The Woodlands, TX (Montgomery County Monitor) – On February 16, 2007, a request for public information was sent to the Woodlands Community Association (WCA).

The request was for information pertaining to franchise fees. This topic was discussed in an executive session at the February 13, 2007 WCA meeting. An executive session allows an organization that is subject to the Texas Open Meetings Act to consult in private with their attorney during an open public meeting.

Franchise fees are fees paid by utility companies for the use of public land. In a true city, the city negotiates a fee with the utility companies to allow the utility companies access to this public property in order to run utility lines (gas, cable, electric, etc.). The city uses these fees for city services that benefit the residents who live in that city. Unfortunately, the utility companies often pass this cost on to their customers.

For those that have cable, check your cable bill. If Time Warner is your cable provider, look at the account details. Under taxes and fees there is a listing for an access fee. This access fee is the fee that the company is charged for “accessing” the public land that is owned by the city. The company then passes this cost on directly to the customer in most cases.

Check your other utility bills also. This fee is sometimes referred to as a franchise fee directly on the utility bill. However, it is often disguised as a “user fee” or “customer charge” so as not to raise questions.

The above description is typical of the arrangement when the parties involved are an incorporated city and any utility company.

However, what happens to that money in The Woodlands? The Woodlands is not an incorporated city. So, where does that money go?

Currently the franchise fees that are being indirectly collected from the residents of The Woodlands are going to a private non-profit 501 (c)(4) corporation. In 2005, this corporation, known as The Woodlands Community Facilities Development Corporation (TWCFDC), collected just over $4 million in franchise fees. This $4 million figure is more than 30% above the amount collected in 2004.

So, who is TWCFDC? As might be guessed, TWCFDC is directly linked to The Woodlands Land Development Company (the “Developer”). The Developer actually is in care of the books for TWCFDC. In 2006, Robert Hibbets, an employee of the Developer, was listed as treasurer for TWCFDC. The Developer has also made several large loans to TWCFDC. Additionally, the president of TWCFDC is Joel Deretchin, who also works for the Developer. Remember, Mr. Deretchin was co-chair of the Governance Steering Committee (Bruce Tough was also co-chair). Also remember this is the same committee that pushed for the special district option instead of immediate incorporation.

This arrangement may be one reason that the Developer does not want The Woodlands to incorporate. If The Woodlands does incorporate then the franchise fees will go to the City of The Woodlands, not a Developer-linked private corporation. In other words, the formation of The City of The Woodlands would cause a substantial amount of lost revenue for TWCFDC and the Developer.

In addition, as far as we can determine, a private organization has no authority to collect franchise fees.

As stated earlier, information was requested in regards to material presented in an executive session of a WCA public meeting. The WCA refused to release this information stating, “Executive Sessions are closed meetings not subject to disclosure.” However, it clearly states in the Texas Open Meetings Act (the “Act”) that the mere fact that a document was discussed in executive session does not make it confidential under the Act.

The Texas Public Information Act (the “Act”) gives organizations that are subject to the Act ten days to ask for an Attorney General’s ruling if the organization believes the information requested is not public. The WCA deemed this particular information was not public but they failed to ask for a ruling from the Attorney General.

Once again a complaint for failing to comply with the law has been sent to the Attorney General’s office.

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