Where did $6.8 Million Go?: Improvement Districts Part 3

Where did $6.8 Million Go?: Improvement Districts Part 3

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.

Read More

History of the Mountain: Improvement Districts Part 2

This is a little background on the history of the Emerald Mountain/Carrington Place districts the timing of events is important to understand the district's financial issues that will be explained in the next few parts in this series. If you have not, I recommend reading part 1 as a good primer for what an Improvement District does as a local government.

Part 1: What is an Improvement District?

Part 2: History of the Mountain

Part 3: Where did $6.8 Million Go?

Early History

At the September 1998 City Council meeting, the City Council passed City Ordinances in response to the  petitions submitted by Doug Loftin and his business partners to form the South Fork Ranch (District 6) and Carrington Place (District 10) improvement districts (local governments that collect the property taxes) [1][2]. On June 1, 2000, Doug Loftin resigned as a commissioner of the Carrington Place (District 10), citing the "hostile attitude of the other commissioners and the inability to communicate" [3].

Between 2000 and 2006 the Carrington Place Improvement District collected over $69,000 [4]. There appears to be no public record of where that money was not spent, but it was not used on any of the existing improvements those were paid for with the Emerald Mountain improvement district (District 53) construction funds [5][6].

Formation of Emerald Mountain (Districts 53/54)

September of 2005, Doug Loftin and the other owners of Hometex, LLC, went through a similar process with the City Council to form two Improvement Districts in Emerald Mountain (Districts 53/54). District 53 and District 54 have the same district lines and were formed with the same broad powers to build sanitary waterworks, sewer collection systems, green areas, landscaping, lighting, playgrounds, swimming pools, tennis courts, and roads. The purpose of both districts was again very broadly stated. District 53 was supposed to establish recreational property and improvements and District 54 was supposed to construct utilities and access to other residential subdivision infrastructure[7][8].

For the next two years Emerald Mountain (Districts 53/54), Bank of the Ozarks acted as the Trusty in a four series of bonds that were worth in total $6.8 Million. The bonds came with some significant overhead, so only $5.8 Million was actually deposited into the construction fund accounts [9][10][11].

Relationship between Carrington Place and Emerald Mountain 

In 2007, Carrington Place (District 10) entered into an legal agreement with Emerald Mountain Recreation (District 53).  The agreement is still binding and required Emerald Mountain to pay for and build specific facilities in Carrington Place (pool, walking trails, play houses, basketball court) and allows joint use of all improvements.  In exchange Carrington Place sends all collected property taxes to Emerald Mountain Recreation (District 53) for maintenance of joint district facilities and for construction of new facilities[xx need link]. The agreement prohibits Emerald Mountain Recreation (District 53) from using any Carrington Place (District 10) funds to make any debt payments[12].

Construction Status

Construction started up in 2008 and the swimming pool opened that summer. Most of the existing improvements (walking trails, playgrounds, basketball court, front entrance) were completed by the end of 2009. Doug Loftin promised that "More recreational facilities are planned for 2009 and beyond"[13]. It has been at least seven years since any of the Districts have built anything new and the districts do not have the finances for any major new improvements.


What is an Improvement District? Improvement Districts Part 1

What is an Improvement District? Improvement Districts Part 1

Improvement districts are independent local governments formed under several different provisions of Arkansas Code. Generally improvement district are formed to serve a very specific public service.  There are many different types of improvement districts, but a few common types you may be familiar with are mosquito abatement, sewer, water, fire, or drainage district...

Read More

$6,750 in Penalties for the Developer of Emerald Mountain

Storm water in Valley Ridge 
Credit: Megan Chapman, May 2016
Residents of the Valley Ridge subdivision, at the back of Emerald Mountain, are no strangers to the state of neglect the undeveloped lots were in when the old developer Doug Loftin and his company Hometex filed for Chapter 7 bankruptcy back in 2015.  As part of the bankruptcy process, the empty lots and hundreds of remaining acres of undeveloped land ended up being owned by Bank of the Ozarks. One of Bank of the Ozarks (BOTO) subsidiaries BOTO Arkansas Properties[1] is continuing development of the empty lots and has stated that they had to move more than 70,000 cubic yards of dirt and spend more than $330,000 on corrective action to clean up the lots for sale[2].  BOTO has done a lot to clean up the lots, but it is not clear how much the cost was due to poor maintenance and how much would have been spent regardless of the owner.  
“...most noteworthy the drainage plan for Valley Ridge was not one that was properly perfected to accommodate the storm water discharge over the long haul” Gene Holman, BOTO Arkansas Properties
Regardless of how much they have done to clean up the site, BOTO has not also kept up with or followed their stormwater plan.  Since BOTO obtained ownership, they have been inspected by the State five times.  Each inspection they were cited with at least a few permit violations, 35 in total [3][4][5][6][7].  The more recent permit violations, including five in January of this year, are likely not attributable to the actions or inactions of Hometex, LLC. BOTO has been quick in it's responses to the State and has always taken corrective action to fix issues, once cited with a permit violation by the State.  As a result of the first three inspections the State and BOTO have entered a consent administrative order (CAO).  By signing the CAO, BOTO agreed with the facts of findings by the State, agreed to pay $6,750 in voluntary penalties, to file quarterly progress reports, and submit an updated Storm Water Pollution Prevention Plan[8].  Back in 2005, Doug Loftin with Hometex, LLC entered into a different CAO with the State for the same construction permit[9].  
Erosion gullies behind Valley Ridge subdivision 
Credit: ADEQ inspection reportJanuary 2017
BOTO has owned the lots now for over two years and with Rausch Coleman building homes over the hill at Meadows Edge in Alexander, there is no sign that the empty lots will have homes soon[11].  In their response to the State, BOTO has stated they have no plans to develop the several hundred acres of undeveloped land past Valley Ridge subdivision and only plans to sell it[2].  
Storm water causing damage to property
Credit: Megan Chapman, November 2015
Although it appears that BOTO has cleaned up Valley Ridge subdivision, they don't seem to always follow their stormwater permit.  If you notice that any construction site is not maintained  or causing damage to your property you can always file complaint with the State (link). The State is required to investigate all complaints and they can be anonymous if you want.  It is also worth noting that the City of Shannon Hills has a Construction Site Storm Water Runoff Ordinance 2006-02 on the books and they can and should enforce if a construction site ever gets into such a bad condition again.  BOTO did not respond to a request for an interview, but their full response to the draft CAO can be found at the end of this article. 

Documents: 

  1. Re: Response to Proposed Administrative Order - Permit ARR 151435,  January 11, 2017