Director Bunch
made many negative comments regarding our staff and the Board. They were very
pointed and negative from the 31 minute mark to the 37 minute mark. My biggest "heart burn" was his
assertion that our Board has “fallen short of sticking up for our community.” Although
I agree with some of Director Bunch’s comments, I disagree with many of his
assertions, especially this one. I personally consider this to be an insult. Everyone
is entitled to their own views, but in many instances I believe he has distorted
the facts and disseminated misinformation.
Although no Board Member will always agree with every Board Member, I give our Board credit for doing what each of them thinks is right for our community. Each Board Member sometimes just sees an issue differently. We are all unpaid volunteers trying to do the best job we can for our community. Although I may disagree with my fellow Board Members from time to time, I would never impugn their motives.
Since I have been on the Board I have also been very impressed with the quality of the work done by our staff. No one is perfect, but in general I believe, contrary to Director Bunch’s assertion, the Staff and the Board try to select the highest quality contractors and vendors that will deliver the best quality and value, and in most cases at the lowest cost, to our residents. We live in a community that has high expectations and we all strive to meet these expectations.
Although no Board Member will always agree with every Board Member, I give our Board credit for doing what each of them thinks is right for our community. Each Board Member sometimes just sees an issue differently. We are all unpaid volunteers trying to do the best job we can for our community. Although I may disagree with my fellow Board Members from time to time, I would never impugn their motives.
Since I have been on the Board I have also been very impressed with the quality of the work done by our staff. No one is perfect, but in general I believe, contrary to Director Bunch’s assertion, the Staff and the Board try to select the highest quality contractors and vendors that will deliver the best quality and value, and in most cases at the lowest cost, to our residents. We live in a community that has high expectations and we all strive to meet these expectations.
In regards to
Director Bunch’s specific comments and assertions, I have the following “counter
points”:
1) Tax Rates- Director Bunch gives the
impression that the Board has not supported lower tax rates- in 2013 we reduced
the rate to $.3173. Our tax rate has steadily gone down since we became the
Township. This was the effective tax rate- the rate required to keep the
revenue the same as the previous year in light of increasing appraisal values.
When I ran for office, this was my commitment- at a minimum we should always
reduce the tax rate to reflect increases in our appraisal values. I do not
believe in the adage “that taxes are not going up because the tax rate has
stayed the same.”
This year I expect the effective tax rate will be even lower and we should further decrease the rate. Last year, Bunch, Hausman and Long wanted to lower the tax rate even lower than I proposed. I, and the other Board Members, resisted because we were concerned that many financial risks and uncertainties had not yet been sorted out.
From his comments, it now appears Director Bunch is in favor of incorporation. He seems concerned that if we lower our tax rate further in 2014 we may have to increase it when we incorporate. I do not see this as a rationale for holding onto your money because I do not see incorporation happening in the near term. We will debate the issue again because I will still push for a lower tax rate, at least no higher than the effective tax rate. I expect for 2014 that our operating cost will be up only 2% but revenue will be up about 9% (and I recognize this revenue projection is probably low). We need to share this revenue increase with the tax payers.
This year I expect the effective tax rate will be even lower and we should further decrease the rate. Last year, Bunch, Hausman and Long wanted to lower the tax rate even lower than I proposed. I, and the other Board Members, resisted because we were concerned that many financial risks and uncertainties had not yet been sorted out.
From his comments, it now appears Director Bunch is in favor of incorporation. He seems concerned that if we lower our tax rate further in 2014 we may have to increase it when we incorporate. I do not see this as a rationale for holding onto your money because I do not see incorporation happening in the near term. We will debate the issue again because I will still push for a lower tax rate, at least no higher than the effective tax rate. I expect for 2014 that our operating cost will be up only 2% but revenue will be up about 9% (and I recognize this revenue projection is probably low). We need to share this revenue increase with the tax payers.
2) Insurance- Director Bunch was not the only
Board Member upset with our Staff and our Broker on how our insurance renewal
was done. Our Staff is not always perfect and in this case they made a mistake
by presenting a renewal proposal at the last minute. The Board’s decision was to approve the proposed
coverage because we had no choice given the impending termination dates. But we
also decided to reevaluate the Broker, our coverage and go out for new bids. We
were told by Director Bunch that we could cancel the policies without penalty
once a better approach was developed. I personally have no respect for this
Broker. I would have been happier if we had chosen a new broker and then
gone out for new bids but the Board decided to do both at the same time. I
believe the Township over relied on Director Bunch’s company to do what we could
not do as we did not have a qualified broker in place. Director Bunch and I
still disagree on this basic approach. I do not think we can create the needed
level of risk management expertise within our organization and will need to
continue to rely on the expertise of a qualified broker. Most political entities find it very difficult
to build this expertise in house and rely on their brokers. Thus, it critical
to have a qualified broker in place before we seek new coverage.
3)
Incorporation
This is a very complex area and involves more than costs and tax rates. I, along with some other Directors, was not happy with the quality of the consulting study. Like Director Bunch, I do not think we need more consultants and can figure this out ourselves. Many on the Board, not just Director Bunch, think we can significantly reduce the cost impact of incorporation. The real open question is the MUDs. In addition, one should recognize that on the revenue side we have more flexibility with how we use our 1% economic development and hotel tax than do General Law cities (which is what we would have to first become in any incorporation). So we need to understand any impact here and how to deal with it. In addition incorporation does not negate our covenants and deed restrictions. Contrary to the comment made, we do have building code and permitting but it is handled through the covenant organization. So how will this all work within the context of a city? We need to figure it out.
I hear a lot about the approach being taken by the City of Conroe’s annexation of April Sound in regard to their MUDs. Some seem to think this is a magic bullet. I am not so sure. If a City and a MUD BOTH agree for the MUD to continue to operate, then the MUD can continue to do so as a “limited district”. But in our case we have to get 14 MUDs to agree. And, as noted by a member in the Tea Party audience, the residents that have paid down their MUD debt to below the average are not going to be in favor of anything that increases their debt again. They have paid their debt! Right now the combined debt of the MUDs is about $300 million. If we wait to incorporate, this debt will go down. There may also be some other legislative solution. I do agree this is an area we need to look at much more closely.
This is a very complex area and involves more than costs and tax rates. I, along with some other Directors, was not happy with the quality of the consulting study. Like Director Bunch, I do not think we need more consultants and can figure this out ourselves. Many on the Board, not just Director Bunch, think we can significantly reduce the cost impact of incorporation. The real open question is the MUDs. In addition, one should recognize that on the revenue side we have more flexibility with how we use our 1% economic development and hotel tax than do General Law cities (which is what we would have to first become in any incorporation). So we need to understand any impact here and how to deal with it. In addition incorporation does not negate our covenants and deed restrictions. Contrary to the comment made, we do have building code and permitting but it is handled through the covenant organization. So how will this all work within the context of a city? We need to figure it out.
I hear a lot about the approach being taken by the City of Conroe’s annexation of April Sound in regard to their MUDs. Some seem to think this is a magic bullet. I am not so sure. If a City and a MUD BOTH agree for the MUD to continue to operate, then the MUD can continue to do so as a “limited district”. But in our case we have to get 14 MUDs to agree. And, as noted by a member in the Tea Party audience, the residents that have paid down their MUD debt to below the average are not going to be in favor of anything that increases their debt again. They have paid their debt! Right now the combined debt of the MUDs is about $300 million. If we wait to incorporate, this debt will go down. There may also be some other legislative solution. I do agree this is an area we need to look at much more closely.
My position about incorporation is still the same:
-We should not rush into any decision; we have until 2057 before a decision is imminent.
-But we also should not stick our head in the sand
-We should continue to assess the situation and see if anything has changed that would cause us to move faster. This was just done at our Board planning session on May 16 (you can watch the video). The conclusion was that nothing has changed in the last year that warrants a change in our 2012 decision to defer incorporation. I heard no push back from Director Bunch at that time. If he thinks we need to do something different, why is he not bringing his ideas forward?
Frankly, our most pressing issue is not incorporation. The biggest issue we are dealing with is how and when we should absorb all the activities that still fall under the developer. These will ultimately be our responsibility. Many of these activities are a result of history. We need to move to a positio0n that is less dependent of the developer. Undertaking activities now done by the developer will have their own organizational and cost impact to be worked out
-We should continue to assess the situation and see if anything has changed that would cause us to move faster. This was just done at our Board planning session on May 16 (you can watch the video). The conclusion was that nothing has changed in the last year that warrants a change in our 2012 decision to defer incorporation. I heard no push back from Director Bunch at that time. If he thinks we need to do something different, why is he not bringing his ideas forward?
Frankly, our most pressing issue is not incorporation. The biggest issue we are dealing with is how and when we should absorb all the activities that still fall under the developer. These will ultimately be our responsibility. Many of these activities are a result of history. We need to move to a positio0n that is less dependent of the developer. Undertaking activities now done by the developer will have their own organizational and cost impact to be worked out
4) Transportation- Director Bunch mentioned
that we are not yet members of HGAC because we are not a city. So what- - a lot
of members of HGAC are not cities and a lot of smaller cities are not HGAC members.
In spite of this fact, we have significantly increased our influence within
this organization. Next year when the TPC considers new members, I am confident
we will be added to the Transportation Policy Council (TPC) Member. In the
meantime, I now attend every HGAC TPC monthly meeting.
In his comments, Director Bunch was incorrect in two respects-1) allocation of federal and state transportation funds is not predicated on a formal membership within HGAC or the TPC and 2) none of the FTA transit funding that will come to the new Conroe- Woodlands Urban Area is predicated on any approval by HGAC. Not being a city has absolutely no impact on our ability to receive state or federal transportation funds.
In his comments, Director Bunch was incorrect in two respects-1) allocation of federal and state transportation funds is not predicated on a formal membership within HGAC or the TPC and 2) none of the FTA transit funding that will come to the new Conroe- Woodlands Urban Area is predicated on any approval by HGAC. Not being a city has absolutely no impact on our ability to receive state or federal transportation funds.
5) CVB-One thing that was not mentioned in
the presentation was the amount invested by the Township in the CVB. A Board
that Director Bunch was elected to. Right now the Township invests in the CVB about
$700K more than the hotel tax they are entitled to receive. I thought when we
elected two of our more conservative Board Members to the CVB, we might see
some movement to a) reduce all the events we are funding and b) reevaluate the
water taxi funding. But I have seen no change. In fact, I see a push for even
more events in our community. The water taxies are funded through FTA grants
and ridership fees. They barely break even. But worse they are drawing down our
FTA transit appropriations resulting in the use of more FTA funds than we receive
each year. Thus, our surplus is gradually being used up. I believe that the CVB
needs to get to the point where a) they use no FTA funds and b) are fully
funded by sponsorships and the Hotel Tax.
6)
Reserves
a.
Operating
reserve- yes we have about a $19 million, 20% contingency reserve as Director
Bunch states. I agree this reserve is too high. But to maintain an AAA credit
rating, the minimum reserve required is 15% of operating expenses. We will not improve
our rating by having a reserve higher than 15%. Nor does more comprehensive insurance
coverage alleviate the need for this reserve. I am still skeptical that some of
the loss protection coverages can be obtained at a reasonable cost. I went
through this with my previous city about 6 years ago and some of this coverage
was very expensive. But I am willing to be convinced. In summary, I believe we
can reduce this reserve to the 15% level, and save around $4-5 million. But insurance
will not fully replace the need for this reserve.
b.
Capital
Reserve- This is not a reserve like the above. It is a “sinking fund” to
accumulate the monies needed to replace our capital assets and amenities over
the next 20 years. The Township has $174 million of assets, of which $114
million have to be replaced in the next 20 years. We will be working this
summer to decide if we fund these replacements through a buildup of cash or a
combination of cash and debt.
7)
County
Taxes
I agree with Director Bunch that we pay the County a lot and get little in return. I have no idea where all this money goes; not very much comes back to Precinct 2/3 or The Township. All of our roads have been paid for by WRUD#1, not the County.
However, on law enforcement he and I have chosen to disagree. I expect we will continue to do so. The Sherriff’s District 2 covers all of the South County. It used to cover the Woodlands. Prior to the change initiated by the Township, District 2 had 32 deputies. Now they have 26 and 6 have been embedded in the new Woodlands District 6. Sure I would like more deputies paid for by the County. But their staff is not increasing so I do not see us getting more resources. I will remain focused on what is, rather than what we might want reality to be. I will remain focused on what we need to have a safe community. To achieve this objective, I will continue to support the Township paying what it takes above what the County is not willing to step up to. I would rather the Township pay more and have more control how the resources are used rather than revert to the old paradigm where we were not sure where the Deputies were being assigned. I believe most residents feel this way.
I agree with Director Bunch that we pay the County a lot and get little in return. I have no idea where all this money goes; not very much comes back to Precinct 2/3 or The Township. All of our roads have been paid for by WRUD#1, not the County.
However, on law enforcement he and I have chosen to disagree. I expect we will continue to do so. The Sherriff’s District 2 covers all of the South County. It used to cover the Woodlands. Prior to the change initiated by the Township, District 2 had 32 deputies. Now they have 26 and 6 have been embedded in the new Woodlands District 6. Sure I would like more deputies paid for by the County. But their staff is not increasing so I do not see us getting more resources. I will remain focused on what is, rather than what we might want reality to be. I will remain focused on what we need to have a safe community. To achieve this objective, I will continue to support the Township paying what it takes above what the County is not willing to step up to. I would rather the Township pay more and have more control how the resources are used rather than revert to the old paradigm where we were not sure where the Deputies were being assigned. I believe most residents feel this way.
I am always willing
to sit down for an exchange of views. I always reserve the right to say I am
mistaken, am wrong or have changed my mind.
