THE WOODLANDS TOWNSHIP’S INCORPORATION LAW ENFORCEMENT PLAN: INSUFFICIENT, INACCURATE AND UNRELIABLE
“Every resident should be alarmed by the profound financial and operational deficiencies of the Township’s plan for public safety uncovered by two independent law enforcement experts. Their analysis clearly demonstrates that a rush to incorporate would jeopardize our public safety. These findings are critical to casting an informed ballot on November 2nd.”
– Jim Carman, President of the Houston Region at The Howard Hughes Corporation
KEY FINDINGS SHOW HIGHER COSTS AND A RISK OF SAFETY
- Grossly understates ongoing costs, primarily labor. For the first four years, cumulative costs are understated by $12.1 million to $14.5 million.
- The cost of procuring patrol vehicles is understated by $6.1 million.
- Ignores the risk and costs of assuming liability and does not budget for the settlement of claims or liability insurance.
- Does not plan for inevitable cost increases of salaries, benefits, insurance coverage or pension plans.
- Does not address the cost of collective bargaining and negotiating with a new police union.
- Does not identify how financial crimes, special victims, gang activity, computer crime, juvenile crime, some vice offenses and regulatory offenses will be addressed or funded.
“The Township’s law enforcement plan is significantly deficient in many areas and does not include many operations fundamental to policing. It fails to properly identify and assess the cost of law enforcement operations and services, causing the financial projections to be grossly understated.”
– Joe Fenninger, Former Deputy Director and Chief Financial Officer, Houston Police Department
“We have no confidence in the law enforcement plan’s financial projections. In our opinion, the plan falls significantly short of providing a reliable blueprint for ensuring public safety in The Woodlands.”
– Tim Oettmeier, Former Executive Assistant Chief of Police, Houston Police Department
“Leaders in law enforcement had some concerns about the validity of those numbers (from the Township’s Novak study), so whenever I saw the study from Chief Oettmeier, who I have a lot of respect for, these were much more valid numbers and really spoke to what it takes to run a police department.”
– Montgomery County Sheriff Rand Henderson
Joe Fenninger, Former Deputy Director and Chief Financial Officer, Houston Police Department
Tim Oettmeier, Former Executive Assistant Chief of Police, Houston Police Department
REVIEW OF THE WOODLANDS TOWNSHIP INCORPORATION MODEL REVEALS MAJOR FINANCIAL MISCALCULATIONS
Understated Costs of Establishing and Operating a New City Government Conceal Higher Fees for Businesses and Residents and Place Future Tax Rate and Service Levels at Risk
The Howard Hughes Corporation released the findings of an independent report that reveals major financial miscalculations by The Woodlands Township Board of Directors in their Incorporation Model, along with an egregious over-reliance on $21 million in reserve funds that was quietly collected by pre-taxing the community without voter approval. The Township not only grossly underestimates the initial tax rate that will be necessary to convert The Woodlands from a township governance model to that of a traditional city but conceals the significantly higher fees that residents and businesses will be required to pay to maintain service levels and infrastructure needs.
“Our community has a vested interest in understanding the financial impacts of incorporation and the accuracy of the forecasts proposed and approved by The Woodlands Township Board of Directors. To provide this clarity for all taxpayers of The Woodlands, we engaged Bill Frazer, an independent CPA to conduct an objective study of the revenues and expenses included in the Board’s Incorporation Financial Model,” said Jim Carman, President of the Houston Region at The Howard Hughes Corporation. “Review of the Township’s Model reveals a massive understatement of the expenses associated with incorporation and inaccurate franchise fee projections. The Woodlands residents and businesses would pay significantly more to support the costs of an incorporated city than they currently pay as a Township or risk a lower level of service and public safety than we enjoy today, burdening a future Mayor and City Council with the decision to raise taxes or cut services.”
Frazer has been a CPA since 1975. He is a past President of the Houston CPA Society and has served on the Board of Directors of the Texas Society of CPAs for over 20 years. His report of the Incorporation Financial Model reveals:
- A $16.2 million understatement of one-time capital expenses necessary for incorporation.
- A $26.8 million total understatement of funds needed for incorporation.
- A $9.4 million understatement of a new city’s annual operating expenses.
- A $3 million understatement of one-time start-up capital expenses for a new police department, according to the Board’s own Incorporation Financial Model.
- Net new public works expense projections are understated by as much as $4.7 million per year when compared to the public works budgets of peer cities.
- The Board’s Financial Model overspends the incorporation reserve fund by $10.7 million. The Board has disclosed that it has pre-taxed residents to stockpile reserve funds for incorporation, but the $21 million in the incorporation reserve still comes up short.
- The $7.6 million in franchise fees projected by the Board represents $6.6 million in entirely new fees to be charged to residents via higher utility bills, the equivalent of a 3.62-cent property tax rate increase per $100 valuation.
- The Incorporation Financial Model bases its $7.6 million franchise fee projections on those collected by peer cities in 2017. Using Novak Consulting Group’s per household formula, the expected franchise fees to be collected in The Woodlands should be $6.4 million, not $7.6 million.
- The Board’s revenue projections represent a departure from previous conservative estimates, doubling the annual property tax revaluations from previous budgets and almost tripling sales tax revenue projections.
Frazer explained, “I was asked to conduct an independent and objective assessment of the financial projections included in the consolidated Incorporation Model presented by The Woodlands Township Board of Directors. My aim was to determine if the proposed maximum tax rate would be sufficient to sustain the operations and infrastructure of a new City of The Woodlands. My conclusion is that the proposed tax rate would fall well short of covering the expenses of a new city, leaving gaps that must be covered by additional tax increases.”
Jim Carman, President of the Houston Region at The Howard Hughes Corporation, issued an open letter to residents of The Woodlands, opposing the rushed incorporation of the state’s only township.
In the letter, which can be found here, Carman carefully explains his reasoning, including the following key highlights:
“The Woodlands Township Board of Directors’ recent decision to hastily put incorporation on November’s ballot has placed the future of The Woodlands as we know it at risk, with an unnecessary and costly proposal to needlessly change the fundamental nature of our exceptional community. We cannot afford to make the wrong decision.”
“The success of The Woodlands has not happened by accident. Our unique governance model was designed to deliver outstanding services while keeping property taxes low and avoiding the overreach of government bureaucracy, in keeping with founder George Mitchell’s vision to deliver the very best environment for families and businesses to thrive.”
“We are a thriving community because The Woodlands is NOT a traditional city. The system of governance we enjoy today in The Woodlands should be replicated, not eliminated. If we vote to incorporate, the decision would be permanent.”
“We have read the Incorporation Planning Study prepared under the guidance of The Woodlands Township Board of Directors. It represents a fundamental and extremely risky change to budget and forecasting models which have served The Woodlands well. The flawed study wants us to believe—without the data to prove—that a future “City of The Woodlands” could somehow maintain our current levels of service and safety without a tax increase, and at a significantly lower tax rate than our ‘peer cities’.”
“The bottom line is that incorporation is a needless and costly proposal to ‘fix what ain’t broke’ and forever change a community that has thrived by keeping taxes low and government small.”
“In my conversations with local business owners and residents, the fear of annexation by the city of Houston is often mentioned as a reason to become a city. The truth is that forced annexation is illegal under state law, meaning The Woodlands cannot be annexed without the consent of our citizens at the ballot box. Incorporation is not necessary to protect us from annexation, nor is there an impending deadline or threat to our way of life that necessitates this rushed vote.”
The Woodlands was recently ranked as the #1 Best Community to Live in America by Niche.com. Protect our community and vote against this rushed, blind leap into incorporation. Let’s keep The Woodlands #1.
Howard Hughes is supporting Preserve The Woodlands. Preserve The Woodlands was created by local residents and business owners that are concerned about the potential risks and negative impacts of incorporation on our community.
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