By Sam Lopez - NTTA - Thursday, Sept. 20, 2007
Plano, TX – At a regularly scheduled board meeting on Wednesday, Sept. 19, the North Texas Tollway Authority (NTTA) Board of Directors unanimously authorized project development services for State Highway (SH) 170 from SH 114 to IH 35W in Denton and Tarrant counties; SH 360 from Green Oaks Boulevard to United States (U.S.) 287 in Ellis, Johnson and Tarrant counties and the Dallas North Tollway (DNT) Phases 4 and 5 in Collin and Grayson counties.
The services for these projects were authorized to further the environmental clearance process for each corridor and fast track project development. Each contract will encompass preliminary concept development and analysis, schematic design, environmental documentation and public involvement support.
“Although the SH 170 and SH 360 projects are subject to the market valuation process outlined in SB 792, in the interest of keeping these critical regional projects moving forward, the NTTA board has authorized contracts in excess of $6,000,000 to bring each project closer to completion as we seek to solve our regional mobility challenges,” said NTTA Board Chairman Paul N. Wageman.
“This action demonstrates NTTA’s desire to fast track projects. We will continue to work with our regional partners to support the final delivery of these projects to the citizens of north Texas,” said Jorge C. Figueredo, NTTA Executive Director. “We recognize that a significant amount of work and study have already gone into each of these projects from our regional partners most notably the Texas Department of Transportation’s Fort Worth District.”
At their Sept. 19th meeting, NTTA board members emphasized NTTA’s strong commitment to working with its regional partners to deliver SH 170, SH 360 and DNT Phases 4 and 5. “We have been challenged to help ‘get them across the goal line’ and this reflects our commitment to do just that,” continued Wageman.
This initial section of SH 170 will be a new limited-access roadway in southern Denton and northern Tarrant counties. This 6.3-mile segment of the road will start at SH 114 and terminate at IH 35W; previously built frontage roads along the road will accommodate a toll road within the median. When completely built, SH 170 will extend from IH 35W to SH 199 in Parker County.
SH 360, a new limited access roadway in southeast Tarrant, northwest Ellis and northeast Johnson counties, is a 9.7-mile facility extending from Green Oaks Boulevard to U.S. 287. Northbound and southbound frontage roads along the alignment are open to traffic from Green Oaks Boulevard to the Southern Pacific Railroad (SPRR) crossing. A single frontage road on the west side of the alignment is operating with two-way traffic from the SPRR crossing to U.S. 287. The final phase of SH 360 will be from U.S. 287 to U.S. 67.
DNT Phases 4 and 5 will extend the DNT to meet the anticipated growth in northwest Collin, northeast Denton and southwest Grayson counties. DNT Phase 4, a six mile facility, will extend from U.S. 380 to Farm to Market (FM) 428. Collin County has already begun development of the future northbound service road that will open to traffic in 2008. DNT Phase 5 will further extend the DNT 11.6-miles from FM 428 to FM 121 into Grayson County.
Friday, September 21, 2007
Lawsuit to STOP TxDOT’s illegal lobbying postponed to Monday!
State objected to judge, will attempt to throw it in an appeals court black hole
By Terri Hall - T.U.R.F. - Thursday, September 20, 2007
In Travis County District Court today, TURF Founder Terri Hall, filed a petition for a temporary restraining order against the Texas Department of Transportation (TxDOT) to immediately halt its illegal taxpayer funded, toll road campaign. Judges from all over the state are at a conference in Galveston, TX so a visiting judge, Bill Bender, was assigned the case. The lawyer with the Attorney General’s office, Kristina Silcox, representing individuals employed by TxDOT who are named in the suit, objected to the judge, and having no available replacement, the hearing for a temporary restraining order was postponed until Monday.
Judge Bender was apparently unacceptable to the State since he resides in Seguin, which happens to be in the path of the Trans Texas Corridor.
“TxDOT didn’t want this case heard before a judge whose community is deeply affected by the Trans Texas Corridor,” thinks Hall. "Every day this case isn't heard is another day TxDOT illegally spends taxpayer money on a toll road ad campaign."
Silcox also entered a plea to the jurisdiction, which is the State’s new playbook to force a strong case into an appeals court abyss (as they did with a lawsuit against the Metropolitan Planning Organizations filed in October of 2005 and is still stuck in an appeals court black hole: read about it here.). The State’s argument will not hold up but it won’t matter. The code, changed in 2005, allows the State to dump any good case it stands to lose by doing a fast track appeal as soon as they lose a motion and BEFORE the case is EVER heard! If they win the motion, the case is dismissed. Either way, they’ll call it a win.
“Not so fast,” says Hall. “These fast track appeals are the State's get out of jail free card and resemble the State's fast track eminent domain that forcibly removes landowners in 90 days. We knew they’d try this and we’ll combat it so that this case is heard and TxDOT is FORCED to comply with the LAW! I thought we are a nation governed by the rule of law, but since Governor Perry took office and started promoting his toll road schemes, he and his transportation commission rule more like an oligarchy. Even with a stacked deck, the people of Texas seek justice and will fight on.”
This lawsuit is brought pursuant to § 37, Texas Civil Practice and Remedies Code. TxDOT’s expenditure of public funds for the Keep Texas Moving campaign is illegal, and an injunction prohibiting any further illegal expenditures in this regard.
TxDOT has violated § 556.004 of the Texas Government Code by directing the expenditure of public funds for political advocacy in support of toll roads and the Trans Texas Corridor, and have openly indicated TxDOT’s intention to directly lobby the United States Congress in favor of additional toll road programs.
On August 22, 2007, TURF filed a formal complaint with Travis County District Attorney Ronnie Earle to investigate TxDOT’s illegal lobbying and asked him to prosecute TxDOT for criminal wrongdoing. See the formal complaint here . Today’s petition seeks immediate injunctive relief in a civil proceeding.
“Between TxDOT’s PR campaign, report to Congress asking that all limitations on tolling be lifted including buying back existing interstates, and Chairman Ric Williamson's recent trip to D.C. lobbying for the same, it's clear they've not only crossed the line into illegal lobbying, but they leaped over it,” says Hall.
TxDOT’s report to Congress, Forward Momentum, ignited a category 5 blowback that prompted Senator Kay Bailey Hutchison and U.S. Representatives Charlie Gonzalez,and Ciro Rodriguez to file legislation (S 2019 and HR 3510) to halt the tolling of existing interstates and to prohibit TxDOT from buying back interstates for the purpose of tolling them (read more here). TxDOT’s actions also prompted Rep. Rodriguez to call for a House Transportation and Infrastructure Committee hearing on converting interstates to tollways and on TxDOT's ad campaign (read more here.).
Thursday, September 20, 2007
T.U.R.F. files lawsuit to stop TxDOT's ad campaign!
By Terri Hall - T.U.R.F.- Sept. 20, 2007
Lawsuit filed to STOP TxDOT’s illegal lobbying
TURF Founder seeks temporary restraining order to halt public relations campaign
Thursday, September 20, 2007 – TURF Founder Terri Hall has filed a petition for a temporary restraining order against the Texas Department of Transportation (TxDOT) in Travis County District Court and the case is scheduled to come before visiting Judge Bill Bender at 3 PM.
The petition also seeks injunctive relief, including Temporary Restraining Order against Steven E. Simmons, P.E. Individually and as Interim Executive Director of the Texas Department of Transportation and Coby Chase, Individually and as Director of the Texas Department of Transportation Government and Public Affairs Division. This lawsuit is brought pursuant to § 37, Texas Civil Practice and Remedies Code. TxDOT’s expenditure of public funds for the Keep Texas Moving campaign is illegal, and an injunction prohibiting any further illegal expenditures in this regard.TxDOT has violated § 556.004 of the Texas Government Code by directing the expenditure of public funds for political advocacy in support of toll roads and the Trans Texas Corridor, and have openly indicated TxDOT’s intention to directly lobby the United States Congress in favor of additional toll road programs.
On August 22, 2007, TURF filed a formal complaint with Travis County District Attorney Ronnie Earle to investigate TxDOT’s illegal lobbying and asked him to prosecute TxDOT for criminal wrongdoing. See the formal complaint here. Today’s petition seeks immediate injunctive relief in a civil proceeding.“Between TxDOT’s PR campaign, report to Congress asking that all limitations on tolling be lifted including buying back existing interstates, and Chairman Ric Williamson’s recent trip to D.C. lobbying for the same, it’s clear they’ve not only crossed the line into illegal lobbying, but they leaped over it,” says Hall.
TxDOT’s report to Congress, Forward Momentum, ignited a category 5 blowback that prompted Senator Kay Bailey Hutchison and U.S. Representatives Charlie Gonzalez,and Ciro Rodriguez to file legislation (S 2019 and HR 3510) to halt the tolling of existing interstates and to prohibit TxDOT from buying back interstates for the purpose of tolling them (read more here). TxDOT’s actions also prompted Rep. Rodriguez to call for a House Transportation and Infrastructure Committee hearing on converting interstates to tollways and on TxDOT’s ad campaign (read more here.).
The report and ad campaign have been the topic of many editorials across Texas, including the Houston Chronicle (read more here.) and Express-News, and even TV newsrooms are weighing in with the General Manager of KSAT 12 TV in San Antonio giving a scathing review of the ad campaign read more here.
“The citizens of Texas are fed-up with TxDOT’s blatant disregard for the public’s disdain of toll roads and their infinite attempts to cram toll roads down our throats using TAXPAYER MONEY to do it! It’s high time someone puts a stop to it!” Hall admonished.
View petition and affidavits:
Petition
Terri Hall’s affidavit
Bill Barker’s affidavit
Lawsuit filed to STOP TxDOT’s illegal lobbying
TURF Founder seeks temporary restraining order to halt public relations campaign
Thursday, September 20, 2007 – TURF Founder Terri Hall has filed a petition for a temporary restraining order against the Texas Department of Transportation (TxDOT) in Travis County District Court and the case is scheduled to come before visiting Judge Bill Bender at 3 PM.
The petition also seeks injunctive relief, including Temporary Restraining Order against Steven E. Simmons, P.E. Individually and as Interim Executive Director of the Texas Department of Transportation and Coby Chase, Individually and as Director of the Texas Department of Transportation Government and Public Affairs Division. This lawsuit is brought pursuant to § 37, Texas Civil Practice and Remedies Code. TxDOT’s expenditure of public funds for the Keep Texas Moving campaign is illegal, and an injunction prohibiting any further illegal expenditures in this regard.TxDOT has violated § 556.004 of the Texas Government Code by directing the expenditure of public funds for political advocacy in support of toll roads and the Trans Texas Corridor, and have openly indicated TxDOT’s intention to directly lobby the United States Congress in favor of additional toll road programs.
On August 22, 2007, TURF filed a formal complaint with Travis County District Attorney Ronnie Earle to investigate TxDOT’s illegal lobbying and asked him to prosecute TxDOT for criminal wrongdoing. See the formal complaint here. Today’s petition seeks immediate injunctive relief in a civil proceeding.“Between TxDOT’s PR campaign, report to Congress asking that all limitations on tolling be lifted including buying back existing interstates, and Chairman Ric Williamson’s recent trip to D.C. lobbying for the same, it’s clear they’ve not only crossed the line into illegal lobbying, but they leaped over it,” says Hall.
TxDOT’s report to Congress, Forward Momentum, ignited a category 5 blowback that prompted Senator Kay Bailey Hutchison and U.S. Representatives Charlie Gonzalez,and Ciro Rodriguez to file legislation (S 2019 and HR 3510) to halt the tolling of existing interstates and to prohibit TxDOT from buying back interstates for the purpose of tolling them (read more here). TxDOT’s actions also prompted Rep. Rodriguez to call for a House Transportation and Infrastructure Committee hearing on converting interstates to tollways and on TxDOT’s ad campaign (read more here.).
The report and ad campaign have been the topic of many editorials across Texas, including the Houston Chronicle (read more here.) and Express-News, and even TV newsrooms are weighing in with the General Manager of KSAT 12 TV in San Antonio giving a scathing review of the ad campaign read more here.
“The citizens of Texas are fed-up with TxDOT’s blatant disregard for the public’s disdain of toll roads and their infinite attempts to cram toll roads down our throats using TAXPAYER MONEY to do it! It’s high time someone puts a stop to it!” Hall admonished.
View petition and affidavits:
Petition
Terri Hall’s affidavit
Bill Barker’s affidavit
Sunday, September 16, 2007
Some seeking to curb state's desire for land
By Jay Root - Star-Telegram staff writer - Sun, Sep. 16, 2007
AUSTIN -- San Marcos' leaders weren't surprised to learn last year that a commercial real estate developer planned to pump $50 million into a shopping mall project along Interstate 35 south of Austin. It was going to be built near the city's booming factory outlet centers, the third most-visited site in Texas, so the profit potential was obvious.
What was a shock, city officials said, was the identity of the developer: the Texas General Land Office. The agency, flush with cash from oil royalty income, has been on a real estate buying binge since 2001, snapping up more than a half-billion dollars in property and entering into numerous deals with private developers -- some of them controversial.
Although many of the transactions are shrouded in state-sanctioned secrecy, available records show that the investments range from a $100 million Wal-Mart distribution center near Baytown, one of the world's largest warehouses, to a Bryan-area prison farm bought from clothing magnate Carlo Benetton for $15 million.
The land office, citing ongoing negotiations, has declined to release detailed records about its Tarrant County holdings, but Tarrant Appraisal District data show that the agency has acquired property worth more than $31 million in the last two years. Its use hasn't yet been determined.
But as San Marcos authorities found, the state does not have to adhere to the local requirements imposed on private developers, and any land it owns is exempt from property taxes used to fund schools and local services.
On the other hand, profits generated by the real estate holdings are injected into the $24 billion Permanent School Fund, which produces about $800 million a year for public education in Texas. And taxing jurisdictions can still impose levies on lease values and equipment even if the state-owned property is exempt.
Competition
For the fund's land managers, the growing real estate portfolio keeps the educational endowment -- the nation's second-largest -- diversified and modern. But some lawmakers are seeking to curb the state's appetite for real estate and return the school fund to safer, more traditional investments.
"I don't really believe that government, no matter whether it's local or state government, should be in the business of competing against private interests," said state Rep. Rob Orr, R-Burleson, who oversees the land office as chairman of the House Land and Resources Management Committee. "I think they should be into more-conservative investments."
Orr said he is drawing up plans to look into the state land deals in a formal legislative study, with an eye toward possible overhauls during the 2009 session of the Legislature. In the meantime, Land Commissioner Jerry Patterson, who leads the land investment team, says he'll continue to pursue sensible real estate deals. But there's already a shift in investment strategy at the land office -- away from direct purchases of real estate and toward institutional funds favored by other large endowments and pension funds.
Patterson said that over the last 18 months, the land office has injected $842 million into externally managed funds, more than it has spent on all direct real estate purchases in the last six years. But the active land deals have generated the most controversy. This week, the land office is expected to receive bids for the sale of a 9,269-acre tract containing the Christmas Mountains in far West Texas. Environmentalists have protested, saying the land -- given to the state by a conservation group -- should stay in state hands.
Likewise, the Great Plains Restoration Council, a Tarrant County environmentalist group, wanted to preserve a 1,983-acre undeveloped swath off Old Granbury Road near Crowley. Patterson has agreed to give Great Plains more time to come up with the money to buy the tract. But Patterson makes it clear that the price will be considerably higher than the $21 million the state paid in 2005.
"I'm not in the park business. I'm in the moneymaking business," Patterson said. "If somebody that's in the park business wishes to buy it, then that's fine." Given the hefty price, though, Patterson said it is more likely that only a portion will remain undeveloped.
A tough politician
Blunt talk like that is a Patterson trademark. A Marine and Vietnam War veteran, the Republican has never lost his taste for combat, even if the battlefield has shifted from Southeast Asia to the rough-and-tumble world of Texas politics. When allies of Democratic presidential contender John Kerry went to Crawford to raise a stink about 2004 ads critical of the Massachusetts senator's war record, President Bush dispatched Patterson to greet them outside his ranch.
Patterson's attachment to the land office's mission is well-documented. When he first ran for the office, in 2002, Patterson promised to seek re-election in 2006 to stress that, unlike his predecessors, he wasn't using the post as a steppingstone to higher office. Patterson has since taken to the school fund's profit-making mission with a Southern preacher's zeal.
For San Marcos officials, the sudden appearance of a tax-exempt real estate speculator was unwelcome. Already, 25 percent of the property in the city is tax-exempt, they said, and here was a new tax-exempt parcel in the middle of one of Texas' hottest real estate markets.
Alarmed at the prospect of losing more property tax revenues and power to oversee and approve the mall development, estimated at $50 million in local media accounts, city officials went to see Patterson and the real estate portfolio managers at the land office about a year ago. City Manager Dan O'Leary describes the meeting as "an ambush." He said officials told him bluntly that profiting from state exemptions on taxes and regulations was "exactly what they intended to do."
"The reaction was basically, 'Well, yeah, we're the state,'" O'Leary recalled. "'Why would we want to take away our competitive advantage?'"
Limiting access
The land office has since begun to pull out of the mall deal and is selling the 113-acre tract to Direct Development, the private developer that was supposed to join the state as a partner in the project, officials said. The land office won't say how much it's selling the land for, but O'Leary said it is at a "highly inflated price." Calls to Direct Development were not returned.
After the deal fell through, O'Leary and San Marcos Mayor Susan Narvaiz pressed the Legislature to enact changes that would give local governments a more powerful voice in land office deals. Instead, O'Leary said, he walked into another ambush.
Rather than giving cities more input, the Legislature passed new exemptions -- over vociferous objections from San Marcos officials -- that allow the land office to further limit public access to key land transaction records, such as appraisals, deeds and purchase orders. The law, which took effect in June, seals the records until all transactions -- such as development contracts and ongoing subdivisions sales -- are completed.
Testifying at a legislative hearing in February, Narvaiz said the date on which public access is granted "could effectively be 'never' under current development practices." State Rep. Patrick Rose, D-Dripping Springs, who represents San Marcos in the Legislature, called the new law a "bad idea on its face."
"The state's business is the people's business," Rose said. "To take this out of the sunshine of open records just doesn't make sense. It makes a problem that's bad, I think, worse."
Patterson calls the public access issue a "red herring." He said that in the San Marcos deal, the land office went out of its way to notify city officials in advance, and he described the mayor as a "hard-to-please lady." Patterson also said all the same documents that were available before the law took effect will still be made public -- just not as quickly. Meanwhile, the new law will ensure that potential buyers can't use government sunshine laws to get key cost and sales information, and gain a competitive advantage, in state deals.
A cash advantage
The Legislature created the school fund in 1854, endowing it with $2 million in cash and millions of acres of Texas land. Any income from oil and gas royalties were deposited into the endowment, and that money was generally used to buy stocks and bonds.
That all changed in 2001, when lawmakers passed a bill directing oil and gas royalties into an escrow account that can be tapped for real estate investments.
By 2007, with the price of oil more than triple the $22 it fetched in 2001, over $2 billion had flowed into the escrow account.
The elected State Board of Education manages the school fund's cash and traditional investments. The real estate holdings, by contrast, are overseen by the three-member School Land Board, made up of Patterson, who is the chairman, and two appointed members.
The land escrow account had about $372 million at the end of July, much of it committed to deals, but Patterson said he sends at least $6 million a month to the money managers at the education board.
Objections from local authorities about lost tax revenue have nixed some land deals, but the ever-replenishing fund and its ability to hold something tax-free forever make the school fund a unique and influential player in the state's commercial real estate market.
"The biggest advantage is, we have large amounts of cash," Patterson said. "And we can stay for the long haul."
By the numbers
$2 million: Permanent School Fund's starting balance, in 1854
$22.9 billion: School fund's balance as of August 2006
$2.03 billion: Oil and gas royalty money available for real estate buys since 2001
$532 million: Value of real estate acquired by school fund since 2001
768,012: Number of acres of Texas land owned by school fund
10.44: Percent increase in school fund's value from 2005 to 2006
Sources: Texas Education Agency, General Land Office
Property of the government
At $24 billion, the 153-year-old Permanent School Fund is the nation's second-largest educational endowment; it doles out some $800 million annually to Texas public schools. Fund managers invested almost exclusively in stocks and bonds until 2001, when the school fund began gobbling up commercial real estate. Since then, the General Land Office has acquired over $500 million of property and struck several deals, some of them controversial, with private developers.
A look at some of the largest:
Sugar Land mixed use, 2002
Price: $52.2 million
Acreage: 4,917
Description: In state hands for decades and home to a prison farm, most of this school fund property has been sold, generating profits of $41 million so far. Now the fund is working with Raleigh, N.C.-based Cherokee Investment Partners in a development that will include housing, retail and office space on about 900 remaining acres near the site of the old Imperial Sugar factory.
Buffalo Ranch Prison Farm, 2003
Price: $14.9 million
Acreage: 11,002
Description: In Burleson County near Bryan, this property is the site of a new state prison farm where inmates grow cotton for their own uniforms. It replaces a prison farm in Fort Bend County. The fund bought Buffalo Ranch from clothing magnate Carlo Benetton. The Texas Department of Criminal Justice leases the farm from the fund for $753,000 a year.
Austin Triangle, 2004
Price: $8.9 million
Acreage: 33
Description: Among the last large tracts of undeveloped land in central Austin, the Triangle project -- a residential and retail complex just north of the University of Texas at Austin -- was conceived in the 1990s as the land office's first and largest for-profit land and development venture in modern times. About 7.5 acres of it were sold, and lease payments totaling $4.7 million have been received so far.
Wal-Mart distribution center, 2005
Price: $100 million
Acreage: 474
Description: At 4 million square feet, enough to hold 70 football fields, it's said to be the largest U.S. distribution center dedicated to one company. The state owns the land and building, and the school fund stands to make at least $303 million from its 30-year lease. It's the largest land deal in the fund's history, and it reportedly gave Wal-Mart its largest tax break ever -- about $70 million -- though Wal-Mart still pays over $4 million annually in business property taxes.
Sources: Texas Education Agency, General Land Office
Read more in the Fort Worth Star Telegram and see Excel Spreadsheet of known acquisitions.
AUSTIN -- San Marcos' leaders weren't surprised to learn last year that a commercial real estate developer planned to pump $50 million into a shopping mall project along Interstate 35 south of Austin. It was going to be built near the city's booming factory outlet centers, the third most-visited site in Texas, so the profit potential was obvious.
What was a shock, city officials said, was the identity of the developer: the Texas General Land Office. The agency, flush with cash from oil royalty income, has been on a real estate buying binge since 2001, snapping up more than a half-billion dollars in property and entering into numerous deals with private developers -- some of them controversial.
Although many of the transactions are shrouded in state-sanctioned secrecy, available records show that the investments range from a $100 million Wal-Mart distribution center near Baytown, one of the world's largest warehouses, to a Bryan-area prison farm bought from clothing magnate Carlo Benetton for $15 million.
The land office, citing ongoing negotiations, has declined to release detailed records about its Tarrant County holdings, but Tarrant Appraisal District data show that the agency has acquired property worth more than $31 million in the last two years. Its use hasn't yet been determined.
But as San Marcos authorities found, the state does not have to adhere to the local requirements imposed on private developers, and any land it owns is exempt from property taxes used to fund schools and local services.
On the other hand, profits generated by the real estate holdings are injected into the $24 billion Permanent School Fund, which produces about $800 million a year for public education in Texas. And taxing jurisdictions can still impose levies on lease values and equipment even if the state-owned property is exempt.
Competition
For the fund's land managers, the growing real estate portfolio keeps the educational endowment -- the nation's second-largest -- diversified and modern. But some lawmakers are seeking to curb the state's appetite for real estate and return the school fund to safer, more traditional investments.
"I don't really believe that government, no matter whether it's local or state government, should be in the business of competing against private interests," said state Rep. Rob Orr, R-Burleson, who oversees the land office as chairman of the House Land and Resources Management Committee. "I think they should be into more-conservative investments."
Orr said he is drawing up plans to look into the state land deals in a formal legislative study, with an eye toward possible overhauls during the 2009 session of the Legislature. In the meantime, Land Commissioner Jerry Patterson, who leads the land investment team, says he'll continue to pursue sensible real estate deals. But there's already a shift in investment strategy at the land office -- away from direct purchases of real estate and toward institutional funds favored by other large endowments and pension funds.
Patterson said that over the last 18 months, the land office has injected $842 million into externally managed funds, more than it has spent on all direct real estate purchases in the last six years. But the active land deals have generated the most controversy. This week, the land office is expected to receive bids for the sale of a 9,269-acre tract containing the Christmas Mountains in far West Texas. Environmentalists have protested, saying the land -- given to the state by a conservation group -- should stay in state hands.
Likewise, the Great Plains Restoration Council, a Tarrant County environmentalist group, wanted to preserve a 1,983-acre undeveloped swath off Old Granbury Road near Crowley. Patterson has agreed to give Great Plains more time to come up with the money to buy the tract. But Patterson makes it clear that the price will be considerably higher than the $21 million the state paid in 2005.
"I'm not in the park business. I'm in the moneymaking business," Patterson said. "If somebody that's in the park business wishes to buy it, then that's fine." Given the hefty price, though, Patterson said it is more likely that only a portion will remain undeveloped.
A tough politician
Blunt talk like that is a Patterson trademark. A Marine and Vietnam War veteran, the Republican has never lost his taste for combat, even if the battlefield has shifted from Southeast Asia to the rough-and-tumble world of Texas politics. When allies of Democratic presidential contender John Kerry went to Crawford to raise a stink about 2004 ads critical of the Massachusetts senator's war record, President Bush dispatched Patterson to greet them outside his ranch.
Patterson's attachment to the land office's mission is well-documented. When he first ran for the office, in 2002, Patterson promised to seek re-election in 2006 to stress that, unlike his predecessors, he wasn't using the post as a steppingstone to higher office. Patterson has since taken to the school fund's profit-making mission with a Southern preacher's zeal.
For San Marcos officials, the sudden appearance of a tax-exempt real estate speculator was unwelcome. Already, 25 percent of the property in the city is tax-exempt, they said, and here was a new tax-exempt parcel in the middle of one of Texas' hottest real estate markets.
Alarmed at the prospect of losing more property tax revenues and power to oversee and approve the mall development, estimated at $50 million in local media accounts, city officials went to see Patterson and the real estate portfolio managers at the land office about a year ago. City Manager Dan O'Leary describes the meeting as "an ambush." He said officials told him bluntly that profiting from state exemptions on taxes and regulations was "exactly what they intended to do."
"The reaction was basically, 'Well, yeah, we're the state,'" O'Leary recalled. "'Why would we want to take away our competitive advantage?'"
Limiting access
The land office has since begun to pull out of the mall deal and is selling the 113-acre tract to Direct Development, the private developer that was supposed to join the state as a partner in the project, officials said. The land office won't say how much it's selling the land for, but O'Leary said it is at a "highly inflated price." Calls to Direct Development were not returned.
After the deal fell through, O'Leary and San Marcos Mayor Susan Narvaiz pressed the Legislature to enact changes that would give local governments a more powerful voice in land office deals. Instead, O'Leary said, he walked into another ambush.
Rather than giving cities more input, the Legislature passed new exemptions -- over vociferous objections from San Marcos officials -- that allow the land office to further limit public access to key land transaction records, such as appraisals, deeds and purchase orders. The law, which took effect in June, seals the records until all transactions -- such as development contracts and ongoing subdivisions sales -- are completed.
Testifying at a legislative hearing in February, Narvaiz said the date on which public access is granted "could effectively be 'never' under current development practices." State Rep. Patrick Rose, D-Dripping Springs, who represents San Marcos in the Legislature, called the new law a "bad idea on its face."
"The state's business is the people's business," Rose said. "To take this out of the sunshine of open records just doesn't make sense. It makes a problem that's bad, I think, worse."
Patterson calls the public access issue a "red herring." He said that in the San Marcos deal, the land office went out of its way to notify city officials in advance, and he described the mayor as a "hard-to-please lady." Patterson also said all the same documents that were available before the law took effect will still be made public -- just not as quickly. Meanwhile, the new law will ensure that potential buyers can't use government sunshine laws to get key cost and sales information, and gain a competitive advantage, in state deals.
A cash advantage
The Legislature created the school fund in 1854, endowing it with $2 million in cash and millions of acres of Texas land. Any income from oil and gas royalties were deposited into the endowment, and that money was generally used to buy stocks and bonds.
That all changed in 2001, when lawmakers passed a bill directing oil and gas royalties into an escrow account that can be tapped for real estate investments.
By 2007, with the price of oil more than triple the $22 it fetched in 2001, over $2 billion had flowed into the escrow account.
The elected State Board of Education manages the school fund's cash and traditional investments. The real estate holdings, by contrast, are overseen by the three-member School Land Board, made up of Patterson, who is the chairman, and two appointed members.
The land escrow account had about $372 million at the end of July, much of it committed to deals, but Patterson said he sends at least $6 million a month to the money managers at the education board.
Objections from local authorities about lost tax revenue have nixed some land deals, but the ever-replenishing fund and its ability to hold something tax-free forever make the school fund a unique and influential player in the state's commercial real estate market.
"The biggest advantage is, we have large amounts of cash," Patterson said. "And we can stay for the long haul."
By the numbers
$2 million: Permanent School Fund's starting balance, in 1854
$22.9 billion: School fund's balance as of August 2006
$2.03 billion: Oil and gas royalty money available for real estate buys since 2001
$532 million: Value of real estate acquired by school fund since 2001
768,012: Number of acres of Texas land owned by school fund
10.44: Percent increase in school fund's value from 2005 to 2006
Sources: Texas Education Agency, General Land Office
Property of the government
At $24 billion, the 153-year-old Permanent School Fund is the nation's second-largest educational endowment; it doles out some $800 million annually to Texas public schools. Fund managers invested almost exclusively in stocks and bonds until 2001, when the school fund began gobbling up commercial real estate. Since then, the General Land Office has acquired over $500 million of property and struck several deals, some of them controversial, with private developers.
A look at some of the largest:
Sugar Land mixed use, 2002
Price: $52.2 million
Acreage: 4,917
Description: In state hands for decades and home to a prison farm, most of this school fund property has been sold, generating profits of $41 million so far. Now the fund is working with Raleigh, N.C.-based Cherokee Investment Partners in a development that will include housing, retail and office space on about 900 remaining acres near the site of the old Imperial Sugar factory.
Buffalo Ranch Prison Farm, 2003
Price: $14.9 million
Acreage: 11,002
Description: In Burleson County near Bryan, this property is the site of a new state prison farm where inmates grow cotton for their own uniforms. It replaces a prison farm in Fort Bend County. The fund bought Buffalo Ranch from clothing magnate Carlo Benetton. The Texas Department of Criminal Justice leases the farm from the fund for $753,000 a year.
Austin Triangle, 2004
Price: $8.9 million
Acreage: 33
Description: Among the last large tracts of undeveloped land in central Austin, the Triangle project -- a residential and retail complex just north of the University of Texas at Austin -- was conceived in the 1990s as the land office's first and largest for-profit land and development venture in modern times. About 7.5 acres of it were sold, and lease payments totaling $4.7 million have been received so far.
Wal-Mart distribution center, 2005
Price: $100 million
Acreage: 474
Description: At 4 million square feet, enough to hold 70 football fields, it's said to be the largest U.S. distribution center dedicated to one company. The state owns the land and building, and the school fund stands to make at least $303 million from its 30-year lease. It's the largest land deal in the fund's history, and it reportedly gave Wal-Mart its largest tax break ever -- about $70 million -- though Wal-Mart still pays over $4 million annually in business property taxes.
Sources: Texas Education Agency, General Land Office
Read more in the Fort Worth Star Telegram and see Excel Spreadsheet of known acquisitions.
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