We were warned what was going to happen to us. Jim Bob Moffett told us. So did
the mayor. Our senator warned us. The local monopoly daily warned us. But we
wouldn’t listen. Now Austin has to pay. We were told to do the “reasonable” thing: Give New Orleans-based developer
Freeport-McMoRan their city sewer and approve their Barton Creek planned unit
development (PUD). Otherwise, things were going to get nasty. Freeport chairman
Moffett promised to “bankrupt” Austin with lawsuits. Meanwhile, went the
warnings, the Legislature would give him everything he needed anyhow and then
they would punish Austin to boot.
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.
Government of, by, and for Freeport-McMoRan
Freeport lobbyists and legislators seem to have thought of everything. They
won the right to declare themselves a “water quality protection zone,” free of
all Austin environmental regulations. They won approval of seven municipal
utility districts (MUDs) which can issue bonds for infrastructure, and are
exempted from annexation. A separate bill even appears to offer a fallback
position: It allows a water district that currently provides some service to
the area to break contracts with Austin, annex Freeport’s property, and provide
them with water and wastewater service.
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.)
A Rocket in His Pocket
A more direct winner in the anti-Austin frenzy, if Bush signs his bill, is
Gary Bradley. The man who let taxpayers eat $90 million worth of his loans
(while he kept his development), once again pigged out at the public trough.
Working the Legislature with what Pamela Ward of the Statesman calls his
“silvering hair, liquid black eyes, and quick laughter,” Bradley won approval
of legislation that is astounding even by Texas standards.
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.
The Defenders of Austin
In a moment, we will look at potential legal strategies to stave off the
special Austin laws. First, however, let’s examine the resistance put up by
Austin officials against the legislative onslaught. The kindest thing that can
be said is that the resistance was ineffective. A more cynical interpretation
is that some of those charged with fighting on behalf of Austin were not on the
city’s side.
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.
Tomorrow’s Another Day
So what can the city do about this mess in which it finds itself? The first
line of defense is to pursue a veto from Governor Bush. Success is considered
unlikely in many quarters, but judging from his public comments, Bush is
evidently thinking about the bills rather than just knee-jerk signing them. He
could gain big political capital in Austin with a veto. He could also show that
he truly believes in local control, and that he makes decisions based on merit
rather than political alliances. He would also show that he doesn’t hold
political grudges, seeing as how the mayor and four councilmembers signed a
letter supporting his opponent in last year’s election.
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.)
At the Courthouse
Assuming the bills are signed, however, there appear to be two key possible
strategies to get them struck down in court. The first concerns constitutional
prohibitions against “local or special” laws, and the second concerns
constitutional posting and notice requirements.
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
This article appears in June 9 • 1995 and June 9 • 1995 (Cover).