Point Austin: Once More Into the MUD

What we get when we annex unplanned development: expensive entertainment

Point Austin
Canyon Creek is on a winning streak.

Earlier this year, the U.S. Supreme Court issued the Northwest Austin suburb a partial victory in its lawsuit against the Department of Justice, granting its utility governing board – the Northwest Austin Municipal Utility District No. 1, aka "NAMUDNO" – the right to "bail out" of its previous election obligations under the Voting Rights Act. (See "Point Austin," June 26.) More recently, in another case, the state 3rd Court of Appeals, in a decision that had been pending for more than four years, ruled that Canyon Creek homeowners are unfairly bound by a longstanding developer's agreement with the city, under which they pay both MUD infrastructure taxes and city property taxes. (The city appealed but was recently turned away by the state Supremes.) The deal isn't done yet, but it looks certain that the Canyon Creek taxpayers will soon be getting a break (at the expense of the rest of us, of course, but that's how taxes work).

Neither victory was overwhelming, although in this long-running suburban melodrama the tax case will have a much more real effect on the lives of Canyon Creekers than will the Voting Rights Act case. The high-profile Republicans recruiting and underwriting the VRA lawsuit were fondly hoping that the John Roberts Court would recognize its partisan duty and declare unconstitutional the VRA's Section 5 – which requires Department of Justice preclearance of electoral changes that might adversely affect minority voters in covered jurisdictions, e.g., Texas – and in oral arguments it sounded like the justices were leaning that way. In the end, the GOP garnered only a dyspeptic Clare­nce Thomas, and a brief majority opinion suggesting that bailout is sufficient unto the day, but another plaintiff might do better next time.

The tax lawsuit dates from 2002, although the history goes back to the creation of Canyon Creek in the Eighties by developer Nash Phillips Copus, over the objections of the city (trying to avoid expensive sprawl) but with the approval of the state (where real estate always rules). Under the inevitable annexation agreement, the city agreed to provide water and wastewater services, but NPC left future residents holding the bag and the debt for basic infrastructure – so they eventually sued, on the grounds that double expenses, even under contract, amount to "double taxation." The suit has gone on so long that the originally named City Council members who were the defendants have all since left office. The lower courts had ruled for the city. The appeal lay fallow for years, and in 2005 the council – prodded by state Rep. Mark Strama in a close election campaign – granted the Canyoneros a 50% discount on water rates, frankly to win votes but partly in the fond and foolish hope that it would persuade the MUD to drop the suit.

This month, on the eve of retirement, the 3rd Court's Kenneth Law issued a complex opinion ruling that the Creeksters are right, sort of. In brief, although the plain language of the original agreement allows the city to charge full property tax rates, under Law's law, that was in fact a tax "allocation agreement" under state law – meaning the overall Canyon Creek tax rate cannot exceed what the city charges everybody else in Austin.

No Escaping Justice

Where does all that leave us? Well, on the voting side, nothing much changes. The various parties to the VRA lawsuit (always a crowd by the time it reaches the Supremes) have signed off on a consent agreement enabling NAMUDNO to bail out of burdensome Department of Justice obligations like filling out an occasional form – the district calculated that it cost a couple of hundred bucks annually to comply. However, for the last several cycles, the MUD has actually contracted out its voting process to Travis County, which is still bound by Section 5 and officially considers the law helpful and necessary to prevent discrimination – and so will not be bailing out of anything.

Nationally, there may be a few other tiny jurisdictions that huff and puff over a bailout, and the GOP will have to go hunting for another credulous (or calculating) plaintiff to take a stand on constitutional grounds. But such a case is unlikely to get back to the Supremes quickly enough to affect preclearance in the wake of the next census, and therefore on the next round of congressional redistricting – the point of the whole legal exercise in the first place. Austinites will recall that DOJ preclearance, although it did not prevent all of Tom DeLay's radical gerrymandering, did have a salutary effect on the worst of it – for example, eventually preventing Congressman Lloyd Doggett from becoming only nominally an Austin representative.

The March of Progress

Sorting out the tax case will not be so straightforward. According to city attorney Anne Morgan, there are a few more procedural hoops, and then the parties will have to sit down and discuss what happens next. The 3rd Court's rather tortured opinion does not actually direct a new allocation of the debt, only concludes that the current arrangement must be revised. Whatever happens, you can be sure that you and I – that is, the remaining taxpayers of Austin – will be picking up a greater share of the previously contracted, indebted infrastructure tab for the 3,500 residents of Canyon Creek, less than one half of 1% of the city's population and with a median family income nearly twice that of the city as a whole.

I intend to pay it with goodwill, comforting myself somewhat with the bitter knowledge that this endless lawsuit and its outcome are essentially the last practical joke on the city by the original developer, which (as they do) took the bank's money and ran. And rather than stoically bear the burden of the deal they made when they bought their homes, the litigious Canyonicals found a trial lawyer who would hear their desperate pleas and carry their pseudo-libertarian argument that paying (as they had agreed) for their infrastructure and city services amounted to double taxation. Finally, the Canyoneros have been delivered an equitable solution: spreading that unanticipated cost onto their neighbors, throughout the whole city. And we all get to help our less fortunate neighbors in their hour of need.

As is only right, socialism triumphs.

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KEYWORDS FOR THIS STORY

Canyon Creek, NAMUDNO, Supreme Court, 3rd Court of Appeals, Voting Rights Act

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