Dripping Springs officials have personal ties to $25M development

Investigations

DRIPPING SPRINGS, Texas (KXAN) – The main drag through Dripping Springs is only a half-mile long. It’s like walking back in time, with white limestone buildings and rusty tin roofs covering the small, locally-owned businesses along Mercer Street.  

Downtown still looks a lot like the one-horse towns you’d expect to find around Texas 50 years ago. 

If you blink, you’ll miss it. And it’s this way on purpose as the city’s worked to preserve Mercer Street’s rural, small-town look.  

But, one block over, Dripping Springs is dealing with some big city problems along U.S. Highway 290. It’s the main line between Austin and Johnson City and its traffic jams are getting worse. Each day, coming and going, thousands of cars and people pass through Dripping Springs. 

Many of them are headed to the subdivisions that have popped up around the city. Undeveloped land in Dripping Springs is more valuable today than it has ever been. 

A growing government

With growth and city annexations, the city of Dripping Springs and the Dripping Springs Independent School District are taking in more tax dollars than ever before. Both governments believe they need to grow with it and are finding ways to spend that influx of money.

The first big project: The Town Center. 

The project has an estimted price tag of $25 million. It’s a government center the city, school district, Hays County and the library board are all working to build. The project will house the school district’s administrative offices, city hall, community library and Hays County satellite offices. It’ll also provide commercial space for lease to private businesses. 

The city formed a Tax Increment Reinvestment Zone, known as the TIRZ board, to make recommendations to city council on several development projects the city’s looking to spend taxpayer dollars on. One of the “priority” projects is the Town Center. 

City drawings show walking paths and planned roadways connecting the taxpayer-funded TIRZ/Town Center to a 200-acre private development known as the Heritage Subdivision. 

That subdivision is currently undeveloped but would join property lines with DSISD’s current offices and the Dripping Springs High School. A KXAN investigation found three public officials — all members of the same family — once owned the planned development property but are now listed as minority owners of the planned development and are holding seats on boards planning the $25 million taxpayer-funded project. 

That family, in a letter to KXAN sent three days after this report aired, disputed a land connection between the TIRZ/Town Center project and the Heritage Subdivision. “There is a parcel of land separating the Town Center project from the Heritage Subdivision,” the letter stated. 

The family also addressed their ownership percentage of the Heritage Subdivision in the March 1 letter writing, “Our family owns less than 20 percent interest in the Heritage development. It is not “our” development.”

The Heritage Subdivision

In October 2017, the Dripping Springs City Council voted to annex 198 acres of land and to give the land developers a development approval known as Planned Development District #5. The development is officially identified as the Heritage Subdivision in city records. 

The 2017 vote allowed the owners of the 198-acres to begin the process of developing the property that plans show could contain up to 700 new homes. Without the development approval from council, the 198-acre property could not be developed in this way.

The development agreement is between the city and two private entities: BobWhite Investments, LP and SLF IV Dripping Springs JV, LP. The agreement also gives the land owners a signed agreement that the city would provide all city services, including “street and drainage maintenance” for public streets in the development, “street lighting” and “traffic engineering” for the development, according to the ordinance signed Oct. 17, 2017. 

Connecting the dots

Our investigation found some of the Heritage Subdivision tracts belong to three public officials and their family members: Dripping Springs City Councilman John Kroll, Dripping Springs Independent School District Board President Carrie Kroll and John Kroll’s sister Missy Atwood. 

Atwood is a voting member of the TIRZ board and is the president of the Dripping Springs Community Library Board. 

Hays County property records show the entire Heritage Subdivision development is owned by the two partnerships that signed the October 2017 development agreement with the city: BobWhite Investments, LP and SLF IV Dripping Springs JV, LP.

A search of Texas Secretary of State records shows BobWhite Investments, LP’s registered agent is Missy Atwood. The limited partnership’s mailing address on file with the state comes back to a property owned by Missy and her husband, Gary, who is a former Dripping Springs ISD board member. 

State lobbying records show John Kroll has been a registered lobbyist for BobWhite Investments, LLC since 2015 and a registered lobbyist for several other Texas cities. Kroll’s wife, Carrie, is also a registered lobbyist for the Texas Hospital Association. 

The BobWhite Investments limited partnership is part of BobWhite Investments, GP, which is a general partnership, commonly known as a private equity firm. Secretary of state records show both BobWhite Investments, LP and BobWhite Investments, GP were created on the same day: Dec. 9, 2014.

Days later, on Dec. 18, 2014, county land records show Heritage Subdivision property that once listed in the Kroll and Atwood families’ names was conveyed to BobWhite Investments, LP for $10. 

A Dec. 13, 2018 Secretary of State filing shows BobWhite Investments, LP is one of the parent companies of the entity with the largest ownership stake in the Heritage Subdivision: SLF IV Dripping Springs JV, LP.

The same day, land records show 187 acres in the Heritage Subdivision was deeded to SLF IV Dripping Springs JV, LP. The sellers are listed as: John Davidson Kroll, Missy Kroll Atwood and Micky Davidson Kroll, who is Missy and John’s mother. 

Aside from the prior ownership records, the conveyance ultimately removed the Kroll and Atwood names from the land ownership records. 

Official actions —  and inaction

The Heritage Subdivision and the Town Center were the subject of dozens of board agenda items since 2016. The Town Center project and the city’s transportation plan, which includes new roads through the development, are still being discussed and decisions are still being made on those items today. 

Our review of three years of official Dripping Springs City Council minutes show at least 29 times items related to the Heritage Subdivision came before council. Council minutes show councilman John Kroll offered recusals in some cases, but the city could not provide records to show Kroll filed conflict of interest affidavits for those recusals. 

“Mr. Kroll has not participated or taken any vote on the Heritage Development,” the family wrote in the letter sent to KXAN three days after this investigation was published. 

The city did provide a 2014 and 2016 affidavit where Kroll disclosed a “substantial interest” in 109 acres inside the property that comprises more than half of the Heritage Subdivision property. Kroll’s affidavit also lists his mother’s home, which is located inside the Heritage Subdivision property, as another property where he holds a “potential conflict of interest.”

An open records request filed with the city shows Kroll has not disclosed his “substantial interest” in the Heritage Subdivision property in his annual disclosure filings since January 2016. Since then, the property has come before council more than two dozen times. 

City meeting records also show Kroll went behind closed doors with council in multiple executive sessions where the Heritage Subdivision was discussed. Many of those private meetings dealt with city officials receiving briefings and advice from the city attorney regarding legal issues connected to the development. 

Both Kroll and the city denied he was in the room when those closed-door items related to the Heritage Subdivision were discussed. The city’s spokeswoman provided this statement to KXAN after an attempt to question Kroll about the executive sessions at a public meeting earlier this month: 

“City of Dripping Springs Councilmember John Kroll did not attend closed session where the city council discussed the Heritage Development. The City Administrator has confirmed that any time the item of Heritage was presented to the city council in closed session, Councilmember Kroll left the room on advice of the city attorney’s office.  Councilmember Kroll was not in attendance —and did not participate — when the item related to the Heritage Development was discussed by the city council. If other items were on the closed session agenda, he participated in those items.  The only records related to the closed session meetings are the confidential certified agendas (closed session minutes) which are prohibited from public release by the Texas Open Meetings Act.”

The city’s official minutes do not note whether Kroll recused himself in those private meetings. The city’s statement indicated any record of Kroll’s attendance during those meetings will be kept secret. 

On July 11, 2017, city meeting minutes show John Kroll was appointed to the city’s TIRZ board. The TIRZ board is deciding the financing of and location of the Town Center project and issuing recommendations to the city. The city plans to build the center just feet away from the Heritage Subdivision property line and renderings show public walkways connecting to the Heritage property. 

Kroll’s sister, Missy Atwood, was also appointed to the TIRZ board by city council and holds a voting position on the board. Atwood’s held a seat on the TIRZ board from the start of the TIRZ in Dripping Springs. John Kroll’s appointment does not give him voting power on the board. 

City records show Kroll voted on his sister’s appointment to the TIRZ board at least once: Dec. 11, 2018. In that meeting, Atwood’s name is listed in the agenda and meetings minutes do not indicate Kroll recused himself from that consent agenda item. 

Atwood’s original appointment happened during a Nov. 29, 2016 council meeting and minutes show John Kroll abstained from that vote, but the city could not provide KXAN a disclosure filing where Kroll explains the reason for his conflict in that vote. Meeting minutes for the original TIRZ board appointment do not show any of the names up for a vote that night.

We filed an open records request with the city for conflict of interest and disclosure records for Missy Atwood. The city told KXAN there are no disclosure statements on file for Missy Atwood during the time she’s served on the city’s TIRZ board. The reason: since the TIRZ board is an “advisory board” state law doesn’t require those officials to file disclosures when they have a conflict in a vote. 

Which means a board member could vote on an item that could provide a financial benefit to the official and that official doesn’t have to tell the public about it. A review of TIRZ board meeting minutes does not show any recusals from Atwood regarding any of the votes taken on Town Center agenda items. 

Although our review of school board minutes show the Heritage Subdivision never appeared on the DSISD agendas for a vote, board minutes show the development was the subject of several public hearings regarding the city’s annexation of the property. Board minutes do not show any recusals or disclosures from board president Carrie Kroll notifying the public of her and her family’s ownership interest in the development during those public hearing items.  

The school board also considered several items regarding the Roger Hanks Parkway, which, once completed, would act as a bypass around the city. The city’s 2018 Transportation Master Plan also shows the bypass would run along the west side of Dripping Springs High School, make a 90 degree turn to the east at the football stadium and run right through the heart of the Heritage Subdivision. 

On May 22, 2017, board minutes show Carrie Kroll voted twice during that meeting to approve sealed proposals for an extension of one part of the Roger Hanks Parkway. The total project cost is listed as $1.2 million in the board records. 

The next school board meeting on June 26, 2017 board minutes show Kroll “abstained” from voting on an “interlocal agreement” to build the Roger Hanks Parkway extension. Board minutes do not show why Kroll did not vote and the school board told KXAN Kroll never filed any conflict affidavits to support her abstention. 

KXAN attempted to review DSISD’s recording of that June 26, 2017 meeting, but the district told KXAN that audio recording doesn’t exist: 

“Apparently there were a few meetings that year when we had technical difficulties and the recordings did not record; that meeting was one of them.” -Dale Whitaker, DSISD Spokesman 

However, school board documents show part of the DSISD and the city’s plans related to the Roger Hanks Parkway paid a contractor $673,000 to remove brush and asphalt from private property at a business office located at the intersection of Highway 290 and Roger Hanks Parkway.

Hays County property records show the private property belongs to the Kroll and Atwood families. Carrie Kroll’s husband, John Kroll, declared a “substantial interest” in the property in his 2014 and 2016 conflict of interest affidavits, noting the property belonged to his mother and sister, Missy Atwood. 

In the family’s March 1 letter, they offered more detail on the background of the Roger Hanks Parkway project and its ties to their family’s Highway 290 property:

“The cleared property was previously right-of-way (ROW) owned by TXDOT and the City of Dripping Springs. Our family and another private citizen agreed to gift new ROW property to the city in exchange for a portion of the abandoned Old Highway 290 ROW, becuase it would help the community and the school be able to access their facilities, and provide for safe egress from the stadium and another way to get emergency vehicles back to the school facilities. A condition of the gift from both landowners was the removal of the brush and asphalt from the abandoned old ROW.” -Kroll/Atwood letter to KXAN

School board minutes also show Carrie Kroll attended executive sessions, cast votes in open session and even signed agreements with the city of Dripping Springs related to the Town Center project, which is planned to be built beside her family’s Heritage Subdivision. 

Board minutes also show Carrie Kroll never disclosed publicly that her husband and sister-in-law were members of the TIRZ board during meetings where she voted on and signed the Town Center agreements. 

However, at the Dec. 18, 2018 board meeting when KXAN showed up to video record the school board meeting, Kroll announced from the dais, “I would just like to state — as a reminder — that my sister-in-law is the chair of the library board for — this is all something you know, but for proper disclosure purposes.” 

Despite disclosing the relationship, Kroll cast a vote to approve an updated Town Center agreement but said during the meeting she had no financial interest in the project.  

Ethics concerns

We asked ethics attorney, Cris Feldman, to review the public records we obtained in our investigation. Feldman specializes in public corruption and ethics law and is noted as one of the attorneys in who helped end former U.S. House Majority Leader Tom Delay’s political career over a money laundering investigation. 

Delay was convicted of felony money laundering in 2010, but the conviction was overturned in 2013. 

“The problem here is you have registered Texas lobbyists who own land in Hays County and have cornered the local government infrastructure — as far as populating the boards here — and they are using their positions, by appearance at least, to further along the use of public tax dollars that ultimately benefits a very large and lucrative project that they have,” Feldman told KXAN after reviewing the files. 

Feldman said the Krolls and Atwood are required to file annual conflict disclosures, detailing any “substantial interest” they might own in any business or real estate. The rule applies to any “local public official,” Feldman explained. 

The definition of a local public official is in Texas Government Code Chapter 171: “…means a member of the governing body or another officer, whether elected, appointed, paid, or unpaid, of any district (including a school district), county, municipality, precinct, central appraisal district, transit authority or district, or other local governmental entity who exercises responsibilities beyond those that are advisory in nature.” 

Although the Town Center project sits next door to the Heritage Subdivision, Feldman said the state’s ethics laws require disclosure since tax dollars are being used to fund such a major public development next to a private development.

“I’m not an appraiser, but I would certainly think putting in a $25 million project full of municipal buildings and becoming the nerve center of local government in Hays County right next to your private development could only have a positive financial benefit in terms of that land,” Feldman said.

“Obviously it’s a benefit to this 200-acre tract.” 

‘You have our statement’

Since Jan. 14, KXAN tried multiple times to have the Krolls and Atwood schedule an interview to go over the records we found and to address concerns regarding potential state and local ethics violations for failing to file disclosure documents. 

Missy Atwood emailed a statement to KXAN on Feb. 4, confirming the family’s ownership stake in the Heritage Subdivision property and asking that the statement be used in lieu of an interview. That statement is here: 

“A portion of the land that now constitutes the Heritage at Dripping Springs project was acquired by our grandparents 65 years ago. In 2014, we sold a majority stake of our land interests to Stratford Land, making our family a limited, minority partner with no ability to influence or direct activities of Stratford Land. No member of our family has been involved in negotiations on behalf of or involving the Heritage at Dripping Springs project.  Further, when appropriate, we have recused ourselves from relevant votes related to the project.  (All appropriate disclosures and records of recusals are on file and publicly available.)”
Given the records uncovered in this investigation, we wanted to have each of the three public officials explain their involvement and disclosures in the various elements that comprise the Heritage Subdivision, the Town Center and the Roger Hanks Parkway. 

All three public officials declined to be interviewed for this report.

KXAN found Missy Atwood and John Kroll during the Feb. 4 TIRZ board meeting at city hall. We asked Atwood to answer questions as she walked into city hall. “I’m really happy that you’re interested in the project, but I’ve got to go into the TIRZ board meeting right now, thanks,” Atwood told KXAN investigator Jody Barr.

“I did provide you with a statement,” Atwood added as she walked inside.

We approached John Kroll inside the public area of the council chambers after the meeting. “Well, Mr. Barr, thank you for your interest in this, but I think we’ve provided you a statement for your — kind of address the topics you brought up in your email. And again, I appreciate your interest in it, but I think the statement speaks for itself,” Kroll said before walking into a hallway inside city hall. 

We found Dripping Springs Independent School Board President Carrie Kroll walking into a board meeting last week. Kroll would not stop to answer questions regarding her involvement in items related to the Heritage Subdivision, the Town Center and Roger Hanks Parkway. 

Kroll declined another request for an interview, but told Barr, “I’m glad you all are interested in our community,” Kroll said. 

“Plenty of the people in the community know about my ethics, I think you may have been led astray by some people,” Kroll said. “We’ve been real clear in everything we’ve done to be of the utmost solid, so I appreciate the interest in your community and I’ll let my statement speak for itself. Thank you.”

When asked whether Kroll ever disclosed her family’s ownership of the Heritage Subdivision property, she replied, “I don’t believe that that’s been required, and everybody is aware — on the board — that I own that. There’s not a disclosure requirement. There’s no votes I’ve taken on the school board that’s relevant, so.” 

When asked why the property was not disclosed on her annual disclosure filings, Kroll said “It has no relevance to my school board position.”

 “There’s plenty of people on the school board that live in the community and own property in the community,” Kroll added. 

‘An investigation should be done — as to what the hell is going on there’

The city has a form to fully disclose a city official’s interest in Dripping Springs. During the Heritage Subdivision’s move through city council in 2017, Councilman Travis Crow noticed a property being re-zoned from agriculture to commercial looked familiar to him.

That property was next-door to Crow’s private property. 

“I wanted to keep it clear and transparent to the public that I was recusing myself from this decision since the property was directly adjacent to mine,” Crow told KXAN. Crow not only recused himself from the matter when it came for a vote, council minutes show he left council chambers and had the city secretary attach his conflict of interest affidavit to the public minutes. 

“I knew to do it, but I also sought counsel from the city attorney to make sure that all the correct steps and procedures were taken to do this,” Crow said. The city attorney instructed Crow to list the agenda item with the conflict and to explain the scope of his conflict. 

“I am in the notification zone of the property proposed to be rezoned,” Crow wrote on the form. Crow did not own any of the 22.10 acres being rezoned. 

“I think I took the correct steps and procedures to recuse myself and did the right thing,” Crow told KXAN.

The Sept. 12, 2017 conflict affidavit is still posted in the public minutes on the city’s website. 

The city contends Councilman John Kroll’s 2016 disclosure filing covers Kroll into the future and claims disclosures are only required “the first time a councilmember recognizes that there may be a conflict,” the city’s spokeswoman Bonnie Gonzales wrote in a Feb. 27 statement to KXAN. ‘He (Kroll) complied with all the requirements when he filed he affidavit and abstained from participation in any issue related to the Heritage property,” the statement continued. 

Ethics attorney Cris Feldman told KXAN the city’s interpretation of the state’s dislcosure law is wrong. “It’s common sense, absolutely. The public shouldn’t be forced to go back and look back through years of records to figure out, oh…John Q has a conflict that he disclosed in 2014 and it’s still applicable today.” 

“Every time that governmental entity takes an action affecting the personal, private financial interest of that council member, school board member, TIRZ member–it has to be disclosed at that time and they need to abstain or recuse from a vote,” Feldman said.   

“They know better. And, for anyone to suggest that this is an innocent mistake or that we should look the other way, and this is a minor matter, should think twice. Because, it’s this kind of conduct, this appearance that erodes public faith in our institutions and ultimately leads to a backlash of people taking more extreme views because they’re so cynical of government,” Feldman told KXAN.  

I think the whole thing should be put on pause and an investigation should be done, as to what the hell is going on there,” Feldman added. 

FOOTNOTE: One day after our investigation aired, the City of Dripping Springs sent a statement to KXAN. Read the complete statement here: 

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