Hearing 888-893-3767 Hearing Pagess ...

·1· · · · · · · · ·SOAH DOCKET NO. 582-18-3270

· · · · · · · · · TCEQ DOCKET NO. 2018-0414-DIS

·2

· · APPEAL BY 308 FURMAN, LTD. OF*· BEFORE THE STATE OFFICE

·3· THE DECISIONS BY THE BOARD OF*

· · DIRECTORS OF HARRIS COUNTY· ·*

·4· WATER CONTROL AND· · · · · · *· · · · · · OF

· · IMPROVEMENT DISTRICT NO. 89 *

·5· PURSUANT TO TITLE 30 TEXAS· ·*

· · ADMINISTRATIVE CODE 293.180· *· ADMINISTRATIVE HEARINGS

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· · · · · · *****************************************

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· · · · · · · · · · · HEARING ON THE MERITS

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· · · · · · *****************************************

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15

16

17· · · On the 24th day of September, 2019, the following

18· proceedings came on to be heard in the above-entitled

19· and numbered cause before Administrative Law Judge Linda

20· Brite, held at STATE OFFICE OF ADMINISTRATIVE HEARINGS,

21· BAKER, located at 2020 North Loop West, Suite 111,

22· Houston, Texas 77018.

23

24· Proceedings reported by Shorthand Machine method.

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Page 2·1· · · · · · · · · · A P P E A R A N C E S·2· MS. LINDA BRITE· · STATE OFFICE OF ADMINISTRATIVE HEARINGS·3· 300 West 15th Street, Suite 504 Boulevard,· · Austin, Texas· 78701·4· Phone:· (512) 475-493· · Fax:· · (512) 475-4994·5· [email protected]· · ADMINISTRATIVE LAW JUDGE·6·7· MS. NATALIE B. SCOTT· · -and-·8· MR. BARRY RABON· · COATS ROSE·9· 901 S. Mopac Expressway, Building 1, Suite 500· · Austin, Texas· 7874610· Phone:· (512) 469-7987· · Fax:· · (512) 469-940911· [email protected]· · [email protected]· ATTORNEYS FOR PETITIONER 308 FURMAN, LTD.1314· MR. GEORGE R. GIBSON· · -and-15· MS. LAURA K. NAPOLI-JANITENS· · NATHAN SOMMERS JACOBS16· 2800 Post Oak Boulevard, 6th Floor· · Houston, Texas· 7705617· Phone:· (713) 892-4843· · Fax:· · (713) 892-480018· [email protected]· · [email protected]· ATTORNEYS FOR RESPONDENT HARRIS COUNTY WCID 892021· MS. KAYLA MURRAY· · TEXAS COMMISSION ON ENVIRONMENTAL QUALITY22· Staff Attorney - Environmental Law Divison· · 12100 Park 35 Circle, Building A23· Austin, Texas· 78753· · Phone:· (512) 239-476124· Fax:· · (512) 239-0606· · [email protected]· FOR TCEQ EXECUTIVE DIRECTOR

Page 3·1· · · · · · · · · · APPEARANCES CONTINUED

·2· MR. SHELDON P. WAYNE

· · TEXAS COMMISSION ON ENVIRONMENTAL QUALITY

·3· Assistant Public Interest Counsel

· · Office of Public Interest Counsel

·4· 12100 Park 35 Circle, Building A

· · Austin, Texas· 78753

·5· Phone:· (512) 239-3144

· · Fax:· · (512) 239-6377

·6· [email protected]

· · TCEQ PUBLIC INTEREST COUNSEL

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Page 4·1· · · · · · · · · · ·CHRONOLOGICAL INDEX

· · · · · · · · · · · HEARING ON THE MERITS

·2

·3· SEPTEMBER 24, 2019· · · · · · · · · · · · · · · · · PAGE

·4· Caption.....................................· · · · · 1

·5· Appearances.................................· · · · · 2

·6· Chronological Index.........................· · · · · 4

·7· Exhibit List................................· · · · · 5

·8· Proceedings.................................· · · · ·28

·9· Petitioner Opening Statement................· · · · ·42

10· Respondent Opening Statement................· · · · ·49

11· Executive Director's Opening Statement......· · · · ·57

12· Office of Public Interest Counsel Opening

13· Statement...................................· · · · ·57

14

· · PETITIONER'S

15· WITNESSES· · · · · · · · · · · · · · DIRECT· · · ·CROSS

16· Johnson, Michael· · · · · · · · · · ·60,158· · · 61,189

17

· · RESPONDENT'S


19· Smalls, Sharyn· · · · · · · · · · · ·193,245· · · · 194

20

· · EXECUTIVE DIRECTOR'S


22· Paynter, Andrew· · · · · · · · · · · · ·250

23· Proceedings concluded.......................· · · · 253

24· Court Reporter's Certificate................· · · · 254

25

1· · · · · · · · · · · · EXHIBIT INDEX

·2· PETITIONER'S

· · NO. DESCRIPTION· · · · · · · · · · · OFFERED· ·ADMITTED

·3

·4· Exhibit 1...........................· · · 32· · · · ·32

·5· · · Reimbursement Agreement

· · · · (308 FUR 017790-017810)

·6

· · Exhibit 2...........................· · · 32· · · · ·32

·7

· · · · ·05.02.2017 Meeting Minutes

·8· · · (308 FUR 017811-017816)

·9· Exhibit 3...........................· · · 32· · · · ·32

10· · · Dist. 89 - Projects Not Included

· · · · in Bond Issue 7 (308 FUR 017817)

11

· · Exhibit 4...........................· · · 32· · · · ·32

12

· · · · Developer Interest Calculation

13· · · (308 FUR 021621-0216410)

14· Exhibit 5...........................· · · 32· · · · ·32

15· · · Detention Maintenance Cost Deduct -

· · · · Bond 7 (308 FUR 017836)

16

17· Exhibit 6...........................· · · 32· · · · ·32

18· · · 11.2017 Engineering Rpt. -

· · · · Bond 7 (308 FUR 017850-017899)

19

· · Exhibit 7...........................· · · 32· · · · ·32

20

· · · · Construction Contract Checklist

21· · · (308 FUR 017902)

22· Exhibit 8...........................· · · 32· · · · ·32

23· · · Pump Station Approved Plans

· · · · (308 FUR 017903-017941)

24

25

Page 6·1· · · · · · · · · ·EXHIBIT INDEX CONTINUED

·2· PETITIONER'S


·3

·4· Exhibit 9...........................· · · 32· · · · ·32

·5· · · Affidavit of Publication - Pump

· · · · Station (308 FUR 017942-017945)

·6

· · Exhibit 10..........................· · · 32· · · · ·32

·7

· · · · Bid Tab - Pump Station

·8· · · (308 FUR 017947-017948)

·9· Exhibit 11..........................· · · 32· · · · ·32

10· · · Pate Engineers Recommendations of

· · · · Award - Pump Station

11· · · (308 FUR 017949)

12· Exhibit 12..........................· · · 32· · · · ·32

13· · · Pump Station Contract & Tech Docs

· · · · (308 FUR 017951-018039)

14

· · Exhibit 13..........................· · · 32· · · · ·32

15

· · · · Ntc to Proceed - Pump Station

16· · · (308 FUR 018041-018042)

17· Exhibit 14..........................· · · 32· · · · ·32

18· · · T&C Constuction Pay Apps re Pump

· · · · Station (308 FUR 018099-018134)

19

· · Exhibit 15..........................· · · 32· · · · ·32

20

· · · · T&C Construction Change Orders

21· · · (308 FUR 018136-018138)

22· Exhibit 16..........................· · · 32· · · · ·32

23· · · Erosion Summary Sheet w Invoices

· · · · & Payments (308 FUR 018043-018063)

24

25


·2· PETITIONER'S


·3

·4· Exhibit 17..........................· · · 32· · · · ·32

·5· · · Pate Eng. Summary Sheet w

· · · · Invoices & Payments

·6· · · (308 FUR 018064-018098)

·7· Exhibit 18..........................· · · 32· · · · ·32

·8· · · Terracon Summary Sheet w Invoices

· · · · & Payments (308 FUR 018142-018152)

·9

· · Exhibit 19..........................· · · 32· · · · ·32

10

· · · · 08.17.09 Pate Eng. Ltr re Final

11· · · Walk-Through (308 FUR 018168)

12· Exhibit 20..........................· · · 32· · · · ·32

13· · · Pate Eng. Cert of Completion to

· · · · TCEQ (308 FUR 018170-018172)

14

· · Exhibit 21..........................· · · 32· · · · ·32

15

· · · · Pate Eng. Ltr to Dist. 89

16· · · Certifying Pump Station

· · · · Substancial Completion

17· · · (308 FUR 018174)

18· Exhibit 22..........................· · · 32· · · · ·32

19· · · 22. Summary of Dist. 89 Meeting

· · · · Minutes (308 FUR 018175)

20

· · Exhibit 23..........................· · · 32· · · · ·32

21

· · · · 11.20.09-07.07.09 Meeting Minutes

22· · · (308 FUR 018177-018303)

23· Exhibit 24..........................· · · 32· · · · ·32

24· · · Summary of Advances to Dist 89

· · · · (308 FUR 021641-021644)

25


·2· PETITIONER'S


·3

·4· Exhibit 25..........................· · · 32· · · · ·32

·5· · · Invoices & Payments to Dist. 89

· · · · for Advances

·6· · · (308 FUR 018307-018518)

·7· Exhibit 26..........................· · · 32· · · · ·32

·8· · · 10.02.12 Meeting Minutes

· · · · (308 FUR 016852-016858)

·9

· · Exhibit 27..........................· · · 32· · · · ·32

10

· · · · 10.16.12 Meeting Minutes

11· · · (308 FUR 016859-016866)

12· Exhibit 28..........................· · · 32· · · · ·32

13· · · 11.06.12 Meeting Minutes

· · · · (308 FUR 016875-016881)

14

· · Exhibit 29..........................· · · 32· · · · ·32

15


16· · · (308 FUR 016894-016903)

17· Exhibit 30..........................· · · 32· · · · ·32


· · · · (308 FUR 016904-016911)

19

· · Exhibit 31..........................· · · 32· · · · ·32

20


21· · · (308 FUR 016939-016944)

22· Exhibit 32..........................· · · 32· · · · ·32

23· · · Aerial Photo Sequence - Brunswick

· · · · Meadows (308 FUR 019525-019534)

24

25

1· · · · · · · · · ·EXHIBIT INDEX CONTINUED

·2· PETITIONER'S


·3

·4· Exhibit 33..........................· · · 32· · · · ·32


· · · · (308 FUR 016919-016923)

·6

· · Exhibit 41..........................· · · 32· · · · ·32

·7

· · · · 06.21.13 HCFCD to Pate Eng. & IDS

·8· · · (HCFCD 000610-000614)

·9· Exhibit 42..........................· · · 32· · · · ·32

10· · · Pump Station Operations Manual

· · · · (308 FUR 021559-021916)

11

· · Exhibit 43..........................· · · 32· · · · ·32

12

· · · · 03.19.15 Ltr re HCFCD to Brunswick

13· · · HOA (308 FUR 010435-308 FUR 010436)

14· Exhibit 44..........................· · · 32· · · · ·32

15· · · 01.16.14 Memo 308 Furman to NPH

· · · · (308 FUR 009597-009598)

16

· · Exhibit 45..........................· · · 32· · · · ·32

17

· · · · Detention Easement - NPH

18· · · (308 FUR 009815-009821)

19· Exhibit 46..........................· · · 32· · · · ·32

20· · · 11.15.14 Cost Sharing Agreement

· · · · (308 FUR 017715-017718)

21

· · Exhibit 47..........................· · · 32· · · · ·32

22

· · · · 07.27.16 MAC Invoice re Pump

23· · · Station (HOA 000001-000002)

24

25


·2· PETITIONER'S


·3

·4· Exhibit 48..........................· · · 32· · · · ·32

·5· · · 01.15.15 Maintenance Agreement

· · · · (HOA 000135)

·6

· · Exhibit 49...........................· · ·32· · · · ·32

·7

· · · · 04.19.19 HOA Settlement

·8· · · (308 FUR 021532-021537)

·9· Exhibit 50...........................· · ·32· · · · ·32

10· · · Pump Station Cost Summary

· · · · (308 FUR 021619)

11

· · Exhibit 51...........................· · ·32· · · · ·32

12

· · · · Tolunay Wong Costs

13· · · (308FUR 018153-018167)

14· Exhibit 52...........................· · ·32· · · · ·32

15· · · 12.05.17 Dist. 89 Resolution

· · · · (308 FUR 021538-021540)

16

· · Exhibit 53...........................· · ·32· · · · ·32

17

· · · · 03.23.15 Pond Expansion by NPH -

18· · · Drainage Analysis

· · · · (HCFCD 000428-000448)

19

· · Exhibit 54...........................· · ·32· · · · ·32

20

· · · · Detention Pond Maintenance Cost

21· · · Deduct (HCWCID89 000691-000741)

22· Exhibit 55...........................· · ·32· · · · ·32

23· · · 04.09.02 Annexation Agreement

· · · · (HCWCID89 000621-000625)

24

25


·2· PETITIONER'S


·3

·4· Exhibit 56...........................· · ·32· · · · ·32

·5· · · 07.23.13 Detention Pond Meeting

· · · · (HCWCID89 000679)

·6

· · Exhibit 57...........................· · ·32· · · · ·32

·7

· · · · 01.08.06 Pate Eng. Ltr to

·8· · · Ainsworth (IDS 000803-000804)

·9· Exhibit 58...........................· · ·32· · · · ·32

10· · · 11.08.06 A&S Ltr to Pate Eng.

· · · · (IDS 000885-000886)

11

· · Exhibit 59...........................· · ·32· · · · ·32

12

· · · · 06.18.07 Model & Map Management

13· · · System (IDS 001107)

14· Exhibit 60...........................· · ·32· · · · ·32

15· · · 09.19.07 Memorandum of Acceptance

· · · · by HCFCD (HCFCD 000798)

16

· · Exhibit 61...........................· · ·32· · · · ·32

17

· · · · 61. 01.10.06 Meeting Minutes

18· · · (HCWCID89 000076-000077)

19· Exhibit 62............................· · 32· · · · ·32

20· · · 05.16.06 A&S Engineer's Report

· · · · (IDS 000849)

21

· · Exhibit 63............................· · 32· · · · ·32

22


23· · · (HCWCID89 000123-000129)

24· Exhibit 64.............................· ·32· · · · ·32

25· · · 64. 10.02.16 Meeting Minutes

· · · · (308 FUR 016852-016858)


·2· PETITIONER'S

· · NO. DESCRIPTION· · · · · · · · · · · ·OFFERED· ·ADMITTED

·3

·4· Exhibit 65............................· · ·32· · · · ·32


· · · · (308 FUR 016859-016866)

·6

· · Exhibit 66............................· · ·32· · · · ·32

·7


·8· · · (308 FUR 016875-016881)

·9· Exhibit 67............................· · ·32· · · · ·32

10· · · 12.04.12 Meeting Mintues

· · · · (308 FUR 016894-016903)

11

· · Exhibit 68............................· · ·32· · · · ·32

12


13· · · (308 FUR 016904-016911)

14· Exhibit 69............................· · ·32· · · · ·32


· · · · (308 FUR 021559-021567)

16

· · Exhibit 70............................· · ·32· · · · ·32

17


18· · · (308 FUR 021568-012574)

19· Exhibit 71............................· · ·32· · · · ·32


· · · · (308 FUR 0121575-021581)

21

· · Exhibit 72............................· · ·32· · · · ·32

22


23· · · (308 FUR 021582-021587)

24· Exhibit 73............................· · ·32· · · · ·32

25· · · 73. 09.22.17 Meeting Minutes

· · · · (308 FUR 021588-021595)


·2· PETITIONER'S


·3

·4· Exhibit 74............................· · ·32· · · · ·32


· · · · (308 FUR 021596-021601)

·6

· · Exhibit 75............................· · ·32· · · · ·32

·7


·8· · · (308 FUR 021602-021608)

·9· Exhibit 76............................· · ·32· · · · ·32


· · · · (308 FUR 021609-021613)

11

· · Exhibit 77............................· · ·32· · · · ·32

12


13· · · (308 FUR 021614-021618)

14· Exhibit 78............................· · ·32· · · · ·32

15· · · Email String Ending 08.06.15 -

· · · · HCFCD & AES (HCFCD 000243-000244)

16

· · Exhibit 79............................· · ·32· · · · ·32

17

· · · · Email String Ending 08.15.17 -

18· · · HCFCD (HCFCD 000800-000802)

19· Exhibit 80............................· · ·32· · · · ·32

20· · · 01.22.18 TCEQ Technical Memorandum

· · · · (HCWDIC89 000659-000668)

21

· · Exhibit 81............................· · ·32· · · · ·32

22

· · · · 05.25.07 Pate Eng. Ltr to HCFCD

23· · · (HCFCD 000331-000335)

24· Exhibit 82............................· · ·32· · · · ·32

25· · · Brunswick Meadows Detention

· · · · Pond Map (308 FUR 021620)


·2· PETITIONER'S


·3

·4· Exhibit 83............................· · ·32· · · · ·32

·5· · · 06.05.07 Pate ENg. Ltr to Dist. 89

· · · · (HCWCID89 000163-000165)

·6

· · Exhibit 84............................· · ·32· · · · ·32

·7


·8· · · (308 FUR 016273-016279)

·9· Exhibit 85............................· · ·32· · · · ·32


· · · · (308 FUR 016436-016441)

11

· · Exhibit 86............................· · ·32· · · · ·32

12


13· · · (308 FUR 016939-016944)

14· Exhibit 87............................· · ·32· · · · ·32

15· · · 04.01.18 Dist. 89 Unlmited Tax Bonds

· · · · Series 2018 (308 FUR 011085-011124)

16

· · Exhibit 88............................· · ·32· · · · ·32

17

· · · · Excerpt from Bond Issue 7 - Dist. 89

18· · · Combined Debt Service Requirements

· · · · (308 FUR 02074)

19

· · Exhibit 89............................· · ·32· · · · ·32

20

· · · · Excerpt from Bond Issue 7 - Dist. 89

21· · · Debt Service Cash Flow

· · · · (308 FUR 020735)

22

· · Exhibit 90............................· · ·32· · · · ·32

23

· · · · 07.06.17 GMS Ltr to TCEQ re

24· · · Capitalized Interest (308 FUR 021383)

25


·2· PETITIONER'S


·3

·4· Exhibit 91............................· · ·32· · · · ·32

·5· · · Excerpt from Bond Issue 7 -

· · · · Section 8 - Financial Information

·6· · · (308 FUR 020970-020974)

·7· Exhibit 92............................· · ·32· · · · ·32

·8· · · 09.19.07 HCFCD Internal Memo

· · · · (HCFCD 000798)

·9

· · Exhibit 93............................· · ·32· · · · ·32

10

· · · · 03.23.15 WGA Drainage Study

11· · · Exhibits (HCFCD 000448-000481)

12· Exhibit 94............................· · ·32· · · · ·32

13· · · 08.16.15 HCFCD Email String

· · · · Including AEI (HCFCD 000243-000244)

14

· · Exhibit 95............................· · ·32· · · · ·32

15

· · · · 08.15.17 HCFD Internal Email String

16· · · (HCFCID 000800-000802)

17· Exhibit 96............................· · ·32· · · · ·32

18· · · Contract No. 1 - Final Punch List,

· · · · Payment, and Certificate of

19· · · Completion Documents

· · · · (308 FUR 022452-022474)

20

· · Exhibit 97............................· · ·32· · · · ·32

21

· · · · Contract No. 3 - Final Punch List,

22· · · Payment, and Certificate of

· · · · Completion Documents

23· · · (308 FUR 022475-022485)

24

25


·2· PETITIONER'S


·3

·4· Exhibit 98............................· · ·32· · · · ·32

·5· · · Developer Demand Letter to WCID 89

· · · · - 100% Reimbursement for Bond Issue

·6· · · - 7.18.2007 (308 FUR 022486-022490)

·7· Exhibit 99............................· · ·32· · · · ·32

·8· · · Drainage Easement from 308 Furman

· · · · to WCID 89 - 10.20.2011

·9· · · (308 FUR 022491-022495)

10· Exhibit 100...........................· · ·32· · · · ·32

11· · · Pump Station Analysis

· · · · (308 FUR 022496)

12

· · Exhibit 101...........................· · ·32· · · · ·32

13

· · · · Slope Repairs - Contract

14· · · Information (308 FUR 022497-022499)

15· Exhibit 102...........................· · ·32· · · · ·32

16· · · 03.09.04 Correspondence and

· · · · Maintenance Agreement “ Outfall

17· · · Channel (IDS 000001-000004)

18· Exhibit A.............................· · ·34· · · · ·34

19· · · Prefiled testimony of Michael W.

· · · · Johnson

20

· · Exhibit B.............................· · ·34· · · · ·34

21

22· · · Prefiled testimony of

· · · · Sandra Musgrove

23

· · Exhibit C.............................· · ·34· · · · ·34

24

· · · · Prefiled testimony of

25· · · Chad Abrams


·2· PETITIONER'S


·3

·4· Exhibit D.............................· · ·34· · · · ·34

·5· · · Prefiled testimony of

· · · · Timothy Buscha

·6

· · Exhibit E.............................· · ·34· · · · ·34

·7

· · · · Prefiled testimony of John Howell

·8

· · Exhibit F.............................· · ·34· · · · ·34

·9


10· · · James Ainsworth

11· Exhibit H.............................· · ·39· · · · ·39

12· · · Prefiled testimony of

· · · · Nancy Blackwell

13

14· **Petitioner's Exhibit Nos. 34-40

· · · were not marked

15

16· RESPONDENT'S

· · NO. DESCRIPTION· · · · · · · · · · · · OFFERED· ADMITTED

17

18· Exhibit R1............................· · · 42· · · · 42

19· · · Reimbursement Agreement

· · · · (308 FUR 018547-018559)

20

· · Exhibit R2............................· · · 42· · · · 42

21

· · · · Storm Sewer and Drainage Easement

22· · · (IDS000005-IDS000010)

23· Exhibit R3............................· · · 42· · · · 42

24· · · Brunswick Meadows Drainage Plan

· · · · For 308 Furman, Ltd.

25· · · (HCFCD000891-HCFCD000967)

Page 18·1· · · · · · · · · · EXHIBIT INDEX CONTINUED

·2· RESPONDENT'S


·3

·4· Exhibit R4............................· · · 42· · · · 42

·5· · · Letter to Joe Fogarty from

· · · · Provident Consulting, Inc. - 4.4.05

·6· · · (IDS000687-IDS000689)

·7· Exhibit R5............................· · · 42· · · · 42

·8· · · Letter to Joe McKee from

· · · · Pate Engineers, Inc. - 4.11.05

·9· · · (IDS000717-IDS000719)

10· Exhibit R6............................· · · 42· · · · 42

11· · · Project Design Memo - Harris County

· · · · Water Control and Improvement

12· · · District No. 89 - Harris County,

· · · · Texas - 8.8.05 -

13· · · (IDS000777-IDS000778)

14· Exhibit R7............................· · · 42· · · · 42

15· · · Letter to Timothy Buscha from

· · · · Harris County Public Infrastructure

16· · · Department Engineering Division -

· · · · 12.12.05 (HCFCD000107-HCFCD000109)

17

· · Exhibit R8............................· · · 42· · · · 42

18

· · · · Harris County Water Control and

19· · · Improvement District No. 89 -

· · · · Conceptual Construction Cost

20· · · Estimate - Stormwater Detention

· · · · Facilities to Serve Brunswick

21· · · Meadows Subdivision

· · · · (IDS00081-IDS000815)

22

23

24

25


·2· RESPONDENT'S


·3

·4· Exhibit R9............................· · · 42· · · · 42

·5· · · Project Design Memo Rescope -

· · · · Harris County Water Control and

·6· · · Improvement District No. 89 -

· · · · Harris County, Texas - 2.22.06 -

·7· · · (IDS000822-IDS000832)

·8· Exhibit R10...........................· · · 42· · · · 42

·9· · · E-mail to Brian Gibson from Randy

· · · · Odinet - 4.10.06 - Re: Brunswick

10· · · Meadows Pump Station and Final

· · · · Detention-HCFCD Acceptance

11· · · (IDS000844)

12· Exhibit R11...........................· · · 42· · · · 42

13· · · E-mail to Randy Odinet from Joe

· · · · McKee - 4.11.06 - Re: Brunswick

14· · · Meadows Pump Station (IDS000212)

15· Exhibit R12...........................· · · 42· · · · 42

16· · · Pate Engineers - Harris County

· · · · Water Control and Improvement

17· · · District No. 89 - Conceptual

· · · · Construction Cost Estimate -

18· · · Stormwater Detention Facilities to

· · · · Serve Brunswick Meadows

19· · · Subdivision - (IDS000845-IDS000847)

20· Exhibit R13............................· · ·42· · · · 42

21· · · Pate Engineers handwritten notes -

· · · · Subject: Board Meeting - WCID 89 -

22· · · RTO - 6.6.06 - (IDS000857-IDS000858)

23

24

25

Page 20·1· · · · · · · · · ·EXHIBIT INDEX CONTINUED·2· RESPONDENT'S· · NO. DESCRIPTION· · · · · · · · · · · · OFFERED· ADMITTED·3·4· Exhibit R14............................· · ·42· · · · 42·5· · · E-mail to Brian Gibson from Randy· · · · Odinet - 10.13.16 - Re: Brunswick·6· · · Meadows Pump Station/Detention· · · · (IDS000213)·7· · Exhibit R15............................· · ·42· · · · 42·8· · · · E-mail to P. Brian Gibson from Randy·9· · · Odinet - 2.6.07 - Re: Brunswick· · · · (IDS000197)10· · Exhibit R16............................· · ·42· · · · 4211· · · · Pate Engineers - Letter of12· · · Transmittal - 5.25.07 - Re: Pump· · · · Station System to Serve Stormwater13· · · Detention Basin for Brunswick· · · · Meadows Subdivision - Harris County14· · · Water Control and Improvement· · · · District No. 89 -15· · · (HCFCD000331-HCFCD000335)16· Exhibit R17............................· · ·42· · · · 4217· · · Letter to Harris County Water Control· · · · and Improvement District No. 89 c/o18· · · Washington & ssociates from Pate· · · · Engineers - 6.5.07 -19· · · (HCWCID8900164-HCWCID8900165)20· Exhibit R18............................· · ·42· · · · 4221· · · E-mail String - 6.19.07-6.20.07· · · · (IDS000963)22· · Exhibit R19............................· · ·42· · · · 4223· · · · Letters to Harris County Flood24· · · Control District from Pate Engineers· · · · - 8.20.07 and 8.21.07; Storm Water25· · · Quality Management Plan -· · · · (308 FUR 010483-308 FUR 010534)


·2· RESPONDENT'S


·3

·4· Exhibit R20...........................· · · 42· · · · 42

·5· · · Minutes of Meeting of the Board of

· · · · Directors - 4.7.09 -

·6· · · (308 FUR 016265-308 FUR 016272)

·7· Exhibit R21...........................· · · 42· · · · 42

·8· · · Minutes of Meeting of the Board of

· · · · Directors - 4.21.09 -

·9· · · (308 FUR 016273-308 FUR 016279)

10· Exhibit R22...........................· · · 42· · · · 42

11· · · Letter to Joe Fogarty from Strawn &

· · · · Richardson, P.C. - 4.27.09 -

12· · · Re: Harris County Water Control and

· · · · Improvement District No. 89 (the

13· · · "District"); 308 Furman, Ltd.; New

· · · · Electric Service & Auto Dialer at

14· · · Brunswick Meadows Storm Water Pump

· · · · Station at 2850 Maybrook Hallow Lane

15· · · (308 FUR 005356 - 308 FUR 005357)

16· Exhibit R23..........................· · · ·42· · · · 42

17· · · Letter to T&C Construction, Ltd.,

· · · · from Pate Engineers - 8.25.09 -

18· · · Re: Final Walk Through Punchlist -

· · · · Stormwater Pump Station -

19· · · (HCWCID8900672-HCWCID8900674)

20· Exhibit R24..........................· · · ·42· · · · 42

21· · · E-mail string - March 2010 -

· · · · (HCFCD000386-HCFCD000387)

22

· · Exhibit R25..........................· · · ·42· · · · 42

23

· · · · Letter to Herb Herndon from Pate

24· · · Engineers - 9.14.10 - Re: Brunswick

· · · · Meadows Pump Station and Detention

25· · · Basin - (IDS001166)

Page 22·1· · · · · · · · · ·EXHIBIT INDEX CONTINUED·2· RESPONDENT'S· · NO. DESCRIPTION· · · · · · · · · · · · OFFERED· ADMITTED·3· · Exhibit R26..........................· · · ·42· · · · 42·4· · · · Letter to Honorable County Judge·5· · · & Commissioners Court Building· · · · from Harris County Public·6· · · Infrastructure Department· · · · Architecture & Engineering·7· · · Division - 5.27.11 -· · · · (IDS001170-IDS001176)·8· · Exhibit R27..........................· · · ·42· · · · 42·9· · · · Letter to Friendswood Development10· · · Company from Tolunay-Wong· · · · Engineers, Inc. - 8.17.11 - Re:11· · · Letter report-Brunswick Meadows· · · · Slope Repair-Harris County, Texas12· · · (IDS000117-IDS000142)13· Exhibit R28..........................· · · ·42· · · · 4214· · · Letter to Shamar O'Bryant from· · · · Pate Engineers - 8.29.11 - Re:15· · · Proposal to Perform Professional· · · · Engineering and Surveying Services16· · · for a Stormwater Pump Station and· · · · Detention Facilities to Serve the17· · · Brunswick Meadows Subdivision in· · · · WCID No. 89 - (IDS000166-IDS000168)18· · Exhibit R29...........................· · · 42· · · · 4219· · · · E-mail to Carolyn White (Flood20· · · Control) from Robert Jones -· · · · 5.30.12 - Re: Brunswick Detention21· · · Acceptance - (IDS000149)22· Exhibit R30...........................· · · 42· · · · 4223· · · Note - Brunswick Meadows Detention· · · · Harris County Flood Control24· · · District - 7.19.12 (IDS000143)25

Page 23·1· · · · · · · · · ·EXHIBIT INDEX CONTINUED·2· RESPONDENT'S· · NO. DESCRIPTION· · · · · · · · · · · · OFFERED· ADMITTED·3·4· Exhibit R31..........................· · · ·42· · · · 42·5· · · E-mail string - February through· · · · July 2013 - IDS000172-IDS000177)·6· · Exhibit R32..........................· · · ·42· · · · 42·7· · · · E-mail string - July 2013 -·8· · · (IDS000190)·9· Exhibit R33..........................· · · ·42· · · · 4210· · · IDS Engineering Group Conceptual· · · · Cost Estimate for Brunswick11· · · Meadows Detention Acceptance· · · · July 22, 2013 Punchlist - 8.8.1312· · · (IDS000169)13· Exhibit R34..........................· · · ·42· · · · 4214· · · Letter to Harris County Flood· · · · Control District from IDS15· · · Engineering Group - 12.10.13 -· · · · Re: Brunswick Meadows Pump16· · · Station and Detention Basin· · · · (IDS001169)17· · Exhibit R35..........................· · · ·42· · · · 4218· · · · Memo to Ryan Lovell from19· · · Friendswood Development Company -· · · · 1.16.14 - Re: Brunswick Meadows Pump20· · · Station and Detention Facilities· · · · (308 FUR 009597-308 FUR 009598)21· · Exhibit R36..........................· · · ·42· · · · 4222· · · · IDS Engineering Group Conceptual23· · · Cost Estimate for Brunswick· · · · Meadows Detention Acceptance24· · · July 22, 2013 Punchlist - 7.31.13· · · · (IDS000170-IDS000171)25


·2· RESPONDENT'S


·3

·4· Exhibit R37..........................· · · ·42· · · · 42

·5· · · E-mail string - November 2014 -

· · · · Re: Status of Detention Basin

·6· · · Acceptance for Brunswick Meadows

· · · · Subdivision -

·7· · · (HCFCD000818-HCFCD000819)

·8· Exhibit R38..........................· · · ·42· · · · 42

·9· · · Brunswick Meadows - Cost Summary

· · · · for Detention/Drainage System -

10· · · (308 FUR 017723)

11· Exhibit R39..........................· · · ·42· · · · 42

12· · · Cost Sharing Agreement

· · · · (308 FUR 017715 - 308 FUR 017718)

13

· · Exhibit R40..........................· · · ·42· · · · 42

14

· · · · E-mail from Michael W. Johnson -

15· · · 1.9.15 - Re: Maintenance Agreement

· · · · 308 and HOA - (308 FUR 017726)

16

· · Exhibit R41..........................· · · ·42· · · · 42

17

· · · · E-mail string - January 2015 -

18· · · Re: Maintenance Agreement

· · · · 308 & HOA -

19· · · (308 FUR 017772 - 308 FUR 017775)

20· Exhibit R42..........................· · · ·42· · · · 42

21· · · E-mail from Michael W. Johnson -

· · · · 1.16.15 - Re: Brunswick Meadows

22· · · Agreements - (308 FUR 017714)

23· Exhibit R43..........................· · · ·42· · · · 42

24· · · Letter to First Service Residential

· · · · from Harris County Flood Control

25· · · District - 3.19.15 -

· · · · (308 FUR 010435 - 308 FUR 010436

1· · · · · · · · · · EXHIBIT INDEX CONTINUED

·2· RESPONDENT'S


·3

·4· Exhibit R44..........................· · · ·42· · · · 42

·5· · · Letter to Sarah B. Gerdes from

· · · · Ware Jackson Lee O'Neill Smith

·6· · · Barrow - 9.19.16 -

· · · · Texas. R. Evid. 408 Confidential

·7· · · Settlement Communication -

· · · · (HOA000081-HOA000082)

·8

· · Exhibit R45..........................· · · ·42· · · · 42

·9

· · · · Letter to Sarah B. Gerdes from

10· · · Ware Jackson Lee O'Neill Smith

· · · · Barrow - 1.4.17 - Rule 408

11· · · Confidential Settlement

· · · · Communication -

12· · · (HOA000084-HOA000090)

13· Exhibit R46..........................· · · ·42· · · · 42

14· · · E-mail string - August 2017 -

· · · · (HCFCD000800-HCFCD000802)

15

· · Exhibit R47..........................· · · ·42· · · · 42

16

· · · · Letter to Sharyn Smalls from

17· · · Texas Commission on Environmental

· · · · Quality - 2.5.18 -

18· · · (308 FUR 004416 - 308 FUR 004429)

19· Exhibit R48..........................· · · ·42· · · · 42

20· · · Plaintiff's Original Petition

21· Exhibit R49..........................· · · ·42· · · · 42

22· · · HCFCD Policy, Criteria & Procedure

· · · · Manual for Approval and Acceptance

23· · · of Infrastructure

24

25


·2· RESPONDENT'S


·3

·4· Exhibit R50..........................· · · ·42· · · · 42

·5· · · E-mail string - February through

· · · · June 2013

·6· · · (HCFCD000610-HCFCD000614)

·7· Exhibit R51..........................· · · ·42· · · · 42

·8· · · Annexation Agreement

· · · · (HCWCID8900621-HCWCID8900632)

·9

· · Exhibit R52..........................· · · ·42· · · · 42

10

· · · · TCEQ Technical Memorandum to

11· · · Chris S. Ulmann from Daniel

· · · · Harrison - 1.22.18

12· · · (308 FUR 017704 - 308 FUR 017712)

13· Exhibit R-B...........................· · · 37· · · · 39

14· · · Deposition Testimony of

· · · · Sandra Musgrove

15

· · Exhibit R-C...........................· · · 36· · · · 39

16

· · · · Deposition Testimony of

17· · · Chad Abram

18· Exhibit R-D............................· · ·36· · · · 39

19· · · Deposition Testimony of

· · · · Timothy Buscha

20

· · Exhibit R-E............................· · ·37· · · · 39

21

· · · · Deposition Testimony of John Howell

22

· · Exhibit R-F............................· · ·37· · · · 39

23

· · · · Counter Ceposition Testimony of

24· · · James Ainsworth

25


·2· RESPONDENT'S


·3

·4· Exhibit G.............................· · · 36· · · · 39

·5· · · Direct Testimony of

· · · · Sharyn Smalls

·6

· · Exhibit H.............................· · · 38· · · · 39

·7

· · · · Deposition Testimony of

·8· · · Nancy Blackwell

·9

10· EXECUTIVE DIRECTOR'S


11

· · Exhibit ED AP1.......................· · · ·40· · · · 41

12


13· · · Andrew Paynter

14· Exhibit ED AP2.......................· · · ·40· · · · 41

15· · · Andrew Paynter - resume

16

17

18

19

20

21

22

23

24

25

Page 28·1· · · · · · · · · · HEARING ON THE MERITS

· · · · · · · · ·September 24, 2019 - 9:58 a.m.

·2

· · · · · · · · · · · * * * * * * * * * * *

·3· · · · · · · · · · P R O C E E D I N G S

·4· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· We are on

·5· the record.· This is SOAH Docket No. 582-18-3270, TCEQ

·6· Docket No. 2018-0414-DIS.

·7· · · · · · · ·My name is the Linda Bright.· I'm the ALJ

·8· assigned to hear this case.· Today is September 24th,

·9· 2019, and this hearing is being held in Houston, Texas.

10· This matter is regarding the appeal by 308 Furman, Ltd.,

11· of the decisions by the board of the directors of Harris

12· County Water Control and Improvement District No. 89

13· pursuant to Title 30 Texas Administrative Code Section

14· 293.180.

15· · · · · · · ·We're going to begin with appearances of

16· the parties starting with the petitioner.

17· · · · · · · ·MS. SCOTT:· Natalie Scott for the

18· Petitioner, and this is my law partner Barry Rabon.

19· · · · · · · ·MR. GIBSON:· Good morning, Judge.· George

20· Gibson here on behalf of District 89, and also here with

21· our firm is Laura Napoli-Janitens.

22· · · · · · · ·MS. MURRAY:· Good morning.· I'm Kayla

23· Murray with ED.· With me is Andrew Paynter and Chris

24· Ulmann.

25· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· All right.

1· And has anyone appeared for OPIC?

·2· · · · · · · ·MR. WAYNE:· Good morning, Your Honor.

·3· Sheldon Wayne on behalf of OPIC.

·4· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· And

·5· because we have this hearing scheduled for one day, I am

·6· going to limit the parties' time.· Preliminarily I am

·7· thinking two hours for the petitioner, two hours for the

·8· respondent, and then roughly an hour for the ED.· And I

·9· don't expect that OPIC will have too much, but -- but 45

10· minutes to an hour for OPIC as well.

11· · · · · · · ·MR. WAYNE:· Your Honor, to the extent

12· necessary, you can limit OPIC's time more if it would

13· benefit the other parties --

14· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.

15· · · · · · · ·MR. WAYNE:· -- to allow a more efficient

16· presentation.

17· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· So for now

18· we'll say 30 maybe minutes then for OPIC.

19· · · · · · · ·MR. WAYNE:· Thank you, Your Honor.

20· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· And this

21· would -- and since direct testimony has been prefiled

22· already, this would be the cross-examination time.· When

23· it comes to the petitioner, it also includes any

24· presentation of rebuttal evidence that you have.

25· · · · · · · ·Okay.· Then let's go ahead and address

Page 30·1· some of the exhibits.· Were there any -- any preliminary

·2· matters that we need to address before we get into

·3· presentation?

·4· · · · · · · ·MS. SCOTT:· Yes.· We have any agreements

·5· that we want to get on the record?

·6· · · · · · · ·MR. GIBSON:· Sure.· Your Honor, we had

·7· a -- in order to limit the testimonial time, we have

·8· agreed to a number of witnesses.· I think there were

·9· approximately eight different witnesses that the parties

10· had submitted testimony on.· However, for -- and this is

11· in -- in a stipulation that we filed with court last

12· week.· For the vast majority of those witnesses, we both

13· agreed that that can be submitted solely through the

14· deposition testimony.· Both sides have done their

15· designations -- designations, counter-designations, et

16· cetera.· And the only two witnesses that we're

17· anticipating having today for live cross-examination are

18· a representative of the Appellant, 308 Furman, and that

19· would be Mr. Michael Johnson, as I understand it, and

20· also a representative of District 89, who would be

21· Sharyn Smalls, that's present.

22· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· And

23· I did see that last week, and I do appreciate the

24· attempts to make efficient time of the hearing.

25· · · · · · · ·Do the parties anticipate doing

Page 31·1· cross-examination live of the ED's witness?

·2· · · · · · · ·MS. SCOTT:· There -- we might have a brief

·3· cross on the ED's witness, but I don't think it would be

·4· anything more than -- I mean less than half an hour for

·5· sure.

·6· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· So

·7· at the very most we're looking at three live witnesses?

·8· · · · · · · ·MS. SCOTT:· Uh-huh.· Yes.

·9· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.

10· · · · · · · ·MS. SCOTT:· And, Judge, I know that we had

11· submitted objections and responses, and then you've

12· overruled the objections on the exhibits.· Are these

13· admitted, or do we need to move for admission on the

14· exhibits?

15· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Typically,

16· the witness gets on the stand and then adopts them as

17· their own.· For the witness that will be called live, we

18· will go ahead with that procedure.· But let me just go

19· ahead and en mass admit the documents so that -- you

20· know, for efficiency of process.· But when you do bring

21· a witness up on the stand, we'll have them adopt it as

22· their own --

23· · · · · · · ·MS. SCOTT: Okay.

24· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· -- and see

25· if there are any changes that they feel like need to be

Page 32·1· made.

·2· · · · · · · ·MS. SCOTT:· Okay.

·3· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· So if the

·4· petitioner would like to offer their witness -- their

·5· exhibits.

·6· · · · · · · ·MS. SCOTT:· Yes, Your Honor.· I offer for

·7· admission Exhibits 1 through 101 --

·8· · · · · · · ·MR. RABON:· 2.

·9· · · · · · · ·MS. SCOTT:· -- 102.· And move admission of

10· those exhibits.

11· · · · · · · ·(Petitioner's Exhibit Nos. 1 through 102

12· · · · · · · ·offered for admission.)


14· · · · · · · ·MR. GIBSON:· Your Honor, we've already

15· stated our objections to certain exhibits, which I

16· understand have been overruled, but we're not waiving

17· those.

18· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· And,

19· then, with those objections in mind, Petitioner's

20· Exhibits 1 through 102 are admitted.

21· · · · · · · ·(Petitioner's Exhibit Nos. 1 through 102

22· · · · · · · ·admitted.)

23· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· And the

24· prefiled testimony, were those labeled as exhibits with

25· exhibit numbers or were they separate and aside?

1· · · · · · · ·MR. RABON:· Separate.

·2· · · · · · · ·MS. SCOTT:· They're separate.

·3· · · · · · · ·MR. GIBSON:· Separate.

·4· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· Then

·5· I will need those admitted with exhibit labels.· Why

·6· don't we go ahead and go through those as A, B, C, and D

·7· so as to differentiate them from the trial exhibits.

·8· · · · · · · ·MS. SCOTT:· Okay.

·9· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· So --

10· · · · · · · ·MS. SCOTT:· So we have Exhibit -- I'm

11· sorry -- deposition testimony that we're offering for

12· Sandra Musgrove, Chad Abram, Tim Buscha, John Howell.

13· Yeah, so that's it -- that's it for the deposition --

14· · · · · · · ·MR. RABON:· No, no.· We also have --

15· · · · · · · ·MS. SCOTT:· Oh, James Ainsworth as well.

16· · · · · · · ·And then we did prefile direct testimony

17· of Michael Johnson, so I don't know if that needs to be

18· marked as well for admission.

19· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Yes.

20· · · · · · · ·MS. SCOTT:· Okay.· And that --

21· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· So

22· Mr. John --

23· · · · · · · ·MS. SCOTT:· -- will be a live witness as

24· well.

25· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Yes.· So

Page 34·1· let's label the prefiled direct testimony of Michael

·2· Johnson as Exhibit A since he will be presented live.

·3· · · · · · · ·MS. SCOTT:· Okay.

·4· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Whereas the

·5· deposition designations of Musgrove would be --

·6· Ms. Musgrove would be Exhibit B, Mr. Abrams would be

·7· Exhibit C, Mr. Buscha would be Exhibit D.

·8· · · · · · · ·MR. GIBSON:· D as in dog?

·9· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Yes, D as

10· in dog.

11· · · · · · · ·Mr. Howell would be Exhibit E, as in

12· elephant, and Mr. Ainsworth would be Exhibit F.

13· · · · · · · ·(Petitioner's Exhibits A through F

14· · · · · · · ·marked.)

15· · · · · · · ·MS. SCOTT:· Okay.· All right.· So I would

16· move admission for Exhibits A through F.

17· · · · · · · ·(Petitioner's Exhibits A through F offered

18· · · · · · · ·for admission.)

19· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Aside from

20· the prior noted objections, does the respondent have any

21· other objections to the --

22· · · · · · · ·MR. GIBSON:· No objections.

23· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· Then

24· Petitioner's Exhibits A through F are admitted.

25· · · · · · · ·(Petitioner's Exhibits A through F

Page 35·1· · · · · · · ·admitted.)

·2· · · · · · · ·MR. GIBSON:· And, Your Honor, to the

·3· extent that we have any designations on some of those

·4· same witnesses that are overlapping, will those be

·5· considered part of the same exhibit?· Like -- for

·6· example, for Timothy Buscha, B-U-S-C-H-A, we both had

·7· designations for him.· So will those both be within D or

·8· will ours be a separate number?

·9· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· And I think

10· because of the way they were submitted, portions of the

11· deposition that weren't part of the petitioner's

12· designations weren't necessarily included in their

13· filing, so I am going to go ahead and admit yours

14· separately so that all of those pieces are there that --

15· that you're trying to point out as Respondent.· But we

16· will try to make the letters line up, at the very least,

17· so that, you know, Musgrove will still be Exhibit B and

18· so on.

19· · · · · · · ·MR. GIBSON:· So our portions -- okay. I

20· see.· I see.· Okay.

21· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Uh-huh.

22· · · · · · · ·MR. GIBSON:· So, first, the respondents

23· offer the prefiled testimony of Sharyn Smalls, which has

24· already been filed with record, and we also anticipate

25· her testifying.· Will that be F, Your Honor?

Page 36·1· · · · · · · ·MR. RABON:· No.

·2· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Ainsworth

·3· is F.

·4· · · · · · · ·MR. GIBSON:· Oh, I'm sorry.· Would that be

·5· G?

·6· · · · · · · ·(Respondent's Exhibit G offered for

·7· · · · · · · ·admission.)

·8· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Yes.· Then

·9· we'll label Ms. Small's as Exhibit G, her prefiled

10· testimony.

11· · · · · · · ·MR. GIBSON:· Respondent District 89 has

12· also filed -- prefiled testimony for Chad Abram, which

13· we offer.

14· · · · · · · ·(Respondent's Exhibit C offered for

15· · · · · · · ·admission.)

16· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· And that

17· will be Exhibit -- Respondent's Exhibit C.

18· · · · · · · ·MR. GIBSON:· Exhibit what?· I'm sorry.

19· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· C as in

20· cat.

21· · · · · · · ·MR. GIBSON:· Okay.· And we also offer

22· pre -- the prefiled deposition exhibit testimony of

23· Timothy Buscha.

24· · · · · · · ·(Respondent's Exhibit D offered for

25· · · · · · · ·admission.)

1· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· The

·2· Respondent's designations of Buscha's testimony would be

·3· Exhibit D, as in dog.

·4· · · · · · · ·MR. GIBSON:· We also offer the prefiled

·5· deposition testimony of Sandra Musgrove.

·6· · · · · · · ·(Respondent's Exhibit B offered for

·7· · · · · · · ·admission.)

·8· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:

·9· Ms. Musgrove deposition designations from Respondent

10· would be Exhibit B.· B as in boy.

11· · · · · · · ·MR. GIBSON:· We also offer designations

12· from the deposition of James Ainsworth.

13· · · · · · · ·(Respondent's Exhibit F offered for

14· · · · · · · ·admission.)

15· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· The

16· Ainsworth designations would be Exhibit F.

17· · · · · · · ·MR. GIBSON:· Respondent F, correct?

18· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Yes,

19· Respondent Exhibit F.

20· · · · · · · ·MR. GIBSON:· And we offer the deposition

21· excerpts of John Howell.

22· · · · · · · ·(Respondent's Exhibit E offered

23· · · · · · · ·for admission.)

24· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· As

25· Respondent Exhibit E.

Page 38·1· · · · · · · ·MR. GIBSON:· We offer the deposition

·2· excerpts from the deposition of Nancy Blackwell.

·3· · · · · · · ·(Respondent's Exhibit H offered for

·4· · · · · · · ·admission.)

·5· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· This is

·6· going to be a new letter then.

·7· · · · · · · ·MS. SCOTT:· And, Your Honor, I'm sorry.

·8· We did also offer some testimony from Ms. Blackwell.· So

·9· that would probably be H.


11· · · · · · · ·MR. RABON:· It would be H for us and

12· Respondent H for --

13· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Respondent

14· H.· Okay.· So let's -- after Respondent finishes theirs,

15· we'll go back to you and address Petitioner's Exhibit H

16· as well.

17· · · · · · · ·Okay.· So the deposition -- the

18· respondent's deposition designations of Blackwell are

19· Respondent Exhibit H.

20· · · · · · · ·MR. GIBSON:· That is all the testimony --

21· prefiled testimony, Judge, for Respondent.

22· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· So I

23· believe the letters run B through H.

24· · · · · · · ·MR. GIBSON:· Yes.

25· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· And

Page 39·1· then are there any objections to Respondent's prefiled

·2· testimony that hasn't been otherwise presented?

·3· · · · · · · ·MS. SCOTT:· No.· I would just reurge our

·4· prior objections.


·6· with those objections in mind, Respondent's Exhibits B

·7· through H are admitted.

·8· · · · · · · ·(Respondent's Exhibits B through H

·9· · · · · · · ·admitted.)

10· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· And now we

11· will return to the Petitioner's Exhibit H, I believe,

12· Ms. Blackwell.

13· · · · · · · ·MS. SCOTT:· Yes, Your Honor.· We would

14· move for admission of Petitioner's Exhibit H, which is

15· is the deposition testimony of Ms. Blackwell.

16· · · · · · · ·(Petitioner's Exhibit H offered for

17· · · · · · · ·admission.)

18· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Any

19· objections?

20· · · · · · · ·MR. GIBSON:· No, Judge.


22· Petitioner's Exhibit H is admitted.

23· · · · · · · ·(Petitioner's Exhibit H admitted.)

24· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· And from

25· the ED?

Page 40·1· · · · · · · ·MS. MURRAY:· Yes, Your Honor, we have --

·2· we have two exhibits.· One for pretrial testimony and

·3· one resume.· I did prelabel them, so I'm not sure if

·4· that's going to be too problematic.· They're the same

·5· labels as were submitted to the parties:· ED AP1 and ED

·6· AP2.· Is that going to be --

·7· · · · · · · ·(ED Exhibits AP1 and AP2 offered for

·8· · · · · · · ·admission.)

·9· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Did you say

10· AP1 and AP2?

11· · · · · · · ·MS. MURRAY:· Uh-huh.

12· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Out of

13· curiosity, what is AP?

14· · · · · · · ·MS. MURRAY:· Andrew Paynter.

15· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Oh, that's

16· acceptable then as long as we know what it means.

17· · · · · · · ·MR. GIBSON:· There's some logical

18· connection.


20· Then, yeah, those labels are fine.

21· · · · · · · ·MS. MURRAY:· Okay.· Do I need to give a

22· copy to the court reporter now or --


24· · · · · · · ·MS. MURRAY:· Okay.

25· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Were there

1· any objections to ED AP1 and ED AP2 that were not

·2· otherwise noted?

·3· · · · · · · ·MS. SCOTT:· No, Judge.

·4· · · · · · · ·MR. GIBSON:· No objections.

·5· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· All right.

·6· Then ED AP1 and ED AP2 are admitted.

·7· · · · · · · ·(ED Exhibits AP1 and AP2 admitted.)

·8· · · · · · · ·MR. WAYNE:· And, Your Honor, just for

·9· clarification, what -- what was ED AP2?

10· · · · · · · ·MR. RABON:· Resume.

11· · · · · · · ·MS. MURRAY:· His resume.

12· · · · · · · ·MR. WAYNE:· His resume?

13· · · · · · · ·MS. MURRAY:· Uh-huh.

14· · · · · · · ·MR. WAYNE:· ·what was 1?

15· · · · · · · ·MS. MURRAY:· His prefiled testimony.

16· · · · · · · ·Should I hand those copies out right now?

17· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Yeah.

18· Yeah, that's fine.

19· · · · · · · ·MR. GIBSON:· While she's doing that,

20· Judge -- I don't want to mess up Your Honor's order.

21· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Uh-huh.

22· · · · · · · ·MR. GIBSON:· But we -- we did not preadmit

23· the Respondent's exhibits yet.· I just wanted to --

24· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Oh, the

25· exhibit list, yes.

Page 42·1· · · · · · · ·MR. GIBSON:· Yeah.· I just wanted to put

·2· that in line whenever you're ready, Judge.


·4· Respondent's Exhibits then.

·5· · · · · · · ·MR. GIBSON:· Respondent's offer their

·6· prefiled exhibits, which we have labeled R1 through R52.

·7· · · · · · · ·(Respondent's Exhibit Nos. R1 through R52

·8· · · · · · · ·offered for admission.)


10· Any objections to Respondent's exhibits that haven't

11· been previously noted?

12· · · · · · · ·MS. SCOTT:· Yes, just to reurge the prior

13· objections.


15· Then Respondent's Exhibits R1 through R52 are admitted.

16· · · · · · · ·(Respondent's Exhibit Nos. R1 through R52

17· · · · · · · ·admitted.)

18· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· Now

19· we can start with the petitioner's presentation of their

20· case and their witness.

21· · · · · · · ·PETITIONER'S OPENING STATEMENT

22· · · · · · · ·MS. SCOTT:· So, Your Honor, I think we'll

23· just have a brief opening just to sort of signpost where

24· we're going to go.

25· · · · · · · ·And, as I've mentioned, my name is Natalie

Page 43·1· Scott.· I represent 308 Furman, who is here on the

·2· appeal.· And I think it might be helpful to just to go

·3· in a little bit of public policy direction with regard

·4· to the purpose of water districts in the state of Texas.

·5· · · · · · · ·They're permitted under the Texas

·6· constitution.· They can be created administratively or

·7· through the legislature.· And typically in the

·8· legislature -- I mean, there are many -- hundreds of

·9· districts created during the legislative sessions.· And

10· the purpose is -- and I think that the state of Texas

11· has recognized as a public policy position that these

12· are good for the state of Texas.· They are good for the

13· consumer.· You may have heard what's often referred to

14· as the "Texas Miracle," which is our economy that was

15· sustainable during the recession where in many other

16· states such a -- the recession was really, you know,

17· detrimental to those states.· But here we were still

18· creating jobs and people were still moving here.

19· · · · · · · ·And, in fact, we had so many people moving

20· here, that we needed to put roofs over their head, and

21· creations of these districts allows that to happen.· And

22· not just for the developer to go and front the money to

23· do that, but to do it in a way that provides reasonable

24· housing.· The cost of housing is less because the

25· developer can finance the infrastructure after they put

Page 44·1· in a significant investment for over 30 years.· And they

·2· do this by selling tax-exempt bonds that can finance

·3· many amenities within the developments that make the

·4· housing more affordable and provide things for people,

·5· you know, like green space and recreational amenities

·6· that they other -- otherwise wouldn't be able to afford

·7· to do.

·8· · · · · · · ·And because this is the public policy of

·9· the state of Texas, in order for it to work, the

10· developer has to get reimbursed pursuant to the

11· reimbursement agreement with the water district and

12· pursuant to state law.· Because if they don't, it

13· doesn't work.· Then the developer doesn't get to pass on

14· its savings to the consumer because it doesn't have any

15· savings because they've gone back to just financing the

16· investment from the very beginning.

17· · · · · · · ·And that's why we're here, because the

18· Water District -- and I'll refer to WCID 89 as the

19· "District" -- has refused to pay back my client the

20· reimbursable share of their costs associated with

21· development of 308 Furman.· And the way -- just in case

22· you're curious -- I was -- 308 is the number -- the

23· amount of acreage that the development consists of.· And

24· that was annexed into the Water District in the early

25· 2000s, and so development started then and continued

1· through about 2014.

·2· · · · · · · ·And I will -- the evidence will give you a

·3· more precise dateline on that, but my client can testify

·4· to that, obviously.

·5· · · · · · · ·So that's a little bit of background on

·6· the District.

·7· · · · · · · ·And we filed this appeal.· And I

·8· understand it's a pretty rare procedural appeal, but

·9· it's appealing the decision of the Water District, and

10· the decision that we're appealing is the fact that my

11· client wasn't reimbursed for a pump station, that they

12· did not receive the full amount of interest that they're

13· entitled to.· They only received two years of interest

14· rather than five years that they're entitled to under

15· the agreement with the District.· They were not

16· reimbursed developer advances, which are common in this

17· type of development, and they also were deducted some

18· maintenance expenses that they're also entitled to

19· reimbursement on.

20· · · · · · · ·So I'll just go through the specific

21· claims each.· And when you look at the statute -- or the

22· rules when you're making your decision, the -- what the

23· rules say is that you'll consider the suitability and

24· necessity of the facilities, the reasonableness of the

25· cost of the facilities, the economic viability of

Page 46·1· District and any other relevant evidence.

·2· · · · · · · ·So here I think that you're going to hear

·3· some testimony from the Water District that will suggest

·4· that this -- the pump station, for example, wasn't

·5· neccesary, but the evidence will show you that it is.

·6· It's been functioning for over ten years, and it's been

·7· functioning as it's intended to.· It serves the District

·8· and its residents, and so far they haven't paid for it.

·9· So, I mean, when you consider the reasonableness of the

10· cost, so far it's been free.· We're asking for

11· reimbursement of the $800,000.· But I don't think that

12· there's any evidence that shows that the pump isn't

13· necessary or that it's not suitable for the District.

14· · · · · · · ·You have evidence in the deposition

15· testimony of Mr. Howell that says that if -- if the cost

16· of not just the pump but all the items that we're

17· seeking reimbursement for had been included in this bond

18· issue, that the District would still be economically

19· viable.· So I think that we have financial analyst

20· testimony that -- that shows it's feasible -- all the

21· costs are feasible within the District.

22· · · · · · · ·You're also going to hear some testimony

23· from the District regarding the acceptance of the pump

24· from the Harris County Flood Control District.· And I

25· think the best evidence that we have is the ED's

Page 47·1· testimony that says that that is not a prerequisite for

·2· reimbursement from the District to my client.· And

·3· you'll hear testimony from us as well that those are

·4· some of the facts that will -- under these criteria that

·5· are under the rule that show the viability of the pump,

·6· the reasonble -- reasonableness of it, and the fact that

·7· it's necessary and serves the District and has been for

·8· over ten years.

·9· · · · · · · ·The next item that we come to is the

10· interest, which is the District reimburse my client two

11· years rather than five years of interest.· Under the

12· parties' agreement that document states that the -- my

13· client will be reimbursed up to the maximum extent

14· allowed under the TCEQ rules, and that's five years.· So

15· we don't have any, really, explanation of why they

16· deducted that three years of interest other than they

17· just wanted to.

18· · · · · · · ·The same is true for the developer

19· advances.· So before the District has any tax base and

20· before it has any money, the developer spends the money

21· up front and gets reimbursed for the District -- from

22· the District.· So those are the developer advances.· And

23· here a number of those were excluded, and they're mainly

24· engineering costs and some administrative costs.· And,

25· again, I don't think there's any evidence that shows a

Page 48·1· reasonable explanation for those.· We submitted

·2· everything that we are required to under the rules.· And

·3· I think that the ED's testimony suggests, as well, that

·4· we provided everything that we were supposed to for

·5· reimbursement on our developer advances.

·6· · · · · · · ·Finally, after the development was

·7· complete we spent around $265,000 in some maintenance

·8· for the detention pond, and that involved mowing.· We

·9· don't believe that we should have been responsible for

10· it after completion, but we did that anyway, and the

11· District did not reimburse us for those costs.· The

12· District -- the District charged us for those expenses,

13· and we paid for them and were not reimbursed for those

14· expenses.

15· · · · · · · ·So, Your Honor, those are the four claims

16· that -- that we're here on, and the relief that we're

17· seeking is the relief that's provided under the rule and

18· was also expanded on a little bit in Judge Bell's

19· opinion when he denied the District's motion to dismiss

20· this appeal.· And we're asking for a finding by you that

21· the Water District erred in its decisions not to

22· reimburse 308 Furman for those four items.· And, in

23· addition, we are seeking a refund of the deposits that

24· we have made with the commission in relation to the

25· appeal.


·2· Opening statement.

·3· · · · · · · ·MR. GIBSON:· May we go off the record one

·4· moment, please.

·5· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Oh, sure.

·6· · · · · · · ·(Break from 10:23 a.m. to 10:25 a.m.)

·7· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· We're back

·8· on the record.

·9· · · · · · · ·RESPONDENT'S OPENING STATEMENT

10· · · · · · · ·MR. GIBSON:· Good morning, Judge.· May it

11· please the Court.· George Gibson here on behalf of

12· Harris County Water Control Improvement District No. 89.

13· And also here with Laura Napoli-Janitens.· And we're

14· with the law firm Nathan, Sommers, Jacobs.· We're very

15· proud to represent District 89, its board and its

16· taxpayers that live within its borders.

17· · · · · · · ·I want to follow up on a theme that

18· Ms. Scott referenced in her opening statement on the

19· idea of public policy.· While, obviously, Texas has

20· benefited from the public policy of encouraging

21· development and specifically encouraging residential

22· development through the creation of water districts, as

23· they're sometimes called, or in this case water control

24· improvement district, but there's also another policy.

25· And one of the reasons that the state government,

Page 50·1· through the Texas Commission on Environmental Quality,

·2· is so heavily involved in this process -- and that is to

·3· protect the taxpayers, and that is to ensure that

·4· taxpayer funds are not being used except for those that

·5· are allowed under the law.

·6· · · · · · · ·And in this particular instance, the

·7· boards of the taxing authorities, such as District 89,

·8· are charged with the responsibility of stewarding and

·9· shepherding those taxes that are collected from the

10· citizens and the taxpayers and ensuring that those funds

11· are used only for things that are properly done.

12· · · · · · · ·And it would not -- it would be an

13· aberration -- or it would be really an abrogation of

14· those responsibilities if a developer were to just go

15· out and build whatever they wanted to whenever they

16· wanted to, however they wanted to, wherever they wanted

17· to without first getting the approval and agreement of

18· the districts.· That is why, for example -- one of the

19· exhibits that you have in front of you in both the

20· respondent and the appellant's exhibits is the 2002

21· Reimbursement Agreement.· And that Reimbursement

22· Agreement is written very generically, and it's written

23· in broad forms because it's going to encompass, you

24· know, 10, 15 years' worth of developments after that.

25· That's why when a developer is going to build something,

Page 51·1· they have to go to the district and get approval and

·2· agreement that, yes, you can build that in our district

·3· and we will reimburse you.

·4· · · · · · · ·And that's inherently one of the issues

·5· that's in dispute today.· They -- they say that, well,

·6· we built it.· And so long as it complies with TCEQ

·7· guidelines for reimbursement, that's it.· That's all we

·8· to prove.· That's totally not true.

·9· · · · · · · ·They also have to approve that the

10· District -- they have to prove that the District agreed

11· to it, that the District said, "Yes, you can build

12· that."· And in this particular instance, they had

13· certain conditions.· And Your Honor's going to hear a

14· lot of evidence about the criteria that these facilities

15· have to meet with regard to Harris County Flood Control

16· District.· I'm not going to go into that detail right

17· now because you'll hear plenty of evidence about it, but

18· that's a -- something that's missing.· That's the other

19· side of the equation.· You've heard the developer's side

20· that we need an efficient way where we can get

21· reimbursed for our investments.· That's all -- that's

22· true.

23· · · · · · · ·But the taxpayer side of it is, but we

24· need to make sure that what you're getting reimbursed

25· for is what you were supposed to do.· And that's the

Page 52·1· other side of this equation.· That's the contractual

·2· side of this equation.

·3· · · · · · · ·And that brings up one of infirmities that

·4· we believe is present in this very procedure.· And we

·5· believe that Your Honor's going to have to struggle with

·6· it.· We think that the commission is going to have to

·7· struggle with it, and that is that inherently this

·8· dispute is a dispute over contract.· It's a dispute over

·9· what were the terms of the District's agreement to

10· authorize them to build this expanded detention pond and

11· pump station?· And that's the contract interpretation

12· issue.

13· · · · · · · ·And there -- there are many cases in Texas

14· that say that the TCEQ and the very appellate statutes

15· that they're proceeding under do not allow the TCEQ and

16· therefore Your Honor to make contractual

17· interpretations.· Those are for the courts at law.· And

18· that's where this -- this started.· They started with a

19· lawsuit in Harris County district court, and that's

20· really where this belongs because inherently what's

21· going to have to be determined by a jury is what was the

22· parties' agreement, what were parameters and scope of

23· that, and did Lennar or 308 Furman comply with the terms

24· of that agreement in seeking their reimbursement?

25· And at the end of the day we believe that that's -- that

1· that is not something that this Court or the TCEQ can

·2· do.

·3· · · · · · · ·Another problem with this appeal is very,

·4· very fundamental, and that goes straight to the Texas

·5· Administrative Code, Section 293.180 that they proceed

·6· under.· That section says that a party may -- a party

·7· agreed by a decision of the board of directors of a MUD

·8· may appeal a decision if it involves the cost purchase

·9· or use of improvements.· And 308 Furman's had the

10· opportunity to file their appeal, and they've had the

11· opportunity and obligation to identify what is the

12· decision that you are appealing from.

13· · · · · · · ·And I submit this as a signpost to Your

14· Honor, and respectfully request that Your Honor listen

15· for the evidence when this comes, but you will hear that

16· they're appealing from a decision allegedly made on May

17· 2nd, 2017, at a board meeting.· Setting aside a lack of

18· evidence regarding that, the -- the minutes from that

19· meeting, which is really the only evidence they submit,

20· don't entail any decision having been made that day.· In

21· fact, the -- the decisions that they really are

22· complaining about weren't made for many, many months

23· afterwards.· And -- and so therefore we would submit

24· that when Your Honor looks at this from a legal

25· standpoint after the evidence is complete -- and we'll

Page 54·1· brief this, I'm sure, later for Your Honor -- that

·2· that's -- that's a problem that they cannot overcome.

·3· · · · · · · ·The statute is clear that a decision by a

·4· MUD board like District 89 has to be appealed within 30

·5· days of the decision.· And that's there for a reason, so

·6· you don't have public bodies exercising their right and

·7· their obligation to shepherd and steward the public's

·8· funds constantly having to answer for their decision.

·9· You make a decision, and then within 30 days there's no

10· challenge to it because that's -- because they need the

11· ability to make those decisions as a public body.· And

12· in this case 308 Furman did not meet that burden.

13· · · · · · · ·One of things that I think that Your

14· Honor -- when -- when you hear from the executive

15· director -- or, more specifically, review the executive

16· director's profile testimony, just a sign post of a

17· couple small parts of it -- I know Your Honor will read

18· the whole thing.· Probably already have.· But a couple

19· of things that the executive director says is whether or

20· not the TCEQ and therefore Your Honor has any authority

21· to require a district to include more than two years of

22· interest, and the answer is, no, that there is no

23· authority.· According to the executive director, there

24· is no authority to make the finding that they're asking

25· for.

Page 55·1· · · · · · · ·Does the TCEQ have the authority to

·2· determine which projects or reimbursables must

·3· be included in a bond application?· No.· That decision

·4· is at the discretion of the District's board, and so

·5· therefore we believe that that testimony supports our

·6· position that this is not something that can be before

·7· the TCEQ and therefore Your Honor.

·8· · · · · · · ·We -- just briefly on the substance --

·9· just to sign post it, as Ms. Scott said, we believe that

10· when you get to the substance of the issue regarding the

11· pump, is that you will hear that the promises were

12· made, the responsibility was undertaken to design and

13· build that expanded detention pond and pump station in

14· accordance with Harris County Flood Control criteria for

15· acceptance by maintenance by Flood Control, and the

16· evidence is going to be uncontroverted that they did not

17· do that.· And we will highlight that for Your Honor.

18· · · · · · · ·With regard to the two years of interest,

19· two years of interest is the maximum that's allowed

20· under the statute.· I -- we just disagree with their

21· interpretation of the Reimbursement Agreement, the

22· contractual language, which is essentially what the

23· Court will have to do, is to interpret contractual

24· language in order to determine whether or not more than

25· two years of interest was required to have been applied

Page 56·1· for.· And we will talk about that more in evidence but

·2· also in -- in argument.

·3· · · · · · · ·With regard to the advancements, what --

·4· we believe that the evidence will show that the -- the

·5· payments that were made that they're seeking

·6· reimbursement for were not advancements.· Those were not

·7· advancements to a district that didn't have a tax base.

·8· This district did.· It was already a functioning

·9· district.· This neighborhood, Brunswick Meadows, is not

10· the only neighborhood in this district.· There are

11· others.· And this district was already a functioning,

12· viable entity by that time.

13· · · · · · · ·And then, finally, with regard to the

14· deduction that the District made from the bond issue

15· that was made in 2018, the District deducted that

16· because, as the documents we present Your Honor will

17· show, the maintenance of that detention pond was 308

18· Furman's responsibility, and they weren't fulfilling

19· that responsibility.· And so the District had to take it

20· over in order to make sure that its residents were safe,

21· that the -- it was functioning and not overgrown.· And

22· so that's why those -- those items were deducted,

23· because they weren't doing what they were supposed to

24· do.

25· · · · · · · ·So at the end of this we hope, and we

1· request, that Your Honor deny the appeal.· And we'll be

·2· prepared to present our evidence.· Thank you.

·3· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Opening

·4· from the EDT.

·5· · · · · ·EXECUTIVE DIRECTOR'S OPENING STATEMENT

·6· · · · · · · ·MS. MURRAY:· It's very brief.

·7· · · · · · · ·For the reasons outlined in the ED's

·8· staff's prefiled testimony that were submitted to all

·9· the parties on August 9th of this year, the ED will not

10· be offering an opinion on whether the petition submitted

11· by 308 Furman be granted or denied, but rather the ED's

12· testimony will consist of explaining the general process

13· for reviewing district bond applications as well as what

14· the ED specifically reviewed in the bond application

15· issue.· Thank you.

16· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Any opening

17· from OPIC?

18· · OFFICE OF PUBLIC INTEREST COUNSEL'S OPENING STATEMENT

19· · · · · · · ·MR. WAYNE:· Yes, Your Honor, just very

20· quickly.

21· · · · · · · ·Good morning, Your Honor.· Sheldon Wayne

22· on behalf of OPIC.· And while -- just to kind of give a

23· little bit of OPIC's perspective on -- on this matter,

24· while OPIC does agree that this is really at its heart a

25· dispute between the contractor and the District, there

Page 58·1· are before you public policy considerations at play, as

·2· stated by both Petitioner and -- and the District

·3· themselves.

·4· · · · · · · ·And OPIC's ultimate goal in this

·5· proceeding is to give both Your Honor and the

·6· commissioners themselves a recommendation on whether or

·7· not to grant or deny the petition.· And in doing so,

·8· OPIC is going to pay special attention to those factors

·9· that are stated in 30 Texas Administrative Code Section

10· 293.180, subpart (c)2 with special attention paid to the

11· suitability and necessity of those facilities, the

12· reasonableness of cost of those facilities, and the

13· economic viability of the district, Your Honor.· Thank

14· you.


16· Would the petitioner like to call its witness?

17· · · · · · · ·MS. SCOTT:· Yes, Your Honor.· And we

18· provided our order of witness, but I think that everyone

19· other than Michael Johnson has been submitted through

20· deposition testimony.· So --


22· · · · · · · ·MS. SCOTT:· -- we will call Michael

23· Johnson.

24· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· If you

25· would, raise your right hand.

Page 59·1· · · · · · · ·(Witness sworn.)


·3· Have a seat, please.

·4· · · · · · · ·MR. GIBSON:· Your Honor, just to -- I

·5· don't want to step on toes.· As I understand the

·6· procedure, and, please, correct me, is that they've

·7· submitted Mr. Johnson's direct testimony --

·8· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Yes.

·9· · · · · · · ·MR. GIBSON:· -- and so now he's subject to

10· our cross-examination?


12· · · · · · · ·MR. GIBSON:· And their redirect after

13· that?

14· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Yes.· But

15· just briefly we'll cover him adopting that testimony as

16· his own --

17· · · · · · · ·MR. GIBSON:· Great.

18· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· -- and any

19· changes or updates that you feel need to be made.

20· · · · · · · ·MR. GIBSON:· Thank you.

21· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· But that

22· should be rather brief.· And then he'll be subject to

23· cross-examination.


25· · · · · · · ·MS. SCOTT:· So, Your Honor, do I -- I need

Page 60·1· to prove up, then, that he has submitted his testimony

·2· and that --


·4· · · · · · · ·MS. SCOTT:· Okay.· All right.

·5· · · · · · · · · · · MICHAEL JOHNSON,

·6· having been first duly sworn, testified as follows:

·7· · · · · · · · · · ·DIRECT EXAMINATION

·8· BY MS. SCOTT:

·9· · · Q.· ·Good morning, Mr. Johnson.

10· · · A.· ·Good morning.

11· · · Q.· ·Do you -- did you provide direct testimony in

12· this matter?

13· · · A.· ·I did.

14· · · Q.· ·And you have reviewed that testimony, and you

15· testify that that testimony is your own?

16· · · A.· ·I have, and I do.

17· · · Q.· ·Okay.

18· · · · · · · ·MS. SCOTT:· Do I need do anything further

19· to prove that up or --

20· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Identify --

21· is that prefiled direct testimony Petitioner's Exhibit

22· A?

23· · · · · · · ·THE WITNESS:· Yes.

24· · · Q.· ·(BY MS. SCOTT)· So you -- you heard the

25· Court --

1· · · A.· ·Yeah.

·2· · · Q.· ·-- adopt that -- your testimony as Exhibit A?

·3· And that -- that is the direct testimony that you

·4· provided in this case?

·5· · · A.· ·Yes.

·6· · · Q.· ·Okay.


·8· I notes that Petitioner's Exhibit A was previously

·9· admitted.

10· · · · · · · ·And now Respondent's cross-examination.

11· · · · · · · ·MR. GIBSON:· Thank you, Your Honor.

12· Appreciate it.

13· · · · · · · · · · · CROSS-EXAMINATION

14· BY MR. GIBSON:

15· · · Q.· ·Mr. Johnson, you are an employee of a company

16· that's associated with the Lennar Company; is that

17· right?

18· · · A.· ·Correct.

19· · · Q.· ·Which company are you employed by?

20· · · A.· ·Friendswood Development Company.

21· · · Q.· ·And -- and what is the connection between

22· Friendswood Development Company and 308 Furman, Ltd.?

23· · · A.· ·Friendswood Development Company is a wholly

24· owned subsidiary of Lennar.· It's a Lennar entity that

25· acts as the sole general partner and limited partner of

Page 62·1· 308 Furman, Ltd.

·2· · · Q.· ·308 Furman, Ltd., has developed a -- a region

·3· of land within Harris County Water Control Improvement

·4· District No. 89 and built single-family homes in that

·5· area, correct?

·6· · · A.· ·Correct.

·7· · · Q.· ·How many homes did 308 Furman build,

·8· approximately?

·9· · · A.· ·308 Furman did not actually build the homes.

10· Let me correct that.

11· · · Q.· ·Please explain.

12· · · A.· ·We developed the horizontal infrastructure and

13· sold homesites to builder partners that then constructed

14· the vertical homes.· Approximately 1370 homes were built

15· in the neighborhood.

16· · · Q.· ·And approximately when did 308 Furman complete

17· all of its work that it did in that Brunswick Meadows

18· section?

19· · · A.· ·I believe the last home was sold in September

20· of 2015.

21· · · Q.· ·Okay.· And since that time Brunswick -- 308

22· Furman has not engaged in any further construction work

23· or anything like that in Brunswick Meadows section; is

24· that right?

25· · · A.· ·Correct.

Page 63·1· · · Q.· ·And it's also accurate -- isn't it? --

·2· Mr. Johnson, that Brunswick Meadows was -- the

·3· infrastructure for Brunswick Meadows was developed in

·4· sections?

·5· · · A.· ·Yes.

·6· · · Q.· ·How many sections?

·7· · · A.· ·Eighteen residential sections.

·8· · · Q.· ·And did it start with Section 1 and then later

·9· 2, 3, 4, 5, and on down the line?

10· · · A.· ·Not necessarily sequentially throughout the

11· entire project, but we did start with Section 1.

12· · · Q.· ·And then --

13· · · A.· ·2 and 3 I believe were at the same time.

14· · · Q.· ·However the numbers worked out, you -- you

15· went section by section or maybe a couple sections at a

16· time; is that fair?

17· · · A.· ·Yes.

18· · · Q.· ·And in Harris County, and probably many other

19· areas of Texas, when you are a developer and you're

20· building the infrastructure for homesites, one of things

21· you have to take into account and -- and have a design

22· and construction for is detention, correct?

23· · · A.· ·Yes.

24· · · Q.· ·What is detention?

25· · · A.· ·Storage capacity for improvements made on

Page 64·1· undisturbed land.

·2· · · Q.· ·And in layman's terms, and if you want to

·3· describe it a different way -- but the developer would

·4· be required to, you know, essentially dig out a pond or

·5· some kind of holding facility to hold floodwater,

·6· drain -- storm sewer -- stormwater runoff; is that

·7· right?

·8· · · A.· ·Correct.

·9· · · Q.· ·Okay.· And the -- the width and the depth and

10· the capacity of that pond depends on how much land

11· you're developing; is that fair?

12· · · A.· ·There are other components of -- of the

13· calculation to determine the necessary volume, but land

14· area is one.

15· · · Q.· ·Okay.· And in order to determine what the --

16· the volume of those ponds are, a company like 308 Furman

17· would retain engineers that have a licence in Texas and

18· that are specialized in making those determinations and

19· designing those facilities, correct?

20· · · A.· ·Correct.

21· · · Q.· ·In this particular instance for Brunswick

22· Meadows, 308 Furman did hire engineers to assist in

23· those calculations, correct?

24· · · A.· ·Correct.

25· · · Q.· ·There's a company that we -- we will see in

1· the documents called Pate Engineers.· Is that a

·2· engineering firm that was retained by 308 Furman for

·3· those purposes?

·4· · · A.· ·Yes.

·5· · · Q.· ·And do you know or have you seen that Pate

·6· Engineers at some point later changed its name to IDS?

·7· · · A.· ·IDS Engineering Group.

·8· · · Q.· ·Okay.· So in the documents where we either see

·9· a document that refers to Pate Engineers or IDS

10· Engineering Group, those are the same firm under

11· different names; is that right?

12· · · A.· ·Yes.

13· · · Q.· ·In every instance regarding Brunswick Meadows,

14· Pate Engineers and IDS were 308 Furman's engineers,

15· correct?

16· · · A.· ·After phase one of the development.

17· · · Q.· ·Prior to phase one 308 Furman had a different

18· engineer?

19· · · A.· ·Correct.

20· · · Q.· ·Who was that engineer?

21· · · A.· ·Landtech Group.

22· · · Q.· ·So as 308 Furman proceeded in its development

23· of Brunswick Meadows section by section, it needed to

24· expand the detention pond that had originally been built

25· in order to accommodate the additional development,

Page 66·1· correct?

·2· · · A.· ·Yes.

·3· · · Q.· ·And when you are developing a neighborhood

·4· like this, in addition to water detention requirements,

·5· is there also a requirement for a developer like 308

·6· Furman to provide for floodplain mitigation?

·7· · · A.· ·Yes.

·8· · · Q.· ·What does that mean, generally?

·9· · · A.· ·Again, a calculation of storage capacity to

10· offset development in a floodplain.

11· · · Q.· ·And with regard to a developer like 308 Furman

12· that's developing within a water district, like District

13· 89, isn't it true that detention requirements --

14· detention capacity is something that a developer can get

15· reimbursed for through the TCEQ and sale of bond

16· process?· However, flood -- flood -- floodplain

17· mitigation is not something that 308 Furman can be

18· reimbursed for; is that correct?

19· · · A.· ·To the best of my knowledge, yes.

20· · · Q.· ·When a developer like 308 Furman is expanding

21· or moving on to additional sections of its development,

22· such as Brunswick Meadows, and you need a -- essentially

23· a bigger pond, your choices are, at their very simplest

24· form, is that you can make the pond wider, and that

25· would have more capacity, or you can make the pond

Page 67·1· deeper, and it would have more capacity, or some

·2· combination of that, correct?

·3· · · A.· ·Correct.

·4· · · Q.· ·And when you make a pond wider as opposed to

·5· deeper, it would be utilizing more acreage within the

·6· development, correct?

·7· · · A.· ·Correct.

·8· · · Q.· ·So if you were to determine a way from an

·9· engineering standpoint to make a pond meet the detention

10· requirements that's deeper, it would leave more acreage

11· to allow for the developer to develop more homesites,

12· right?

13· · · A.· ·Correct.

14· · · Q.· ·And under those circumstances the developer

15· would then have more homesites able to be sold to the

16· homebuilder, correct?

17· · · A.· ·Correct.

18· · · Q.· ·In front of you are several notebooks that

19· have the exhibits that, I think you heard, have been

20· preadmitted.· There's -- one of them should have the

21· respondent's exhibits.· I think it's the one -- can you

22· turn to the Exhibit R3, please.

23· · · A.· ·Which one?

24· · · Q.· ·R3.

25· · · · · · · ·R3 is the Brunswick Meadows Drainage Plan

Page 68·1· for 308 Furman, Ltd., correct?

·2· · · A.· ·Correct.

·3· · · Q.· ·And this particular plan has been stamped by a

·4· registered engineer in Texas named Timothy Buscha,

·5· correct?

·6· · · A.· ·Correct.

·7· · · Q.· ·And that's spelled B-U-S-C-H-A, right?

·8· · · A.· ·Yes.

·9· · · Q.· ·And Mr. Buscha at this point was an employee

10· of Pate Engineers, correct?

11· · · A.· ·Correct.

12· · · Q.· ·All right.· And if you would, please, look at

13· the Executive Summary of the drainage plan which is on

14· page 1.· There's a table there that just has a Summary

15· of Results.· Do you see that, sir?

16· · · A.· ·Yes.

17· · · Q.· ·And under -- there's two lines right in the

18· middle of that table.· One says "Detention Storage

19· Provided: 306 acre-feet."· Do you see that, sir?

20· · · A.· ·Yes.

21· · · Q.· ·And the other is "Mitigation Storage

22· Provided," and that's 302 acre-feet, right, sir?

23· · · A.· ·Yes.

24· · · Q.· ·So the -- the detention and mitigation

25· facility that was being designed by Mr. Buscha in this

1· Brunswick Meadows Drainage Plan was roughly equal parts

·2· detention requirements and equal part mitigation

·3· requirements.· They're within 4 acre-feet of each

·4· other, right?

·5· · · A.· ·Yes.

·6· · · Q.· ·And then if you'd, please, look at the bottom

·7· of page 2 of the drainage plan.· Section 1.4 called

·8· "Facts, Assumptions and Constraints," do you see that,

·9· sir?

10· · · A.· ·Yes.

11· · · Q.· ·And -- and starting at the very bottom of that

12· page, the last sentence that's shown there says

13· "However, it is planned that a pump will be used due to

14· depth constraints to assist in drawing down the

15· stormwater in the proposed facility."· Do you see that,

16· sir?

17· · · A.· ·Yes.

18· · · Q.· ·So within the drainage plan that was prepared

19· for 308 Furman in August of 2005, it was contemplated

20· that a pump would be used in order to help draw down the

21· stormwater so the -- so the pond could work the way it's

22· being designed, correct?

23· · · A.· ·Correct.

24· · · Q.· ·If you would, please, turn to page 11 of --

25· again, we're on Exhibit R3, which is Brunswick Meadows

Page 70·1· Drainage Plan.· Section 4.9 says "Other Considerations."

·2· And in the -- roughly the middle of that paragraph

·3· there's a sentence that starts:· "The pump system for

·4· the detention facility..."· Do you see that, sir?

·5· · · A.· ·Yes.

·6· · · Q.· ·Okay.· It says "The pump system for the

·7· detention facility will be designed in accordance to

·8· HCFCD Policy, Criteria, and Procedure Manual Section

·9· 6.15."· Do you see that, sir?

10· · · A.· ·Yes.

11· · · Q.· ·So from -- from 308 Furman's original drainage

12· plan that it made for the Brunswick Meadows, it was

13· intended to be designed in accordance with the Flood

14· Control Policy, Criteria, Procedure Manual, correct?

15· · · A.· ·Correct.

16· · · Q.· ·If you would, please, turn -- several pages

17· into Exhibit R3 there are a set of plans attached, and

18· those start on the page marked in the bottom right-hand

19· corner HCFCD923.· And, as that notes, these are

20· documents that were produced by the Flood Control

21· District.

22· · · · · · · ·Starting within the Appendix B, the

23· construction plan set within the drainage plan, these

24· are the 308 Furman on Behalf of District 89 Plans for

25· Construction of Final Detention and Stormwater Pump

Page 71·1· Station to Serve Brunswick Meadows, correct, sir?

·2· · · A.· ·Correct.

·3· · · Q.· ·Will you, please, turn to the next page of the

·4· drawing -- the actual drawing itself.· I'd like to --

·5· this is pretty difficult to read, so --

·6· · · · · · · ·MR. GIBSON:· May I approach, Your Honor?


·8· · · · · · · ·MR. GIBSON:· For demonstrative purposes, I

·9· have a blowup of this page just to make it a little bit

10· easier for everybody to read.

11· · · Q.· ·(BY MR. GIBSON)· The -- this page of the

12· plans this shows, as you can see on the plans, that's

13· the Brunswick Meadows subdivision, correct?

14· · · A.· ·Correct.

15· · · Q.· ·And that section right in the middle is shown

16· to be the -- the actual Brunswick Meadows detention

17· pond, correct, sir?

18· · · A.· ·Correct.· There's a south detention basin and

19· north detention basin on this exhibit.

20· · · Q.· ·Okay.· And then just to the right of that

21· section of the plan there's a -- there's a small box,

22· and it starts with "Detention basin and pump station."

23· Do you see that, sir?

24· · · A.· ·Yes.

25· · · Q.· ·What -- what does that -- what does it say in

Page 72·1· that box?

·2· · · A.· ·"Detention basin and pump station to be

·3· maintained by Harris County Flood Control District."

·4· · · Q.· ·Okay.· Now, if you would, please --

·5· unfortunately, I'm going to have to skip around exhibit

·6· notebooks a little bit.

·7· · · A.· ·Okay.

·8· · · Q.· ·But turn to the -- I believe it would be in

·9· Volume 1 of 308 Furman exhibits -- Exhibit No. 8.

10· · · A.· ·Okay.

11· · · Q.· ·Exhibit No. 8, I believe you identified in

12· your direct testimony, are the approved construction

13· plans for the projects identified as final detention and

14· stormwater pump station to serve Brunswick Meadows

15· Contract No. 1, Contract No. 2, and Contract No. 3,

16· correct?

17· · · A.· ·Correct.

18· · · Q.· ·Okay.· So these are -- as you stated in your

19· prior testimony, these are the set of plans that 308

20· Furman contends were approved by District 89 for

21· construction, correct, sir?

22· · · A.· ·Yes.· There was -- clarification:· There was

23· one set of plans used for all three contracts.

24· · · Q.· ·Okay.

25· · · A.· ·And revisions made for each of the different

1· contracts.

·2· · · Q.· ·Okay.

·3· · · A.· ·But this is that set of plans.

·4· · · Q.· ·Thank you.

·5· · · · · · · ·If you'll, please, turn to the third --

·6· third page of Exhibit No. 8, which is where the actual

·7· plans themselves start.· Do you see that -- there may be

·8· some slight differences, but generally that looks like

·9· roughly the same set of plans we were looking at before,

10· correct?

11· · · A.· ·Correct.

12· · · Q.· ·And you see -- just to the right of the box

13· that has the Brunswick Meadows subdivision laid out with

14· the detention pond, do you see a box similar to the one

15· we looked at before?

16· · · A.· ·Yes.

17· · · Q.· ·What does it say?

18· · · A.· ·"Detention basin and pump station to be

19· maintained by Harris County Flood Control District."

20· · · Q.· ·And that statement was contained on the set of

21· plans that were approved by District 89, correct, sir?

22· · · A.· ·Correct.

23· · · Q.· ·Thank you, sir.· You can put that away for a

24· moment.

25· · · · · · · ·I'd like to back up for just a moment and

Page 74·1· talk about the basis for this appeal.· 308 Furman, Ltd.,

·2· is appealing a decision made by the District 89 board of

·3· directors at a meeting dated May 2nd of 2017; is that

·4· right, sir?

·5· · · A.· ·Yes.

·6· · · Q.· ·Okay.· And that's a -- a meeting that you did

·7· not attend, correct?

·8· · · A.· ·Correct.

·9· · · Q.· ·As a matter of fact, nobody from either 308

10· Furman, Ltd., or Lennar attended that meeting, correct?

11· · · A.· ·Correct.

12· · · Q.· ·Let's look at Exhibit No. 2 with --

13· · · A.· ·Respondent?

14· · · Q.· ·No, the appellant's exhibits.

15· · · · · · · ·Exhibit No. 2 is an exhibit that's

16· propounded by 308 Furman, Ltd., of the May 2nd, 2017,

17· minutes of the District 89 board of directors, correct?

18· · · A.· ·Correct.

19· · · Q.· ·And, if you would, please, turn to just the

20· last page quickly, page 6.· Page 6 of 308 Furman's

21· exhibits shows that this is the set of meeting minutes

22· that were passed, adopted, and approved by the

23· secretary, Mr. Babers, correct, sir?

24· · · A.· ·Yes.

25· · · Q.· ·Okay.· Now, in the interest of time, we're

Page 75·1· not -- obviously, not going to go through every single

·2· section of this, but I'll give you the opportunity to

·3· point out anything you would like to in a moment.

·4· · · · · · · ·First, let's go to the first page of the

·5· meeting minutes, which shows the people that were

·6· present.· And it notes who was present, and it,

·7· obviously, notes that you weren't there, correct?

·8· · · A.· ·Correct.

·9· · · Q.· ·No one else from 308 Furman, Ltd., was there,

10· correct?

11· · · A.· ·Correct.

12· · · Q.· ·No one was there from 308 Furman's engineering

13· firm, correct?

14· · · A.· ·Correct.

15· · · Q.· ·Okay.· No one -- no other consultant or lawyer

16· or anybody -- agent or anybody else on behalf of 308

17· Furman attended that meeting, correct?

18· · · A.· ·Correct.

19· · · Q.· ·If you would, please, turn to page 4.· This is

20· Section 10.· It starts the Engineer's Report.· If you

21· would go to the next page, 5.· At the bottom of that

22· page is where the discussion starts of what the District

23· is going to do with regard to the sale of bonds.· Do you

24· see the paragraph that says "The board discussed the

25· summary of costs"?· Do you see that, sir?· The bottom of

Page 76·1· page 5.

·2· · · A.· ·Yes.

·3· · · Q.· ·Okay.· It says "The board discussed the

·4· summary of costs for the upcoming bond application."

·5· There was a discussion about rough grading.· Do you see

·6· that, sir?

·7· · · A.· ·Yes.

·8· · · Q.· ·Okay.· Then there's a statement "She stated

·9· many of the developer reimbursement items are broken

10· into portions which are not reimbursable under the

11· rules, and a percentage has been applied according to

12· those portions."· Do you see that, sir?

13· · · A.· ·Correct.

14· · · Q.· ·Then it says "Ms. Blackwell" -- and that's

15· Nancy Blackwell.· Have you met Ms. Blackwell before?

16· · · A.· ·I have.

17· · · Q.· ·And Ms. Blackwell -- Nancy Blackwell at this

18· point was the District's engineer with a company called

19· AEI; is that correct, sir?

20· · · A.· ·Yes.

21· · · Q.· ·"Ms. Blackwell discussed AEI's fee for the

22· bond application report.· The board approved the fee.

23· Ms. Blackwell discussed the, quote, projects not

24· included in the summary, and she stated she would

25· calculate the mowing penalties and apply them.· She

1· would total up the proposed deductions and send a

·2· redrafted summary to the developers for feedback."· Do

·3· you see that, sir?

·4· · · A.· ·Yes.

·5· · · Q.· ·And then there's another statement that the

·6· engineer's report was approved.· Do you see that?

·7· · · A.· ·Yes.

·8· · · Q.· ·Okay.· In -- in -- I've tried to direct us in

·9· an interest of time to the section that I think applies,

10· but feel free -- if you know of any other section of

11· this minutes -- there's nowhere it says in there that

12· says that the District -- the board took any vote or

13· made any decision about what was going to be included or

14· not included, is there?

15· · · A.· · Give me a second.

16· · · · · · · ·Section 10, the Engineer's Report, is the

17· applicable section, and it -- and it's the first time

18· that a Projects Not Included list is discussed.

19· · · Q.· ·And it shows the Projects Not Included list

20· was discussed, right?

21· · · A.· ·Correct.

22· · · Q.· ·Do you see anything in those meeting minutes

23· that indicate that there was some vote or decision made

24· about the Projects Not Included list?

25· · · A.· ·The District unanimously approved the

Page 78·1· Engineer's Report that included the Projects Not

·2· Included list.

·3· · · Q.· ·Well, you've seen many, many meeting minutes

·4· from districts, haven't you, sir?

·5· · · A.· ·Yes.

·6· · · Q.· ·And it is a common practice for a consultant

·7· to give a report and then the district approves the

·8· report after it's made, right?

·9· · · A.· ·Correct.

10· · · Q.· ·And that doesn't necessarily mean that there

11· were any votes taken or decisions made or any actions

12· taken based on that report, correct?

13· · · A.· ·The vote says it was 4 to 0.

14· · · Q.· ·It doesn't say anything about any actions

15· taken based on that report, does it?

16· · · A.· ·We would have to review the Engineer's Report

17· in detail to see what was approved through this vote.

18· · · Q.· ·Okay.· Do you see anything in that engineer's

19· detailed report that, for example, discusses the

20· interest -- the two years versus five years of interest?

21· · · A.· ·There -- there is no copy of the Exhibit D,

22· which you explained is the Engineer's Report.

23· · · Q.· ·Okay.· And there's no copy of that exhibit in

24· your -- attached to your version of this exhibit, is

25· there?

Page 79·1· · · A.· ·Correct.

·2· · · Q.· ·So all we have are the meeting minutes that

·3· are in front of you today, correct?

·4· · · A.· ·Correct.

·5· · · Q.· ·You cannot testify, based on personal

·6· knowledge, as to what happened at that meeting, correct?

·7· · · A.· ·I was not in attendance at that meeting.

·8· · · Q.· ·So I'm correct that you can't testify on

·9· personal knowledge about what happened, correct?

10· · · A.· ·I -- I was not at that meeting.

11· · · Q.· ·Right.· So you don't know what happened other

12· than reading the minutes, right?

13· · · A.· ·Correct.

14· · · Q.· ·Now, if you would, please, turn to Exhibit 76

15· within the appellant's exhibits.

16· · · · · · · ·Are you there, sir?

17· · · A.· ·Yes.· 76?

18· · · Q.· ·Yes, sir.

19· · · · · · · ·Those are meeting minutes for the District

20· on November 7th of 2017, correct?

21· · · A.· ·Correct.

22· · · Q.· ·If you would, please, turn to page 4, which is

23· the Engineer's Report.· Within the Engineer's Report,

24· starting at the second page of that, it says that

25· Ms. Blackwell discussed the proposed bond application

Page 80·1· for developer reimbursement.· Do you see that, sir?

·2· · · A.· ·Yes.

·3· · · Q.· ·So at this point in time, in November of 2017,

·4· they're still discussing the proposed bond application,

·5· right?

·6· · · A.· ·Yes.

·7· · · Q.· ·So that doesn't look like there was any

·8· decision made back in May, does it?

·9· · · A.· ·They published a Projects Not Included list

10· back in May.

11· · · Q.· ·And then continue to work on the bond

12· application thereafter, correct?

13· · · A.· ·Yes.

14· · · Q.· ·Okay.· And then it goes on to discuss

15· Ms. Blackwell having communications with other

16· developers.

17· · · · · · · ·And then in the next paragraph, it starts

18· "Director Smalls reviewed the e-mail from Matthew

19· Kelley."· Do you see that, sir?

20· · · A.· ·Yes.

21· · · Q.· ·And it says "...listing the items included in

22· the bond application, and Ms. Blackwell confirmed that

23· Contract No. 2 is not included in the reimbursement."

24· Contract No. 2 for Brunswick Meadows stormwater pump,

25· that's the contract that was excluded that we're here

1· about today, correct?

·2· · · A.· ·Yes.

·3· · · Q.· ·It says that she confirmed maintenance

·4· deductions for mowing and maintenance .· The deductions

·5· are one of the things we're here about today, correct?

·6· · · A.· ·Correct.

·7· · · Q.· ·She discussed the application included only

·8· two years of developer interest, as the board directed.

·9· That's one of the issue we're here about today, right?

10· · · A.· ·Correct.

11· · · Q.· ·"Director Smith asked the consultant if

12· there's anything else the board needs to know;

13· Ms. Blackwell said, 'Nothing else.' Then the bond

14· application would be filed very soon.· And

15· Mr. Richardson prepared cover documents with the updated

16· and final amount of the bonds to be issued for the

17· president's signature."· Do you see that, sir?

18· · · A.· ·Yes.

19· · · Q.· ·And this was a -- a meeting which you did not

20· attend, correct?

21· · · A.· ·Correct.

22· · · Q.· ·And nobody from 308 Furman or Lennar attended,

23· correct?

24· · · A.· ·Correct.

25· · · Q.· ·Based on the meeting minutes we've seen,

Page 82·1· doesn't it appear from the actual words on the page,

·2· which is all we have to go by, that the decision about

·3· the interest and the deduction and Contract No. 2 was

·4· specifically discussed and finally decided in November

·5· of 2017?

·6· · · A.· ·I'm not aware of any changes from the May 2nd

·7· decision to the decisions made here that impact our

·8· Projects Not Included list.

·9· · · Q.· ·And you're assuming that a decision was made

10· in May, correct? because you weren't there.

11· · · A.· ·Based on the published Projects Not Included

12· list, yes.

13· · · Q.· ·Okay.· And -- and you're -- and you're

14· assuming that there were some decision made about those

15· projects in May, because you weren't there to know

16· whether there was or wasn't, right?

17· · · A.· ·Correct.

18· · · Q.· ·We looked a moment ago at the -- the two sets

19· of plans:· one from 2005 and the other from later, the

20· approved set of construction plans that were actually

21· approved by District 89, correct?

22· · · A.· ·Yes.

23· · · Q.· ·And, in fact, that's part of 308 Furman's

24· case.· I mean, that is that 308 Furman says that

25· District -- one part of their case.· I understand you

Page 83·1· have more.· But one part of their case is that 308

·2· Furman says, "Well, District 89 approved our plans and

·3· said we could go construct this pump station and expand

·4· the detention facilities," right?

·5· · · A.· ·Correct.

·6· · · Q.· ·And -- but you would admit that also part of

·7· those plans were -- stamped on every single page was a

·8· designation that says that the pump and the detention

·9· facilities were to be taken over by Flood Control

10· District, right?

11· · · A.· ·Correct.

12· · · Q.· ·If you would, please, pull out the

13· respondent's exhibits, please, and go to R17.

14· · · A.· ·17?

15· · · Q.· ·Yes, sir.· Exhibit R17 is a letter from Pate

16· Engineers dated June 5th of 2007, correct?

17· · · A.· ·Correct.

18· · · Q.· ·And it was actually signed by two members of

19· the Pate Engineers, one Randy Odinet, project manager;

20· and the other Alan McKee, vice president, correct?

21· · · A.· ·Correct.

22· · · Q.· ·And there was -- a copy of this letter was

23· sent to Jim Ainsworth at A&S Engineers, who was a prior

24· District's engineer, correct, sir?

25· · · A.· ·Correct.

Page 84·1· · · Q.· ·And also Brian Gibson, who is somebody at

·2· Friendswood Development Company who's associated with

·3· you, correct?

·4· · · A.· ·Correct.

·5· · · Q.· ·All right.· And Pate Engineers' letter was

·6· addressed to Harris County Water Control Improvement

·7· District No. 89, right?

·8· · · A.· ·Yes.

·9· · · Q.· ·Pate Engineers, as 308 Furman's engineer for

10· Brunswick Meadows, represented 308 Furman to the

11· District, correct?

12· · · A.· ·Would you restate that?

13· · · Q.· ·Yes, sir.

14· · · · · · · ·With regard to communicating with District

15· 89 as it relates to Brunswick Meadows pump station and

16· detention basin, Pate Engineers represented 308 Furman

17· to the District?

18· · · A.· ·Yes.

19· · · Q.· ·Here in the first paragraph it says "We

20· represent 308 Furman."· And then in the second sentence

21· it says "In our previous discussions with the

22· District, we have expressed the goal of 308 Furman and

23· the District to gain Harris County Flood Control

24· acceptance for maintenance of the existing Brunswick

25· Meadows detention basin currently maintained by the

1· District as well as the proposed pump station and

·2· required modifications to the existing basin."· Do you

·3· see that, sir?

·4· · · A.· ·Yes.

·5· · · Q.· ·And the Pate engineers went on to say, "It's

·6· also the goal of 308 Furman to ensure the ability to

·7· continue developing Brunswick Meadows which may require

·8· the District to accept the pump station and detention

·9· basin for maintenance in the event Harris County Flood

10· Control will not," right?

11· · · A.· ·Yes.

12· · · Q.· ·So it was 308 Furman's goal to have Harris

13· County Flood Control maintain the pump station just like

14· it says in that letter and just like it says on the

15· improvement plans, right?

16· · · A.· ·It was both 308 Furman's goal and the

17· District's goal.

18· · · Q.· ·Yes, sir.

19· · · · · · · ·And to achieve that goal, 308 Furman

20· endeavored to comply with the flood control

21· requirements, policies, and procedures in order to gain

22· that acceptance by Flood Control, right?

23· · · A.· ·Yes.

24· · · Q.· ·And in June of 2007, in this letter we just

25· looked at, 308 Furman recognized and accepted that it

Page 86·1· was its responsibility to ensure that the pond --

·2· expanded pond and the pump station were done in

·3· compliance with the flood control policies, procedures,

·4· and requirements, correct?

·5· · · A.· ·Where do you see that?

·6· · · Q.· ·I'm asking you.· You work -- you're 308

·7· Furman's representative, correct?

·8· · · A.· ·Correct.

·9· · · Q.· ·And you gave a deposition in this case as 308

10· Furman's representative, correct?

11· · · A.· ·Correct.

12· · · Q.· ·I'm asking you at this point in time, in June

13· of 2007, 308 Furman recognized and accepted that it was

14· its responsibility to ensure that the expanded detention

15· pond and pump station were done in compliance with flood

16· control policies and procedures and requirements; is

17· that correct?

18· · · A.· ·I -- I believe from this letter it says that

19· is our goal, yeah.

20· · · Q.· ·Well, did -- is my statement correct or not?

21· · · A.· ·That we intended to have this facility

22· accepted by Harris County Flood Control, yes.

23· · · Q.· ·And in June of 2007 308 Furman recognized and

24· accepted that it was its responsibility to ensure that

25· the proposed pump station was -- and required

Page 87·1· modifications to the existing basin would be done in

·2· compliance with flood control policies and procedures

·3· and requirements for acceptance by Flood Control?

·4· · · · · · · ·MS. SCOTT:· Your Honor, I'm going to

·5· object because Counsel is referring the witness to

·6· Respondent's Exhibit No. 17 and asking him to agree with

·7· a statement that is not in that exhibit.· In fact, what

·8· the -- what the exhibit says is that the Harris

·9· County -- that the -- the District may have to accept

10· the -- the pump for maintenance if the Flood Control

11· District wouldn't do it, and that's a very different

12· statement than what Counsel is representing.

13· · · · · · · ·MR. GIBSON:· The question is very

14· specific, Your Honor.· It was at the time of this

15· letter, did the District recognize that it was its

16· responsibility to ensure.

17· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· I'm going

18· to overrule the objection, but I think what the

19· understanding is is what's coming out of his mouth is

20· not exactly from the exhibit.· And then you may answer

21· the question.

22· · · · · · · ·THE WITNESS:· Okay.· I believe what this

23· letter states is that, yes, our goals is to construct a

24· facility that is accepted by Flood Control, but this

25· letter also states that there is risk in obtaining

Page 88·1· acceptance from Harris County Flood Control.· And this

·2· letter makes the District aware of that.

·3· · · Q.· ·(BY MR. GIBSON)· Sir, when you gave your

·4· deposition in this case, did you testify that as of this

·5· time, June of 2007, that 308 Furman recognized and

·6· accepted that it was its responsibility to ensure that

·7· the proposed pump station and required modifications to

·8· the existing basin should be done in compliance with

·9· flood control policies and procedures and requirements

10· for acceptance by Flood Control District?

11· · · A.· ·Do you have a copy of my deposition that I

12· could --

13· · · Q.· ·Sure.

14· · · A.· ·-- reference?

15· · · Q.· ·Do you recall giving that testimony or not?

16· · · A.· ·I do not recall at this time.

17· · · · · · · ·MR. GIBSON:· May I approach, Your Honor?


19· · · · · · · ·MS. SCOTT:· Can I have just a second to

20· get his deposition testimony?


22· · · · · · · ·MS. SCOTT:· Actually, if I can approach,

23· I'll just look onto his copy real quick with him.


25· Sure.· That's fine.

1· · · · · · · ·MS. SCOTT:· Tell me what page you're on,

·2· George.

·3· · · · · · · ·MR. GIBSON:· Page 77, lines 8 through 17.

·4· Here --

·5

·6· · · · · · · ·MS. NAPOLI-JANTES:· Natalie --

·7· · · · · · · ·MR. GIBSON:· -- Natalie, we have --

·8· · · · · · · ·MS. SCOTT:· Oh.

·9· · · · · · · ·MS. NAPOLI-JANTES:· -- here's another

10· copy.

11· · · · · · · ·MS. SCOTT:· Thank you so much.

12· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Great.· The

13· page and line again?

14· · · · · · · ·MR. GIBSON:· Page 77, lines 8 through 17.

15· · · · · · · ·MS. SCOTT:· Your Honor, I objected to his

16· question that he's trying to impeach the witness on now,

17· so I think we probably need to get a ruling on the

18· objection -- on the deposition objection before he can

19· impeach him on that.

20· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· And what --

21· what was the basis of the objection?

22· · · · · · · ·MS. SCOTT:· Well, it was a form objection

23· because there wasn't any foundation to it, and he had

24· given a pretty long narratively stated question to try

25· to get the witness to agree with it, and I don't think

Page 90·1· it was true, and that was the basis of my objection,

·2· because there's no evidence of this.

·3· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Because

·4· this isn't -- hasn't been admitted, right?

·5· · · · · · · ·MS. SCOTT:· Correct.

·6· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· It's not an

·7· exhibit yet?

·8· · · · · · · ·MS. SCOTT:· So that's the testimony I

·9· objected to here and here to those questions.· So that

10· testimony was subject to an objection, so I don't think

11· that he had -- he made any admission that Counsel's

12· trying to -- to get him to say that he made in his

13· objection because I had objected to both of those

14· questions as to the form of the question because I don't

15· think it was a fair question.

16· · · · · · · ·MR. GIBSON:· I'm ready to respond whenever

17· Your Honor's ready.

18· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· I'll

19· hear the response.

20· · · · · · · ·MR. GIBSON:· Yes.· The -- Mr. Johnson, at

21· the time of this deposition, as noted at the front, he

22· was designated as 308 Furman's corporate representative,

23· and that included numerous topics that he was

24· identified, including what were the agreements and --

25· and the responsibilities among and between 308 Furman

Page 91·1· and the District with regard to this particular

·2· detention pond and pump station, et cetera.· And he was

·3· asked a question which he gave a clear "yes" answer to.

·4· He did not equivocate.· And we'll get into the

·5· impeachment in just a moment.· It -- all of her

·6· objections about whether or not -- you know, it seemed

·7· to me to be handled on follow-up questioning if they

·8· wish to try to run away from this answer.· But the

·9· question was fair and clearly stated, and he didn't have

10· a problem answering it.


12· to overrule the objection.


14· · · Q.· ·(BY MR. GIBSON)· Mr. Johnson, do you recall

15· that back on April 11th of 2019 that I had the

16· opportunity to take your deposition in this case?

17· · · A.· ·I don't recall the exact date, but, yes.

18· · · Q.· ·Okay.· And if you want to look at -- the

19· transcript right in front of you will show you --

20· · · A.· ·April 11th, yes.

21· · · Q.· ·All right.· And we -- we took that

22· deposition --

23· · · · · · · ·MS. SCOTT:· One more thing.· He's -- in

24· this question in the deposition he's referred him to

25· Exhibit No. 9

Page 92·1· · · · · · · ·Do you know what the deposition exhibit is

·2· that you're referring to?

·3· · · · · · · ·MR. GIBSON:· It's Exhibit R17, which is

·4· the same one.

·5· · · · · · · ·MS. SCOTT:· It's that same -- all right.

·6· · · · · · · ·MR. GIBSON:· May I proceed?


·8· · · Q.· ·(BY MR. GIBSON)· Do you recall that I took

·9· your deposition in the Coats Rose office here in Houston

10· at Greenway Plaza?· Do you recall that?

11· · · A.· ·Yes.

12· · · Q.· ·And you recall when you sat down for that

13· deposition, you were asked to raise your hand in front

14· of the court reporter and tell the truth and nothing but

15· the truth?

16· · · A.· ·Yes.

17· · · Q.· ·Do you remember that?· Do you remember that,

18· sir?

19· · · A.· ·Yes.

20· · · Q.· ·And do you remember one of the things that we

21· covered early in your deposition was that this

22· deposition was sworn testimony just like you were in

23· front of a judge and jury?· Do you recall we did that?

24· · · A.· ·Yes.

25· · · Q.· ·And then you then proceeded to give your

1· deposition testimony.· And I presume when you gave your

·2· deposition, you endeavored to tell the truth, right?

·3· · · A.· ·Yes.

·4· · · Q.· ·Okay.· So now let's look at page 77 starting

·5· on line 8.· And, in fact, you had asked me to restate

·6· the question, which I did.

·7· · · · · · · ·"As of this time, June of 2007, as

·8· reflected in Exhibit No. 9" -- which I'll represent is

·9· the same as Exhibit R17 -- "did 308 Furman recognize and

10· accept that it was its responsibility to ensure that the

11· proposed pump station and required modifications to the

12· existing basin should be done in compliance with Flood

13· Control District policies and procedures and

14· requirements for acceptance by the Flood Control

15· District?"· Do you see that question, sir, in the

16· transcript?

17· · · A.· ·Yes.

18· · · Q.· ·And you see that your answer was "Yes,"

19· correct?

20· · · A.· ·Correct.

21· · · Q.· ·So in your deposition you agreed that it was

22· 308 Furman's responsibility to ensure that the pump and

23· expanded pond met flood control policies and procedures

24· and requirements for acceptance?· That's what you said,

25· right?

Page 94·1· · · A.· ·Yes.

·2· · · Q.· ·And if we look back at Exhibit R17, this June

·3· 2007 letter by Pate Engineers, you note on there -- when

·4· it refers to this goal, it says that this had been part

·5· of prior discussions with the District, right?

·6· · · A.· ·Correct.

·7· · · Q.· ·So this idea that it was the goal of both the

·8· District and 308 Furman to have the pump station and the

·9· expanded pond designed such that Flood Control could

10· accept it for future maintenance was not just something

11· that was stated in this letter that we see, it had been

12· subject to prior discussions as well, right?

13· · · A.· ·Yes.

14· · · Q.· ·If you would, please, sir, turn to Exhibit R19

15· in the respondent's exhibits.· This is a letter from

16· Pate Engineers a little bit later in 2007 dated August

17· 21st, 2007, correct?

18· · · A.· ·Correct.

19· · · Q.· ·Okay.· And we won't go through the entirety of

20· this letter, but if we just go to the second-to-last

21· paragraph on page 2, it states that the stormwater

22· detention basin pump station and stormwater quality

23· feature will be temporarily maintained by 308 Furman,

24· Ltd., the owner, until such time as conveyed to Harris

25· County Flood Control."· And then it goes on to say "It's

Page 95·1· our intention that the permit will be cancelled and

·2· replaced with a new permit."· Do you see that, sir?

·3· · · A.· ·Yes.

·4· · · Q.· ·Okay.· So that refers to the detention basin

·5· will be temporarily maintained by 308 Furman until

·6· conveyed to Flood Control, right?

·7· · · A.· ·Correct.

·8· · · Q.· ·That's what that says, right?

·9· · · A.· ·Correct.

10· · · Q.· ·Okay.· Generally, what -- what does it take to

11· maintain a detention basin?

12· · · A.· ·Mowing.

13· · · Q.· ·Mowing?

14· · · A.· ·If it's dry, uh-huh.

15· · · Q.· ·And do you also have to ensure that there's

16· sufficient grass or other foliage to hold the dirt in

17· place too?

18· · · A.· ·Correct.

19· · · Q.· ·Okay.· And, according to Pate Engineers in

20· August of 2007, those responsibilities for mowing and

21· planting would be 308 Furman's responsibilities until

22· such time as conveyed to Flood Control.· That's what he

23· said, right?

24· · · A.· ·Correct.

25· · · Q.· ·If you could turn to the Appellant's Exhibit

Page 96·1· A22.

·2· · · · · · · ·MR. GIBSON:· Your Honor, may I approach to

·3· help --


·5· · · · · · · ·MR. GIBSON:· -- organize this a little

·6· bit?

·7· · · · · · · ·Thank you.

·8· · · Q.· ·(BY MR. GIBSON)· What is Exhibit A22?

·9· · · A.· ·Storm Water Pump Station Construction with T&C

10· Construction Open Records Review summary table --

11· · · Q.· ·Who prepared that?

12· · · A.· ·-- from meeting minutes.

13· · · · · · · ·I did.

14· · · Q.· ·To prepare Exhibit A22, or Appellant's 22, did

15· you essentially go through a set of meeting minutes and

16· then write down your observations or what you read in

17· those minutes as they related to the pump station?

18· · · A.· ·Correct, from an open records request from the

19· District.

20· · · Q.· ·And the reason why you say that is that 308

21· Furman asked the District to produce its meeting

22· minutes, and then when you got those meeting minutes,

23· you reviewed certain of them, as list -- as identified

24· here, and then you wrote your notes about what you saw

25· in those meeting minutes, correct?

1· · · A.· ·Correct.

·2· · · Q.· ·Let's turn to Exhibit A22, which is, I think,

·3· the prior -- I'm sorry.· Excuse me.· A23.

·4· · · A.· ·Okay.

·5· · · Q.· ·Which I believe is -- based on your prefiled

·6· testimony, this is the set of meeting minutes that you

·7· reviewed, right?

·8· · · A.· ·Yes.

·9· · · Q.· ·And when you reviewed these compilation of

10· meeting minutes that you noted in your summary, A22, one

11· of the things that you noted in your summary, that I

12· assume you thought was relevant, was that the board

13· approved the contracts - contract one, contract two, and

14· contract three - for the work on the expanded detention

15· pond and pump station, right?

16· · · A.· ·Specifically the November meeting minutes I

17· call out as approving Contract No. 2.

18· · · Q.· ·Okay.· And Contract No. 2 is the contract that

19· related to the pump station's facility?

20· · · A.· ·Correct.

21· · · Q.· ·And when you -- just for the record, when you

22· refer to the November meeting minutes, you're referring

23· to the first page of Exhibit 23, which is the November

24· 20th, 2007, minutes of the board of directors for

25· District 89, right?

Page 98·1· · · A.· ·Correct, November 20th, 2007, meeting minutes.

·2· · · Q.· ·I'm sorry if I stated that incorrectly.

·3· · · A.· ·Yeah.

·4· · · Q.· ·And we've -- we've -- we looked at the

·5· beginning of your testimony, the plans that were

·6· approved all had that designation on it that said that

·7· the pump and the detention pond would be maintained by

·8· Flood Control District, correct?

·9· · · A.· ·Yes.

10· · · Q.· ·So, based on these documents, the District's

11· approval was based on the condition that 308 Furman was

12· responsible for ensuring compliance with flood control

13· criteria, correct?

14· · · A.· ·Could you restate that?

15· · · Q.· ·Yes, sir.

16· · · · · · · ·We've seen the plans themselves.· We've

17· seen the drainage plan.· We've seen your testimony from

18· your deposition.· We've seen the approval on the

19· November 20th of 2007.· And based on all of that the

20· District's approval of the plans for the detention pond

21· and pump station were based on the condition that 308

22· Furman was responsible for ensuring compliance with

23· flood control criteria, correct?

24· · · A.· ·One more time for me, please.· Sorry.

25· · · Q.· ·Sure.

Page 99·1· · · · · · · ·We looked at a number of different pieces

·2· of evidence, right?

·3· · · A.· ·Right.

·4· · · Q.· ·We've looked at the drainage plan, and we saw

·5· the reference in there to the -- that the -- that the

·6· detention pond was going to be a pumped detention pond?

·7· · · A.· ·Right.

·8· · · Q.· ·And it was going to be designed in accordance

·9· with flood control criteria, right?

10· · · A.· ·Correct.

11· · · Q.· ·We've seen the plans -- two different sets of

12· plans, the preliminary plans from 2005 and the approved

13· plans that occurred later, all had that notation in them

14· that the -- that the pump and the detention pond would

15· be accepted by Flood Control for maintenance, right?

16· · · A.· ·Yes.

17· · · Q.· ·We saw the letter of June of 2007 that said

18· that was the goal of the District and 308 Furman, right?

19· · · A.· ·Yes.

20· · · Q.· ·And we saw your testimony where you said that

21· the District -- that 308 Furman understood that it was

22· its responsibility to ensure that the detention pond and

23· pump station complied with flood control criteria,

24· right?

25· · · A.· ·Yes.

Page 100·1· · · Q.· ·Okay.· So based on all that, when District 89

·2· approved these plans, as you note on November 20th of

·3· 2007, that was based upon the condition that 308 Furman

·4· was responsible for ensuring that those plans would be

·5· done in accordance with flood control criteria for

·6· acceptance, right?

·7· · · A.· ·I was not specifically in attendance at that

·8· meeting.

·9· · · Q.· ·So you don't --

10· · · A.· ·Your point earlier.

11· · · Q.· ·Okay.· Well, based upon all the evidence we've

12· seen, as 308 Furman's representative, it's obvious --

13· isn't it? -- that it was everyone's intent and it was

14· everyone's goal and it was 308 Furman's understanding

15· that it was responsible to ensure that it designed and

16· built the pump and expanded detention pond in accordance

17· with flood control criteria, right?

18· · · A.· ·I believe there were also discussions about

19· necessary variances --

20· · · Q.· ·And --

21· · · A.· ·-- over the years.

22· · · Q.· ·And 308 Furman never applied to Harris County

23· Flood Control for a variance, did they?

24· · · A.· ·Not that I'm aware of officially.

25· · · Q.· ·Okay.· All right.· So that didn't happen.· All

1· right.

·2· · · · · · · ·So, based on all evidence that we've

·3· seen, 308 Furman knew and understood that one of the

·4· conditions that was part of all the documentation that

·5· the District approved when it said, "Okay.· Fine.· Go

·6· ahead and build that" -- part of that was that 308

·7· Furman was responsible to ensure that the pond and the

·8· pump station would be designed and built in accordance

·9· with flood control criteria for acceptance, correct?

10· · · A.· ·That was our intent.

11· · · Q.· ·And that was your understanding, that it was

12· your responsibility, right?

13· · · A.· ·Correct.

14· · · Q.· ·Was 308 Furman concerned about the cost that

15· it would incur in designing and building the pond -- the

16· expanded pond and the pump station to meet Flood Control

17· acceptance?

18· · · A.· ·Yes, that was -- economic viability is a

19· consideration.

20· · · Q.· ·And, you know, we've seen the -- the letter in

21· June of 2007 and some of the other correspondence in

22· 2007.· Prior to 2007 hadn't 308 Furman internally

23· already decided to design and install the pump station

24· without complying with flood control criteria?

25· · · A.· ·Back to my comment, there were discussions on

Page 102·1· certain conditions that were not economically feasible

·2· to meet their criteria.

·3· · · Q.· ·And those discussions about economic -- and I

·4· understand economic viability -- feasibility.· But those

·5· discussions where Lennar had decided not to pursue and

·6· not to budget for doing things that it took to comply

·7· with the criteria, those actually occurred back in 2006,

·8· didn't they?

·9· · · A.· ·I believe 2005, '6, '7, correct.· That time

10· period.

11· · · Q.· ·So prior to the discussions that are noted in

12· the June 2007 letter where it says "it's our goal," 308

13· Furman had already decided not to spend the money that

14· it would take to design and build the pump and expanded

15· pond to comply with flood control criteria, correct?

16· · · A.· ·I believe that was shared with the District as

17· evidenced by some letters from A&S to the District as

18· well.

19· · · Q.· ·Well, I mean, it looks like -- we just looked

20· at the June 2007 letter.· There's nothing shared in that

21· letter that says that we're -- we're not going to do

22· what it takes to have the pond comply with flood control

23· criteria, correct?

24· · · A.· ·We're back to the letter.· 17?

25· · · Q.· ·It's in R17.

Page 103·1· · · A.· ·R17.· "In" -- yeah, "In our previous

·2· discussions with the District, we have expressed the

·3· goal of 308 Furman and the District to gain Harris

·4· County Flood Control District acceptance for maintenance

·5· of the existing Brunswick Meadows detention basin

·6· currently maintained by the District as well as the

·7· proposed pump station and required modifications to the

·8· existing basin.· It's also the goal of 308 Furman to

·9· ensure the ability to continue developing Brunswick

10· Meadows, which may require the District to accept the

11· pump station and detention basin for maintenance."

12· · · Q.· ·And thank you for reading that.· And there's

13· nothing in that June of 2007 letter that informs the

14· District that 308 Furman had previously instructed its

15· engineers not to design the pond and pump such that it

16· would be -- design and build the pond and pump such that

17· it would be capable for acceptance?· That's not

18· disclosed in that letter, is it?

19· · · A.· ·No.

20· · · Q.· ·So let's look at Respondent's Exhibit 11,

21· please.· This is an e-mail that -- you can see in the

22· bottom right-hand corner this was produced to us by IDS,

23· the engineer.· And here's an e-mail from Joe McKee at

24· Lennar to Randy Odinet.· Do you see that, sir?

25· · · A.· ·Yes.

Page 104·1· · · Q.· ·And there's copy to Brian Gibson, right?

·2· · · A.· ·Yes.

·3· · · Q.· ·And just to make sure that the judge gets the

·4· full perspective, who is Joe McKee?

·5· · · A.· ·He was an old project manager for Lennar.

·6· · · Q.· ·Okay.· And Randy Odinet, we've seen his name

·7· already.· He's an engineer with Pate, correct?

·8· · · A.· ·Correct.

·9· · · Q.· ·And then Brian Gibson, we already saw that he

10· is an Lennar employee as well, correct?

11· · · A.· ·Correct.

12· · · Q.· ·All right.· And this e-mail was authored April

13· 11th, 2006, right?

14· · · A.· ·Correct.

15· · · Q.· ·And you weren't with the company in 2006, were

16· you?

17· · · A.· ·Correct.· Not at this time.

18· · · Q.· ·Right.· So we can read what they say here.

19· But you actually didn't author this, you didn't receive

20· it, right?

21· · · A.· ·Correct.

22· · · Q.· ·Okay.· And here Mr. McKee says, "Randy" --

23· writing to the engineer at Pate Engineers -- "in

24· reviewing the pump station contract submitted by Pate

25· Engineering, it is almost three times the budget."· Do

1· you see that, sir?

·2· · · A.· ·Yes.

·3· · · Q.· ·"The only estimate that I have received for

·4· the pump station includes all the repairs to the

·5· detention.· Please resubmit an updated estimate for the

·6· pump station without the HCFC" -- Harris County Flood

·7· Control -- "items required for acceptance and a new

·8· contract for engineering fees reflective of the same."

·9· Do you see that, sir?

10· · · A.· ·Yes.

11· · · Q.· ·"...without Harris County Flood Control items

12· required for acceptance."· Okay.· So, based on Exhibit

13· R11, it looks like that Lennar management -- 308

14· Furman's management decided not to pay its engineer to

15· pursue acceptance tasks associated with the Flood

16· Control District, correct?

17· · · A.· ·I don't get that from this e-mail.

18· · · Q.· ·You don't?

19· · · A.· ·That they're considering what it would cost --

20· they're asking for what it would cost without the flood

21· control requirements.

22· · · Q.· ·Right.

23· · · A.· ·They're asking for that estimate, yes.

24· · · Q.· ·Okay.· Well, this was dated in 2006, right?

25· · · A.· ·Yes.

Page 106·1· · · Q.· ·Okay.· In 2007 we have the letter, among other

·2· letters, that says "It's our goal to have this accepted

·3· by Flood Control," right?

·4· · · A.· ·Yes.

·5· · · Q.· ·Construction started in late 2007, right?

·6· · · A.· ·Yes.

·7· · · Q.· ·ed roughly in 2009, right?

·8· · · A.· ·Correct.

·9· · · Q.· ·And at no point during that time period had

10· 308 Furman engaged its engineer to do the engineering

11· tasks necessary to design and build the pond and pump

12· station so that it met flood control requirements,

13· right?

14· · · A.· ·I disagree.· The Flood Control approved our

15· construction plans.

16· · · Q.· ·Well, they may have approved the construction

17· plans.· But you recognize, sir -- because I know you're

18· in this business.· You recognize that approval of

19· construction plans by Flood Control is different than

20· meeting the criteria for acceptance of a facility by

21· Flood Control for maintenance?· Those are different

22· things, right?

23· · · A.· ·Correct.

24· · · Q.· ·Let's look at Exhibit R23, please.· Earlier we

25· mentioned that the construction period was roughly 2007

Page 107·1· to 2009.· Exhibit R23 is a letter by Pate Engineers

·2· dated August 25th of 2009, correct?

·3· · · A.· ·Correct.

·4· · · Q.· ·And it's signed by Jason Keeling, a

·5· construction services manager at Pate Engineers, right?

·6· · · A.· ·Yes.

·7· · · Q.· ·And this letter is addressed to T&C

·8· Construction, Ltd.· As it relates to the issues in this

·9· case, who -- who is T&C Construction?

10· · · A.· ·The contractor that constructed the pump

11· station.

12· · · Q.· ·Okay.· And the reference to this letter is the

13· "Final Walk Through Punchlist Stormwater Pump Station,"

14· correct?

15· · · A.· ·Correct.

16· · · Q.· ·And there's a -- a whole bunch of

17· representatives at this meeting from Pate Engineers and

18· the District's engineer, A&S, and for Flood Control, and

19· others.· And then there's a notation down here of punch

20· list items, right?

21· · · A.· ·Correct.

22· · · Q.· ·And in industry parlance, punch list items are

23· things that somebody has found that don't meet the plans

24· or specifications, right?

25· · · A.· ·Correct.

Page 108·1· · · Q.· ·They're things that need to be repaired or

·2· fixed, right?

·3· · · A.· ·Correct.

·4· · · Q.· ·And here it notes that the jockey pump was not

·5· pumping water, right?

·6· · · A.· ·Correct.

·7· · · Q.· ·And it notes that a drop rod on the gates

·8· needed repair.· And then No. 3, Harris County Flood

·9· Control checklist, it says that's a Pate -- Pate

10· Engineers, Inc., item, right?

11· · · A.· ·Right.

12· · · Q.· ·So as of August 25th of 2009, the stormwater

13· pump station did not pass inspection by Flood Control,

14· correct?

15· · · A.· ·This punch list was prepared by Pate, but

16· it -- it indicated that there were checklist items from

17· Flood Control outstanding.

18· · · Q.· ·Okay.· All right.· Well, we'll see what Flood

19· Control says about that.

20· · · · · · · ·Let's look at Respondent's Exhibit 24,

21· please.· So -- and, as Your Honor knows, most -- many

22· e-mail chains go backwards, right?· So if you go to the

23· last one, that's the earliest e-mail and then move

24· forward in time.· If you would go to the last e-mail on

25· page 24 from a Charles Gooden dated March 8th of 2010.


·2· · · A.· ·Yes.

·3· · · Q.· ·And Charles Gooden, was he an engineer doing

·4· work for 308 Furman?

·5· · · A.· ·I do not know.

·6· · · Q.· ·Okay.· Well, this e-mail dated March 8th of

·7· 2010 is roughly seven months after the inspection that

·8· was done in August where the -- the pump did not pass

·9· inspection, right?

10· · · A.· ·Correct.

11· · · Q.· ·And here he says to Herb Herndon at Flood

12· Control, "Herb, has HCFCD reviewed, approved in

13· principle, and agreed to accept District 89's final

14· detention pond and form -- stormwater pump station?"· Do


16· · · A.· ·Yes.

17· · · Q.· ·And then on the first page of Exhibit 24 we

18· have Mr. Herdon replied, and he essentially said, "You

19· need to get in touch with Ric Weber," correct?· And we

20· have -- then Mr. -- the next --

21· · · A.· ·Yes.

22· · · Q.· ·-- e-mail on the middle of page 1 of Exhibit

23· 24, March 11th, 2010, again roughly seven months after

24· the inspection, Mr. Gooden writes, "Mr. Pederson, I

25· received your message.· Called you back.· Would you,

Page 110·1· please, e-mail me the status of Flood Control's

·2· acceptance and maintenance of the pond and pump

·3· station," right, sir?

·4· · · A.· ·Yes.

·5· · · Q.· ·And then we have Mr. Pederson's response:

·6· "The Harris County Flood Control acceptance of this

·7· project is a long way off.· A final post-construction

·8· inspection of the basin area has not been performed by

·9· my group, and the station was inspected on August 25th,

10· 2009; did not pass inspection.· That's where it stands,

11· and the ball is in" development's -- "developer's

12· court."· Do you see that, sir?

13· · · A.· ·Yes.

14· · · Q.· ·So you made a distinction a moment ago that --

15· that the -- the prior letter, Exhibit 23, was Pate

16· Engineer saying these are the problems, but here we see

17· the Flood Control's position on that was in August of

18· 2009, seven months later, it did not pass inspection,

19· right?

20· · · A.· ·Correct.

21· · · Q.· ·And Mr. Gooden, it appears, is reaching out

22· saying, "What's the status of acceptance," right?

23· · · A.· ·Right.

24· · · Q.· ·And Flood Control is unequivocally stating the

25· ball is in the developer's court, right?


·2· · · Q.· ·Now let's look at Exhibit R28.· This is a Pate

·3· Engineer's letter dated August 29th, 2011, which says

·4· "Proposal to perform professional engineering and

·5· surveying services for a pump station and detention

·6· facilities for Brunswick Meadows," right?

·7· · · A.· ·Yes.

·8· · · Q.· ·And it's addressed to Shamar O'Bryant at 308

·9· Furman, right?

10· · · A.· ·Correct.

11· · · Q.· ·And it says "This letter represents our

12· proposed agreement to perform professional engineering

13· and surveying services for 308 Furman on behalf of

14· District 89 in connection with the acceptance and

15· maintenance of the pump station and detention

16· facilities," correct?

17· · · A.· ·Correct.

18· · · Q.· ·Are -- are you aware of any engagement letter

19· that shows that prior to August of 2011 that Pate

20· Engineers was retained to perform services in connection

21· with acceptance and maintenance of the pump and pond by

22· Flood Control?

23· · · A.· ·The original contract documents.

24· · · Q.· ·Well --

25· · · A.· ·The construction phase services --

Page 112·1· · · Q.· ·Okay.

·2· · · A.· ·-- would have included final completion of

·3· project.

·4· · · Q.· ·Well, final completion is different than the

·5· efforts to obtain acceptance.

·6· · · A.· ·Correct.

·7· · · Q.· ·All right.· And this is the first contract we

·8· see in the record, and we got the whole record in front

·9· of us, where 308 Furman was retaining Pate Engineers to

10· obtain acceptance of the pond and pump, right?

11· · · A.· ·Correct.

12· · · Q.· ·Okay.· And in the Scope of Services -- just to

13· briefly go through it -- that, No. 1, we needed an

14· as-built survey as required by Flood Control; there

15· needs to be boundary lines and property lines staked;

16· prepare a record drawing package for submittal to Flood

17· Control; No. 4, conduct a record drawing inspection with

18· Flood Control.· Now, do you know whether or not a record

19· drawing package was ever submitted to Flood Control?

20· · · A.· ·I do not.

21· · · Q.· ·And then No. 5 on the top of page 2:· "Conduct

22· a one-year warranty inspection with Flood Control."· Do


24· · · A.· ·Yes.

25· · · Q.· ·So, according to this document, that two years

1· had passed since the construction was complete and 308

·2· Furman was at this point in time, two years later,

·3· retaining its engineers to work on acceptance of the

·4· facilities for maintenance by Flood Control, right?

·5· · · A.· ·Yes.

·6· · · Q.· ·And this proposal was done August 29th of

·7· 2011.· And, as we can see on page 3, this was executed

·8· two months later in October of 2011, right?

·9· · · A.· ·Correct.

10· · · Q.· ·So this wasn't exactly something that 308

11· Furman was working very quickly on, was it?

12· · · A.· ·What was the question?

13· · · Q.· ·We'll move on.

14· · · · · · · ·If you'll go to Exhibit R29, please.· This

15· is an e-mail written by Robert Jones at Pate Engineers.


17· · · A.· ·Yes.

18· · · Q.· ·And he's writing to Caroloyn White at Flood

19· Control, right?

20· · · A.· ·Correct.

21· · · Q.· ·May 30th, 2012.· He says "Thanks for meeting

22· with me on-site.· I appreciate your understanding that

23· the end goal for us and our client is to present a

24· solution that will be approved and accepted by Flood

25· Control," right?


·2· · · Q.· ·And then he goes on - 1, 2, 3, and 4 - to

·3· delineate some things that he understood that needed to

·4· be done to progress towards acceptance, right?

·5· · · A.· ·Correct.

·6· · · Q.· ·And he says that excavation on the backslope

·7· needs to be done, No. 1; No. 2, have to re-grade the

·8· slide slopes; No. 3, designate a no-mow zone; and, 4,

·9· coordinate with Flood Control wetlands contract, right?

10· · · A.· ·Correct.

11· · · Q.· ·That's what he said, right?

12· · · A.· ·Correct.

13· · · Q.· ·So we -- we've seen that August of 2009 it

14· fails inspection.· Seven months later, March of 2010, it

15· appears that nothing's happened.· August of 2011 it

16· still fails.· And now we're up to May 30th of 2012, and

17· the engineers are -- are still trying to figure out what

18· all has to be done to get the pond and the pump

19· accepted, right?

20· · · A.· ·Correct.

21· · · Q.· ·Let's go to Exhibit R30, please, sir.· R30 is

22· a document produced to us by IDS, 308 Furman's

23· engineers.· And you see that it's dated July 19th of

24· 2012, sir?

25· · · A.· ·Yes.

Page 115·1· · · Q.· ·And, No. 1, it's still referring to the

·2· overall goal to get the detention pond accepted, right?

·3· · · A.· ·Correct.

·4· · · Q.· ·And No. 2 says that the engineers are having

·5· difficulty establishing suitable cover on porches --

·6· portions of the pond, right?

·7· · · A.· ·Correct.

·8· · · Q.· ·And it also says that they're investigating

·9· how to stabilize the slopes, right, sir?

10· · · · · · · ·MS. SCOTT:· Your Honor.

11· · · · · · · ·THE WITNESS:· Correct.

12· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Yes?

13· · · · · · · ·MS. SCOTT:· I want to maybe make an

14· objection on clarification.· We're here about the

15· reimbursement on the pump, and all of these exhibits

16· that he's referring to refer to the detention pond.

17· Those are two separate issues.· And this is a relevance

18· issue because we're not asking -- we've been reimbursed

19· for the pond.· I mean, it wasn't accepted, and we got

20· reimbursed for it.· So we're only here to talk about the

21· pump.· So I think in the interest of time we can

22· recognize the relevance -- or irrelevance of this.

23· · · · · · · ·MR. GIBSON:· For acceptance purposes, the

24· pond and the pump are considered together.· Flood

25· Control is not going to accept a pump but not the pond.

Page 116·1· So they have to be considered together.

·2· · · · · · · ·MS. SCOTT:· Well, that may be true.· But

·3· we're -- we got reimbursed for the pond, and we're not

·4· asking for any finding with regard to reimbursement on

·5· the pond.· We're only asking for a finding with regard

·6· to the reimbursement on the pump.· So they -- they may

·7· be one in together with the Harris County Flood Control

·8· District -- and I think there's a necessary distinction

·9· to be made.· Because if the justification for not paying

10· us for the pump is that the Flood Control District

11· didn't accept it, then the same thing would be true for

12· the pond.· But we're not -- we're not asking for

13· reimbursement on the pond because we already got it.

14· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· I'm

15· overruling the objection just as the relevance pertains

16· to Flood Control acceptance.

17· · · · · · · ·MR. GIBSON:· Thank you, Judge.

18· · · Q.· ·(BY MR. GIBSON)· Now if you'll, please, turn

19· to Respondent's Exhibit 31.· Exhibit 31 is another set

20· of e-mails.· And, through the Judge's orientation, it's

21· a set of e-mails that are going back and forth between

22· Flood Control and Pate Engineers representatives.· If

23· you'll, please, turn to the -- to the first e-mail,

24· which is, of course, the very bottom of page 5 of

25· Exhibit 31 and it goes onto page 6.· It's an e-mail from

1· Randy Odinet dated November 9th, 2012.· Do you see that,

·2· sir?

·3· · · A.· ·Let me see.· Yes.

·4· · · Q.· ·And --

·5· · · A.· ·19th -- November 19th, 2012.

·6· · · Q.· ·Yes, sir.

·7· · · · · · · ·And it's addressed to Herb Herndon at

·8· Flood Control.· We've now advanced another several

·9· months after the last communication about this.· And

10· Mr. Odinet says, "We met a month or two ago regarding

11· slope stability near the outfall.· This represents the

12· most recent analysis.· We'd like to revisit this issue

13· to determine a method of managing the issue to get to

14· the one-year maintenance period."· Do you see that, sir?

15· · · A.· ·Yes.

16· · · Q.· ·And then the next e-mail is Herb Herndon

17· letting him know that you need to contact Sandra

18· Musgrove, director of Flood Control Infrastructure, for

19· further coordination.· Do you see that?

20· · · A.· ·Correct.

21· · · Q.· ·All right.· Now, if we go to page 4, we have

22· Ms. Musgrove's substantive response.· And I want to

23· point out that her response is dated February 14th of

24· 2013 at 8:20 a.m.· Do you see that, sir?

25· · · A.· ·Correct.

Page 118·1· · · Q.· ·So when Mr. Odinet first reached out on

·2· November 19th, 2012, we've now advanced another several

·3· months into February of 2013, correct?

·4· · · A.· ·Yes.

·5· · · Q.· ·All right.· And here Ms. Musgrove says, "I

·6· reviewed the field notes and e-mails." And then she

·7· refers to the August 25th, 2009, pump station

·8· walk-through.· Remember we saw that exhibit earlier,

·9· right?

10· · · A.· ·Yes.

11· · · Q.· ·That was the Pate Engineer's letter that

12· essentially laid out the deficiencies as to why the pump

13· was not approved at that time, right?

14· · · A.· ·Yes.· The punch list, yes.

15· · · Q.· ·The punch list, yes, sir.

16· · · · · · · ·That was August of 2009?

17· · · A.· ·Correct.

18· · · Q.· ·And so now we're 3 1/2 years later, and she is

19· again telling 308 Furman's engineers that the pump

20· station walk-through failed and that all we're aware are

21· the findings.· And you see that she talks about the

22· small pump being inoperable, right?

23· · · A.· ·Yes.

24· · · Q.· ·And then bullet point No. 2:· "The O&M Manual"

25· was -- "is required and shall provide electrical

Page 119·1· schematics, back-up generator, vendor manuals with brand

·2· of pumps."· Do you see that?

·3· · · A.· ·Yes.

·4· · · Q.· ·And there it says "Record drawings are

·5· required," right?

·6· · · A.· ·Yes.

·7· · · Q.· ·Do you recall from the August of 2011

·8· engagement with Pate Engineers it referred to the

·9· preparation of record drawings?

10· · · A.· ·Yes.

11· · · Q.· ·And so, based on Ms. Musgrove's e-mail, from

12· August of 2011 to February of 2013, no record drawings

13· have been submitted, right?

14· · · A.· ·Correct.

15· · · Q.· ·And then it talks about monetary provisions to

16· cover five years of operating costs.

17· · · · · · · ·And then her next paragraph:· "March 11th,

18· 2010, Charles Gooden requested the status of acceptance"

19· -- we saw that -- "although no contact by the engineer

20· had been made since August of 2009 nor had any of the

21· required documents been provided."

22· · · · · · · ·And then she goes down:· "Mr. Pederson

23· responded that the facility did not pass on August 25th,

24· 2009," and then "To date, no one from the engineer or

25· the MUD has contacted Flood Control for a final

Page 120·1· inspection nor have the other items been resolved."· Do

·2· you see that?

·3· · · A.· ·Yes.

·4· · · Q.· ·Then the next e-mail within Exhibit 31 is June

·5· 4th of 2013 from Chad Abram to Sandra Musgrove.· Do you

·6· see that, sir?

·7· · · A.· ·Yes.

·8· · · Q.· ·And what is the subject of that e-mail?

·9· · · A.· ·"Acceptance of Brunswick Meadows detention

10· basin and pump station."

11· · · Q.· ·Okay.· And here, roughly four months later,

12· Mr. Abram asked about the monetary provisions for five

13· years, correct?

14· · · A.· ·Correct.

15· · · Q.· ·And then Ms. Musgrove -- on page 3 of Exhibit

16· 31 she gives one response at 8:23 a.m. and then another

17· response at 11:42 a.m., and she says disregard her prior

18· e-mail.· She confused it with another pump facility.· Do

19· you see this, sir?

20· · · A.· ·Yes.

21· · · Q.· ·And then she goes on to say, "In regards to

22· Brunswick Meadows, please refer to the policy, criteria,

23· and procedure manual Section 6.15.· Pump detention

24· facilities must outfall into a Harris County Flood

25· Control-maintained channel.· Your facility does not.

1· Based on this criteria, Flood Control will not take over

·2· the Brunswick facility for maintenance."· Do you see

·3· that, sir?

·4· · · A.· ·Yes.

·5· · · Q.· ·Okay.· But were you made aware at this time

·6· that Ms. Musgrove had -- had mentioned this outfall

·7· channel?

·8· · · A.· ·Do -- can you restate that?

·9· · · Q.· ·I'll be more specific, yes, sir.

10· · · · · · · ·Did -- did the engineers make you aware at

11· 308 Furman that Flood Control had -- had raised an issue

12· with -- regarding an outfall channel?· And we'll talk

13· about what that is in a moment.

14· · · A.· ·I don't -- I don't recall me personally, but I

15· would imagine we would have been made aware of this.

16· · · Q.· ·Okay.· All right.· So for the -- we all know

17· what the outfall channel is, Mr. Johnson.· I want to

18· make sure the judge understands it.· She may already.

19· But right here in the red box -- and I do appreciate you

20· and your lawyers letting me use this demonstrative.

21· · · · · · · ·MR. RABON:· And that's Petitioner's 32.


23· · · Q.· ·(BY MR. GIBSON)· This is an aerial of

24· Brunswick Meadows, right, sir?

25· · · A.· ·Correct.

Page 122·1· · · Q.· ·And here within the red box is the -- the --

·2· the Brunswick Meadows development, correct?

·3· · · A.· ·Correct.

·4· · · Q.· ·And here in the middle, we're showing the

·5· judge, that's the pond -- both the north and the south

·6· pond; is that right?

·7· · · A.· ·Correct.· You want to -- if you stand it up,

·8· north will be -- the other way.· North will be

·9· pointed up.

10· · · Q.· ·All right.

11· · · A.· ·Right.

12· · · Q.· ·There we go.· All right.

13· · · · · · · ·And as we -- as we come down -- the -- the

14· water that is in this detention pond has to flow down

15· south to Clear Creek; is that right?

16· · · A.· ·Correct.

17· · · Q.· ·Okay.· And here -- just below the red box --

18· and I think this is a later photograph, but there was a

19· channel that went across that property that the water

20· flowed through to get underneath Beltway 8 and then

21· eventually go down to Clear Creek; is that right?

22· · · A.· ·Correct.

23· · · Q.· ·Okay.

24· · · A.· ·Yeah.· And that photo is from February of this

25· year.

Page 123·1· · · Q.· ·Yes, sir.

·2· · · A.· ·Yes.

·3· · · Q.· ·So this photo does not specifically show the

·4· outfall channel we're talking about, right?

·5· · · A.· ·This is after the commercial development was

·6· constructed.

·7· · · Q.· ·Right.· And I'm -- we'll talk about that

·8· later.

·9· · · · · · · ·After the commercial development the

10· outfall channel was -- was filled in, and they put it

11· underground in culverts, right?

12· · · A.· ·Partially, yes.

13· · · Q.· ·Okay.· However, just for orientation for the

14· judge, in order for the water to flow -- when we talk

15· about the outfall channel, at this point in time there

16· was a channel that went down and the water flowed --

17· flowed down underneath Beltway 8 and got to Clear Creek?

18· · · A.· ·It actually collects in the southwest corner

19· of the south basin where the pump station sits.

20· · · Q.· ·Right there, sir?

21· · · A.· ·Correct.

22· · · Q.· ·Okay.

23· · · A.· ·And then it's forced east and then south

24· through the -- what used to be the open drainage --

25· · · Q.· ·And before this photograph there was an open

Page 124·1· ditch that -- essentially, that's the outfall channel

·2· that we're discussing?

·3· · · A.· ·Correct.

·4· · · Q.· ·All right.· And then there's a later e-mail by

·5· Ms. Musgrove on June 21st of 2013.· So a couple weeks

·6· later.· It starts on the bottom of page 1 of Exhibit 31,

·7· and it goes onto page 2.· Do you see her e-mail, sir?

·8· · · A.· ·Yes.

·9· · · Q.· ·And most relevantly in the middle she says,

10· "There are currently many items of criteria that have

11· not been met.· I will not list all the items, but the

12· most important are" -- and then she gives what she

13· called "not an all-inclusive list."· Do you see that,

14· sir?

15· · · A.· ·Yes.

16· · · Q.· ·The first bullet point:· "Outfall into a

17· Harris County Flood Control-maintained channel," right,

18· sir?

19· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Before we

20· go any further, I just -- in the interest of time, this

21· has been admitted into evidence.· So if the question is

22· purely "Do you see that?" then I don't think we need to

23· go through all of it like that.

24· · · · · · · ·MR. GIBSON:· Sure.· Sure.

25· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· But if you

1· have a particular question for him to address, then we

·2· can do that.

·3· · · · · · · ·MR. GIBSON:· Yes, Judge.· I'll do that.

·4· · · Q.· ·(BY MR. GIBSON)· And the third bullet point

·5· says "Submit an operations and maintenance manual for

·6· the pump facility."· Do you see that, sir?

·7· · · A.· ·Yes.

·8· · · Q.· ·And 308 Furman has never submitted an

·9· operations and maintenance manual to Flood Control; is

10· that right?

11· · · A.· ·I am not aware.

12· · · Q.· ·Now, discussing the proper -- the rights to

13· that outfall channel -- if you would, please, turn to

14· Respondent's Exhibit No. 2.· This is a Storm Sewer and

15· Drainage Easement, correct, sir?

16· · · A.· ·Yes.

17· · · Q.· ·And you see that it's the Storm Sewer and

18· Drainage Easement made by and between South Beltway 8

19· Scott Street, Ltd., to Harris County Water Control &

20· Improvement District, right, sir?

21· · · A.· ·Yes.

22· · · Q.· ·And you -- you've seen this document before,

23· haven't you?

24· · · A.· ·Yes.

25· · · Q.· ·Okay.· And back in 2004 -- May 6 of 2004, the

Page 126·1· owners of that property at that time, that we just

·2· showed underneath the red box on the photo we just saw,

·3· conveyed to 308 Furman -- strike that.· They conveyed to

·4· District 89 an easement to use and maintain and operate

·5· that outfall channel, correct?

·6· · · A.· ·Correct.

·7· · · Q.· ·So at the point in time in 20 -- 2009, 2011,

·8· 2013 with these communications with Flood Control we've

·9· been looking at, when they discussed Flood Control

10· needing the rights to the outfall channel, District 89

11· did have easement rights to that channel, correct?

12· · · A.· ·Yes.

13· · · Q.· ·Have you read Ms. Sandra Musgrove's testimony

14· in this case?

15· · · A.· ·I have.

16· · · Q.· ·And Ms. Musgrove testified -- didn't she? --

17· that the -- the rights that Flood Control needed could

18· be satisfied by an easement across that channel, right?

19· · · A.· ·Yes.

20· · · Q.· ·If you would turn to Respondent's Exhibit 36,

21· please.

22· · · A.· ·Respondent's 36?

23· · · Q.· ·Yes.

24· · · · · · · ·Respondent's Exhibit 36 is a cost estimate

25· prepared by IDS Engineering for the Brunswick Meadows

Page 127·1· Detention Acceptance Punch List, correct?

·2· · · A.· ·Correct.

·3· · · Q.· ·And they submitted a cost estimate of just

·4· over $1 million, right?

·5· · · A.· ·Correct.

·6· · · Q.· ·And you understand that this cost estimate --

·7· which you've seen before, right?

·8· · · A.· ·Yes.

·9· · · Q.· ·And this cost estimate was prepared by 308

10· Furman's engineers to give 308 Furman an estimate of

11· what it would cost to make the changes and do the things

12· that Harris County Flood Control said that they required

13· to do for acceptance, right?

14· · · A.· ·This is an estimate of those acceptance punch

15· list items, yes.

16· · · Q.· ·And 308 Furman did not authorize its engineers

17· to proceed with the work shown on Exhibit 36, correct?

18· · · A.· ·Correct.

19· · · · · · · ·MR. GIBSON:· Your Honor, would now be a

20· good time for a break?

21· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Yes.· Do

22· you foresee going on for a while still?

23· · · · · · · ·MR. GIBSON:· Yes.

24· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· It's

25· about lunchtime, so -- it's 12:10 right now.· We'll come

Page 128·1· back at 1:15, then, from lunch.

·2· · · · · · · ·MR. GIBSON:· Okay.· Thank you, Judge.

·3· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Off the

·4· record.

·5· · · · · · · ·(Break from 12:08 p.m. to 1:24 p.m.)

·6· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· We are back

·7· on the record after our lunch break, and we will resume

·8· with the cross-examination of Mr. Johnson.

·9· · · · · · · ·And I'll remind you that you're still

10· under oath from when it was administered earlier.

11· · · · · · · · ·CROSS-EXAMINATION CONTINUED

12· BY MR. GIBSON:

13· · · Q.· ·Mr. Johnson, if you could, please, pull out

14· the small binder in front of you.· It's got your

15· deposition testimony, but it also has your direct

16· testimony filed in this case.· If you would, please,

17· turn to your direct testimony, which has been marked as

18· Exhibit A.· Are you there, sir?

19· · · A.· ·Yes.

20· · · Q.· ·Would you, please, go to the last page of that

21· document, which is your affidavit.· Is that your

22· signature on the affidavit of Michael W. Johnson?

23· · · A.· ·Yes.

24· · · Q.· ·And so by signing this affidavit, did you

25· understand that you had read your direct testimony and

1· that you swore that you had personal knowledge of the

·2· facts contained therein and all answers are true and

·3· correct?

·4· · · A.· ·Yes.

·5· · · Q.· ·There's a -- some specific passages of your

·6· direct testimony that we're going to talk about at this

·7· point.· The first one is on page 5.· We're going to

·8· start on page 95 -- I'm sorry, line 95 -- page 5, line

·9· 95.· And do you see where your counsel had asked a

10· written question about Section 2.01?· You see that, sir?

11· · · A.· ·Yes.

12· · · Q.· ·And then you were asked about the provision

13· 2.01 of the Reimbursement Agreement, correct?

14· · · A.· ·I believe that's what that is referring to.

15· · · Q.· ·If you -- if you'd like to confirm that, if

16· you go back to page 3, which is where this -- the bottom

17· of page 3, which is where this segment of your testimony

18· started, your counsel referred you to Exhibit 1, which

19· is the Reimbursement Agreement.· Do you see that, sir?

20· · · A.· ·Yes.

21· · · Q.· ·And then there's a series of questions about

22· specific sections of the Reimbursement Agreement, right?

23· · · A.· ·Yes, correct.

24· · · Q.· ·So on page 5 starting on line 95 you were

25· asked about Section 2.01.· The first sentence which --

Page 130·1· relates to the developer's engineer preparing plans and

·2· specifications, correct?

·3· · · A.· ·Yes.

·4· · · Q.· ·And then starting on line 100 you were

·5· asked -- again another section -- provision of 2.01,

·6· which says that the District's engineer will submit

·7· plans and specifications to the District for approval.

·8· You see that, sir?

·9· · · A.· ·Yes.

10· · · Q.· ·And -- and then you were asked whether that

11· process was followed, and you said it was, right?

12· · · A.· ·Yes.

13· · · Q.· ·And -- and you were asked, "How do you know

14· this?"

15· · · · · · · ·And you said, "It was from either

16· attending District 89 meetings or reading the meeting

17· minutes produced by District 89," right?

18· · · A.· ·Correct.

19· · · Q.· ·Now, I think you were testifying generically

20· in this question and answer, just to be fair.· However,

21· with regard to the specific plans and specification of

22· contracts that were at issue in this case, we saw the

23· meeting minutes from 2007 where those were approved.

24· That was prior to your personal involvement with 308

25· Furman, correct?


·2· · · Q.· ·According to your testimony, your personal

·3· knowledge with 308 Furman started in 2009, correct?

·4· · · A.· ·Correct.

·5· · · Q.· ·Anything -- you did projects for Lennar prior

·6· to that time?· That's correct?

·7· · · A.· ·Yes.

·8· · · Q.· ·So when you said that you knew that -- the

·9· process of the District engineer submitting plans and

10· specifications to the direct for approval, that was

11· based upon reading the meeting minutes, right?

12· · · A.· ·At this time, yes.

13· · · Q.· ·Okay.· And so when you said, "from either

14· attending District 89 meetings or reading the meeting

15· minutes" as the basis for how did you know that, with

16· regard to the issues in this case, it was merely because

17· you read the meeting minutes regarding the approval of

18· those plans and specifications, right?

19· · · A.· ·Specifically to the approval of plans and

20· specs, yes.

21· · · Q.· ·The ones at issue in this case, correct?

22· · · A.· ·Correct.

23· · · Q.· ·Not based on any personal knowledge?

24· · · A.· ·Not with regards to approval of the plans,

25· correct.

Page 132·1· · · Q.· ·Okay.· And then on the top of page 6 of your

·2· testimony in line -- starting with line 108 --

·3· · · · · · · ·MR. GIBSON:· I'm sorry, Judge.· Is it okay

·4· if I examine sitting down?· I just realized I was doing

·5· that.

·6· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Oh, yes,

·7· that's --

·8· · · · · · · ·MR. GIBSON:· Is that okay?

·9· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· That's

10· fine.

11· · · · · · · ·MR. GIBSON:· Okay.· Thank you.

12· · · Q.· ·(BY MR. GIBSON)· In line 108 of page 6 of your

13· testimony, which is Exhibit A, you refer to the

14· provision in Section 2.01 of the Reimbursement Agreement

15· that says that the District's engineer shall have final

16· approval of the plans and specifications, which approval

17· shall not be unreasonably withheld.

18· · · · · · · ·And you were asked whether that process

19· was followed, and you answered, "Yes," correct?

20· · · A.· ·Correct.

21· · · Q.· ·And then you again were asked, "How do you

22· know this?"

23· · · · · · · ·"From either attending District 89

24· meetings or reading the meeting minutes," correct?

25· · · A.· ·Yes.

1· · · Q.· ·With regard to the specific plans and

·2· specifications for the expanded detention pond and pump

·3· station that we've been talking about here today, your

·4· knowledge of that, through your testimony, is only based

·5· upon reading the meeting minutes, correct?

·6· · · A.· ·Again, with regards to the construction plan

·7· approval, yes.

·8· · · Q.· ·Okay.· Not based upon attending the meetings

·9· for that specific --

10· · · A.· ·Correct.

11· · · Q.· ·-- topic, right?

12· · · A.· ·Right.

13· · · Q.· ·And then next -- on line 116 of your testimony

14· you said -- "Do you know if District 89's engineer made

15· recommendations to the board regarding the award of

16· contracts to accomplish the work and the plans and

17· specifications?"

18· · · · · · · ·And you said, "Yes," right?

19· · · A.· ·Yes.

20· · · Q.· ·Then you were asked, "How do you know?"

21· · · · · · · ·And again you said, "Attending the

22· District 89 meetings or reading the meeting minutes

23· produced by District 89," right?

24· · · A.· ·I don't specifically see where that --

25· · · Q.· ·It's on line 121.

Page 134·1· · · A.· ·Okay.· Yes.

·2· · · Q.· ·Okay.· So with regard to any specific

·3· recommendations regarding the District's engineer,

·4· regarding the contracts at issue in this case, you

·5· weren't there at the time, and so thereafter whatever

·6· knowledge you have is only based upon reading the

·7· meeting minutes, correct?

·8· · · A.· ·Correct.

·9· · · Q.· ·Okay.· So to broaden it out a little bit, to

10· the extent that there are any facts that are being

11· presented here today or documents regarding issues of

12· dispute in this case that occurred in 2005 or 2006 or

13· 2007, you do not and cannot testify with personal

14· knowledge about those facts, right?

15· · · A.· ·Correct.

16· · · Q.· ·And so don't you find -- given that, don't you

17· find that your testimony is misleading in this respect,

18· that you claim that you know these things either by

19· attending meetings or by reading the meeting minutes,

20· but really you don't know anything about what happened

21· in 2005 and '6 and '7 other than what any of us could

22· learn from reading the documents?· Don't you find that

23· misleading?

24· · · A.· ·No.

25· · · Q.· ·Let's go to page 11 of your testimony, Exhibit

Page 135·1· A, please.· On page 11, line 234, your counsel had asked

·2· you the question:· "Will the detention pond work as

·3· intended without the pump station?"

·4· · · · · · · ·And then you answered, "No," right, sir?

·5· · · A.· ·Yes.

·6· · · Q.· ·Do you remember earlier when we looked at

·7· Respondent's Exhibit 3, which was the Brunswick Meadows

·8· Drainage Plan in 2005?· Do you recall that, sir?

·9· · · A.· ·Yes.

10· · · Q.· ·Okay.· If you need to pull it out, that's

11· great, but I'm not going to ask you anything specific

12· about it.

13· · · A.· ·Okay.

14· · · Q.· ·Isn't it true that you don't know whether 308

15· Furman followed the Brunswick Meadows Drainage Plan in

16· its development of Brunswick Meadows?· Correct?

17· · · A.· ·Restate the question, please.

18· · · Q.· ·Sure.· Isn't it a fact that you don't know

19· whether 308 Furman followed the 2005 drainage plan in

20· its development of Brunswick Meadows?· Correct?

21· · · A.· ·I believe, yeah, I've stated that I -- that

22· I'm not certain that everything in this drainage report

23· was followed.

24· · · Q.· ·Right.· And, in fact, in your testimony you

25· referred -- you said -- I asked, "Who would know that?"

Page 136·1· · · · · · · ·And you said, "The engineers," right?

·2· · · A.· ·Correct.

·3· · · Q.· ·Okay.· Now, given that, you don't know whether

·4· or not the drainage plan was followed.· You really don't

·5· have any basis for giving the testimony that you gave in

·6· your direct testimony that the detention pond would not

·7· work as intended without the pump station, right?

·8· · · A.· ·I disagree.

·9· · · Q.· ·Well, if you don't know whether or not the

10· drainage plan, which you -- which we read earlier,

11· included the necessity of a pump -- we talked -- we read

12· that earlier -- and if you don't know whether or not

13· that drainage plan was followed or not, you can't really

14· say one way or the other whether or not the detention

15· pond would work as intended without the pump station,

16· can you?

17· · · A.· ·Except that we've had ten years of the pump

18· station operating and affirmed by your operator as

19· operating and functioning to the benefit of the

20· District.

21· · · Q.· ·And -- and, as far as you know, the pump has

22· always operated, has always worked, right?

23· · · A.· ·But for the initial stages where it showed up

24· on a punch list that repairs had to be made.

25· · · Q.· ·Okay.· But that's where the pump is operated,

1· right?· I mean, the pump, as far as you know --

·2· · · A.· ·Yeah, the pump has operated for -- since 2010.

·3· · · Q.· ·You were asked by your lawyer:· "Will the

·4· detention pond work as intended without the pump

·5· station?"

·6· · · · · · · ·And you said, "No."

·7· · · · · · · ·And the point is you don't really know

·8· whether that's true or not because you don't know

·9· whether the drainage plan was followed, right?

10· · · A.· ·I think my understanding of the drainage

11· plan -- my answer to the understanding of the drainage

12· plan was to every single specific with regards to the

13· drainage plan.· I know in generality that a pump was

14· needed in order to make the expanded deepened pond

15· function.

16· · · Q.· ·You're -- you're not an engineer, correct?

17· · · A.· ·Correct.

18· · · Q.· ·Is it fair to say you're a business guy,

19· right?

20· · · A.· ·Yes.

21· · · Q.· ·Okay.· You're not really the right person to

22· be giving opinions on whether or not the drainage

23· facilities will work or not work under certain

24· conditions, are you?

25· · · A.· ·I am not an engineer.

Page 138·1· · · Q.· ·But, yet, you submitted this testimony

·2· anyway, right?

·3· · · A.· ·Yes, I did.

·4· · · Q.· ·Well, let's look at something on the next

·5· page, 12, of your testimony, Exhibit A, line 253.· You

·6· were asked:· "Was the pump station functioning as

·7· intended as of June 5th of 2010?"

·8· · · · · · · ·And you answered, "Yes," right?

·9· · · A.· ·Yes.

10· · · Q.· ·And since you don't know whether or not the

11· drainage plan, which included the pump, was followed or

12· not, and you're not an engineer, you don't really

13· know -- do you? -- whether or not the pump station was

14· functioning as intended as of some date in 2010, do you?

15· · · A.· ·I would rely on the completion certificate of

16· the facility and the District's operator and engineer at

17· the time affirming that it was operational.

18· · · Q.· ·All right.· So you would rely on those things?

19· · · A.· ·Correct.

20· · · Q.· ·But we saw earlier you signed an affidavit

21· saying that you had personal knowledge of the matters

22· that you included in your testimony?

23· · · A.· ·Correct.· I was aware that the operator and

24· the engineer and consultant for the District has stated

25· that it was operational.

Page 139·1· · · Q.· ·But you didn't say that in your testimony.

·2· You just said, "Yes, the pump station was functioning as

·3· intended," when you really didn't have any kind of

·4· experience or education to be able to make that

·5· determination, right?

·6· · · A.· ·I believe I stated under which situation I

·7· would -- I would make that.

·8· · · Q.· ·You just did in your testimony here today,

·9· right?

10· · · A.· ·Yes.· Yes.

11· · · Q.· ·But if I hadn't brought it up, you would have

12· just led this judge to believe that you had some

13· knowledge or experience that would indicate the pump

14· functioned as intended when, in fact, you really were

15· just relying upon what other people have said or did?

16· · · A.· ·Except that I have general knowledge of how a

17· pump -- a pump station works and that the option, when

18· it comes to detention, is either to dig wider or dig

19· deeper, and we chose to dig deeper.· And in order for

20· the entire system to function, the bottom half of the

21· pond had to be pumped.· And that was -- that was working

22· at the time.

23· · · Q.· ·And that -- and the reason that you dug it

24· deeper was the reason that a pump was necessary, as you

25· just said, right?

Page 140·1· · · A.· ·Yes.

·2· · · Q.· ·And so when that plan was presented to the

·3· District for approval, it was conditioned on the fact

·4· that a deeper pond needed a pump, right?

·5· · · A.· ·Yes.

·6· · · Q.· ·And the whole thing was -- was presented to

·7· the District with the goal that it would all be designed

·8· and built so that it would be accepted by Flood Control,

·9· right?

10· · · A.· ·Yes.

11· · · Q.· ·Now let's -- let's go down to the lower part

12· of page 12 of your testimony.· Again, we're on Exhibit

13· A, page 12, starting line 257.· In 257 your attorney

14· asks you a question about that printed block on the

15· plans:· "Retention basin and pump station to be

16· maintained by Harris County Flood Control District."

17· Remember we saw that on the plans?

18· · · A.· ·Yes.

19· · · Q.· ·And then it was asked -- and then you were

20· asked by your lawyer, "Did the Harris County Flood

21· Control District take over the maintenance of either the

22· detention basin or pump station?"

23· · · · · · · ·And you answered, "No," right?

24· · · A.· ·Correct.

25· · · Q.· ·And then you were asked by your counsel, "Why

1· not?"

·2· · · · · · · ·And then you gave an answer, and you said,

·3· "Flood Control refused to take the facilities due to the

·4· alleged issues with, one, detention pond slope; two,

·5· holding water in some areas; three, lack of an

·6· operations manual for the pump station; and, four, some

·7· other issues out of 308 Furman's control."· That was

·8· your answer, correct?

·9· · · A.· ·Yes.

10· · · Q.· ·And then on the top of page 13, line 268, you

11· were asked, "What issues, if any, were outside of the

12· control of 308 Furman?"

13· · · · · · · ·And there you mentioned the outfall from

14· the detention basin, right?

15· · · A.· ·Correct.

16· · · Q.· ·Do you remember we introduced that to the

17· Judge earlier and described where that was located?

18· · · A.· ·Right.

19· · · Q.· ·You said, "The detention basin drains through

20· a property owned by another developer.· This drainage

21· ditch is not maintained by the Harris County Flood

22· Control, and Flood Control will not accept a detention

23· pond that does not outfall into a Harris County Flood

24· Control-maintained channel," right?

25· · · A.· ·Yes.

Page 142·1· · · Q.· ·Okay.· But when you submitted this testimony

·2· to Judge Brite and to the TCEQ, you did not mention that

·3· District 89 had an easement over and across that outfall

·4· channel to use it as a -- as an outfall for the water

·5· retention basin.· You didn't mention that, did you?

·6· · · A.· ·Correct.

·7· · · Q.· ·Okay.· And at the bottom of page 13 you were

·8· asked directly, "Who owns the property in which the

·9· outfall channel is located?"

10· · · · · · · ·Answer:· "NPH Scott Street."

11· · · · · · · ·That's the current owner, as you

12· understand it, at the time you did your testimony,

13· right?

14· · · A.· ·Yes.

15· · · Q.· ·"What property rights, if any, did 308 Furman

16· have in the outfall channel?"

17· · · · · · · ·And you answered, "None," right?

18· · · A.· ·Correct.

19· · · Q.· ·That's a -- that's a misleading answer, isn't

20· it?

21· · · A.· ·We do not.· The District has property easement

22· rights.

23· · · Q.· ·Yeah, but you -- you didn't mention that, did

24· you?

25· · · A.· ·I did not.

Page 143·1· · · Q.· ·And if 308 Furman was -- was really and truly

·2· trying to obtain Flood Control acceptance of these

·3· facilities, it could have easily fulfilled Flood

·4· Control's requirement for control over that channel by

·5· going to the District and letting the District know that

·6· those easement rights need to be transferred over to

·7· Flood Control, right?

·8· · · A.· ·I agree that the property rights owned by the

·9· District are transferable to the -- to the Flood

10· Control.

11· · · Q.· ·And that could have been done to fulfill that

12· requirement of Flood Control?

13· · · A.· ·That specific requirement, yes.

14· · · Q.· ·Could you, please, go to page 14 of your

15· testimony, sir, Exhibit A.· In this portion of your

16· testimony starting on line 307, page 14, your attorney

17· referred you to Exhibit 42.· And you identified that as

18· an operations manual prepared by the contractor of the

19· pump station, right, sir?

20· · · A.· ·Correct.

21· · · Q.· ·Okay.· And then you were asked whether or not

22· District 89's operator has the manual.

23· · · · · · · ·You said you don't know.

24· · · · · · · ·You were asked whether the operator ever

25· requested it?

Page 144·1· · · · · · · ·You said, "No."

·2· · · · · · · ·But are you aware of the operator ever

·3· requesting it?

·4· · · A.· ·I'm not aware.

·5· · · Q.· ·You're not aware.

·6· · · · · · · ·Then you say -- "Was the manual required

·7· by the construction specifications?"

·8· · · · · · · ·"Yes."

·9· · · · · · · ·Top of page 15:· "What would be the

10· impact, if any, on the contractor not providing the

11· manual?"

12· · · · · · · ·And you said, "The contractor wouldn't

13· have paid the full contract price."· Then you answered,

14· "If the contractor was paid the full contract price" --

15· and isn't it true, sir, that the point you were making

16· there -- or attempting to make was that, well, the

17· contractor prepared an operations manual for the pump,

18· and they had to have done it because they wouldn't have

19· been paid otherwise, right?· That was your point?

20· · · A.· ·Correct.

21· · · Q.· ·However, isn't the OEM manual, the operations

22· manual, that the contractor provides only a piece of the

23· operations manual that was required to be submitted to

24· Flood Control?

25· · · A.· ·I do not know.

1· · · Q.· ·You don't know.

·2· · · · · · · ·Did you read Tim Buscha's testimony in

·3· this case?

·4· · · A.· ·I have.

·5· · · Q.· ·Do you recall the portion where -- in his

·6· testimony where he said that the contractor's portion of

·7· the operations manual was only a part of it, and Pate

·8· never prepared this part of the operations manual?· Do

·9· you recall that?

10· · · A.· ·I don't specifically recall that.

11· · · Q.· ·You can rely upon the transcript of his

12· testimony?

13· · · A.· ·Yes.

14· · · Q.· ·Do you have anything else -- do you know

15· whether or not Pate ever prepared a -- its portion of

16· the operations manual that was required to be submitted

17· to Flood Control?

18· · · A.· ·I am not aware.

19· · · Q.· ·I'm going to switch gears, sir, and talk about

20· the claim for interest.

21· · · A.· ·Okay.

22· · · Q.· ·In the bonds that were sold in 2018, 308

23· Furman did receive two years' worth of interest on its

24· portion of that bond sale, right?

25· · · A.· ·Correct.

Page 146·1· · · Q.· ·Okay.· And 308 Furman's claim in this case is

·2· that it believes that it had a contractual right to have

·3· the District apply to TCEQ for a full five years of

·4· interest, right?

·5· · · A.· ·Correct.

·6· · · Q.· ·Okay.· And for that claim, as I understand it,

·7· the District -- strike that.

·8· · · · · · · ·For that claim, as I understand it, 308

·9· Furman is relying upon a specific provision of the

10· Reimbursement Agreement for the basis for the claim that

11· the District was contractually obligated to apply for

12· five years of interest, right?

13· · · A.· ·The -- the definition of reimbursement.

14· · · Q.· ·Yes, sir.

15· · · · · · · ·If you could go to Exhibit 1 in

16· Respondent's notebook.

17· · · A.· ·Respondent's?

18· · · Q.· ·I think it's probably Exhibit 1 in the

19· appellant's notebook also.

20· · · A.· ·Okay.

21· · · Q.· ·This is the Reimbursement Agreement, correct?

22· · · A.· ·Yes.

23· · · Q.· ·Dated December 17th of 2002, correct?

24· · · A.· ·Yes.

25· · · Q.· ·Article 1, which starts on page 2 and then

Page 147·1· goes for a couple pages of the Reimbursement

·2· Agreement, is a series of Representations and

·3· Definitions, right?

·4· · · A.· ·Yes.

·5· · · Q.· ·Section 1.01(k), which starts on the third

·6· page of the Reimbursement Agreement and goes on to the

·7· top of page 4, that's the definition of the term, quote,

·8· reimbursable share, closed quote, correct, sir?

·9· · · A.· ·1.02(k), yes.· Not 1.01(k).

10· · · Q.· ·You're right.· You know, I think I made the

11· same mistake in your deposition.

12· · · A.· ·You did.

13· · · Q.· ·Thank you.

14· · · · · · · ·1.02(k) is the definition of the term,

15· quote, reimbursable share, closed quote, correct?

16· · · A.· ·Correct.

17· · · Q.· ·And this definition says that the reimbursable

18· share shall mean the amount of reimbursement specified

19· in the reimbursement audit.· That's the first clause,

20· right?

21· · · A.· ·Yes.

22· · · Q.· ·Then it goes on to say "And upon confirmation

23· of the sale of bonds and approval by the board of said

24· reimbursement audit, the District agrees, subject to

25· conditions of Section 3.01 of the agreement, that it

Page 148·1· will" -- and then it goes on to have No. 1 and No. 2,

·2· correct?

·3· · · A.· ·Correct.

·4· · · Q.· ·What does it say under clause No. 1?

·5· · · A.· ·"Pay the developer up to the maximum for all

·6· sums advanced to, or on behalf of, the District up to

·7· the maximum extent permitted under the commission rules,

·8· including payment of interest on the funds so advanced

·9· to or paid on behalf of the District by the developer."

10· · · Q.· ·Okay.· So under subsection No. 1 of 1.02(k),

11· it says that -- it it has the phrase "up to the maximum"

12· in two places, right?

13· · · A.· ·Correct.

14· · · Q.· ·And it says "Pay the developer up to the

15· maximum for all sums advanced to, or on behalf of, the

16· District up to the maximum extent permitted under the

17· commission rules."· So it says "up to the maximum" twice

18· in that clause, right?

19· · · A.· ·Yes.

20· · · Q.· ·And there's a comma after "commission rules,"

21· right?

22· · · A.· ·Yes.

23· · · Q.· ·Then the next sentence -- next clause says

24· "including payment of interest on the funds so advanced

25· to, or paid on behalf of, the District by the

1· developer," right?

·2· · · A.· ·Yes.

·3· · · Q.· ·In that clause that says "including the

·4· payment of interest on the funds," in that portion of

·5· the phrase the -- the term "up to the maximum" isn't in

·6· that section of the definition, right?

·7· · · A.· ·What's the question?

·8· · · Q.· ·Sure.· The -- the clause that comes after the

·9· comma, after "commission rules," which says "including

10· payment of interest on the funds so advanced" -- and

11· then it goes on. . . -- in that section, it doesn't --

12· there's no reference to "up to the maximum," is there?

13· · · A.· ·"Pay the developer up to the maximum for all

14· sums advanced to, or on behalf of, the District,

15· including payment of interest on the funds so advanced,"

16· if you take out the separated comma section.

17· · · Q.· ·Right.· You'd have to take out the comma to

18· read it that way, right?

19· · · A.· ·Right.

20· · · Q.· ·Okay.· With the comma in there, the phrase

21· "including payment of interest on the funds so

22· advanced". . . -- that phrase does not have the words

23· "up to the maximum in it," does it?

24· · · A.· ·It says it, but it states "including payment

25· of interest."

Page 150·1· · · Q.· ·That's what it says.· But that phrase doesn't

·2· reference "up to the maximum," right?

·3· · · A.· ·My interpretation so "for all sums advanced

·4· to," comma break, comma opens back up, "including

·5· payment of interest on the funds so advanced."

·6· · · Q.· ·Right.· And the only question is the part that

·7· says "including payment of interest on the funds so

·8· advanced," and then it goes on, that -- that

·9· portion -- and that's only a portion of the definition,

10· but that portion does not include the phrase "up to the

11· maximum," right?

12· · · A.· ·No.· I believe that you -- by stating

13· "including payment of interest on the funds so

14· advanced," that interest and the all sums advanced fall

15· under the "up to the maximum."

16· · · Q.· ·You're giving us your contractual

17· interpretation.· Your interpretation is that "including

18· payment of interest" refers back to the preceding clause

19· that includes the term "up to the maximum."· That's your

20· interpretation --

21· · · A.· ·Yes.

22· · · Q.· ·-- right?

23· · · A.· ·Yes.

24· · · Q.· ·Okay.· I'm just asking a simple question.

25· This clause that you rely on -- this definition that you

Page 151·1· rely upon for the more than two years of interest --

·2· simple question.· The -- the clause that states

·3· "including payment of interest on the funds so

·4· advanced," that does not include the phrase "up to the

·5· maximum," right?· Just contextually in the document?

·6· · · A.· ·From after the comma starting "including

·7· payment," yes.

·8· · · Q.· ·Okay.· Your interpretation is that "up to the

·9· maximum" should be read into that clause, right?

10· · · A.· ·Correct.

11· · · Q.· ·Okay.· Now -- and you would agree with me that

12· the preceding clause says twice "up to the maximum"?· It

13· does not say "will pay the maximum," right?

14· · · A.· ·I agree it says "up to the maximum."

15· · · Q.· ·Okay.· Based on your experience with

16· advancements and reimbursements, et cetera, the interest

17· that the district pays developers, such as the interest

18· that we're talking about here today, whether it be two

19· years or five years, setting aside how much, that

20· interest is not a sum advanced to the developer, right?

21· · · A.· ·Correct.

22· · · Q.· ·And that interest is not a sum advanced on

23· behalf of the district by the developer, right?

24· · · A.· ·Correct.

25· · · Q.· ·We're getting close to being done with your

Page 152·1· portion, sir, so I'm kind of jumping around a little

·2· bit.

·3· · · · · · · ·If you would, please, turn to Exhibit 3

·4· of -- no, that's not correct.· Give me one second. I

·5· want to talk about the advancements.· Exhibit 25,

·6· please.

·7· · · A.· ·Respondent?

·8· · · Q.· ·No, Appellant.

·9· · · · · · · ·Exhibit 25 is the document submitted by

10· 308 Furman to document the advancements that it's

11· claiming in this case; is that right?

12· · · A.· ·Yes.

13· · · Q.· ·And Exhibit 24, which is the prior document --

14· please correct me if I'm wrong, but I believe this is

15· the schedule prepared by 308 Furman that summarizes the

16· various payments and -- and invoices, et cetera, that

17· are contained within Exhibit 25; is that right?

18· · · A.· ·Correct.

19· · · Q.· ·All right.· What's the total amount of 308

20· Furman's claim for advancements without interest?

21· · · A.· ·That would be stated in the appeal.

22· · · Q.· ·I think --

23· · · A.· ·Approximately.

24· · · Q.· ·-- it is on page 2 of Exhibit -- I'm not

25· trying to be tricky.· I just want -- is that not right?

1· · · A.· ·This summary adds up --

·2· · · · · · · ·MR. RABON:· 24?

·3· · · · · · · ·MR. GIBSON:· Yeah, 24.

·4· · · · · · · ·THE WITNESS:· The summary adds up to

·5· $131,431.27.

·6· · · Q.· ·(BY MR. GIBSON)· And that's the amount of

·7· advancements that 308 Furman is seeking?

·8· · · A.· ·No.· I -- I believe -- and you said,

·9· "excluding interest," correct?

10· · · Q.· ·Yes.

11· · · A.· ·The summary rolls up -- the summary provided

12· under Exhibit 24 rolls up to 110,727 prior to interest.

13· · · Q.· ·Okay.· So --

14· · · A.· ·With -- for the first batch.· And then page 3

15· an additional batch of 27,786, totaling $138,434.77.

16· · · Q.· ·And -- and the various components of that

17· $138,000 claim are made up of -- if we skip to Exhibit

18· 25 -- all the various invoices and allocations from

19· those invoices dating back as far as 2006, correct?

20· · · A.· ·Correct.

21· · · Q.· ·And it is 308 Furman's contention here -- and

22· I think you -- in your testimony this is what you

23· said -- that these were considered advancements made by

24· the developer, 308 Furman, to the District.· I believe

25· that Ms. Scott, in her opening, characterized these as

Page 154·1· advancements that are commonly done when the district

·2· doesn't have a tax base and is trying to get started,

·3· and the developers will help fund certain costs while

·4· that's happening, right?

·5· · · A.· ·These -- these are -- I think our -- our

·6· position is that these are advances for administrative

·7· and engineering costs associated with our development of

·8· Brunswick Meadows within the District.

·9· · · Q.· ·Are you aware of any specific provision of the

10· Reimbursement Agreement that refers to administrative

11· costs even qualifying as an advancement?

12· · · A.· ·Related to construction costs.

13· · · Q.· ·So when -- just a second.

14· · · A.· ·But for our construction of Brunswick Meadows

15· within the District there would be no need for these

16· invoices to be paid.

17· · · Q.· ·Well, from --

18· · · A.· ·These are all associated with our -- our

19· Brunswick Meadows project.

20· · · Q.· ·From the Reimbursement Agreement, construction

21· cost is defined as "all actual costs including the cost

22· of labor, equipment, material, and supplies, and all

23· engineering, design, and inspection costs of the

24· District's engineer and developer's engineer incurred by

25· the developer in the design, advertisement,

Page 155·1· installation, construction, and inspection of the

·2· facilities."· That's the definition of construction

·3· costs in the Reimbursement Agreement, right?

·4· · · A.· ·I believe, yes.

·5· · · Q.· ·And it -- so it mentions all those costs of

·6· the District's engineer.· Bookkeeping costs and

·7· attorney's costs are not costs of the District's

·8· engineer, are they?

·9· · · A.· ·They are separate from the engineer.

10· · · Q.· ·All right.· So they wouldn't fit the

11· definition of construction costs in the Reimbursement

12· Agreement, would they?

13· · · A.· ·Will you refer me to that definition again?

14· · · Q.· ·Sure.· It's in --

15· · · A.· ·Respondent's 1?

16· · · Q.· ·-- Respondent's No. 1.

17· · · A.· ·Okay.

18· · · Q.· ·Page 3, 1.02(d), as in dog.

19· · · A.· ·Okay.

20· · · Q.· ·I don't see any reference in the definition of

21· construction costs to administrative costs of

22· bookkeepers and lawyers.· Do you?

23· · · A.· ·Except that it's -- it's stated "include all

24· actual costs," and that we incurred these costs as a

25· result of our construction projects within Brunswick

Page 156·1· Meadows.

·2· · · Q.· ·And -- and included within the Exhibit 25,

·3· which has all the invoices for the advancement, there

·4· are invoices for bookkeepers, for a lawyer for the

·5· District, the District's bookkeeper, the District's

·6· lawyer, and the District's engineer.· Aren't those the

·7· categories?

·8· · · A.· ·Correct.

·9· · · Q.· ·And it's -- it's your interpretation of the

10· Reimbursement Agreement that bookkeeper costs and lawyer

11· costs for the District are included in construction

12· costs?· That's -- that's your interpretation, right?

13· · · A.· ·Yes.

14· · · Q.· ·All right.· Well -- okay.· We'll let the Judge

15· look at that and see who's right.

16· · · · · · · ·But in Exhibit 25, in each one of these

17· various letters, there's -- and correct me if I'm wrong.

18· But for each set of advancements -- and there's

19· several -- a couple -- two or three dozen separate

20· advancements.· There's a letter from the bookkeeper --

21· the District's bookkeeper that says these are the costs

22· for Washington & Associates, which was the lawyer; and

23· for municipal accounts, which is the bookkeeper; and for

24· ANS Engineers, which is the engineer, and asks for a

25· check in a certain amount, right?

1· · · A.· ·Right.

·2· · · Q.· ·And attached to that letter are invoices that

·3· delineate each one of those individual line items,

·4· right?

·5· · · A.· ·Right.

·6· · · Q.· ·And each one of those invoices from either the

·7· engineer or the lawyer are not just regarding Brunswick

·8· Meadows.· They're regarding various things that relate

·9· to the District's different neighbors and properties,

10· right?

11· · · A.· ·There were other ongoing projects at the time.

12· · · Q.· ·Okay.· And then 308 Furman wrote a check

13· and -- right?· And that's also included in this

14· document?

15· · · A.· ·Right.· For our portion related to our

16· project, Brunswick Meadows.

17· · · Q.· ·But whatever was delineated in the

18· bookkeeper's letter delineated those portions, right?

19· · · A.· ·Correct.

20· · · Q.· ·However, there's nothing in these documents

21· that contains any type of reservation of rights or 308

22· Furman saying, "Well, here's our check, but we expect to

23· get reimbursed in the future"?· There's nothing like

24· that in these documents, right?

25· · · A.· ·Not in this specific document, no.

Page 158·1· · · · · · · ·MR. GIBSON:· Your Honor, that's all we

·2· have right now.· We would reserve the right for recross

·3· depending on any further direct testimony.

·4· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· Does

·5· ED have cross-examination?

·6· · · · · · · ·MS. MURRAY:· The ED does not have

·7· questions.

·8· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· OPIC?

·9· · · · · · · ·MR. WAYNE:· No questions, Your Honor.

10· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Redirect.

11· · · · · · · ·MS. SCOTT:· Thank you, Your Honor.

12· · · · · · · · · · REDIRECT EXAMINATION

13· BY MS. SCOTT:

14· · · Q.· ·Mr. Johnson, how long have you been involved

15· in the development -- land development business?

16· · · A.· ·I started with Friendswood Development Company

17· in 2007.

18· · · Q.· ·And what's -- what capacity are you here in

19· now?

20· · · A.· ·I've held many roles over my extent there.

21· Beginning as an acquisitions manager, senior

22· acquisitions manager, community development manager,

23· most recently vice president of land.

24· · · Q.· ·And during the -- your tenure there, have you

25· had opportunities, other than this instance, to engage

Page 159·1· with water districts?

·2· · · A.· ·Yes.

·3· · · Q.· ·Okay.· And when I say, "water districts," that

·4· can mean municipal utility district, water control

·5· improvement district.· And that's what we're dealing

·6· with here?

·7· · · A.· ·Correct.

·8· · · Q.· ·Is there any functional difference between a

·9· WCID or a MUD with regard to how it works between the

10· developer and the district?

11· · · A.· ·No.· They generally act the same.

12· · · Q.· ·Okay.· So give us, then, if you can, just a

13· brief education on how those -- those relationships work

14· between the land developer and a water district.

15· · · A.· ·Okay.

16· · · · · · · ·MR. GIBSON:· Objection.· Calls for a

17· narrative.· It's not really specific about what those

18· relationships are.· It's a pretty broad question.



21· · · · · · · ·THE WITNESS:· Water control and

22· improvement district is a -- is a special financing

23· district allowed under the laws of the state of Texas

24· for developers to use to finance new construction

25· projects.· In this situation Water Control Improvement

Page 160·1· District 89 and the developer entered into a

·2· Reimbursement Agreement that defines the stipulations of

·3· their -- their contract relationship where we would

·4· advance money on behalf of the District that would

·5· afford water, sewer, drainage, improvement projects that

·6· would then enable residential homes to be built, a tax

·7· base to be created, and used to then sell bonds to

·8· reimburse for some of those structures -- projects.

·9· · · Q.· ·(BY MS. SCOTT)· So is the developer required

10· to make an initial investment in the development before

11· the bond issues?

12· · · A.· ·Yes.

13· · · Q.· ·Is there a certain percentage that the

14· developer has to invest before the bond issues?

15· · · A.· ·No.

16· · · Q.· ·Okay.· And so in this case, the WCID was

17· really a financing mechanism for your development of the

18· infrastructure:· water, sewer, and drainage?

19· · · A.· ·Right.

20· · · Q.· ·Were roads included in that?

21· · · A.· ·No.

22· · · Q.· ·Okay.· Was the -- tell -- the District was

23· existing when you began the development of that land,

24· correct?

25· · · A.· ·When 308 Furman began, yes.

1· · · Q.· ·Uh-huh.· And how did -- was -- was the land

·2· that you owned annexed into the District?

·3· · · A.· ·It was.

·4· · · Q.· ·So while there was existing tax base there for

·5· your particular development, nothing had occurred?

·6· · · A.· ·There was not -- it was raw land -- our 308

·7· acres that were annexed were raw land at the time of

·8· annexation.· The other property within the District did

·9· have an established tax base.

10· · · Q.· ·When was the first bond issue -- when did that

11· occur with respect to the Brunswick Meadows development?

12· · · A.· ·I believe 2006.

13· · · Q.· ·And --

14· · · A.· ·Approximately.

15· · · Q.· ·-- was -- would that had been contract one?

16· · · A.· ·No.

17· · · Q.· ·Or -- okay.· Tell me what that was.

18· · · A.· ·I don't recall specifically.

19· · · Q.· ·Okay.

20· · · A.· ·But I believe there's been seven bond issues

21· over the life of this project for 308 Furman.

22· · · Q.· ·Okay.· And with regard to the detention pond

23· and pump that we've been talking about today, there are

24· three contracts with regard to those items, correct?

25· · · A.· ·Yeah.· The -- the pond and the pump station

Page 162·1· were constructed under three separate contracts, yes.

·2· Contract No. 1 specifically being the pump.

·3· · · Q.· ·Okay.· And were you reimbursed for contracts

·4· one and three?

·5· · · A.· ·We were for one and three but for small --

·6· excluding -- exclusions based on overbuilding or --

·7· · · Q.· ·Do you know how many years of interest you got

·8· for those two?

·9· · · A.· ·Two years.

10· · · Q.· ·Two years?

11· · · A.· ·That was part of the 2018 issue.

12· · · Q.· ·Okay.· Oh, I'm sorry.· Did -- has there been a

13· bond issue where you have gotten more than two years'

14· interest?

15· · · A.· ·I know for sure in the 2011 series and 2013

16· series we had five years.

17· · · Q.· ·Five years.· Okay.

18· · · · · · · ·So before we get kind of into the -- the

19· facts here, do you remember -- and I'm trying to look

20· and see when it was -- back in October of 2018, it may

21· have been September of 2018, but we had a hearing in

22· Austin with regard to the Water District's motion to

23· dismiss?

24· · · A.· ·I do recall the hearing.

25· · · Q.· ·And you were present for that, correct?

Page 163·1· · · A.· ·I was.

·2· · · Q.· ·All right.· And did you read the Judge's

·3· opinion with regard to that hearing?

·4· · · A.· ·I have.

·5· · · Q.· ·Okay.· And one of -- in the Judge's opinion

·6· when he states the applicable law, they're talking about

·7· the appeal that we've done, that we're here today on,

·8· and it references the statute and it references a bill

·9· analysis from the Texas House of Representatives.· And

10· the purpose, according to the house bill analysis, says

11· that this is an administrative remedy as an alternative

12· to litigation for resolving disputes between MUD board

13· and developers over the cost of the facilities.

14· · · A.· ·Correct.

15· · · Q.· ·Do you recall that?

16· · · · · · · ·MR. GIBSON:· Objection.· She's asking the

17· witness to testify about this Court's prior order --

18· your prior ALJ, and I think it's improper to ask the

19· witness to testify about the Judge's order.

20· · · · · · · ·MS. SCOTT:· He was present for the

21· hearing.

22· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· I am going

23· to sustain that.· I don't believe that the substance of

24· the -- the order that he issues would be appropriate for

25· him to -- to provide his opinion on.

Page 164·1· · · Q.· ·(BY MS. SCOTT)· Do you have an understanding

·2· of what the result was on the -- the Water District's

·3· motion to dismiss?

·4· · · · · · · ·MR. GIBSON:· Objection.· Calls for a legal

·5· conclusion, and the order speaks for itself.

·6· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· I don't

·7· believe as asking for an opinion generally necessarily

·8· calls for a legal conclusion, so I am going to ask you

·9· to keep that in mind when you answer that you're not

10· making any legal conclusions.

11· · · · · · · ·THE WITNESS:· That I'm not making any

12· legal conclusions?


14· · · · · · · ·THE WITNESS:· My understanding of the

15· opinion of the ALJ -- the previous opinion of the ALJ is

16· that we were timely in our appeal and that this hearing

17· should be heard.

18· · · Q.· ·(BY MS. SCOTT)· Okay.· And that's all I'm

19· going to ask, so we can move on from there.

20· · · · · · · ·One of the items that is contained in the

21· statute -- or the rule that we're here under -- and you

22· probably heard this discussed during opening, as well.

23· It talks about what the Court will consider in rendering

24· its opinion here, and one of the criteria is the

25· suitability and necessity for the facilities.· So

1· because the pump is what's at issue that we haven't been

·2· reimbursed for, can you tell the Court how that came to

·3· to be?· How -- how the detention pond and the pump were

·4· developed as suitable for this District for the

·5· development?

·6· · · · · · · ·MR. GIBSON:· Objection.· Lack of

·7· foundation; no personal knowledge.· He wasn't even

·8· working for Lennar in 2005 or 2006 when this was being

·9· designed, and he didn't have any knowledge about 308

10· Furman until 2009, which was much after the case.

11· · · · · · · ·MS. SCOTT:· Judge, this pump has been in

12· operation for ten years.· And he has personal knowledge

13· of the operation of this facility, and he's been

14· employed for -- from -- by Lennar since 2007.· So it's

15· not just the construction of it, but it's the continuing

16· operation of it.

17· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· I'll let

18· him answer the question but fully state the basis of his

19· answer, whether it's personal knowledge or whatever

20· information he's relying on.

21· · · · · · · ·THE WITNESS:· My general understanding of

22· the pump station and pond is that it's been operating

23· since 2010 to the benefit of the District and its

24· taxpayers, and that we had a decision as a company to --

25· in 2005 the requirement to extend -- expand the

Page 166·1· facility, and our options were either to go wider or

·2· deeper.· We elected, based on economic valuation, to go

·3· deeper because it required less surface area and enabled

·4· us to build additional homes and create additional value

·5· from which both we, as the developer, and the District

·6· has benefited.

·7· · · Q.· ·(BY MS. SCOTT)· And what would you say is the

·8· specific benefit to the District?

·9· · · A.· ·We have in our exhibits a rough calculation of

10· the area of the pond that was saved.

11· · · Q.· ·I think it's Exhibit 100, if you want to go

12· ahead and turn to that.

13· · · A.· ·100?

14· · · Q.· ·Yes.

15· · · · · · · ·So when you're -- when you're at that

16· exhibit, you can go ahead and identify it.

17· · · A.· ·This is, I guess, Exhibit 100.· It's Brunswick

18· Meadows -- it's a -- it's a spreadsheet that shows us

19· Lennar closings for the past six months ending February

20· 28th, 2014.· They're -- at the time they were both

21· 50-foot lots and 40-foot lots on which homes were being

22· constructed.· Average home value on the 40-foot

23· homesites is 142,000, on the 50-foot homesites 175,000.

24· Two sections were looked at.· The average density

25· amongst those two sections was approximately six units

Page 167·1· an acre.

·2· · · Q.· ·Uh-huh.

·3· · · A.· ·So when we were analyzing the options to go

·4· whether wider with a -- with a larger surface area pond

·5· versus deeper with this pump facility, we -- we

·6· determined that a -- you know, a rough estimate of

·7· acreage lost if we went wider and not deeper would be 95

·8· acres.· Multiplied by six homes per acre, that equals

·9· 571 homesites --

10· · · Q.· ·Uh-huh.

11· · · A.· ·-- at an average value of 165,000.· So we're

12· talking about $94 million worth of increased AB based on

13· the construction of this pump station facility from

14· which then the District has for the past ten years been

15· collecting taxable value to the tune of -- 83 cents, I

16· think, is their current depth surface -- over $800,000 a

17· year of tax revenue from this decision.

18· · · Q.· ·Okay.· So what you're saying is when you made

19· the decision to go deeper with the pond, it -- it

20· allowed you to build roughly 500 additional homes or

21· lots --

22· · · A.· ·Correct.

23· · · Q.· ·-- in that area?

24· · · · · · · ·And as the result in that, the Water

25· District's taxable value has increased, and they're

Page 168·1· collecting taxes on an additional 500 homes that they

·2· otherwise wouldn't be able to, correct?

·3· · · A.· ·Yes.

·4· · · Q.· ·Okay.· So you also have on this chart -- the

·5· next criteria that we're -- and I'm under B, the

·6· reasonableness -- reasonableness of the cost of the

·7· facilities.· You have on Exhibit 100 that the original

·8· cost of the pump station was around $700,000.

·9· · · A.· ·That sounds --

10· · · Q.· ·Okay.

11· · · A.· ·-- correct.

12· · · Q.· ·All right.· So in light of the additional tax

13· base that was created there, I would say that that's a

14· reasonable number.· Would you agree?

15· · · A.· ·Well, in -- in -- the pump station was

16· competitively bid.

17· · · Q.· ·Sure.· So when -- when we're talking about the

18· cost, then, both of the -- the benefit to the District

19· and the fact that this was a publicly bid project goes

20· both to the reasonableness of the cost there, correct?

21· · · A.· ·Yes.

22· · · Q.· ·Okay.· And I think too, with regard to the

23· economic viability of the District, the document that we

24· just looked at, Exhibit 100, tells us some of the --

25· just additional tax base that was added with the pump?

1· · · · · · · ·MR. GIBSON:· Objection.

·2· · · · · · · ·THE WITNESS:· I think the best --

·3· · · · · · · ·MR. GIBSON:· Objection.· Leading.

·4· · · · · · · ·MS. SCOTT:· I know that I'm leading.· But

·5· I think that we're trying to get done with this as

·6· quickly as we can, and it's a lot more efficient if I

·7· can have some leeway to question this witness so that we

·8· can move along.

·9· · · · · · · ·MR. GIBSON:· The background and setup,

10· that's why I didn't say anything.· But we're getting

11· into the substance of the core of this case, so. . .


13· to overrule it for now.· But if it gets extensive and

14· into leading questions, then I will sustain the

15· objection.


17· · · · · · · ·MS. SCOTT:· Sure.· I understand.

18· · · Q.· ·(BY MS. SCOTT)· So on -- I'm sorry.· You were

19· about to continue with some -- some other --

20· · · A.· ·Would you restate the question?

21· · · Q.· ·Yes.· I was asking about the reasonableness of

22· the cost and the economic viability of the District, and

23· I think you were about to say, "I think the best" --

24· · · A.· ·Yeah. I -- I would rely on the District's

25· financial advisor to determine whether or not this --

Page 170·1· the District had the financial capability of refunding

·2· us for this -- these projects.

·3· · · Q.· ·Did -- did you review the financial advisor's

·4· direct testimony in this matter?

·5· · · A.· ·I did.

·6· · · Q.· ·And did you read his testimony that indicated

·7· if the cost of this pump station and the other items

·8· that we're asking for had been included in the latest

·9· bond issues, that the -- the TCEQ's economic

10· feasibility rules would have still been met?

11· · · A.· ·Yeah.· I believe it was -- it was specifically

12· asked "Would $2 million be possible?"

13· · · · · · · ·And I think his response was that it

14· should happen.

15· · · Q.· ·Right.· And the 2 -- $2 million number is

16· basically what we're asking to be reimbursed for?

17· · · A.· ·Yes.

18· · · Q.· ·Thank you.

19· · · · · · · ·So I'm going to point you back then to --

20· yeah -- Exhibit -- it's going to be our Exhibit No. 3.

21· · · A.· ·3?

22· · · Q.· ·Uh-huh.

23· · · A.· ·Okay.

24· · · Q.· ·What is that document?

25· · · A.· ·"Harris County Water Control & Improvement

Page 171·1· District No. 89's Projects Not Included in Bond Issue

·2· No. 7" list.

·3· · · Q.· ·Okay.· And under the Comments what's -- what's

·4· the first comment say on that document?

·5· · · A.· ·Item one is in regards to a pump station.· The

·6· comment says, "Pump station project was not authorized

·7· or approved by the WCID No. 89 board."

·8· · · Q.· ·And is that the -- is that the basis for this

·9· appeal?

10· · · A.· ·They have -- we believe they erred in their

11· decision not to include both the stormwater pump station

12· and the developer advances listed here.

13· · · Q.· ·Okay.· And going down to Developer

14· Advances, can you read that comment with regard to

15· Developer Advances, please.

16· · · A.· ·"Legal, bookkeeping, and other fees are

17· eligible for reimbursement if provided the specific

18· project and purpose of fee.· Not enough detail was

19· provided to specifically substantiate the request for

20· reimbursement."

21· · · Q.· ·Okay.· And did you -- after you got this

22· information, did you provide additional information to

23· the District with regard to developer advances?

24· · · A.· ·Yes.· We made -- we made another open records

25· request to the bookkeeper for historical documents

Page 172·1· associated with our advancements.

·2· · · Q.· ·Okay.

·3· · · A.· ·And also pulled our records.

·4· · · Q.· ·Did -- in any of the -- the items that were

·5· submitted for reimbursement as an advance, did any of

·6· the vendors that are included in there ever work

·7· directly for 308 Furman?

·8· · · A.· ·No.

·9· · · Q.· ·They've worked -- worked for the Water

10· District?

11· · · A.· ·They -- they were consultants of the District,

12· correct.

13· · · Q.· ·All right.· I want to ask you, too, before we

14· move on to talk about the pump a little bit more

15· specifically -- we've been talking a lot about the

16· Harris County Flood Control District accepting the pump

17· for maintenance.· What does that mean?

18· · · A.· ·What does acceptance for maintenance mean?

19· · · Q.· ·Uh-huh.· Yes.

20· · · A.· ·That they would -- they would take over

21· ownership control of the facility and -- and ultimately

22· mow.

23· · · Q.· ·Okay.

24· · · A.· ·And maintain the facility.

25· · · Q.· ·And do you have any idea how -- what the

1· mowing costs are for a facility of that size?

·2· · · A.· ·I think that's best estimated based on the

·3· District's bid of the maintenance work back in 2013.

·4· · · Q.· ·And what was that?

·5· · · A.· ·Approximately 65,000 a year, if done at the

·6· frequency and to the extent that the District had

·7· outlayed in their bid.

·8· · · Q.· ·Uh-huh.

·9· · · A.· ·I think there's multiple cases where it was

10· stated through minutes of the District that Harris

11· County Flood Control does not mow more than two or three

12· times a year.

13· · · Q.· ·So with all of this talk about the pump being

14· accepted, is it -- is it your understanding that that's

15· the District's stated reason for not reimbursing you for

16· the pump?

17· · · A.· ·Yes.

18· · · Q.· ·Just because the -- the Flood Control District

19· isn't mowing it?

20· · · A.· ·Correct.· That they do not accept the facility

21· for maintenance.

22· · · Q.· ·Now, was -- was the detention pond accepted by

23· the Flood Control District?

24· · · A.· ·It was not.

25· · · Q.· ·And did the Water District reimburse 308

Page 174·1· Furman for the cost associated with the detention pond?

·2· · · A.· ·It did.

·3· · · Q.· ·What's the difference between the pump being

·4· accepted and the -- I'm sorry, the pump and the pond not

·5· being accepted but you're reimbursed for one but not the

·6· other?

·7· · · A.· ·I'm not sure.

·8· · · Q.· ·Okay.· Go ahead and look at Exhibit No. 1. I

·9· think it's the same in both binders.

10· · · A.· ·1?

11· · · Q.· ·Yes.

12· · · A.· ·The Reimbursement Agreement?

13· · · Q.· ·Correct.

14· · · · · · · ·I'm sorry.· I'm trying to find my place.

15· So you went over this with Mr. Gibson earlier, but if

16· you will look for me under Section 1.02(k).

17· · · A.· ·I'm there.

18· · · Q.· ·And y'all parsed through that in pretty good

19· detail, but I'm going to ask you too about your

20· understanding of what this means with regard to the

21· years of interest that you're eligible for under the

22· TCEQ rules.

23· · · A.· ·Yeah.· Our -- our interpretation of this

24· definition is that the maximum amount allowable under

25· the commission rules applies to interest on the funds

Page 175·1· advanced as well.· And we are aware, based on the TCEQ

·2· rules and previous bond issues, that a developer can

·3· receive up to five years of interest.

·4· · · Q.· ·So -- and, in fact, y'all had received up to

·5· five years of interest in the past?

·6· · · A.· ·In previous issues.

·7· · · Q.· ·And I do -- I'm glad you pointed that out

·8· because in your exchange with Mr. Gibson, there was some

·9· discussion about whether or not interest was an

10· advancement.· But what you're getting interest on is the

11· advancement of funds, correct?

12· · · A.· ·That's correct.

13· · · Q.· ·Okay.· All right.· If you'll turn over to page

14· 8, please.· And it's Section 3.05.

15· · · A.· ·Yes.

16· · · Q.· ·And it states there "The District's obligation

17· to purchase the newly constructed facilities and pay the

18· reimbursable share is subject to the following."· And

19· what does it say under A?

20· · · A.· ·Approval of --

21· · · · · · · ·MR. GIBSON:· Objection.· Your Honor, this

22· goes beyond the scope of the -- the cross-examination.

23· We did not have any cross-examination on this section or

24· this testimony about it.

25· · · · · · · ·MS. SCOTT:· Well, there was a lot of

Page 176·1· testimony about what's reimbursable and whether or not

·2· that -- the fact that the Harris County Flood Control

·3· District didn't accept the facility.· And under here it

·4· says "Approval of plans and specifications."· It doesn't

·5· say anything about substance, and I wanted to get

·6· some --

·7· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Your

·8· objection is overruled.

·9· · · Q.· ·(BY MS. SCOTT)· So -- I'm sorry.· Go back to

10· Section 305(a).· And, if you can, just read that

11· portion.

12· · · A.· ·"Approval of the plans and specifications of

13· the facilities by all federal, state, and local bodies

14· having jurisdiction."

15· · · Q.· ·Did that occur with regard to the pump

16· station?

17· · · A.· ·Yes.

18· · · Q.· ·Who approved the plans and specifications?

19· · · A.· ·The -- the District, the Flood Control

20· District, Harris County, the engineering department.

21· · · Q.· ·And does it say there anything with regard to

22· acceptance of the facility?

23· · · A.· ·No.

24· · · Q.· ·All right.· Did the Water District's engineers

25· inspect the pump while --

1· · · A.· ·They -- they oversaw --

·2· · · Q.· ·-- doing --

·3· · · A.· ·-- the construction of the facility

·4· periodically throughout the construction.

·5· · · Q.· ·Okay.· And did you submit pay applications to

·6· the District with regard to your payments for the

·7· construction costs?

·8· · · A.· ·Yes.

·9· · · Q.· ·Were those approved?

10· · · A.· ·Yes.

11· · · Q.· ·Okay.· The second -- (b) under Section 30 --

12· 3.05 says that the facilities shall be constructed in a

13· good and workmanlike manner and that the materials shall

14· be free from defects and fit for their intended purpose.

15· · · · · · · ·Had you received a complaint from the

16· District that this was not constructed in a good and

17· workmanlike manner?

18· · · A.· ·Only through the sense that it was not

19· accepted.

20· · · Q.· ·And, to your knowledge, is the pump

21· functioning for its intended purpose?

22· · · A.· ·Yes.

23· · · Q.· ·And go back, then, to page 3 where -- under

24· (d).· You and Mr. Gibson discussed the term

25· "construction costs" --


·2· · · Q.· ·-- for items that are eligible to be

·3· reimbursed as an advance.

·4· · · · · · · ·On the next page where y'all were -- under

·5· (k) where you were talking about reimbursable share, the

·6· reimbursement is not just limited to what's listed in

·7· (d) as construction costs, correct?

·8· · · · · · · ·Because under (k) it says "for all sums

·9· advanced"; is that correct?

10· · · A.· ·Yes.

11· · · Q.· ·Okay.· Also, on Exhibit 3 -- when -- when were

12· you made aware of this?

13· · · A.· ·The following -- following meeting that was on

14· May 2nd.

15· · · Q.· ·Was this document attached to the meeting

16· minutes?

17· · · A.· ·I believe it was an exhibit to the meeting

18· minutes.

19· · · Q.· ·Okay.· And I'm curious too -- you've already

20· read this.· But on this document it says legal

21· bookkeeping and other fees are eligible for

22· reimbursement, correct?

23· · · A.· ·Yes.

24· · · · · · · ·I'd like to add also that the ED's

25· testimony -- direct testimony --

Page 179·1· · · · · · · ·MR. GIBSON:· Objection.· Nonresponsive.

·2· He hasn't been asked about the ED's testimony, and the

·3· ED's testimony speaks for itself.

·4· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Sustained.

·5· · · Q.· ·(BY MS. SCOTT)· Did you review the executive

·6· director's testimony in this matter?

·7· · · A.· ·Yes.

·8· · · Q.· ·Is there anything in that testimony that's

·9· relevant to your reimbursement for advances?

10· · · · · · · ·MR. GIBSON:· Objection.· That testimony

11· speaks for itself.

12· · · · · · · ·MS. SCOTT:· Well, Your Honor, we have

13· referred back and forth in the deposition testimony

14· that's been referenced and the direct testimony.· If the

15· witness relied, he would be able to testify about it

16· because I would have said, "Did you hear the executive

17· director's testimony?"



20· · · · · · · ·THE WITNESS:· I believe that the direct

21· testimony from the executive director stated that what

22· we submitted with our appeal -- or application for

23· appeal -- first amended appeal was sufficient backup for

24· the commission to review and determine whether or not

25· these were eligible reimbursement costs.

Page 180·1· · · Q.· ·(BY MS. SCOTT)· And, Mr. Johnson, you might

·2· know, because you just looked at it, are those the

·3· documents that are contained in Exhibit 25?

·4· · · A.· ·With regards to the developer advances, yes.

·5· · · Q.· ·Okay.· All right.· Thank you.

·6· · · · · · · ·We're going to get into the pump station a

·7· little bit more.· And the -- the majority of your

·8· testimony this morning was spent with regard to whether

·9· the Harris County Flood Control District had accepted

10· the pump for maintenance.· And because you were just

11· recalling the executive director's testimony, did you --

12· do you remember from his testimony whether or not the

13· acceptance is a prerequisite to reimbursement?

14· · · A.· ·It is not.

15· · · Q.· ·All right.· So going back, then, to

16· construction of the pump, was your testimony that that

17· began in 2005?

18· · · A.· ·The design of the pump station --

19· · · Q.· ·Did --

20· · · A.· ·-- began in 2005.· I believe we contracted

21· it in -- later in 2007.

22· · · Q.· ·Okay.· And as the corporate represent for 308

23· Furman, you testified that the intention and the goal

24· was to have the pump station accepted by the Flood

25· Control District?

1· · · A.· ·Yes.·2· · · Q.· ·Okay.· And we know now, as we sit here today,

·3· that that didn't happen?

·4· · · A.· ·Correct.·5· · · Q.· ·And you went through with Mr. Gibson -- and --

·6· and I won't go back through all of those exhibits.· But

·7· there was a time period in the beginning where there

·8· seemed to be some activity with regard to getting that

·9· acceptance to occur?

10· · · A.· ·Correct.11· · · Q.· ·And if we look at -- I think the -- there was

12· an exhibit that y'all discussed quite a bit, and I think

13· it's -- is it Exhibit 42?

14· · · · · · · ·MR. RABON:· This right here.

15· · · · · · · ·MS. SCOTT:· Sorry.· Yeah.· Okay.· Yeah,

16· it's the letter -- it's Exhibit 17.

17· · · · · · · ·MR. GIBSON:· Respondent's 17?

18· · · · · · · ·MS. SCOTT:· Respondent's, yes.· I'm sorry.

19· · · Q.· ·(BY MS. SCOTT)· And if you're on 17, can you

20· tell me what the date of this letter is?

21· · · A.· ·June 5th, 2007.22· · · Q.· ·All right.· And in the first paragraph of this

23· letter, can you -- can you read the last sentence of

24· that and then tell me what that means?

25· · · A.· ·"It is also the goal of the 308 Furman, Ltd.,

Page 182·1· to ensure the ability to continue developing Brunswick

·2· Meadows, which may require the District to accept the

·3· pump station and retention basin for maintenance in the

·4· event Harris County Flood District will not."

·5· · · Q.· ·Okay.· So what it looks like that letter is

·6· saying is that in 2007 308 Furman was interested in

·7· continuing to develop Brunswick Meadows; is that

·8· correct?

·9· · · A.· ·Yes, we were.

10· · · Q.· ·And one of the things that you told the board

11· of the Water District is that that may mean that the

12· District has to accept the pump station for maintenance

13· in the event that the Flood Control District won't do

14· it?

15· · · A.· ·Correct.

16· · · Q.· ·Okay.· So they knew, at least, in June of 2007

17· that there was a possibility that the Flood Control

18· District would not accept the pump and detention pond?

19· · · · · · · ·MR. GIBSON:· Objection.· Leading and also

20· calls for speculation about what they knew.


22· to overrule that objection.

23· · · · · · · ·THE WITNESS:· I believe there's

24· communications earlier than June of 2007 as well between

25· Pate Engineers and the District's engineer and the

Page 183·1· District engineer's and the board, as well, outlaying

·2· the risk in Flood Control acceptance of the system.

·3· · · Q.· ·(BY MS. SCOTT)· Okay.· And we know that the

·4· Flood Control District ultimately did not accept the

·5· pump for maintenance.· Is the District now paying for

·6· the maintenance on the pump?

·7· · · A.· ·Is the District paying for the maintenance of

·8· the pump?

·9· · · Q.· ·Uh-huh.

10· · · A.· ·No.

11· · · Q.· ·Who does?

12· · · A.· ·We transferred our responsibility to maintain

13· the stormwater pump station to the HOA.

14· · · Q.· ·Okay.· So the District hasn't reimbursed you

15· for the cost of the construction of the pump?

16· · · A.· ·Correct.

17· · · Q.· ·And they haven't paid during the life of the

18· pump for any maintenance?

19· · · A.· ·308 Furman paid from the completion of the

20· pump through January of 2015, and the HOA has paid from

21· 2015 forward, to the best of my knowledge.

22· · · Q.· ·So they're getting the benefit of a working

23· detention pond and pump?· Yes?

24· · · A.· ·Correct.

25· · · Q.· ·They have the benefit of the increased tax

Page 184·1· base because you were able to put additional homes

·2· around the construction?

·3· · · A.· ·Correct.

·4· · · Q.· ·Yes?

·5· · · · · · · ·And they haven't paid a dime for it?

·6· · · A.· ·Not that I'm aware of.

·7· · · Q.· ·Okay.· So just to get into a little bit more

·8· with regard to the Flood Control District's acceptance,

·9· I think ultimately what that came down to is that it was

10· an impossibility for the Flood Control District to

11· accept it?

12· · · · · · · ·MR. GIBSON:· Objection.· That's leading,

13· and she -- she's putting words of impossibility into the

14· record herself.· She's now testifying.· No witness has

15· testified to that.

16· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· I'll

17· sustain that leading objection.

18· · · Q.· ·(BY MS. SCOTT)· Can you turn to Respondent's

19· Exhibit 33, please.

20· · · · · · · ·MR. GIBSON:· 33?

21· · · · · · · ·MS. SCOTT:· 43.

22· · · · · · · ·MR. GIBSON:· 43?

23· · · · · · · ·MS. SCOTT:· Yeah.

24· · · Q.· ·(BY MS. SCOTT)· And turn to the second page,

25· please, of that document.

1· · · A.· ·Okay.

·2· · · Q.· ·And the last sentence before the phone number

·3· there, what does that say?

·4· · · A.· ·"Since the proposed box channel will serve as

·5· the outfall for the pump detention basin, District

·6· acceptance will be precluded."

·7· · · Q.· ·What does that mean to you?

·8· · · A.· ·That the District will never accept the

·9· Brunswick Meadows pump station and detention pond

10· system.

11· · · Q.· ·So -- so go back to the first page, and then

12· also read to me the -- what -- what comes after No. 3.

13· · · A.· ·"The detention basin and pump facility must

14· outfall to a District-maintained channel."

15· · · Q.· ·Okay.· So could that have ever happened?

16· · · A.· ·The District did have property rights to a

17· channel that -- an open channel that was then converted

18· to -- partly to a box system.· At the time that was

19· converted to a box system, that -- that open channel was

20· behind us.

21· · · Q.· ·Okay.· So after that occurred there was

22· nothing at that point that 308 Furman could do to get

23· the pump accepted by the Flood Control District?

24· · · A.· ·As stated in their March 2015 letter, the

25· Flood Control District would never accept -- acceptance

Page 186·1· would be precluded --

·2· · · Q.· ·Okay.

·3· · · A.· ·-- and never accepted.

·4· · · Q.· ·So even if you had done all of those other

·5· things that you testified about this morning, such as

·6· the punch list items that were presented to you, the

·7· operating manual -- all the items that -- that you and

·8· Mr. Gibson discussed, even if you had done those, could

·9· there be a possibility that it would have been accepted

10· by the Flood Control District?

11· · · A.· ·Not once it was converted to a box.

12· · · Q.· ·Okay.· You know --

13· · · · · · · ·MS. SCOTT:· Your Honor, if I can approach,

14· I'm going to pull out an exhibit and --

15· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Go right

16· ahead.

17· · · Q.· ·(BY MS. SCOTT)· I don't know if it will be

18· easier for you to point out how the -- the drainage

19· works and where the channel is and then what now exists

20· as the underground --

21· · · A.· ·Okay.

22· · · Q.· ·-- culvert.

23· · · A.· ·As we discussed earlier, the original plan --

24· before this piece of property was developed there was an

25· open ditch that we keep referring to the -- the

Page 187·1· District's easement that they had here that tied into

·2· the box culvert within Beltway 8 but then outfalled into

·3· a Harris County Flood Control channel just south of the

·4· Beltway.· Once this development was approved, that open

·5· ditch from, you know, underneath this parking lot was

·6· converted to an underground box culvert.

·7· · · Q.· ·Does the other picture that we have

·8· demonstrate what it looked like before the box culvert?

·9· · · A.· ·It appears to.

10· · · Q.· ·Okay.· Maybe that will help too.

11· · · A.· ·Coming out of the southeast corner there's an

12· open ditch that then ties into the ditch south of the

13· Beltway.

14· · · Q.· ·Okay.· Thank you.

15· · · · · · · ·So we've been through the pump

16· reimbursement and the interest and the developer

17· advances, but there's one other category -- one other

18· item that -- that you were not reimbursed for, and that

19· is the mowing for the pond; is that correct?

20· · · A.· ·It's not that we weren't reimbursed for it.

21· It's in 20 -- up until 2013 308 Furman was maintaining

22· the pond itself.· In 2013 the District voted

23· unilaterally to hire a contractor to mow the pond from

24· thereafter.· It's from that --

25· · · Q.· ·Did they have an agreement with you to do

Page 188·1· that?

·2· · · A.· ·No.

·3· · · Q.· ·Okay.

·4· · · A.· ·From 2013 forward the District paid for the

·5· maintenance of the pond itself, and it's during that

·6· time period that they then deducted those expenses from

·7· our approved reimbursable projects.

·8· · · Q.· ·And what's the amount of those expenses?

·9· · · A.· ·Approximately 265,000.

10· · · Q.· ·Do you -- do you know what the monthly

11· maintenance on the pump is?· Do you know what that cost

12· is?

13· · · A.· ·Just from historical information used when --

14· when working with the HOA.

15· · · Q.· ·Uh-huh.

16· · · A.· ·At that time we had estimated it was roughly

17· 16,000 a year.

18· · · Q.· ·Uh-huh.· So monthly 7 --

19· · · A.· ·Monthly divided by 1,200, it's 1,200 or so

20· dollars a month.

21· · · Q.· ·Okay.· All right.

22· · · · · · · ·Well, Mr. Johnson, that's all I have for

23· you.· Thank you.


25· Respondent, any additional?

1· · · · · · · ·MR. GIBSON:· Does anybody else have

·2· questions or --

·3· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· From ED?

·4· · · · · · · ·MS. MURRAY:· ED does not.

·5· · · · · · · ·MR. WAYNE:· No, Your Honor.

·6· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Anything

·7· from OPIC?

·8· · · · · · · ·MR. WAYNE:· Thank you, Your Honor.

·9· · · · · · · · · · ·RECROSS-EXAMINATION

10· BY MR. GIBSON:

11· · · Q.· ·Just a couple follow-ups, Mr. Johnson.· Turn

12· to Exhibit 43, please.· Respondent's 43.· This is the

13· Flood Control letter that Ms. Scott was just asking you

14· questions about a few minutes ago, right?

15· · · A.· ·Right.

16· · · Q.· ·And you -- you testified about -- that this

17· was a -- I think you termed it a final decision by Flood

18· Control not to accept the pond and the pump, right?

19· · · A.· ·Yes.

20· · · Q.· ·Okay.· One portion -- Ms. Scott referred to a

21· couple portions of -- of deficiencies that were noted in

22· the Flood Control letter.· She talked about property

23· rights and the outfall, but this letter also contains

24· reference to the developer's engineer being aware of

25· numerous other deficiencies, and that those deficiencies

Page 190·1· were never corrected, right?· That's also in this

·2· letter?

·3· · · A.· ·Yeah, deficiencies in relation to their

·4· acceptance -- or their criteria for acceptance.

·5· · · Q.· ·Yes.

·6· · · A.· ·Yes.

·7· · · Q.· ·So you agree with that?

·8· · · A.· ·Yes.

·9· · · Q.· ·Okay.· And the date of this letter is March

10· 19th of 2015, correct?

11· · · A.· ·Correct.

12· · · Q.· ·Please turn to Respondent's Exhibit 36.· We

13· looked at this document earlier, and this was the July

14· 31st, 2014, conceptual cost estimate by 308 Furman's

15· engineer of roughly a million dollars that it would take

16· to do the work to comply with the flood control

17· criteria, right?

18· · · A.· ·Correct.

19· · · Q.· ·And so prior to Flood Control issuing its May

20· 2015 letter, 308 Furman had already made the decision

21· not to do the work that was required by Flood Control

22· for acceptance, correct?

23· · · A.· ·Could you restate that, please.

24· · · Q.· ·Yes, sir.

25· · · · · · · ·Based upon Exhibit 36 and the $1 million

Page 191·1· estimate for cost -- conceptual cost to comply, and, as

·2· you already said, 308 Furman elected not to spend this

·3· money --

·4· · · A.· ·We did.

·5· · · Q.· ·-- to comply?

·6· · · A.· ·We did not --

·7· · · Q.· ·Okay.

·8· · · A.· ·-- spend a million dollars.

·9· · · Q.· ·So 308 Furman's decision not to do the work

10· necessary to comply with flood control criteria, that

11· occurred long before the 2015 letter issued by Flood

12· Control, right?

13· · · A.· ·There were physical deficiencies that we chose

14· not to address prior to March of 2015.

15· · · Q.· ·Okay.· And -- and when you chose not to

16· address it, 308 Furman made the decision, I assume a

17· cost-benefit decision, that by not addressing those

18· deficiencies meant that 308 Furman knew that Flood

19· Control was not going to accept the pond and pump for

20· maintenance, correct?

21· · · A.· ·Not without a variance.


23· · · · · · · ·MR GIBSON:· That's all I have.· Thank you.

24· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· So I

25· understand that the petitioner has no other witnesses to

Page 192·1· call live today?

·2· · · · · · · ·MS. SCOTT:· Yes, that's correct.


·4· you may step down.

·5· · · · · · · ·And I suppose now would be a good time as

·6· any to take a break.· We're off the record.

·7· · · · · · · ·(Break from 2:49 p.m. to 3:04 p.m.)

·8· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· We are back

·9· on the record after the afternoon break.· And we

10· discussed the briefing schedule, and so the written

11· closing briefs will be due November 7th from all the

12· parties, and the reply briefs will be due December 5th.

13· And December 5th will also be the date that the record

14· closes.

15· · · · · · · ·Okay.· And I believe we have moved on to

16· the respondent's witness.

17· · · · · · · ·MR. GIBSON:· Yes.· Judge, District 89, the

18· respondent, calls Ms. Sharyn Smalls, the president of

19· the District 89 board.


21· · · · · · · ·(Witness sworn.)


23· Have a seat, please.

24· · · · · · · ·You may proceed.

25· · · · · · · · · · · ·Sharyn SMALLS,

1· having been first duly sworn, testified as follows:

·2· · · · · · · · · · ·DIRECT EXAMINATION

·3· BY MR. GIBSON:

·4· · · Q.· ·What is your name, ma'am?

·5· · · A.· ·Sharyn Foston Smalls.

·6· · · Q.· ·Ms. Smalls, how are you associated with

·7· District 89?

·8· · · A.· ·I am the president of Harris County Water

·9· Control and Improvement District, and I have been

10· president since 2006.· And I was elected to the board --

11· well, appointed 2000 -- in the year 2000.

12· · · Q.· ·So you were a board member from 2000 to 2006

13· and then president from 2006 to present?

14· · · A.· ·Correct.

15· · · Q.· ·All right.· Have -- have you had the

16· opportunity to submit direct -- written direct testimony

17· in this case?

18· · · A.· ·Yes, I have.

19· · · Q.· ·Okay.· And we're pulling out a copy of it.

20· Let me show you what's been identified on the record as

21· Exhibit G.· Is that a copy of your direct testimony?

22· · · A.· ·Yes, it is.

23· · · Q.· ·And did you have the opportunity to sign that

24· testimony previously?

25· · · A.· ·I did.

Page 194·1· · · · · · · ·MR. GIBSON:· Your Honor, we offer Exhibit

·2· G.


·4· Any objections -- oh, I'm sorry.· That actually has been

·5· previously admitted, so --

·6· · · · · · · ·MR. GIBSON:· That concludes our direct

·7· testimony.


·9· now she's subject to cross-examination.· Does the ED

10· have any cross-examination for her?

11· · · · · · · ·MS. MURRAY:· The ED does not.

12· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· OPIC?

13· · · · · · · ·MR. WAYNE:· No, Your Honor.


15· from the petitioner.

16· · · · · · · ·MR. RABON:· Barry Rabon.· I will

17· cross-examine.

18· · · · · · · · · · · CROSS-EXAMINATION

19· BY MR. RABON:

20· · · Q.· ·Good afternoon, Ms. Smalls.

21· · · A.· ·Hello.· How are you today?

22· · · Q.· ·You and I have met one time before, haven't

23· we?

24· · · A.· ·Yes, we have.

25· · · Q.· ·Okay.· I want to look immediately at some of

Page 195·1· your testimony that you have in front of you on page 3.

·2· And your answer top of the page, the second full

·3· sentence, this is talking about the pump station.· You

·4· say, "The District objected to this change of the

·5· construction plan until 308 Furman promised the District

·6· would not be saddled with additional construction costs

·7· and maintenance and that it would be designed and built

·8· so that Flood Control would accept the facilities for

·9· long-term maintenance."· Do you see that?

10· · · A.· ·Yes, that's correct.

11· · · Q.· ·Now, the -- it's -- where is there an

12· agreement that the Flood Control -- that Flood Control

13· would accept the facility?· Is that -- is that listed

14· anywhere in meeting minutes prior to the project being

15· bid out?

16· · · A.· ·Well, it was discussed.· And, remember, I was

17· at the meetings.

18· · · Q.· ·Uh-huh.

19· · · A.· ·So this is firsthand.· It was discussed on

20· many occasions as well as it was in the various plans,

21· which we did see.

22· · · Q.· ·I want you to look at Petitioner's Exhibit 61.

23· That will be in our second book.

24· · · · · · · ·MR. RABON:· Can I approach just to point

25· her --

Page 196·1· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Yes.

·2· · · · · · · ·MR. RABON:· -- toward the books?

·3· · · Q.· ·(BY MR. RABON)· That will be in your Volume 2.

·4· And I'll let you find it.· It will be Exhibit 62.

·5· · · A.· ·62?

·6· · · Q.· ·Yes, ma'am.

·7· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· I think

·8· what you just mentioned was 61.· Is it 61 or --

·9· · · · · · · ·MR. RABON:· I'm sorry.· 61.· I apologize.


11· · · Q.· ·(BY MR. RABON)· Exhibit 61.

12· · · A.· ·Okay.· I'm going to stand because I need some

13· arm strength here.· All right.

14· · · Q.· ·Okay.· And this is some meeting minutes.· And

15· on the first page of 61 under "Engineer's Report," item

16· 1, it says "The Engineer's Report was next presented

17· by" -- Mr. Angworth -- "Mr. Ainsworth."· And then it

18· goes on to talk about a Mr. Alan McKee with Pate

19· Engineering providing you information about the design

20· and about the pump station.· Do you see that paragraph?

21· · · A.· ·Yes, I do.

22· · · Q.· ·Okay.· Now, I've looked at these meeting

23· minutes, and I don't see anywhere where there was some

24· objection to the pump station being designed, being

25· deeper, and having a pump station.· I don't see it in

1· these meeting minutes.· Do you?

·2· · · A.· ·I don't see it in this particular paragraph --·3· · · Q.· ·Okay.

·4· · · A.· ·-- if that's what you're asking.

·5· · · Q.· ·Well, do you see it in this -- in this

·6· document?

·7· · · A.· ·No.

·8· · · Q.· ·Okay.· And are you aware if any of the

·9· exhibits before this Court prior to approving the pump

10· station where this board said in meeting minutes that

11· they objected to this pond being built deeper using a

12· pump station?· Are you aware of any minutes that say

13· that?

14· · · A.· ·So offhand, no.

15· · · Q.· ·Okay.· All right.· Now I want you to look at

16· Exhibit 62, and this is an Engineer's Report from a

17· Mr. Ainsworth.· And Mr. Ainsworth was the District's

18· engineer in 2006; is that right?

19· · · A.· ·Yes.20· · · Q.· ·And --

21· · · · · · · ·MR. GIBSON:· Give me the number again,

22· please.

23· · · · · · · ·MR. RABON:· I'm sorry.· Exhibit 62 --

24· Petitioner's 62.


Page 198·1· · · Q.· ·(BY MR. RABON)· And this at the top says

·2· "Meeting of May 16, 2006."

·3· · · A.· ·Uh-huh.

·4· · · Q.· ·I'll -- I'll represent to you that we did an

·5· open records request.· We didn't get the meeting

·6· minutes, but somewhere along the line in discovery -- I

·7· guess this was from the engineer -- we did get this

·8· document.· So I don't see a meeting minutes that goes

·9· with this.· But have you ever seen this letter from

10· your -- your Mr. Ainsworth in May of 2006?

11· · · A.· ·Memories, no, but I'm going to -- to say that

12· it looks like a proper document --

13· · · Q.· ·Yes, ma'am.

14· · · A.· ·-- that he would submit.

15· · · Q.· ·Okay.· And I want you to look at the

16· paragraph -- or the last paragraph just above the 2006

17· bond application, the second paragraph from the end.· It

18· says "Methods are available to assure that all the

19· District's residents are not on financial hook for the

20· maintenance of these ponds.· It is a requirement that

21· the accountability of the pond maintenance rests with

22· the governmental body.· What can be done through deed

23· restrictions and HOA fees is to assure that the cost of

24· maintaining the ponds are adequately reflected in the

25· fees, and there's an appropriate mechanism for

Page 199·1· adjustment of the fees to reflect any increase in cost."

·2· You see that?

·3· · · A.· ·Yes, I do.

·4· · · Q.· ·Okay.· So Mr. Ainsworth is telling you also on

·5· May 16th, 2006, that the District may have some ultimate

·6· liability or -- to maintain these ponds, isn't that

·7· correct?

·8· · · A.· ·No, it's not.

·9· · · Q.· ·Oh.

10· · · A.· ·No.· What he's -- what he's saying here is

11· that -- he's talking about methods to assure that all

12· District's residents are not on a financial hook, which

13· is a -- which was a regular theme of our district,

14· because of the fact that we had an established district

15· and then we annexed in the -- the 308 Furman property.

16· So it was a common theme that we would not have the

17· current residents pay for the development for 308

18· Furman.· So this was a general discussion to -- where

19· they always tried to explain to us how the current

20· District would not be on the hook.· So it doesn't really

21· talk -- it's -- it's not about restrictions, and it's

22· not about how -- yeah, it's -- it's not what you say.

23· · · Q.· ·Oh.

24· · · A.· ·It's him -- it's him basically reassuring us

25· that some -- in some way, shape or form there could be

Page 200·1· some method by which the residents of 308 Furman are

·2· actually the ones paying as opposed to the residents

·3· of -- the current residents of the District.

·4· · · Q.· ·Well, it says "HOA fees."· You're talking

·5· about -- that would be Brunswick Meadows Homeowners

·6· Association?

·7· · · A.· ·Yes, it is.

·8· · · Q.· ·Okay.· So is this saying that the -- the HOA

·9· for Brunswick Meadows could assess the fees to take care

10· of paying for the -- for the pump station?

11· · · A.· ·So, again, he was -- the engineer -- he

12· actually did not have anything to -- any authority to

13· assess fees or anything of that nature.

14· · · Q.· ·Uh-huh.

15· · · A.· ·He was just advising the board that there is a

16· way for you not have to pay for this particular --

17· this -- the maintenance of these ponds.· And, if you

18· notice, he says -- where he talks about the issue of

19· the -- the paragraph before that relates to the

20· detention pond, that says as -- as what went on is that

21· we did have an issue with that detention pond.· So he

22· was looking for ways to help us understand that it may

23· not be the issue that we thought it was.

24· · · Q.· ·Well, Mr. Ainsworth states that HOA fees may

25· have to be considered to handle some of these issues,

1· isn't that correct?

·2· · · A.· ·That was his opinion.

·3· · · Q.· ·Okay.

·4· · · A.· ·He's the engineer.

·5· · · Q.· ·Thank you.

·6· · · · · · · ·All right.· Now let's take a look at

·7· Respondent's Exhibit 17.· That will be in your binder.

·8· And this is the June 5, 2007, letter from Pate Engineers

·9· to the Water District 89.· It's been talked about quite

10· a bit.· And in this first paragraph it does state that

11· it is the goal of 308 Furman and the District to gain

12· Harris County Flood Control, isn't that true?

13· · · A.· ·Yes, it does.

14· · · Q.· ·And then it also says in that first paragraph

15· "It is the goal to ensure the ability to continue

16· developing Brunswick Meadows, which may require the

17· District to accept the pump station and detention basin

18· for maintenance in the event Harris County Flood Control

19· District will not."· So when you got this, is there a

20· meeting minute somewhere where you just pro -- where the

21· board protested, "Oh, no, we'll never pay for it.

22· You've got to pay for it"?· Is -- is that out there?

23· · · A.· ·So we don't have to respond and protest to

24· this letter.· There was a letter written to us outlining

25· what Lennar's position was and outlining what their

Page 202·1· plans are.· So this was not an agreement and, as far as

·2· we were concerned, did not necessitate a response.

·3· · · Q.· ·Okay.· So -- and then finally let's look at

·4· Exhibit -- Petitioner's Exhibit 23.· That will be in our

·5· book one.

·6· · · A.· ·Okay.

·7· · · · · · · ·MR. RABON:· Exhibit 23, is that the

·8· summary or is that the actual meeting?

·9· · · · · · · ·MS. SCOTT:· Meeting minutes.

10· · · · · · · ·MR. GIBSON:· It's the compilation.

11· · · · · · · ·MR. RABON:· Yeah.

12· · · · · · · ·THE WITNESS:· 23?

13· · · Q.· ·(BY MR. RABON)· Yes.· Okay.· In Exhibit 23

14· this is a meeting minutes dated November 20th, 2007.· Do

15· you see that?

16· · · A.· ·Yes.

17· · · Q.· ·And that's the meeting minutes where the

18· contract two for the pump station was approved.· Do you

19· recall that?

20· · · A.· ·Yes.

21· · · Q.· ·Okay.· So what we have in the record,

22· Ms. Smalls -- and I don't know what else is out there,

23· but what we have in this record is that there were

24· multiple times where the board was told that Harris

25· County Flood Control may not take over that pump

Page 203·1· station, yet you still approved the contract.· Is there

·2· meeting minutes before November 20th, 2007, in which

·3· there's some discussion about we will not take over the

·4· pump station, we will not reimburse you if Harris County

·5· Flood Control won't take over the maintenance?

·6· · · A.· ·So you can rely on meeting minutes, but I was

·7· actually there.· And I'm testifying that, yes, we did

·8· say that we would not take over that pump because of the

·9· fact that the pump was not supposed to be there.· And

10· they represented the full time -- as you have in your

11· other documents, they represented that that -- that

12· that -- the specifications for that pump would be that

13· it -- it would be taken over by Flood Control.· So

14· that's what we were relying on.

15· · · Q.· ·Well, all we can do when we go back and look

16· at the record is look at the meeting minutes that have

17· to be put together under whatever requirements apply to

18· the MUD.· But you can't point to a single meeting

19· minutes where you objected to taking on this contract

20· unless we guaranteed or assured that the -- the Harris

21· County Flood Control would take over the maintenance of

22· the pump and the pond, right?

23· · · A.· ·So it's my sworn testimony that I swore to

24· tell the truth that, in fact, having been there, that

25· that is what the board saw and decided on, that we were

Page 204·1· not going to pay for the pump.· So regardless of the

·2· fact -- because meeting minutes are not transcripts.· So

·3· regardless of the fact whether that detail -- as you can

·4· see, the details are kind of sparse.· The meeting was

·5· two hours, but we have a few paragraphs, so something

·6· was not put in there.

·7· · · Q.· ·Okay.· Now, the pump station itself -- oh, I'm

·8· sorry.· Strike that.

·9· · · · · · · ·The -- the detention pond -- the board

10· deemed to reimburse for that detention pond in Bond

11· Issue 7 --

12· · · A.· ·Yes.

13· · · Q.· ·-- which, I guess, was 2018.· Why did you

14· reimburse the detention pond but not the pump station?

15· · · A.· ·Because detention is reimbursable but

16· mitigation is not, and we have always said that that

17· pump was for mitigation.· So since we already knew that

18· we were going to need to reimburse for the pond, we were

19· not putting that off.· We reimbursed for it.

20· · · Q.· ·Ms. Smalls, I think I've read everything in

21· this case.· I'm -- I'm human.· Maybe I haven't.· I've

22· not seen that explanation used one time through 10 or 12

23· depositions, through about 30,000 pages of documents

24· where the board opted not to reimburse that pump because

25· it's mitigation.· Can you point somewhere to me where

1· that's been documented by the board that that's the

·2· reason you didn't do it?

·3· · · A.· ·So it's mitigation because originally the pump

·4· was supposed to be a dry pond and not a wet pond.· And

·5· the flood control -- or floodplain regulations changed

·6· back in 2005 somewhere in between the start of the

·7· development and the continuation of the development.

·8· Because of those floodplain regulations, that is why the

·9· the developer knew that they either had to fix the

10· pond -- which we always said, "fix it," and -- but they

11· came up with a plan to add a pump instead of, like I

12· said, either going wider or deeper.· So they came up

13· with the pump idea.· We were not sold on that, but they

14· said, "Well, you don't have to worry about it anyway.

15· It's not going to cost you any money.· But we will

16· submit to Flood Control, and Flood Control will accept

17· it."· So that's the basis of our acceptance.

18· · · Q.· ·Have you ever told 308 Furman that the reason

19· you're not reimbursing the pump station is because this

20· is a mitigation issue, it's not a detention issue?

21· · · A.· ·That was something that was discussed, like I

22· said, years ago when -- at the initial start of this --

23· this project.· Did it come out in the deposition?· No

24· one really ever asked me.

25· · · Q.· ·On your Brunswick Lakes, which is another pond

Page 206·1· that has nothing to do with this proceeding --

·2· · · A.· ·Okay.

·3· · · Q.· ·-- has that been accepted by Harris County

·4· Flood Control?

·5· · · A.· ·No.· And that one was not an issue to be

·6· accepted.· They never represented that it would be.· And

·7· that is a gravity pond.

·8· · · Q.· ·Do y'all have -- okay.· So is any -- so is

·9· that -- you have a total of two ponds?

10· · · A.· ·I'm sorry?

11· · · Q.· ·You have two ponds?

12· · · A.· ·No, we have, I think, five.

13· · · Q.· ·Are any of them -- have been accepted by

14· Harris County Flood Control?

15· · · A.· ·None of them were supposed to be accepted by

16· Harris County Flood Control.· Only the pond with the

17· pump.· The rest of them were all gravity ponds.· That's

18· what we did.· That's what worked.· So this was the first

19· time that a pump came into -- into question.

20· · · Q.· ·Now, Mr. Ainsworth, your engineer -- when he

21· was deposed, we asked him if District 89 had any issue

22· with using the pump station, and he answered that he

23· could not recall that being the case.· Did you have any

24· conversations with Mr. Ainsworth about your concerns

25· with the pump station?

Page 207·1· · · A.· ·Yes.· As I said, the only reason that -- well,

·2· I believe the only reason that they were representing

·3· that Flood Control would even take it over was because

·4· we objected to the fact that it was a pump, it was

·5· expensive, and it was going to be -- need to be

·6· maintained.· So conversation, possibly.

·7· · · Q.· ·Okay.· But it never got written down anywhere

·8· before the contract was approved for construction that

·9· you were objecting to the pump station?

10· · · A.· ·I really don't know who wrote down what or

11· why, but that is -- that is exactly what happened.· And

12· that's something that we have talked about and discussed

13· over the period of years.· Again, not a transcript.

14· Very short and brief.

15· · · Q.· ·Let's look at the Petitioner's Exhibit 100.

16· It will be in your book two.· Now, in this document --

17· in Exhibit No. -- I'm sorry.· Got it?

18· · · A.· ·Is this the spreadsheet?

19· · · Q.· ·Yes, ma'am.

20· · · A.· ·Okay.

21· · · Q.· ·That's a spreadsheet that you heard

22· Mr. Johnson talk about a few minutes ago that --

23· building the detention pond like it was built yielded,

24· it looks like, over 500 homes.· Were you aware of that?

25· · · A.· ·Yielded an additional 500 homes?

Page 208·1· · · Q.· ·Yes.

·2· · · A.· ·I didn't know the exact number.

·3· · · Q.· ·Okay.· Well, every home that was built in that

·4· smaller footprint the District does charge -- does have

·5· some taxing authority.· What -- what do you guys charge

·6· each home under -- under your tax base today?

·7· · · A.· ·Well, we're 99 cent -- we're currently 99

·8· cents.· I think 49 cents is for the debt service, and I

·9· guess the other 50 is for the operations and

10· maintenance.

11· · · Q.· ·Okay.

12· · · A.· ·Or it might be switched around, but. . .

13· · · Q.· ·So you're charging 99 cents, which is a little

14· less than 1 percent of the value of these homes.· Is

15· that -- is that a fair way to read the tax?· Is that

16· .99 -- is that -- it's less than 1 percent, right?

17· · · A.· ·When you say "1 percent of the homes," I'm not

18· sure on that -- that math.· All I know is we're charging

19· 99 cents --

20· · · Q.· ·Okay.

21· · · A.· ·-- for --

22· · · Q.· ·What are charging?

23· · · A.· ·-- the tax.

24· · · Q.· ·What --

25· · · A.· ·I'm sorry?

1· · · Q.· ·What is the charge against?

·2· · · A.· ·What do you mean?

·3· · · Q.· ·The value of the home?· What's it charged

·4· against?

·5· · · A.· ·It's 99 cents per 100 -- per 1,000 --

·6· · · Q.· ·Okay.

·7· · · A.· ·-- per 1,000 -- it's -- it's by the -- the·8· property value --

·9· · · Q.· ·Okay.

10· · · A.· ·-- of the home.11· · · Q.· ·All right.· So -- and this charge -- we have

12· property values from 2014 of $93 million.· So

13· if -- if that's -- if that's your last property value,

14· you're putting -- you're charging 99 cents per 1,000 on

15· $93 million, correct?

16· · · A.· ·Well, first of all, when you say "is" -- "if

17· that's correct" --18· · · Q.· ·Uh-huh.

19· · · A.· ·-- I don't agree that this is necessarily

20· correct --21· · · Q.· ·Uh-huh.

22· · · A.· ·-- just because Lennar did a spreadsheet.

23· That's number one.

24· · · · · · · ·And number two, yes, it says that we had25· an advantage -- these -- this particular -- at this

Page 210·1· particular point in time; however, as far as the

·2· District is concerned, it doesn't match up with what the

·3· cost of the pump will be in perpetuity.· You have a

·4· forever pump that will eventually have to be replaced.

·5· · · Q.· ·Well, we'll -- we'll talk about that.· But it

·6· looks to me -- well, Exhibit 100 back when the tax rate

·7· was 83 cents --

·8· · · A.· ·I'm sorry?· What part of the tax --

·9· · · Q.· ·Strike that.· Nevermind.· Nevermind.

10· We'll -- we'll go on.

11· · · · · · · ·Now, the -- the pond as built -- the

12· detention basin as built is approximately 65 acres.· Is

13· that -- do you agree with that?

14· · · A.· ·Okay.

15· · · Q.· ·Okay.· And the District, I guess, from 2013 to

16· 2017 was charging 308 Furman approximately $65,000 a

17· year for mowing and seeding, et cetera.· Does that sound

18· right to you?

19· · · A.· ·It may have been for just that pond in

20· particular or other ponds that they have.· We don't pay

21· until a property's -- until detention is accepted.

22· · · Q.· ·Well, you --

23· · · A.· ·So --

24· · · Q.· ·Well, you didn't back charge 308 Furman for

25· another pond -- did you? -- in Bond 7?

Page 211·1· · · A.· ·I don't think so, but, as I said, again,

·2· that's quite -- that's possible if, for some reason,

·3· they weren't doing the mowing and it was a safety issue.

·4· And then we back charge -- we did a back charge.

·5· · · Q.· ·Okay.· Well, looking at y'all's Exhibit 100,

·6· it looks like the pond, if it would have been wide and

·7· not deep, would be 160 acres.· Any idea what it cost

·8· to -- to mow a 160-acre pond versus a 65-acre pond?

·9· · · · · · · ·MR. GIBSON:· Objection.· The question

10· assumes facts not in evidence.· Counsel is testifying

11· that it would have been 160 acres, but nobody has

12· testified to that.

13· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Sustained.

14· You may rephrase, if you choose to.

15· · · · · · · ·MR. RABON:· We'll get to it because that's

16· what they charged us.

17· · · Q.· ·(BY MR. RABON)· The -- you've heard the -- the

18· discussions about the outfall?

19· · · A.· ·Yes.

20· · · Q.· ·And that property where the outfall is at --

21· and I'm going to briefly show you -- I could show you

22· either one -- well, I'll show you the one that's got --

23· like this.· Okay.· This is the 308 Furman area.

24· · · A.· ·Uh-huh.

25· · · Q.· ·This is the NPH area.

Page 212·1· · · A.· ·Yes.

·2· · · Q.· ·And at one point there was a ditch over here.

·3· · · A.· ·Okay.

·4· · · Q.· ·You understand that?

·5· · · A.· ·Yes.

·6· · · Q.· ·Okay.

·7· · · A.· ·Yes.

·8· · · Q.· ·NPH Scott Street owns this property -- or

·9· owned this property at the time of your ease -- well,

10· no.· It was a different entity at the time of the

11· easement.

12· · · · · · · ·At -- do you know if 308 Furman ever owned

13· this property?

14· · · A.· ·Yes, they did.

15· · · Q.· ·Well -- so is it your position that 308 Furman

16· sold this property to the NPH entity?

17· · · A.· ·That's my understanding, except for an

18· easement.

19· · · Q.· ·Well, can you point to anything in this record

20· here that shows 308 Furman owned this -- the property

21· that was -- which was owned by NPH Scott Street in 2015?

22· · · A.· ·So --

23· · · Q.· ·Have you seen a deed?

24· · · A.· ·So -- no.

25· · · Q.· ·Okay.

1· · · A.· ·No.

·2· · · Q.· ·Is there any evidence that 308 Furman that --

·3· that you have or that the board has that 308 Furman ever

·4· owned that property?

·5· · · A.· ·So, again, that was my impression, but I'm

·6· willing to be mistaken.

·7· · · Q.· ·Now, when we talk about that property of NPH

·8· Scott Street, they're a developer that is developing

·9· stuff within District 89, right?

10· · · A.· ·Yes.

11· · · Q.· ·Okay.· So is that developer -- do -- do you

12· approve their projects?

13· · · A.· ·What part of their projects?· Do you mean the

14· infrastructure type --

15· · · Q.· ·Yes.

16· · · A.· ·Yes, that part of it.

17· · · Q.· ·All right.· So this box culvert that was

18· referenced -- we'll go look at the Exhibit 2 -- 2015.

19· That box culvert that was put in to replace the

20· ditch, did District 89 approve that --

21· · · A.· ·Yes, we did.

22· · · Q.· ·-- infrastructure change?

23· · · A.· ·Yes, we did.

24· · · Q.· ·Okay.· When you approved it -- well, did you

25· think 308 Furman had -- was the -- had been the original

Page 214·1· owner of that ditch?

·2· · · A.· ·So I can't really -- what year was it

·3· approved?

·4· · · Q.· ·2015 is the letter we've been looking at from

·5· Ms. Musgrove.· We can look at the letter.

·6· · · A.· ·Okay.· I -- I would -- I would -- I would like

·7· to know --

·8· · · Q.· ·Okay.

·9· · · A.· ·-- when --

10· · · Q.· ·Well, go to Respondent's Exhibit 47.

11· · · · · · · ·MR. RABON:· Is that right?· 47?· That's

12· the letter.

13· · · · · · · ·THE WITNESS:· Okay.

14· · · Q.· ·(BY MR. RABON)· It's 43.· Respondent's Exhibit

15· 43.

16· · · A.· ·Okay.· This is from Flood Control?

17· · · Q.· ·Yes.

18· · · A.· ·Okay.· Okay.

19· · · Q.· ·All right.· And in this letter -- again, the

20· second page talks about -- the very last sentence says

21· "The proposed box channel will serve as the outfall for

22· the pump detention basin.· District acceptance will be

23· precluded."· Ma'am, did -- was it your understanding

24· back when you got this letter that 308 Furman actually

25· was the prior owner of this property and sold it to NPH

Page 215·1· Scott Street?

·2· · · A.· ·So there was a time that I did think that.

·3· · · Q.· ·Okay.· Well, there's nothing in the record

·4· that -- that identifies that, so --

·5· · · A.· ·I'm willing to be mistaken.

·6· · · Q.· ·Okay.· All right.

·7· · · · · · · ·So do you now under -- or do you

·8· understand -- or does the board now understand that 308

·9· Furman will have nothing to do with any decision that

10· NPH Scott Street would make regarding how it develops

11· its own property?· Do you understand that?

12· · · A.· ·Well --

13· · · · · · · ·MR. GIBSON:· I object that the question's

14· misleading because Counsel knows, and it's in the

15· record, that 308 Furman did sell to NPH capacity in the

16· pond.· So I just -- I think it's misleading to imply --

17· · · · · · · ·MR. RABON:· Well --

18· · · · · · · ·MR. GIBSON:· -- that they had nothing to

19· do with it --

20· · · · · · · ·THE WITNESS:· Thank you.

21· · · · · · · ·MR. GIBSON:· -- when they did.

22· · · · · · · ·MR. RABON:· We sold capacity in the pond,

23· which has nothing to do with this piece of property

24· where the box culvert goes.· What -- so it has nothing

25· to do with it.· We sold capacity in what we own.· We

Page 216·1· don't own anything over here.· And this --

·2· · · · · · · ·THE ADMINISTRATIVE JUDGE:· I'm going to --

·3· · · · · · · ·MR. RABON:· And this is the reason that

·4· Flood Control said no in 2015 forever.

·5· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· I'm going

·6· to overrule the objection.· It seems the question is

·7· about the property.

·8· · · · · · · ·THE WITNESS:· So I'm -- and you -- can you

·9· repeat the question?

10· · · Q.· ·(BY MR. RABON)· The -- are you aware -- well,

11· I won't repeat the question.· We'll move on.· I got a

12· deadline.

13· · · · · · · ·Now, in your testimony -- let's look at

14· Respondent's Exhibit No. 26.· And in your testimony on

15· page 12, you talk about how this Exhibit 26 represents a

16· double-dip.· Can -- can you look at Exhibit 26 and tell

17· us what it is?

18· · · A.· ·Hold on one second.· Respondent's 26?

19· · · Q.· ·Yes, ma'am.

20· · · A.· ·Okay.· This is a letter from -- from Harris

21· County Public Infrastructure?

22· · · Q.· ·Uh-huh.

23· · · A.· ·Okay.

24· · · · · · · ·MR. GIBSON:· And there's a document

25· attached.

1· · · · · · · ·MR. RABON:· Yeah.

·2· · · · · · · ·THE WITNESS:· Okay.· So -- all right.· Oh,

·3· this is the Reimbursement Agreement.· What is this?

·4· Wait.· Hold on.· Okay.· I'm looking at it.

·5· · · Q.· ·(BY MR. RABON)· I'll represent to you that

·6· this is an agreement whereby 308 Furman did sell some of

·7· the excess capacity of the detention pond to Harris

·8· County, $137,000.· Does that refresh your memory?

·9· · · A.· ·It does.· And that's why I thought that they

10· were owners.· It was a capacity issue and not the actual

11· land ownership.

12· · · Q.· ·Okay.

13· · · A.· ·That's what I got --

14· · · Q.· ·Okay.

15· · · A.· ·-- confused.

16· · · Q.· ·Fair enough.

17· · · · · · · ·But in this capacity here you -- on page

18· 12 of your testimony, you were asked if you considered

19· this a double-dip of -- since 308 Furman sold some of

20· its capacity, and you said, "Yes, I do."

21· · · · · · · ·Now, the detention pond itself that was

22· submitted for reimbursement in Bond Issue 7, are you

23· aware that overexcavation charges and those sorts of

24· things are not reimbursed, that -- that the amount that

25· was paid for the detention pond was actually cut under

Page 218·1· Bond Issue 7?· Are you aware of that?

·2· · · A.· ·I don't recall.· But if it says it was cut, it

·3· was cut.

·4· · · Q.· ·Well, let's look at Petitioner's Exhibit 6,

·5· which is the bond program.· It's in our book one, the

·6· bond program.

·7· · · A.· ·Okay.

·8· · · Q.· ·And we have those Bates-stamped numbers at the

·9· bottom of the page.· Let's see here.· I'll refer you to

10· the -- to the number 017872, and we'll start there.

11· 017872.

12· · · A.· ·Okay.· "Facilities proposed for funding"?

13· · · Q.· ·Yes, ma'am.

14· · · · · · · ·And if I -- if you look at what -- what --

15· to the far left, it shows Project No. 2 and Project No.

16· 3.

17· · · A.· ·Yes.

18· · · Q.· ·Do you see that?

19· · · A.· ·Yes.

20· · · Q.· ·And that appears to be the detention ponds

21· contract one, detention ponds contract three.· Now,

22· that's the Brunswick Meadows detention ponds that --

23· · · A.· ·Uh-huh.

24· · · Q.· ·-- the District has reimbursed 308 Furman for,

25· correct?

Page 219·1· · · A.· ·Right.· Uh-huh.

·2· · · Q.· ·Okay.· Then if you go over -- you know, when I

·3· look at those items -- let's go -- look at item -- look

·4· at No. -- Project No. 3 which is Contract No. 3.· Do you

·5· see that?· It references a footnote on the far right

·6· side, No. 4.

·7· · · A.· ·Yes.

·8· · · Q.· ·Oh, I'm sorry.· Wrong one.

·9· · · · · · · ·Look at 2 -- Project No. 2, Contract

10· No. 1.· It references footnotes 2 and 3.· Do you see

11· that?

12· · · A.· ·Yes.

13· · · Q.· ·All right.· Go over to the next page.· And

14· footnote No. 3 was a deduct from the reimbursement of

15· $46,382 because of -- it says "excess excavation."· Do

16· you see that?

17· · · A.· ·Okay.

18· · · Q.· ·Okay.· So 308 Furman was not paid twice for

19· the additional capacity that got built into that pond,

20· was it?

21· · · A.· ·Okay.· No.


23· · · · · · · ·Okay.· The detention pond -- pond pump --

24· I want to look at what -- do you have any idea what the

25· maintenance costs are for the -- for the pump station?

Page 220·1· · · A.· ·No.· Quite honestly not, and I think in my·2· deposition I -- I think I -- I did not take into account·3· a portion that was being paid.·4· · · Q.· ·Uh-huh.

·5· · · A.· ·Which they're also -- the HOA is also paying·6· for electricity and some other items that I had not·7· included in what I thought was being paid for the·8· detention.· I mean for --·9· · · Q.· ·Okay.

10· · · A.· ·-- for the pump.11· · · Q.· ·Okay.· I want you to look at Respondent's

12· Exhibit 45.· It's your exhibit -- or the District's

13· exhibit.· And on the second page of that exhibit,

14· Ms. Smalls, that top -- that first paragraph, it's --

15· it's an analysis of the cost -- the -- of the pump

16· station through, I think, about an eight-year period.

17· And when you look at that, the third line from the top

18· on the second page there basically comes up with

19· $1,188.64 a month.· Do you see that?

20· · · A.· ·So I don't see the 1100 -- where's that?21· Which paragraph?22· · · Q.· ·It's on the third -- it's the first paragraph

23· on the second page.

24· · · A.· ·Oh, second page.· Okay.25· · · Q.· ·Third line.

1· · · A.· ·Oh, sorry.· Okay.

·2· · · Q.· ·Yes, ma'am, third line.

·3· · · A.· ·Yes.

·4· · · Q.· ·Okay.

·5· · · A.· ·I see that.

·6· · · Q.· ·Well, that's the only thing in the record, and

·7· this is your -- the District's exhibit, that shows what

·8· the cost of the pump is.· And that's -- the -- the

·9· maintenance cost of the pump.

10· · · A.· ·Well, actually this attorney I don't recognize

11· them:· Ware, Jackson, Lee.· Are they 308 Furman's

12· attorney --

13· · · Q.· ·I don't --

14· · · A.· ·-- that's writing this letter?

15· · · Q.· ·-- believe they are, but it's your exhibit.

16· · · A.· ·I know.· We did present this exhibit.

17· · · · · · · ·MR. GIBSON:· It says it right here at the

18· top of the exhibit.

19· · · · · · · ·THE WITNESS:· Uh-huh.· Yes.

20· · · · · · · ·MR. GIBSON:· "I represent 308 Furman."

21· · · · · · · ·THE WITNESS:· Yes.

22· · · Q.· ·(BY MR. RABON)· Yeah.· Yes, ma'am.

23· · · A.· ·So -- so, then, yes, it's our exhibit. I

24· mean, I don't know 100 percent the reason for it being

25· here, but it's here for whatever reason.· But I can't

Page 222·1· really -- like I said, I believe that that's not quite

·2· the amount.· You know, I think that -- I think it's a

·3· little more.· And remembering that this -- the purpose

·4· of this letter is to make an offer to -- to release 308

·5· Furman from the responsibility of paying for the pump

·6· that they put on the HOA.· So attorney settlement

·7· letter -- I don't know.

·8· · · Q.· ·Okay.· I -- I -- you see a number that says

·9· it's $1,188.

10· · · A.· ·Yes.· Yes.· But, as I say, I --

11· · · Q.· ·Okay.· And also go to Petitioner's Exhibit 74

12· in our book two.

13· · · A.· ·Okay.· Is that in B?

14· · · Q.· ·I'm sorry.· It's --

15· · · A.· ·I'm sorry?

16· · · Q.· ·You got to dig deep.

17· · · A.· ·All right.

18· · · Q.· ·Exhibit 74.

19· · · A.· ·74.· Okay.· All right.· It's our minutes,

20· correct?

21· · · Q.· ·Yes, ma'am.

22· · · A.· ·Okay.

23· · · Q.· ·That's the meeting minutes from 2017.· And I

24· want to refer you over to page 6, the last page of the

25· Developer's Report.· And in the Developer's Report, this

Page 223·1· is comments from Mr. Ryan Lavell --

·2· · · A.· ·Yes.

·3· · · Q.· ·-- or Lovell of NPH.

·4· · · A.· ·Yes.

·5· · · Q.· ·Second sentence -- well, first sentence:

·6· "Ryan Lovell of NPH notified the board that NPH had

·7· purchased capacity from Brunswick's Meadow's HOA and the

·8· Brunswick Meadows detention pond.· Currently NPH paid 16

·9· percent of the pond and 18.4 percent for the

10· maintenance, but now the proposed increase goes to 37

11· percent of the pump maintenance."

12· · · · · · · ·So you're aware that NPH had entered into

13· an agreement with the Brunswick Meadows HOA?

14· · · A.· ·Yes.

15· · · Q.· ·And from -- from your meeting minutes, it says

16· 37 percent in 2017.· Are you -- are you aware of any

17· other number other than that number that we have in the

18· meeting minutes?

19· · · A.· ·No, this is the last --

20· · · Q.· ·Okay.

21· · · A.· ·-- number that I recall.

22· · · Q.· ·All right.· So -- so the HOA as of 2017 is

23· paying 63 percent and NPH is paying 37 percent.· So what

24· the HOA -- the math -- the math is about $750 a month.

25· So District 89 has never paid one dime of the

Page 224·1· maintenance on this pump station, isn't that true?

·2· · · A.· ·Well, it's not 100 percent true.· We -- we pay

·3· it, and then we're reimbursed for it.

·4· · · Q.· ·Oh.

·5· · · A.· ·So -- so, yes.

·6· · · Q.· ·You -- you -- you pay it?

·7· · · A.· ·Then we're reimbursed by the HOA.

·8· · · Q.· ·So are you out any money by paying it and

·9· being reimbursed for it?

10· · · A.· ·Not for a month or -- you know, except for a

11· month or so before it's paid.

12· · · Q.· ·Okay.· So in ten years this District has not

13· paid -- is not out of pocket any money for maintaining

14· the pump station, correct?

15· · · A.· ·That's correct.

16· · · Q.· ·Okay.

17· · · A.· ·As far as I know, because I was mistaken about

18· how much we were paying.· I left out the electrical at

19· that time.· So I'm still leaving open the fact that I

20· haven't done a forensic investigation, so there may be

21· other sums.

22· · · Q.· ·Now, what is the problem with the HOA paying

23· the maintenance?· Strike that.· Let me ask a better

24· question.

25· · · · · · · ·From your testimony, you contend that the

1· HOA is not a reliable partner to pay the pump station

·2· maintenance.· Is that -- is that a fair statement?

·3· · · A.· ·That's correct.

·4· · · Q.· ·Okay.· Now -- but the HOA -- while it's in

·5· your District, there are -- there's no legal ties

·6· between District 89 and the HOA, are there?

·7· · · A.· ·Well, the HOA are our taxpayers, so those are

·8· ties.

·9· · · Q.· ·Okay.

10· · · A.· ·And if the HOA -- if the taxpayers of our

11· district have a severe financial crisis in the HOA, that

12· means that maybe taxes won't be paid, maybe people move

13· out of the neighborhood.· So it has far-reaching

14· consequences.

15· · · Q.· ·You also know that the -- the -- 308 Furman

16· paid the HOA $160,000 roughly to assist it in

17· maintaining the pump station?

18· · · A.· ·Correct.

19· · · Q.· ·You also -- you now know that since all that

20· started, that another developer is, I guess, permanently

21· obligated, I don't know, to -- to that 37 percent?

22· · · A.· ·Unless they can get the District to take over.

23· It says it in --

24· · · Q.· ·Okay.· So 308 Furman has built you a pump

25· station, and it's not cost you one dime to maintain it,

Page 226·1· and there is no legal obligation for you to maintain it

·2· in the future, isn't that correct?

·3· · · A.· ·That is not correct.· Again, those taxpayers

·4· are part of our district.· If those taxpayers are on the

·5· hook for paying for the maintenance and later on the

·6· repair -- either the repair or replacement of that pump,

·7· which is substantial, you're claiming $800,000 -- so

·8· let's not picture 7 -- you know, 70 -- $750 per month.

·9· Let's picture a huge obligation in the future of maybe

10· $800,000.· And so that -- that group of taxpayers --

11· their HOA goes insolvent.· When HOAs go insolvent, what

12· happens?· Neighborhoods die.· So, yes, we have an

13· obligation to help the members of our district to

14· continue to be solvent.· That's our tax base.

15· · · Q.· ·What are you talking about $800,000? I

16· don't -- I don't follow you where you -- where you

17· mention there's an $800,000 problem.· What -- what are

18· you talking about?

19· · · A.· ·So what was the cost of the pump to put it in?

20· · · Q.· ·Right.

21· · · A.· ·Was it like 200 plus --

22· · · Q.· ·Okay.· Oh, you're talking about the cost of

23· the pump station?

24· · · A.· ·Yes.

25· · · Q.· ·Okay.· But the deal, from your viewpoint, I

Page 227·1· believe, is that if Harris County Flood Control would

·2· take over the maintenance, the District would pay 308

·3· the $800,000; is that right?

·4· · · A.· ·So the deal was that that pump -- whatever the

·5· amount of that pump was was going to be reimbursed if

·6· Flood Control did accept it, because that was part of

·7· our agreement with them when we signed off on those

·8· contracts.

·9· · · Q.· ·Okay.· And instead what we have today is that

10· 308 Furman has obtained another entity, the Brunswick

11· Meadows Homeowners Associations, to do the maintenance.

12· What is the difference to the District that the HOA pays

13· the maintenance, the District is not paying the

14· maintenance?· What is the difference?

15· · · A.· ·The difference is, as I said, the HOA having

16· the responsibility means that when that $160,000 runs --

17· runs out, and it will -- when it runs out, they're on

18· the hook to do whatever replacement or repair there --

19· there is.· And if they're on the hook, that means that

20· at some point in time those taxpayers are going to have

21· to raise their assessments -- right now -- they just had

22· a meeting yesterday where they had to raise their

23· assessments for -- for reasons of poor development.

24· So -- on -- regarding the townhomes.· But, anyway, if

25· the District -- if those taxpayers have to pay for that

Page 228·1· pump, it's going to mean a disaster for the entire

·2· District, not just for the people in those homes but for

·3· each one of the members.· Because you know what will

·4· happen?· They will come -- try to come against the

·5· District, which they already have.· They will try to

·6· come across to the District to say, "Well, we need you

·7· to pay for this."· And eventually they may be able to

·8· get on the board and agree to pay for it or, you know,

·9· whatever.· But, like I said, then the whole -- then

10· everybody goes down.· So, no.

11· · · · · · · ·It is our responsibility to make sure that

12· our neighborhoods do not bear that kind of a burden.

13· Those are our taxpayers.

14· · · Q.· ·Well, 308 Furman has a contract with the

15· District.· And, I believe, you say in your testimony

16· that 308 Furman didn't meet a condition on the pump

17· station, and the condition was that it had to be taken

18· over by Harris County Flood Control; is -- is that --

19· · · A.· ·That was --

20· · · Q.· ·-- correct?

21· · · A.· ·-- the condition under which we agreed to sign

22· off on the construction of the pond, yes.

23· · · Q.· ·Uh-huh.· And where we stand today is that ten

24· years after it was built the District has not paid a

25· dime for maintenance, nor has any legal obligation to

1· pay a dime for maintenance, yet it still won't reimburse

·2· for the pump station.· Is that where we stand?

·3· · · A.· ·Where we stand is that ten years later when

·4· Lennar said that they were going to take over -- they're

·5· going to have Flood Control take over that pump, we find

·6· out that they didn't even make any types of motions

·7· towards actually doing that.· Not only that.· They came

·8· to our meeting, they lied to us on many occasions saying

·9· that they were in the process of getting Flood Control

10· to do this several, several, several times.· And

11· meanwhile all of that happened, and what do we find out?

12· That they never even -- they never even built it to be

13· accepted.· So, you know, but -- that's all I have to

14· say.

15· · · Q.· ·Do you think Harris County Flood Control would

16· even look at it if the initial plans that they looked at

17· didn't comply with their standards?

18· · · A.· ·So the initial plans and the -- the

19· completion -- the follow-up are two different things.

20· What happened in between the many years of the initial

21· plans was nothing on the part of Lennar, Flood Control

22· asking for -- for information, Flood Control saying that

23· there was a punch list, Lennar coming to our meeting

24· lying to us saying, "Oh, yeah, they were working on it,"

25· and all the documents bear out the fact that they

Page 230·1· absolutely were not.

·2· · · Q.· ·And in March 15th, as per Exhibit 43 --

·3· · · A.· ·March '15?

·4· · · Q.· ·Yeah, Exhibit -- Respondent's Exhibit 43.

·5· · · A.· ·Okay.

·6· · · Q.· ·The actions of the District with -- working

·7· with NPH foreclosed any possibility of Harris County

·8· Flood Control ever accepting the pond pump or the -- or

·9· the pump station, isn't that correct?

10· · · A.· ·No.· First of all -- and that was 2015.

11· · · Q.· ·Uh-huh.

12· · · A.· ·This pump had been an issue way back from

13· 20 -- 2000 -- I'll just -- I'll give you 2009 because

14· that's the point at which the punch list was developed.

15· · · Q.· ·Uh-huh.

16· · · A.· ·But, no, you can't say that way in 2015 our

17· actions impacted what you didn't do for six years.

18· · · Q.· ·Ma'am, as of March 19th, 2015, the Harris

19· County Flood Control informed the -- the District,

20· Brunswick Meadows HOA, and 308 Furman that it would

21· never take over the pump detention basin because of the

22· proposed box channel, isn't that correct?

23· · · A.· ·So two things are going on.· Yes, they said

24· they would not take it over, but, again, that wasn't

25· until 2015.

Page 231·1· · · Q.· ·Uh-huh.

·2· · · A.· ·In between the time not only did Lennar come

·3· to us with the -- with the -- regarding the -- the

·4· capacity letters -- so, as I said, that's how I got it a

·5· little confused regarding the ownership because it was

·6· Lennar that came to us about the capacity on behalf of

·7· NPH.· So not only did -- did they come to us regarding

·8· the capacity, but also they came to us regarding the

·9· easement.· Could we grant them the easement?· And we, of

10· course, wanted to keep development going, and so we did

11· grant the easement.

12· · · · · · · ·Now, did we know at that time that that

13· would cause the outfall channel to not be eligible?· Did

14· we know that?· No.· But Lennar did.

15· · · Q.· ·Lennar -- Lennar had no ownership interest in

16· the NPH property.· Haven't we decided that today?

17· · · A.· ·No.· What we decided is that they should

18· have -- they should have, at least, made sure that

19· whatever they needed to do to make that process go

20· through with Flood Control, they should have done.· And

21· that includes they should not have asked for the outfall

22· to be changed.· So I'm sure their engineers already knew

23· that.

24· · · Q.· ·You're saying Lennar's engineers should have

25· known that?

Page 232·1· · · A.· ·Yes, I am.

·2· · · Q.· ·Well, do you know that it was your own

·3· engineer that was working with NPH -- with ADI that was

·4· working --

·5· · · A.· ·Yes.

·6· · · Q.· ·-- working with NPH?

·7· · · A.· ·Yes.

·8· · · Q.· ·They knew.

·9· · · A.· ·Yes, they --

10· · · Q.· ·Why -- why did they -- why did they let it

11· happen?

12· · · A.· ·Well, the whole point is this -- the -- the --

13· the business with Flood Control and the punch list had

14· already happened.· It was already -- and it's in your

15· own documents.· It was already set the Flood Control was

16· not going to take that over because Lennar was not

17· fulfilling the responsibilities of the punch list.· So

18· that was already done, already known.· So it wasn't our

19· engineer's responsibility to look after them to see if

20· they were doing what they should have been doing.

21· · · Q.· ·Why did you engineers bill 308 Furman up until

22· 2014 through your bookkeeper?

23· · · A.· ·Because there were two BANs, bond anticipation

24· notes, that were done by Lennar.· Lennar came to us and

25· begged us -- and I will say begged.· They came to us and

1· they begged us if we would do bond anticipation notes.

·2· And both -- both times --

·3· · · Q.· ·I'm sorry.· Go ahead.

·4· · · A.· ·Both times both BAN anticipation notes they

·5· were talking about their end-of-year results that they

·6· were trying make sure that they were -- that they were

·7· not falling below what their targets were, and we agreed

·8· to do the BANs with the understanding that we would not

·9· pay one cents -- not one cent for those BANs.· They

10· agreed to that.· And we said, "We're going to bill you

11· for every dime that we pay on those BANs."· And

12· that's what we did, and that's why our engineer, our

13· attorney were involved, our bookkeeper.· Because the

14· bookkeeper said, "Hey, I'm not keeping track of all of

15· their stuff for nothing.· I have to charge for that."

16· So that's why they charged you back.

17· · · · · · · ·And let me say the other part of that is

18· we were -- we had -- we were financially stable, yes.

19· We asked our -- our financial advisor.· So how can we

20· both be financially stable and then unstable so that we

21· needed developer advancements?· I don't understand.

22· · · Q.· ·Look at Petitioner's Exhibit 24, please.

23· That's in our book one.· I'm looking at that summary

24· sheet, Exhibit 24.

25· · · A.· ·Okay.

Page 234·1· · · Q.· ·Petitioner's book one.

·2· · · A.· ·Oh, this says "BAN" --

·3· · · Q.· ·That -- that must be --

·4· · · A.· ·Oh, no.· Bond -- okay.· Whose document is

·5· this?

·6· · · Q.· ·This is --

·7· · · A.· ·Okay.· It says "our."

·8· · · Q.· ·This right here, ma'am, is what I'm trying

·9· to --

10· · · A.· ·Yes, I -- yes, it has invoice -- it's -- okay.

11· Yes, I -- I'm looking.· Okay.· Uh-huh.

12· · · Q.· ·Okay.· Now, first of, has there been a BAN

13· done since 2007?

14· · · A.· ·There was one in 2008.

15· · · Q.· ·Okay.· Is that the last one?

16· · · A.· ·Yes, it was.

17· · · Q.· ·Okay.· All right.· So is there any writing

18· about some agreement on 308 Furman paying all the cost

19· of a BAN?

20· · · A.· ·Any writing?· You mean --

21· · · Q.· ·Yeah, is there a written agreement?

22· · · A.· ·I don't recall.

23· · · Q.· ·Okay.· Now, the -- when you look at this

24· spreadsheet -- I asked you why engineering charges, and

25· you talk about BANs.· There's not been one since 2008.

Page 235·1· · · A.· ·That's correct.

·2· · · Q.· ·But you charged engineering charges up until

·3· 2014.· Why is that?

·4· · · A.· ·So, you know, this was quite a while ago, so,

·5· quite honestly, I don't recall.· But I do want to say

·6· that if you would throw those old things -- the BAN

·7· items on there and those weren't true, we're just not,

·8· you know, trusting.· Because you have no documentation

·9· that shows why.· And if we don't either, well, we just

10· have to assume that they're more falsehoods.

11· · · Q.· ·Well -- well --

12· · · · · · · ·THE WITNESS:· I said, "falsehoods."

13· · · Q.· ·(BY MR. RABON)· Ms. Smalls, I took the

14· deposition of Nancy Blackwell, and she -- I asked her if

15· she had looked into any of this, and she said, no, she

16· was not instructed to.· So you don't -- you don't know

17· if this is good stuff or bad stuff because no one's

18· looked at it at the District, have they?

19· · · A.· ·Well, what we looked at were the parts that I

20· just told you about.· So if you -- if you present me

21· hundreds of documents, and I can look and, at least, 20

22· of them are falsehoods, well, now, how far am I going to

23· look?· And what am I going to believe if I don't have

24· documentation?

25· · · Q.· ·Now, the -- you're aware that the -- both

Page 236·1· engineers -- both -- I guess AES and AEI --

·2· · · A.· ·AEI and AES, uh-huh.

·3· · · Q.· ·I'm sorry.· Both of those firms continued to

·4· bill 308 Furman for -- for nine years.· Are you aware of

·5· that?

·6· · · A.· ·What -- you're referring to these invoices

·7· here?

·8· · · Q.· ·Yeah.

·9· · · A.· ·Uh-huh.· Okay.

10· · · Q.· ·And we do have Ms. Blackwell's testimony, so

11· we'll let that stand about what she did to both review

12· or approve; is that fair?

13· · · A.· ·Uh-huh.· That's fine.

14· · · Q.· ·Okay.· And we have Mr. Ainsworth's testimony

15· as well, which is in the record, that -- regarding these

16· issues.

17· · · A.· ·Well, he was a fired -- a previously fired

18· consultant, but okay.

19· · · Q.· ·Oh, was he fired?

20· · · A.· ·Yes, he was.

21· · · Q.· ·Okay.· Why was he fired?

22· · · A.· ·One of the reasons was that we found that he

23· wasn't quite telling us the truth about a gas -- a gas

24· generator that we requested.

25· · · Q.· ·Okay.

1· · · A.· ·So he said it couldn't be done, but --

·2· CenterPoint told him it couldn't done, and we found out

·3· that it could be done, and they didn't say that it

·4· couldn't be done.· So that was just one of the reasons.

·5· · · Q.· ·Okay.· On maintenance costs -- and I'm talking

·6· about the mowing.

·7· · · A.· ·Uh-huh.· Okay.

·8· · · Q.· ·The -- let's look at Petitioner's Exhibit 33.

·9· It will be in that same book you're in.· That's some

10· meeting minutes from January 15, 2013.· And on page 3 it

11· says under the Engineer's Report, I believe -- let's

12· see.· Oh, I'm sorry.· It's on the Developer's Report on

13· page 3 about halfway down.· "Mr. Gilbert also stated

14· Lennar will continue mowing until Harris County takes

15· over."

16· · · · · · · ·Now, up until 2013, then, 308 Furman was

17· mowing the pond.· Is that -- do you know?

18· · · A.· ·Yes, I believe that's true.

19· · · Q.· ·All right.· Do you have -- did you enter into

20· any agreement with 308 Furman in which it agreed that

21· you could -- you could have somebody else do the mowing

22· and charge them for it?

23· · · A.· ·So there was some older agreements regarding

24· maintenance that was signed by Joe Fogarty who -- Lennar

25· took over the project for that developer.· So there were

Page 238·1· some previous agreements for us to do the mowing.· But

·2· when Lennar came on, then they started doing the mowing.

·3· So then at some point they stopped doing the mowing.· We

·4· had a lot of complaints.· We had snakes -- people

·5· sending us pictures of snakes -- huge snakes and other

·6· things.· And so then we asked them if they would step up

·7· the mowing.· And when they wouldn't, we told them we are

·8· going to take it over.

·9· · · Q.· ·Why didn't you bill them through the

10· bookkeeper like you did this other stuff?· Why didn't

11· you bill them for that once a month like you did the --

12· the -- the other -- the other advancements that --

13· · · A.· ·Because we had made several requests for them

14· to deal directly with the mowers, which is what they had

15· been doing.· So then we then dealt with the mowers.

16· · · Q.· ·You knew 308 Furman would not have sent you a

17· check if you would have sent it through that bookkeeper

18· for that mowing, didn't you?

19· · · A.· ·No, not necessarily.

20· · · Q.· ·Uh-huh.

21· · · A.· ·We had no idea.· But we wanted to get it done

22· and get it done quickly, and we wanted them to get paid

23· right away.

24· · · Q.· ·Okay.· And I -- I understand that there's an

25· agreement on maintenance of the pump station, but I

Page 239·1· don't see it -- a written agreement regarding mowing.

·2· Are you aware of one?

·3· · · A.· ·Again, as I said, I believe that there -- that

·4· there were old agreements, but this specific time period

·5· in 2013 I can't say that there are.

·6· · · Q.· ·All right.

·7· · · A.· ·However, they had adequate notice.· And even

·8· in the minutes that you brought up, that last paragraph

·9· where it said -- let's see here.· Oh.· Oh, no.· That was

10· the -- the first paragraph where Mr. Gilbert said, "He's

11· working with Harris County to resolve issues and get a

12· road connected to Furman.· You know, we know that what

13· they told us in the meeting, they just told us.· He

14· stated he's working to have Harris County take over

15· mowing of Brunswick Meadows' detention pond.· He also

16· stated that Lennar will continue mowing the pond until

17· Harris County takes over, but the county will not mow

18· more than two times a year, directly noted that

19· Environmental Allies will be providing a bid on that

20· pond.· So she was saying right there -- you're saying

21· that you're going to -- you're mowing -- you're going to

22· continue mowing, but, you know, maybe one or two times a

23· year like Harris County, but he was told right there

24· that bids were going to go out to -- to cut that pond.

25· · · Q.· ·There's no written agreement where 308 Furman

Page 240·1· agreed to the contract that the District entered into

·2· with its mowing service, is there?

·3· · · A.· ·But they didn't protest either.

·4· · · Q.· ·Oh.· They never got a bill until you took it

·5· out of their bond issue.

·6· · · A.· ·They were at our meetings during that time.

·7· They knew that were taking a bid on the mowing.· That

·8· was the purpose of taking out the bid on the mowing.

·9· · · Q.· ·First time they saw it was in that May 2nd

10· meeting with that list of things that you were going to

11· back charge them for, isn't that true?

12· · · A.· ·No, that is definitely not true at all.· Not

13· at all.

14· · · · · · · ·We had subjects that we dealt with the

15· developers on, particularly Lennar.· You know, we had

16· running subjects:· pump, mowing.· Those are all running

17· subjects that -- I guess that's why they didn't end up

18· in the minutes anymore, because they were just running

19· commentary as usual.

20· · · Q.· ·Now, let's look at Petitioner's Exhibit No.

21· 67.

22· · · A.· ·Second book.

23· · · Q.· ·Oh, let's see.

24· · · A.· ·Minutes?

25· · · Q.· ·I'm sorry.· Go to 71.· 71 should be in that

1· same book.

·2· · · A.· ·Okay.

·3· · · Q.· ·Now, Exhibit 71 on page 6 -- well, we talked a

·4· little bit about interest earlier.· So I'm -- I'm

·5· looking on page 6.· It's that second big paragraph about

·6· halfway down.· And -- well, we're talking, I guess,

·7· about the bond issue -- the upcoming bond issue, because

·8· this is dated July 7, 2017.

·9· · · A.· ·Uh-huh.

10· · · Q.· ·"Director Smalls stated the board would apply

11· for four years of interest if Lennar would agree to drop

12· the request for the reimbursement of the pump."

13· · · A.· ·Uh-huh.

14· · · Q.· ·"She stated the board is negotiating."

15· · · A.· ·Uh-huh.

16· · · Q.· ·Okay.· So --

17· · · A.· ·Uh-huh.

18· · · Q.· ·-- you know, the -- you paid us two years of

19· interest because we won't give up on the pump; is that

20· right?

21· · · A.· ·No.· We were -- paid you two years of interest

22· because, as far as the board is concerned and has

23· understood it to mean, we were only obligated to pay up

24· to two years' interest.

25· · · Q.· ·But you paid four and five years' interest in

Page 242·1· the prior two bond issues.

·2· · · A.· ·We never paid five.· We paid four.

·3· · · Q.· ·Okay.

·4· · · A.· ·Yes.· Now, the board has its discretion to pay

·5· interest above two -- above two years.· We can ask.· As

·6· far as the board is concerned, it's extra.· So we can

·7· ask.· Now, at the time that that four years was paid, it

·8· was a different board.· So discretion, that was what

·9· they decided to pay.· However, this board, we decided to

10· pay two years of interest, not least of which -- not

11· because we had something against you-all, but we had

12· just laid out -- in 2016 we had just laid out $180,000

13· to put in sidewalks that Lennar neglected to put in and

14· wouldn't put in.· And the constables were coming to us,

15· people were coming to us saying it was a safety issue.

16· So, no, we were not ready to do the extra when we felt

17· like we were already doing the extra in finishing up

18· what the developers didn't finish.

19· · · Q.· ·And this board in 2017 made sure to wait as

20· long as possible to reimburse 308 Furman for these

21· projects like the -- the pumps -- the -- the detention

22· pond was finished in 2010, and you reimbursed that in

23· 2018; is that right?

24· · · A.· ·We may have reimbursed them in 2018, but the

25· whole point is there's no specific date by which we

Page 243·1· should and would reimburse.· We look at the projects as

·2· they come up.· We generally try to put developers

·3· together to reimburse --

·4· · · Q.· ·Uh-huh.

·5· · · A.· ·-- so that we're not paying high costs of

·6· issuance.· So between getting information and putting

·7· other developers together, that's the date that it

·8· happened.

·9· · · Q.· ·And if we don't give up on claims, you cut our

10· interest?

11· · · A.· ·No.· It's not about -- so if you look at that

12· paragraph where I said, "I was negotiating," yes.· In

13· fact, it's not that we are punitively not trying to pay

14· them, but the fact is, again, over two years, as far as

15· we're concerned, is extra.· So the way we looked at it

16· was you shouldn't have put the pump in, you, you know,

17· did it knowing that it wouldn't be accepted; however,

18· we are willing to negotiate with you to get this done

19· and pay the extra although to us the extra wasn't

20· warranted.· So that's why -- that's why that was said.

21· But in the end that didn't happen, so then the four

22· years.

23· · · Q.· ·Let's go to Exhibit 67 now.· And this is

24· actually from an earlier time, December 4th, 2012.

25· · · A.· ·Uh-huh.

Page 244·1· · · Q.· ·Before Bond Issue 6.

·2· · · A.· ·Okay.

·3· · · Q.· ·On page 8 talking about the -- the upcoming

·4· bond issue, and there's a lot of discussion in here

·5· about whether the bond issue should be 2.9 million, 4.8

·6· million, et cetera.· But I'm going to refer you to page

·7· 8 starting at the second sentence at the top -- the

·8· third sentence.· And this -- you're complaining about

·9· the ponds.· "Director Smalls stated that there are

10· detention ponds which do not work, although the

11· developers did fix the sidewalks.· She stated developers

12· only do things when they need to gain influence or to

13· receive money.· She further stated that they should not

14· be paid the full amount they are owed to keep them

15· working."· So that's your attitude on this board, isn't

16· it, Ms. Smalls?· Keep us working?

17· · · A.· ·So, first of all, like I said, I did not write

18· those statements, so -- and during that time, which is

19· 2012, I wasn't even actually reviewing the minutes to

20· make sure that what I said was what I said.· However, I

21· will say this:· When Lennar was set to finish up and

22· leave the neighborhood, you know, we were thinking back

23· to the developer who they took over from, who was Joe

24· Fogarty.· He left and left us with a $300,000 undone

25· detention pond.

1· · · · · · · ·We had another developer that came in, and

·2· they left us with half a -- a -- 67 people -- that was

·3· supposed to be a 387 small development.· Left 67

·4· people -- or 87 people paying for all the facilities.

·5· So, yes, we've had bad experiences with developers

·6· coming in and then leaving.· So that's not the

·7· terminology I would use, but the idea of making sure

·8· that they're finished doing everything that they're

·9· supposed to do, then, yes, I will -- I will own up to

10· that.

11· · · · · · · ·MR. RABON:· I have no further questions.

12· Thank you, Ms. Smalls.


14· And, let's see, from the respondent.· And let's keep it

15· brief, if possible.

16· · · · · · · · · · REDIRECT EXAMINATION

17· BY MR. GIBSON:

18· · · Q.· ·Ms. Smalls, if you could, please, turn very

19· quickly to Exhibit 25 of the applicant -- the

20· appellate's -- or I could describe it to you just --

21· · · A.· ·Okay.

22· · · Q.· ·-- for the sake of time.· his is the set of

23· invoices that they claim are advancements.

24· · · A.· ·Uh-huh.· Okay.

25· · · Q.· ·You --

Page 246·1· · · A.· ·Okay.

·2· · · Q.· ·You understand what I'm referring to?

·3· · · A.· ·Yes, I do.

·4· · · Q.· ·Okay.· And they were characterized as

·5· advancements by 308 Furman, correct?

·6· · · A.· ·Yes.

·7· · · Q.· ·From the District's perspective, are the

·8· amounts paid, the one-hundred-thirty-some-odd-thousand

·9· dollars -- were those advancements by 308 Furman to the

10· District?

11· · · A.· ·Not at all.

12· · · Q.· ·What were they?

13· · · A.· ·Those were amounts that the developers owed

14· themselves.· We -- we invoiced them because they were

15· amounts that we put out for the developer.· And when

16· they sent back those -- the money for it, they did not

17· say at that time "Oh, yeah, but we expect to be

18· reimbursed."· No, that was pay -- payment for items the

19· District put out.· It was -- they kind of switched it

20· around a little bit.

21· · · Q.· ·Exhibit 54 is the compilation of maintenance

22· cost invoices which the District 89 deducted from the

23· overall bond issue to 308 Furman.· Do you recall that?

24· · · A.· ·Yes.

25· · · Q.· ·Why did District 89 believe that the roughly

Page 247·1· $265,000 worth of mowing and maintenance costs for the

·2· ponds was owed to the District by 308 Furman?

·3· · · A.· ·Because, in general, when the District is not

·4· responsible for mowing or maintaining until those ponds

·5· are accepted and purchased by reimbursement -- so, as

·6· far as we are concerned, we did not owe any mowing

·7· because those ponds were not accepted.· We sell bonds.

·8· We accept the bonds.· We reimburse.· Those -- those

·9· ponds were not accepted, so we did not -- we did not owe

10· the mowing.

11· · · Q.· ·Was -- was 308 Furman doing a good job of

12· maintaining and mowing those ponds before the District

13· took over the maintenance in --

14· · · A.· ·As I said --

15· · · Q.· ·-- roughly 2013?

16· · · A.· ·No, not at all.· As I said, we got several

17· complaints, people sending us pictures of huge, yellow

18· snakes and all kinds of things that were in those ponds.

19· So as a safety measure we had to respond to our

20· taxpayers, and that's what we did to respond.· We mowed

21· and we seeded.

22· · · Q.· ·When the Brunswick Meadows detention pond was

23· designed -- and we've seen some of the drainage and

24· design documents -- was it designed to be a dry pond or

25· a wet pond?

Page 248·1· · · A.· ·A dry pond.

·2· · · Q.· ·Does that matter to the District whether or

·3· not a pond ends up being wet or dry?

·4· · · A.· ·Yes, it does.· It matters because if it's a

·5· dry pond, of course, it can hold more capacity of

·6· detention.· You know, it's -- its a flood issue.· Not

·7· only that.· I'm also recalling the talk about they were

·8· going to -- it could be used for soccer fields, et

·9· cetera, et cetera.· And that's a dry pond.· So dry

10· ponds -- we have other dry ponds in our area, and they

11· work so. . .

12· · · Q.· ·And just briefly -- briefly, what are the

13· problems caused to the District when it has what's

14· supposed to be a dry pond but it's wet, and it actually

15· ends up having water at the bottom?

16· · · A.· ·So the water -- several issues.· Number one,

17· it can't be maintained the way it should be maintained

18· because it's wet; number two, of course, there's the

19· issue of the mosquitoes, safety, et cetera; and then

20· also the capacity for holding stormwater is not as great

21· as if it was a dry pond.

22· · · Q.· ·Last topic.· We saw earlier Exhibit No. 100,

23· which Mr. Johnson testified.· Recall that's his schedule

24· that he put together -- or Lennar put together saying

25· "If we had built the pond wider instead of deeper, it

1· would have impacted roughly $94 million worth of

·2· homes" --

·3· · · A.· ·Uh-huh.

·4· · · Q.· ·-- "in Brunswick Meadows."· Do you recall

·5· that?

·6· · · A.· ·Uh-huh.· Yes, I recall that testimony.

·7· · · Q.· ·Just -- just assuming that's correct for

·8· purposes of discussion.

·9· · · A.· ·That's fine.

10· · · Q.· ·You know, for that $94 million worth of homes

11· that would have been added to District -- District 89's

12· tax base -- or that was added to District 89's tax base,

13· that reflects $94 million worth of home sales for the

14· developer, correct?

15· · · A.· ·Correct.

16· · · Q.· ·Now, out of that -- out of that $94 million

17· worth of additional home sales, do you think that the --

18· the developer could have come up with the million

19· dollars in cost that its engineer said it would cost to

20· comply with Flood Control?

21· · · A.· ·100 percent.

22· · · Q.· ·If they had done that, maybe -- would we had

23· been here today?

24· · · A.· ·We definitely would not have -- have been if25· they had put the pump in.

Page 250·1· · · · · · · ·MR. GIBSON:· That's all I have.· Thank

·2· you.

·3· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Any

·4· recross?

·5· · · · · · · ·MR. RABON:· No.


·7· I believe this concludes the respondent's case.

·8· · · · · · · ·MR. GIBSON:· Yes, Your Honor.

·9· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· You

10· may step down.· Thank you.

11· · · · · · · ·From the ED.

12· · · · · · · ·MS. MURRAY:· Yes.

13· · · · · · · ·MR. GIBSON:· Can I help pull some of this

14· together just to make some room?


16· · · · · · · ·If you would raise your right hand.

17· · · · · · · · · · · (Witness sworn.)


19· Have a seat.

20· · · · · · · ·And if the ED would like to just ask a few

21· questions to prove up the prefiled testimony.

22· · · · · · · ·MS. MURRAY:· Sure.· Sure.

23· · · · · · · · · · · ·ANDREW PAYNTER,

24· having been first duly sworn, testified as follows:

25· · · · · · · · · · ·DIRECT EXAMINATION

Page 251·1· BY MS. MURRAY:

·2· · · Q.· ·Can you, please, state your name for the

·3· record.

·4· · · A.· ·Andrew Paynter.

·5· · · Q.· ·And, Andrew, who is your current employer, and

·6· what is your position there?

·7· · · A.· ·I'm employed by the TCEQ as a financial

·8· advisor.

·9· · · Q.· ·How long have you been with the commission?

10· · · A.· ·I've been here since May of 2013 -- June of

11· 2013.

12· · · Q.· ·Okay.· And you have two documents that have

13· been marked as Exhibit ED AP1 and Exhibit ED AP2, copies

14· of which were provided to all the parties on August 9th

15· of this year.· And is ED AP1 your prefiled testimony?

16· And is ED AP2 your resume?

17· · · A.· ·They are.

18· · · · · · · ·MS. MURRAY:· And I just would like to make

19· a quick note that the first electronic version that was

20· sent to the parties on August 9th had the prefiled

21· testimony labeled as both ED AP1 and ED AP2, and I just

22· wanted to clear that up that everyone now has the

23· correct version.

24· · · · · · · ·There's something changed from that

25· testimony.

Page 252·1· · · Q.· ·(BY MS. MURRAY)· Are these true and correct

·2· records of your prefiled testimony and resume?

·3· · · A.· ·They are.

·4· · · Q.· ·And do these documents present facts that

·5· support your opinion expressed in your testimony?

·6· · · A.· ·They do.

·7· · · Q.· ·Do you have any changes or corrections to make

·8· to your testimony at this time?

·9· · · A.· ·I do not.

10· · · · · · · ·MS. MURRAY:· And I'd like to make a quick

11· note that this version of the testimony has the legal

12· expenses testimony removed from it that was originally

13· on page 10, lines 24 through 31, and page 11, lines 1

14· through 11.

15· · · Q.· ·(BY MS. MURRAY)· Would your answers to the

16· questions contained in the testimony remain unchanged if

17· you were to give that testimony orally today?

18· · · A.· ·It would remain unchanged.

19· · · · · · · ·MS. MURRAY:· And so, Your Honor, at this

20· time I'd like to offer Exhibits ED AP1 and ED AP2 into

21· evidence.

22· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Yes, and ED

23· AP1 and ED AP2 have been admitted.

24· · · · · · · ·MS. MURRAY:· And I pass the witness.

25· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· Any

1· questions from the petitioner?

·2· · · · · · · ·MR. RABON:· No.

·3· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Respondent?

·4· · · · · · · ·MR. GIBSON:· No, Your Honor.

·5· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· OPIC?

·6· · · · · · · ·MR. WAYNE:· No, Your Honor.

·7· · · · · · · ·THE ADMINISTRATIVE LAW JUDGE:· Okay.· You

·8· may step down.· Thank you.

·9· · · · · · · ·All right.· Any rebuttal from the

10· petitioner?

11· · · · · · · ·MR. RABON:· No.


13· we're doing it with time to spare.· Okay.· So just

14· briefly I'll go over the briefing schedule again.· That

15· is -- we're expecting the transcript approximately two

16· weeks from today, which is October 8th.· The initial

17· briefs from all parties will be due November 7th and

18· reply briefs for all parties are due December 5th.

19· · · · · · · ·All right.· Was there anything else that

20· needs to be addressed?· That concludes today's hearing.

21· Thank you.

22· · ·(Whereupon, the proceedings concluded at 4:30 p.m.)

23

24

25

Page 254·1· THE STATE OF TEXAS· ·)

·2· COUNTY OF HARRIS· · ·)

·3· · · I, Hope Lewandoski, do hereby certify that the

·4· above and foregoing contains a true and correct

·5· transcription of all portions of evidence and other

·6· proceedings requested in writing by counsel for the

·7· parties to be included in this Hearing on the Merits in

·8· the above-styled and -numbered cause, all of

·9· which occurred at the offices of STATE OFFICE OF

10· ADMINISTRATIVE HEARINGS, located at 2020 North Loop

11· West, Suite 111, Houston, Texas 77018, and were

12· reported by me.

13· · · I further certify that this transcript of the

14· Hearing on the Merits proceedings truly and correctly

15· reflects the exhibits, if any, admitted by the

16· respective parties.

17· · · WITNESS MY OFFICIAL HAND this 10th day of

18· October, 2019.

19

20

21· · · · · · · · · · · · __________________________________

· · · · · · · · · · · · · HOPE LEWANDOSKI, Texas CSR 6255

22· · · · · · · · · · · · Expiration Date:· 12-31-19

· · · · · · · · · · · · · LEXITAS

23· · · · · · · · · · · Firm Registration No. 95

· · · · · · · · · · · · · 13101 Northwest Freeway, Suite 210

24· · · · · · · · · · · · Houston, Texas· 77040

· · · · · · · · · · · · · (281) 469-5580

25

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