BELTON — In November 2012, two voters — Nathan Reding, 31, of Cove, and Barry Glenn Kendrick, 68, of Killeen — voted in a Bell County general ballot election to create the 1,500-home Three Creeks subdivision located near Stillhouse Hollow Lake and inside the Belton extraterritorial jurisdiction.
The subdivision, under the direction of Killeen developer Bruce Whitis, was created as a municipal utility district with a board of directors able to levy property taxes on residents to recoup infrastructure costs and issue bonds.
In November 2014, Whitis used family and associates to facilitate the creation of a 3,750-home development south of Killeen that will levy its own property taxes on its residents, issue its own debt and is weaved into millions of dollars of road and water infrastructure improvements that will, in part, service the subdivision.
The Killeen City Council, after vigorously debating the issue for months, agreed to support the district in June 2013, reaching an agreement with Whitis with the intent to annex the district once it is fully built out.
The city was also able to impose certain design standards on the subdivision and will receive some reimbursement on their infrastructure obligations.
While little is known about the current status of Whitis’ Killeen development — also known as the Bell County Municipal Utility District No. 2 or Turnbo Ranch — its creation should come as no surprise after the success of its predecessor just two years before.
To create Three Creeks, Whitis used one family member — Nate Reding — to vote for the district’s incorporation and placed two others — Randy Reding and Michael Conder — on the board of directors.
Nate Reding, a physical education teacher at Clements/Parsons Elementary School, is also on the board of directors for Turnbo Ranch.
Randy Reding is the owner of Reding Construction, which operates out of the same building as Whitis’ WB Development in the 3000 block of Illinois Avenue in Killeen.
According to the Texas Water Code, Whitis’ leverage of family to create the district is legal, but raises concerns of partiality and qualifications in board affairs.
Also similar to Turnbo Ranch, the Three Creeks board of directors acts in almost complete anonymity. Although the board votes to set property tax rates, float bond packages and control contract bidding in the district, answers to basic operational questions are difficult to obtain.
THREE CREEKS BOARD
The Three Creeks board of directors is filled with Whitis’ relatives and two local business leaders.
The board is comprised of Randy Reding, Whitis’ cousin; David Lazar, the owner of Handy Super Pawn in Killeen; Michael Conder, of Belton, another cousin of Whitis; Roger Hunter, the owner of Baird & Hunter Electric in Belton; and Karen Walinder, the chief executive officer of the Mickey’s Convenience Stores chain.
Josh Welch, a manager with WB Development, said the board’s makeup followed state law.
“All of the directors meet all the requirements set forth in the Texas Local Government Code, including nepotism,” Welch said.
The Herald attempted to reach each of the directors during the reporting of this story concerning board meetings, contracting agreements, property tax rates and election procedure.
When reached April 13, Walinder said she didn’t “like the way (the Herald) reports” and declined to comment on her seat.
When reached Thursday, Randy Reding said the board conducted business such as “taking bids and things like that, just like any MUD.”
He did not comment further or specify when or how often the board meets.
“It varies,” Randy Reding said. “You do what you do to the best of your ability for the residents of the MUD.”
Lazar said he did not attend board meetings and was unsure how often the board met. Lazar said he did not any have any business ties to Whitis but had known him for years.
Lazar said he was unaware his name was on the 2014 Bell County ballot to elect the board and said he did not know what Whitis' criteria for board directors was.
Hunter did not return the Herald’s phone calls.
Conder could not be reached for comment.
The ballot petition paperwork to incorporate the Three Creeks subdivision in 2012 is no longer accessible in Bell County’s records and remains behind locked doors at the office of Whitis’ attorney — John Bartram, of Armbrust & Brown in Austin.
Bartram did not return multiple calls for comment.
However, Bell County Elections Administrator Shawn Snyder said the petitions to create the municipal utility districts were filed by representatives from Armbrust & Brown on behalf of Whitis.
According to the Texas Water Code — the guidebook of laws for special districts — a petition to create a municipal utility district only needs the signature of the majority landholder within the proposed district boundaries.
According to Bell County appraisal district records, WB Development was the sole owner of the district land before the incorporation.
As the sole petitioner, Whitis was responsible for putting forward the names for the board of directors that would oversee the initial stages of the development.
Per the Texas Water Code, directors on a MUD board must be landholders within the district’s boundaries.
Whitis found a way to accommodate that stipulation. In the case of Turnbo Ranch, Whitis required each of the five directors to pay $1,000 for a slice of a five-acre parcel of land within the development, according to county records.
Within a day, those slices of land were put into trust with Bartram, with Whitis’ company named as beneficiary — effectively handing the parcel back to Whitis.
The paperwork establishing the deeds for each of the directors puts terms on the $1,000 payment. If any of the directors resign, if their terms expire, or if Dec. 31, 2024, passes, Whitis can then immediately move to sell their parcel.
It is unclear if any of the directors for either development have term limits.
The arrangement for the Three Creeks board of directors owning land within the development is not known.
The schedule of board meetings remains unclear.
Randy Reding said the board did meet but did not specify how often.
According to Sam Listi, Belton’s city manager, the city’s only contact with the board is through Bartram, and no city officials attend board meetings.
As a publicly elected governmental body, the board is subject to the Texas Open Meetings Act, which requires public posting of meetings 72 hours in advance.
Without information from the board, it is not known whether those regulations are being followed.
What is known is that the board at some point approved the district’s current 85 cents per $100 of value assessed property tax rate that will pay for the district’s infrastructure, and county street maintenance, police and fire services. The rate is more than 20 cents per $100 higher than the property tax rate in nearby Belton.
The earliest mention of that proposed tax rate was included in the consent agreement between the city of Belton and Whitis — a full two years before the district was formally created and the board of directors appointed. The rate was also proposed before the district had issued any debt, which the high property tax rate for residents is meant to pay back.
According to the Texas Commission on Environmental Quality — the state’s only governing authority for municipal utility districts — the state does not have the authority to review district property tax rates, but districts are responsible for setting rates that can be challenged in court.
“Although rates should reflect the true cost of service, the TCEQ does not have the authority to review these rates unless customers appeal a rate change,” according to the TCEQ’s general guide for water districts. “Usually, a district will have a consultant develop rates that, if appealed, can be demonstrated to be reasonable and not to discriminate against a class of users.”
It is not known if the district keeps board minutes and how the board considered and agreed upon the tax rate.
The district contracts with two “featured” homebuilders in the subdivision, according to its website.
The Herald contacted both for contracts between each of the companies and the district, price point for homes and expected build out speed.
DR Horton, a national homebuilder that is contracted for other Whitis developments including Yowell Ranch on Featherline Road in Killeen, did not return multiple calls and emails for comment.
Stylecraft Homebuilders, a regional builder that is also contracted to build in Yowell Ranch, did not return emailed questions on the status of their contract with the development.
The district board is responsible, per state law, for bidding and contract agreements within the district.
The Herald could not obtain copies of the contract and bidding documents.
Editor's Note: A previous version of this article was corrected to amend a mistake. Previous comments attributed to board director David Lazar were actually made by a representative from Handy Super Pawn. Additional comments from Lazar have been added after he was contacted May 15.