Cherokee County Development District No. 1 – notes on its history, taxes, neglect and eventual demise.
From: Tyler Morning Telegraph Wednesday, July 7, 2010
Cherokee County Development District No. 1 Re-Formed
By KELLY GOOCH
Staff Writer
Cherokee County Development District No. 1 has been re-formed to help attract people to the northwest part of the county.
Board member Harold Palmer, who is also general manager of Challenge Golf Group, said the development district will receive about $500 or $600 each month from tax revenue generated by Eagle's Bluff Country Club in Bullard. That money can then be used for things such as bringing new businesses and residences to the Lake Palestine and Eagle's Bluff area.
Palmer said there are no official proposed projects at this time, as the district board has not had its first meeting.
"We just got (the board) reactivated and are planning to have our first meeting in the near future," he said. "As soon as we can (get) together, we can get more long-range plans."
And Cherokee County Precinct 3 Commissioner Katherine Pinotti said she is interested to see what those plans are.
"They've got a lot of things on the table and need to sit down as a group and prioritize them," she said.
Palmer expects the board to meet at least quarterly and for the first meeting to take place in August.
Board members include Palmer, Stuart Meisenheimer, vice president of Austin Bank in Jacksonville, Carl Barron, a general contractor in Bullard, area resident Cary Byrd, and Monty Shank, head of the Upper Neches River Water Authority.
Palmer said the board was re-formed after Challenge Golf bought Eagle's Bluff and discovered that this group used to meet at the country club. The board was disbanded years ago because of lack of interest and lack of projects, he said.
"So we tried to reconstruct it and asked people to serve and resurrected the committee …," he said. "However we can best use the money to benefit the county and benefit the use of the area, this is what we want to do."
Commissioner Pinotti said she is pleased that the board was rejuvenated.
"I'm very happy," she said. "They have some great people on the board. They're really good people. When I saw these board members I thought district one is going to soar (and) they're going to do some great things for that area."
Until Kelly Gooch wrote her article, most of us had neither heard nor cared about the Cherokee County Development District No. 1. Despite the subliminal recollection of the name, from a road sign we passed every single time we returned home, the district was not on our radar.
Formation
In 1998, there were very few residents at Eagle’s Bluff. The development was owned by a partnership – Lake Palestine Associates L.P. – representing a group of investors with an interest in owning and operating a golf course and country club and selling adjoining lots to prospective home builders and buyers. I didn’t live here then, nor did you, but building the infrastructure for a neighborhood like Eagle’s Bluff in the Piney Woods of east Texas was expensive and required investments in roads, sewerage, water, power and communications to name the easy ones.
The State of Texas had passed a law in 1995, adding a section to the Local Government Code statutes, called Chapter 383 - County Development Districts that allowed someone with property in a smaller county (like Cherokee) to collect taxes to help pay for development projects so they could become a more popular county (like Smith). You can read the law yourself:
Landowners within a geographic area (the district) petition the County Commissioners to form a Development District, nominating 5 qualified (Texas residents, 21 years old, registered to vote in the county) persons as a temporary board of directors.
Registered voters in the district vote in an election authorizing the Development District and the levy of a 0.5% incremental sales tax to support it.
If approved, the board becomes permanent, the state comptroller is notified (so businesses can collect and remit sales tax), and new projects can begin in the district.
The board authorizes projects which attract “visitors and tourists” and receives warrants (checks) from the state to help pay for those projects.
The board of directors is authorized to issue bonds for their projects.
Unfortunately, although Chapter 383 only permits the levy of an incremental sales tax for its purposes, the statute also contains references to similar statutes which allow other types of taxes - ad valorum (property) taxes, hotel and occupancy taxes, etc. Ambiguities about the specifics of one chapter of Texas law applying to another chapter of Texas law even today raise reasonable questions about the authority of the boards of Development Districts.
Here’s How We Do It, or Not
In 1998, Lake Palestine Associates petitioned (we have some of the documentation of this) the Cherokee County Commissioner’s Court to form Cherokee County Development District No. 1 (CCDD No. 1) with a board of 5 directors (none known to this writer, one located recently, one deceased, the others gone). Approved by the commissioners, an election with one voter authorized the district and an incremental 0.5% sales tax. Eagle’s Bluff member Clark Gable assisted in erecting the signs delimiting the district that we still see today [now gone].
It’s not clear when the state comptroller was notified about the district or exactly when Eagle’s Bluff Country Club started collecting the additional 0.5%, but the sales tax is still collected today (as this is written) at a rate of 7.25%.
None of the extra tax proceeds collected by businesses within the district were ever used. $4180 was collected in 2000, $7967 in 2001, with a peak of $13,792 in 2004. Warrants were sent to the board of the district, but none were ever cashed. Some made their way to local board members, or Ralph Martin (the managing partner of Lake Palestine Associates), or his accountant Leslie, but they were eventually returned or destroyed. Through 2009, $93,281.28 had been collected within the district. Other than the size of tax collections and the extra bookkeeping work, no one seems to be able to say why the board didn’t bother to proceed with projects they once thought warranted creating the district. In about 2000, there were apparently some challenges to the authority of Development Districts elsewhere in Texas, and the state Attorney General (at that time, John Cornyn) issued some opinions that may have limited – or at least discouraged – the use of tax funds for projects that didn’t benefit both the public at large and specifically promote tourism. Private and gated residential communities may have been specially singled out for scrutiny.
