District provides no services to most it taxes
April 29, 2017 at 10:21 p.m.
Updated April 30, 2017 at midnight
A special taxing district that quietly collects almost $650,000 in taxes annually has existed for decades, but most Victoria residents were unaware of its existence until recently.
Victoria County Drainage District No. 3 is a special taxing district that was created to serve Victoria County residents, but more than 80 percent of the taxed residents receive no benefits. That's because the district performs work only outside city limits.
"From our perspective, we haven't gotten support from the drainage district, and we have a huge drainage area that runs from Loop 463 through John Stockbauer," said Robby Burdge, one of the owners of the Club at Colony Creek. "We've had to maintain our own drainage, and it's been a big annual maintenance cost."
Victoria mayors past and present have said it has been difficult to get the district to perform work related to drainage in the city.
Victoria Mayor Paul Polasek said almost 83 percent of the district's tax collections come from Victoria residents, which the mayor said has bothered him for years.
"I do feel compelled to represent the citizens who are paying their taxes to the district," Polasek said. "It hasn't been a fair situation for the citizens."
The district's lack of transparency about its money was another issue for Polasek.
"Non-transparency makes people think that they're doing something wrong," he said.
In March, Polasek brought a resolution to the City Council calling to have the city removed from the drainage district's boundaries. The resolution was never voted on.
Justin Leita, a Drainage District No. 3 director, contends the district has worked and will conduct more work inside the city, if asked.
Leita said the city would flood without the efforts of the drainage district. The district helps to get water flowing from the city to Lavaca Bay in a timely fashion, Leita said, through excavation, mowing and spraying trees to prevent growth.
"The water has to go somewhere," Leita said. "We help with proper water removal."
Polasek said the district's work outside city limits does nothing to prevent flooding inside Victoria. The district's work is all to the south of the city. Water naturally flows south toward the Gulf of Mexico.
Polasek has suggested removing the city from Drainage District No. 3, but such a move would take legislative action. Special districts operate outside the control of city councils and county commissions and with hardly any public oversight.
It's been decades since the last time District No. 3 has had an election for its board of directors.
George Matthews, former Victoria County elections coordinator who served almost 25 years and worked in the county clerk's office before that, said he could not remember the last time an election was conducted for the district. The district's election coincides with presidential elections, and in 2016, no one filed to oppose the current directors. When that happens, the district's election is canceled, and the current directors continue to serve. Residents of the district are eligible to run for election.
To learn how Drainage District No. 3 spends taxpayer money, the Victoria Advocate requested the last 10 years of budget audits.
The analysis revealed a stark difference in how Drainage District No. 3 operates compared with neighboring Drainage District No. 2, which does not cross into city boundaries.
One significant difference is that the No. 3 district directors each make $100 an hour for attending their bimonthly meetings or performing any district-related work.
By comparison, No. 2 district directors get a monthly stipend of $150. Leaders of other governing boards, such as the Victoria Independent School District and Victoria College, do not get paid to serve.
Victoria City Council members each get $225 a month, plus a $50 car allowance. The mayor pro-tem receives $250 a month and a $50 car allowance; the mayor receives $325 a month plus a $250 car allowance.
Another significant difference between how District No. 3 and District No. 2 operate is the amount of money spent on employees and equipment. District No. 2 pays a contractor to do its work and, as a result, has no employees, no equipment, no pensions and an annual budget of $100,000.
In addition to its board of directors, District No. 3 has five full-time employees who all get full health coverage and a pension. The district listed more than $2.7 million in assets in 2016, which includes its equipment, and spends thousands annually on fuel, maintenance and repairs.
City Council conflict?
A Victoria City Council member also has a possible conflict of interest with District No. 3 because she provides bookkeeping services to the taxing entity.
At the March 7 City Council meeting, Councilwoman Josephine Soliz told fellow council members that she had served as the district's bookkeeper since 1990. Soliz owns Golden E Corp., a Victoria tax preparation and bookkeeping services company.
However, in the 10 years of audits released, Soliz is listed only from 2014 to 2016 as the bookkeeper. She was paid $4,200 in 2014, 2015 and 2016.
No bookkeeper is listed in the audits from 2006 to 2013.
Leita said Soliz has served as the district's bookkeeper as long as he has been a board director, which is almost 11 years.
He said he could not explain why Soliz's expenses were missing in earlier audits. Soliz has refused to comment about her involvement in District No. 3, and she has refused repeated requests to explain aspects of the audits that she helped prepare for the district or to comment about her involvement in the district.
City Council ethics rules call for any council member to disclose any possible conflicts of interest. Soliz has not filed such a statement.
According to the state's Local Government Code, an elected official who receives 10 percent of his or her gross income from an entity that has business with the city must file an affidavit before making any decision that affects that specific entity. Otherwise, that elected official must abstain from participating in the matter.
Violating that law knowingly is a Class A misdemeanor, punishable by up to one year in jail or a fine of up to $4,000, or both.
District No. 3's five full-time employees and its three directors make up more than $208,800 of the district's 2016 expenditures of more than $606,000.
The salaries for the full-time employees vary between $33,000 and $43,000. The majority of the employees have been with the district since 2015 and have since received $2,000 to $14,000 in raises.
Full-time employees work a 40-hour workweek Monday through Thursday. A part-time employee also works on an as-needed basis, Leita said. Salaries and raises are determined by the directors, he said, and they depend on the worker's experience, skill set and position.
For directors, there is a limit on how much they can receive during the fiscal year set by the Texas Water Code.
District No. 3 directors were not paid more than $7,200 in fiscal year 2016. The closest was Leita in 2016 at $7,100; Wayne Leita was paid $6,200; and Thomas Cartwright, now a former director, was paid $6,100.
That averages to almost $540 a month.
When asked how that hourly rate for directors was determined, Leita said the pay was set before he became a board director.
One item that was not isolated in the budget was mileage. Leita said he was unsure why mileage was not listed. Directors are reimbursed at 55 cents a mile. A possibility, he said, is that mileage is included in fuel costs, another line item in the budget.
Leita said Soliz, the bookkeeper, would be the authority to explain the audit.
Another part of the audit that was not clear was a 12.54 percent increase last year in total expenses "due to an increase in various expenses."
Leita said the "various expenses" includes adjustments for expenses such as an increase in fuel purchases, item replacement costs, or equipment that required repair or a replacement.
A proposed agreement between the district and the city includes reimbursement to the city for costs to mow drainage facilities, financial contribution from the district for the second phase of the Lone Tree Creek retention pond project, and yearly drainage restoration projects.
The district's answer to that agreement was an overview of the authority and duties of the district, which, the response noted, is under no obligation to work with the city.
"We're just trying to get a little bit of a plan together, and we're trying to help out where needed," Leita said.
Thursday, Leita and city officials met to discuss another agreement.
"It was a rocky start, but we are getting past it. I am hopeful and feeling optimistic," Leita said.
Polasek said he realized at that meeting how the drainage district operates differently than the city with respect to agreements and contracts.
"But it doesn't mean that we can't work it out," Polasek said.
Councilman Tom Halepaska, who has served on the council since May 2004, said he was confused as to why a conflict existed in the first place. His logic, he said, is if a district has duties inside its boundaries - and those boundaries have not changed since it was created almost 100 years ago - then the taxing entity should serve its entire coverage area.
"The founding of the drainage district is to drain an area, period. End of story," he said. "Whether it be city, county, rural, urban, it doesn't matter. It was formed to drain this area."