Suit: Pilot Knob vote violated state, federal law

Civic activist Brian Rodgers has amended the lawsuit he initially filed in February against the city of Austin, challenging the city’s entire scheme for financing water and wastewater improvements at the controversial Pilot Knob development in Southeast Travis County.

Rodgers’ lawsuit, filed by attorneys Bill Aleshire and Roger Borgelt, claims that City Council violated both state and federal law when it approved a plan to divert $81 million from the water utility budget into an affordable housing fund.

The vote allowed developer Brookfield Residential to move forward with construction of 6,500 single-family homes and 1,500 multifamily units at the development it calls Easton Park. In addition, Council waived water utility fees not just for the affordable units but for the entire development. “This ‘deal’ is in direct violation of (state law) which allows for reduction or waiver of the impact fees for any service unit that would qualify as affordable housing,” but not the other housing or apartments, the lawsuit says.

Rodgers is best known as a civic activist, but his activism is informed by considerable experience. He told the Austin Monitor on Tuesday that he owns commercial and industrial property as well as residential property, including apartments and RV parks. “I pay bills every month, and the water and wastewater fees keep going up every month,” he said. “It’s part of the ever-increasing pressure on tenants and also on landlords. … When you start diverting the fees away from their intended use, it creates a vacuum that can only be filled with additional ratepayer money. … I can tell you people are not happy with their water bill increase. There was a 22 percent increase last year, and it just keeps going up and up and up. … The Pilot Knob deal just showed a contempt for the ratepayers.”

The Monitor revealed that most members of Council did not understand what they were voting for last December when they approved what appeared to be just a big PUD zoning case with affordable housing requirements.

The new filing points out that the Texas Local Government Code “restricts what water impact fees such as this can be imposed for and spent on.” In addition, to the extent that the law permits such fee waivers, the law requires that a minimum of 20 percent of the rental units must be occupied by very low-income families for the housing to qualify as affordable. The Pilot Knob ordinance failed to meet that requirement because it requires that only 10 percent of rental units be affordable.

And, because the law permitting water impact fees does not give Austin the authority to spend the money on affordable housing or, “as the mayor told the Council on February 9, 2016, to put it in a pot that the Council could use even for other purposes,” the lawsuit says, the whole scheme is illegal.

If Rodgers and his attorneys are reading the law properly, then the city may not use this money or other utility impact fees for anything other than constructing capital improvements or water facility expansions. Also, the lawsuit points out that Council approved the fee waiver in violation of its own regulations because the development is not located within Austin’s corporate city limits.

Rodgers’ lawsuit seeks to overturn that vote, not only because of the alleged violations of state and federal housing regulations, but also because of violations of the meeting notice requirement of the Texas Open Meetings Act. The city has denied that it violated the Open Meetings Act, and Rodgers is now seeking a permanent injunction to prevent the city from taking similar actions in the future.

The lawsuit has implications not just for people trying to figure out the meaning of items on Council agendas. It will affect the rates current and future water utility customers will pay. According to a Feb. 8, 2016, memo from City Manager Marc Ott, “Any capital recovery fees that are waived, in general, will result in higher water utility rates to cover the growth related debt service that the capital recovery fees” were intended to be used for. “All current and future customers of the utility system would have higher rates to pay for the growth related costs not covered by the waived capital recovery fees,” Ott wrote.

Photo by Emmanuel Huybrechts from Laval, Canada (Golden Lady Justice, Bruges, Belgium) [CC BY 2.0], via Wikimedia Commons. The Austin Monitor’s work is made possible by donations from the community. Though our reporting covers donors from time to time, we are careful to keep business and editorial efforts separate while maintaining transparency. A complete list of donors is available here, and our code of ethics is explained here.