Supreme Court of Texas says NO to Lakewood Village leaves City of Helotes on the hook for $1.8 million dollars

All eyes of Texas and the ears of City Halls were awaiting word from the Texas Supreme Court regarding building codes and building permit fees inside the Extra Territorial Jurisidiciton (ETJ) of a Type A General Law city.

Today, the Supreme Court of Texas spoke. According to the opinion written by Justice Boyd Type A General Law municipalities do not have the authority to enforce its building codes and building permit fees inside the municipality’s ETJ.

The issue came before the Texas Supreme Court when Lakewood Village appealed the 2nd Court of Appeals ruling in the Lakewood Village vs Bizio court case. Bizio purchased a piece of property in the Lakewood Village ETJ intending to construct a home. Bizio started construction on the home then Lakewood Village notified him that he would have to pay permit fees to the City of Lakewood Village and the home would have to be inspected by the City of Lakewood Village. Bizio ignorned the request and the City of Lakewood Village placed a “cease and dissit” order on the property.

Bizio sued in the district court asking for injuctive relief. The lower court ruled the City of Lakewood Village had the authority to charge the permit fees and to require inspection.

Bizio appealed to the 2nd Court of Appeals and the Appelate Court ruled in favor of Bizio and placed the City of Lakewood under a tempory injunction preventing the City of Lakewood from collecting fees or requiring inspections of the property.

The City of Lakewood appealed the Appeal’s Court ruling to the Supreme Court of Texas. Today, the Supreme Court of Texas ruled “Type A muncipalities do not have the authority to enforce their building permit fees and building codes inside the muncipality’s ETJ.

This decision directly impacts the City of Helotes. In 2013, after completing an ETJ swap with the City of San Antonio, the City of Helotes started charging building permit fees and required builders to comply to the building codes of the City of Helotes.

In 2013 the first lawsuit was filed in the 131 District Court Continential Homes vs City of Helotes. On September 25, 2014 the Court ruled against the City of Helotes and required the City to repay $224,282.44 in building permit fees collected by the City of Helotes. Additionally the Court awarded $48,456.00 in attorney’s fees and $2,107.92 in litigation expenses. This amount was subject to a prejudgment interest of 5 percent.

On June 15, 2015 the Court filed the final judgement upholding the previous amount but added the following in the event that the case is appealed to the Court of Appeals by the City $20,000 in attorney’s fees upon the date of the Judgement of Court of Appeals. The court attached a post judgment interest rate of 5 percent until the judgment is paid.

The amount outstanding in the first case during the prejudgment interest phase was $381,833.82. Since the final judgement of the Court the award has grown to $739,121.18 plus $20,000 for the appeal to the Appelate Court. This amount will continue to grow at 5 percent interest until the judgment is paid in full.

In 2014, The Texas Association of Builders and the Greater San Antonio Builders Association (Plaintiff) filed suit against The City of Helotes, Tome Schoolcraft, Rick Schroder, and Ernest Cruz (Defendants) claiming much of the same as Continental Homes.

On August 27 of this year, the judge entered the final judgment against the Defendants and ruled for the plaintiff. One major difference in this judgment, fees paid in protest during the suit were not reimbursed to the builders. However, the court awarded attorneys’ fees and injunctive relief. Also the Court ordered an injunction against the City enforcing Chapter 18 of the City Code in the ETJ.

The awarded attorneys’ fees include $96,494 for reasonable attorney’s fees through July 27, 2015; $5,000 for reasonable attorney’s fees to be incurred between July 27, 2015 and the entry of the final judgment in this litigation; $4,714.66 for reasonable expenses and costs incurred through July 27, 2015; and $75,000 in conditional attorney’s fees, expenses, and costs in the event of an appeal to the court of appeals.

The City of Helotes appealed this case, and on April 29, 2016, appellants filed a motion to abate this appeal pending a determination in Town of Lakewood Village v. Bizios, which is currently pending before the Texas Supreme Court in cause number 15-0106. Appellee filed a response opposing the abatement. One or more of the issues pending in the appeal before this court are similar to the issues pending in the Bizios appeal. Because the Supreme Court’s resolution of the Bizios appeal may have an impact on the present cause, this court has determined that abating this appeal pending a decision by the Supreme Court will likely achieve the greatest judicial efficiency. Therefore, the motion to abate is GRANTED and the appeal is withdrawn from submission. For administrative purposes, this appeal will be treated as a closed case, unless and until appellant files a motion requesting its reinstatement following the Texas Supreme Court’s resolution of the issue(s) in Bizios.

The total judgement outstanding in the 2014 case is $181,208.66

On September 23 in the 150th District Court of Texas, Cause No. 2015-CI-00543 Ashton Homebuilders, Pulte Homes, MHI Central Texas, and Weekly Homes vs. The City of Helotes summary judgment was heard by the court. The case was originally scheduled for jury trial on November 16.

The presiding judge ruled in favor of the summary judgment and on November 16 entered the final judgment for the plaintiffs. The City of Helotes was ordered to repay building permitting, plan review, and inspection fees for Ashton Homes- $117,285.67; MHI Central Texas, LLC- $36,701.66; Pulte Homes of Texas, L.P.- $249,013.59; and to Weekly Homes, LLC,-$177,362.05.

In addition to the refund of fees the Court ordered the defendant to pay the Plaintiffs trail attorney’s fees in the amount of $43,303.33 and $1,818.70. The Court also ordered the defendant to pay 5 percent simple interest on the judgment until the amount is paid.

Additionally, if the City of Helotes appealed the decision, the plaintiffs were awarded $20,000 at the time of the judgment from the Appeals Court. This case was appealed and the Court abated the appeal awaiting decision in Lakewood Village.

The total judgement as of today in the 2015 case is $844,404.75 in addition to the $20,000 for appealing the case.

The total for all three cases is $1,804,734.59 and all but $181,208.66 will continue to grow at five percent until the judgments are paid.

The City maintained they had not spent any of the building fees collected in the ETJ ; however; they have ignored repeated requests to identify the account that is holding the over $800,000 in reserve.

According to sources close to City Council, the City of Helotes will have to issue bonds to pay for the outstanding judgments. The City currently has bonds out to pay of the renovation of Old Town, however, they should be paid off before the end of this fiscal year. The City also has bonds out to pay for the Fire Station and Police Department. Just this last year the City issued $4 million in bonds to complete capital projects such as the Linear Creek Park in Old Town Helotes, the water and sewar line from Circle A to Scenic Loop Drive, a pedistrian bridge in Old Town, and other projects.

Some Council members have expressed concern that if the City continues to amass more debt the triple A rating enjoyed by the City will be impacted. Just recently, the City of Helotes had to list the pending judgements as liabilities in the current audit report.

City Adminstrator Rick Schroder was out of the office today, and Mayor Schoolcraft was unavailable for a comment.

(Editor’s note:  I used a simple interest calculator to find the amounts of the judgement.  I hope for the City’s sake, my simple interest calculations may be off)

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