hired yet another outside attorney to look at local efforts to establish a wastewater treatment plant. For that the city has turned to Susan Zachos, an Austin lawyer who knows her way around the regulatory permitting process. Purcell is also granting more authority to the city's Planning and Zoning Commission, which now reviews all development-related matters before they go before council. (Some of the controversy over the Cypress development agreement may have been avoided, for example, had the document first gone before the P&Z.)

Of the two development agreements, the Rutherford Ranch/Cypress Realty deal is more controversial, because of long-running, highly organized opposition from the Friendship Alliance, a northern Hays County coalition of neighborhoods along the FM 1826 corridor, where Cypress' 2,700-acre Rock Creek development will take shape over the next 10 years. Area residents were particularly dismayed that neither the city of Dripping Springs nor the developer notified them of the proposed project until after the agreement had won council's approval. Because the property lies on top of the sensitive Edwards Aquifer recharge zone, the project requires approval from the U.S. Fish & Wildlife Service. Cypress developer Stephen Clark says he expects a decision on that within the next 60 days.

The Alliance, backed by a legal opinion they got from Austin attorney Michael Marcin, contends that the city's agreement with Cypress contains enough legal flaws to warrant the city rescinding the deal and starting the process anew. Marcin's written opinion challenges the city's judgment in creating an "industrial district" in its ETJ (as general-law cities are allowed under the law) with the primary purpose of residential development. "Even giving the statutory language its broadest meaning," Marcin wrote, "would still limit an 'industrial' district to a primarily commercial purpose." The attorney also questioned why the city would relinquish its governmental authority by allowing Cypress to hire its own engineer to approve the developer's plats. (Purcell insists the city hasn't abdicated its authority because all plats are still subject to city approval.)

Another point of Rutherford Ranch controversy rests on city attorney Baker's name appearing as a trustee on the deed and deed of trust documents drawn up when Cypress bought the property early last year. Baker says his name is on "hundreds" of deeds in the county, by sheer nature of the line of work he does through his title company. He says he doesn't own interest in Cypress and would, in fact, be responsible for bringing foreclosure action against Cypress should it default on its contractual obligations to the city.

Cypress developer Clark argues that in fact, Baker brokered a good deal for the city, given its limited ETJ rights. "Most of the waivers in the agreement are really designed to decrease impervious cover," he said. "There's lots of finger-pointing going on right now, but fundamentally, without that development agreement the city would be a lot worse off."

The other planned development, Foster Ranch, a 1,600-acre project at U.S. 290 and Nutty Brown Road, will be reviewed to determine if the city's agreement with the developer -- California-based Makar Development -- conformed to the city's limited statutory authority.

This limited ETJ authority, explained Mayor Purcell, is the reason the city entered into these development agreements in the first place -- to impose certain restrictions as a means of managing growth. "We can't dictate zoning laws, but we can set impervious cover limits, and we reduced [Cypress' proposed impervious cover] by half," he said. "We want positive growth in this community."

All in all, Purcell does not fault the Baker & Boldt law team for its legal advice. "They both are very ethical," he said. "They live in this community, they care about this community, and they know what's going on in this community. Rex may wear a lot of hats, but so do we all." The 37-year-old lifelong Dripping Springs resident stepped into the mayor's role less than a year ago, when health problems forced Wayne Smith from office. As someone who grew up in a small town, he says, he understands the necessity of taking on multiple responsibilities. He himself co-owns Purcell Electric, an electrician shop, and is a 13-year firefighter with the Austin Fire Dept.

Baker, on the other hand, grew up in the big city of Houston, the son and grandson of successful lawyers. He didn't grow up in Dripping Springs but moved there by choice in 1991, and is by most accounts thriving on life in the little city. (Ironically, Baker has made certain that the subdivision boom will not affect his own residence in the ETJ. He freely admits he has bought enough land around his property's perimeter to ward off encroaching developers.) "When you live in a small community, often you are asked to perform various tasks," Baker said. "This is clearly the case in my situation. I practice law in a local law firm, I have an interest in a family-owned title company, and was a medic for many years with the volunteer EMS service, until I was elected the justice of the peace for this area in 1994."

But some residents maintain that Baker's services are self-serving, taken to advance his own business aspirations -- aspirations that sometimes might run counter to the city's larger set of growth-management problems. Within the Dripping Springs school district alone, some 20 new subdivisions are in different stages of development -- thanks to the Lower Colorado River Authority's extension of a 14-mile water pipeline to provide surface water to these communities. And because of this new availability of water, more subdivisions will surely come.

Resident Jonathan Steinberg, who with Rob Baxter has organized one of northern Hays County's strongest neighborhood forces in the Friendship Alliance, is disappointed in the city's inability -- or unwillingness -- to effectively manage growth. Steinberg is the former chairman of the city's Planning and Zoning Commission, and is all too familiar with the development process. "The city is hamstrung by the legal advice it's getting," he said. "There are certainly tools available to help the city manage growth, but you first have to have a vision. It's not clear to me what the vision is," he said. "But if they're not concerned about growth -- then they're doing fine."

From the perspective of the little city hall across from the Dairy Queen, the vision seems to be clear and untroubled: unencumbered growth is good, and the council, city staff and city attorney Rex Baker are simply doing their level best to facilitate the growth of Dripping Springs. But to many area residents -- particularly those who see a tiny rural community abruptly becoming a big city suburb -- the vision is much more clouded, and aggravated by a growing sense of powerlessness in the face of "progress." Whatever the results of the legal review, as the bulldozers keep rolling, those misgivings are not likely to disappear any time soon. n

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