This is the third part of my improvement district series. I use a lot of jargon and skip over some history, so I highly recommend that you part 1 and 2 before reading this article.
Strange Property Taxes
There is an oddity about the way homeowners on Emerald Mountain and Valley Ridge are taxed. In addition to the normal property taxes, there is one or two line items called Improvement District. All homeowners in Emerald Mountain and Valley Ridge are in both Districts 53 and 54. All Emerald Mountain and Valley Ridge homeowners are charged a property tax line item of $429 called Improvement District 53 property tax. While only 204 homeowners in the older part of Emerald Mountain are charged an additional $920/yr line item called Improvement District 54. The reason for this odd taxing scheme has to do with the bonds that were issued for each phase of development.
Between 2005 and 2006 Districts 53 and 54 issued several series of bonds worth a whopping $6.8 million. Of the original bonds the Districts were given a total of just under $6 million in construction funds after the bond cost were subtracted. The District 53 bonds that were issued were for parks and recreation improvements for all owners in the district. Therefore, it make sense that everyone pays the same $429 property tax because everyone should benefits from the improvements.
Whereas, the original series of District 54 bonds were issued in 2015 for development and covered the first 100 lots in Emerald Mountain. A second series of bonds were issued in 2016 that covered the next 104 lots in Emerald Mountain. More series of bonds were planned to be issued for development of future lots. However, after the 2007 financial crises no additional bonds were issued. In theory only the first 204 lots benefited from the Improvement District 54 bonds and therefore they are the only ones that owe the property taxes. I say in theory, because there is little to no public record of what the Improvement District 54 construction funds were actually spent on or if it was all spent.
Construction Funds - District 53
On October 14, 2005, just three weeks after forming, District 53 purchased over 200 acres of land, Including 43.5 acres outside District 53 in Little Rock, for $2,740,000 from Hometex, LLC, a company owned by Doug Loftin and the other members of the Board of Commissioners of the District. In effect, this was a transfer of property that Hometex, LLC could not build homes on, and which a majority of the land has not been and cannot be used for recreational use. This may have been technically legal under state law. At the time of the land transfer the Commissioners were the only land owners in the District and they could argue they were acting in the best interest of landowners.
Between 2008 and 2009, approximately $285,000 of the construction funds were spent on improvements to less than 25 acres of the over 200 acres originally purchased. The improvements included Candice Cove Park, concrete walking trails, a park pavilion, a pool, a bathhouse, a parking area, and landscaping. Of the original $2,740,000 of construction funds, I cannot locate any record for where $85,000 was spent on.
Construction Funds - District 54
District 54 had a separate construction fund worth a total of $2,723,000. The bond documents required that those funds be used for subdivision infrastructure construction cost for the original 204 lots in Emerald Mountain. The bond documents listed costs of streets, water and sewer, curb and gutter, lighting and other amenities as potential improvements to those lots.
However, according to the 2012 annual transparency report the Doug Loftin's company Hometex, LLC had received most if not all the $2.4 Million in construction funds and had only completed $1.1 Million worth of services. I cannot say for sure, but the way I read the report, the Commissioners loaned over a million dollars to their own company. Keep in mind that by 2012 almost all the 204 lots had been sold to homeowners. As best I can tell Hometex LLC never repaid the loan and there was no improvements or construction between 2012 and 2015, when Doug Loftin and Hometex LLC filed for Chapter 7 bankruptcy. The bankruptcy filing included $267,566 in delinquent property taxes in addition to an undisclosed amount of debt owed to both Districts 53 and 54. In 2015, Bank of the Ozarks acquired most of the undeveloped land previously owned by Hometex, LLC and paid $250,000 of back taxes owed to Improvement District 53.
Unfortunately, the District construction funds were not the only corrupt use of public funds. In later article(s) I will cover where current tax funds are going and why back in 2014 the Improvement District 53 property taxes were raised from $228 to $429 a year.