Coppell Chronicle Vol. 1, No. 21

Cities Sue Comptroller Over Taxes • Are You Ready for Some Volleyball? • Police Story Has Chilling Ending • Dirt Turns for Housing Development

Jul 18, 2021

Cities Sue Comptroller Over Taxes

Coppell and at least three other cities are suing the Texas comptroller over impending changes to the way sales taxes are distributed in the state.

Coppell, DeSoto, and Humble jointly filed a lawsuit against Comptroller Glenn Hegar on Tuesday, one day after Round Rock filed a similar lawsuit of its own.

In early 2020, Hegar proposed that a sales tax collected on an online transaction should go to the city where the buyer resides, rather than the city where the seller is located. According to the lawsuit, Coppell would lose up to $26.7 million per year if the changes take effect on Oct. 1 as proposed. Those dollars generated by Amazon, The Container Store, Staples, and other businesses on the industrial side of town represent more than 18 percent of the city’s total annual revenue.

The joint lawsuit says Humble and DeSoto would each lose about $6 million per year, which equates to 46 percent and 6 percent of their respective annual revenues. The lawsuit filed by Round Rock, the home of the Dell computer company, says it would lose $30 million annually.

The comptroller is the primary steward of Texas’ finances, acting as the state’s treasurer, accountant, and tax collector. Hegar, a Republican, won the job in 2014 and was re-elected in 2018.

“The lawsuits make the same arguments that were presented to my office during the rule-making process,” Hegar said in a statement released by his office. “The arguments are addressed in the preamble and in a prior op-ed that I have written. The arguments were also presented to the Legislature, and the Legislature chose not to change our rules.”

That’s one way to put it. Another way is to say that the Legislature did not pass a bill filed by Rep. Morgan Meyer (R-University Park) in March 2021 that would have turned Hegar’s proposed changes into law.

(For more on that bill, see the May 2 edition of the Coppell Chronicle, which includes links to videos of City Manager Mike Land and former Mayor Karen Hunt testifying against it.)

Hannah Cook, Coppell’s Chief Communications Strategist, told me this is the first time the city has been involved in a lawsuit against a state agency or official — as far as the current city staff knows.

The lawsuit filed by Coppell, DeSoto, and Humble says the three cities “serve as regional, if not national, distribution centers.” Given their locations near airports, interstate highways, and/or railroad lines, the cities adopted policies to encourage the development of warehouses. The lawsuit says such facilities require infrastructure and services that are more expensive than those geared toward homes and retail businesses.

“Coppell, Humble, and DeSoto made these policy decisions in reliance on the statute and the Comptroller’s longstanding interpretations of it, that the costs would be more than covered by the local sales tax generated from those operations,” the lawsuit says. It also says Hegar tried to change the status quo by “regulatory fiat, not a legislative change.”

In his aforementioned op-ed, Hegar says three times that he was trying to clarify the rules regarding online sales. The cities’ lawsuit uses the term “gaslighting” in reference to that. “The change is not a clarification — it is a complete reversal,” it says.

The lawsuit makes many arguments for why a state court in Travis County should declare Hegar’s proposed changes invalid. One argument is that Hegar’s proposal says an order initiated via a website should not be considered to have been received at a business’s physical location, while orders initiated via email, the postal mail, or phone calls should be. The lawsuit says Hegar “provides no rational explanation” for the difference.

“The absence of an explanation is predictable,” the suit says. “There can be none.”

Hegar’s op-ed included this explanation: “A business may establish a single facility, like a ‘customer service center,’ and claim that facility receives internet orders, even though the internet orders are handled and shipped from a separate fulfillment center that may not even be in Texas. Under this arrangement, all the local online sales tax revenue from across the state ends up in the community with the ‘customer service center,’ regardless of where the item is delivered or picked up in Texas.”

Hegar’s op-ed also pointed out that many cities have deals with the companies within their borders that either reduce their property taxes or send a portion of the sales taxes they generate back to the company.

“That means you and all the other taxpayers who thought they were supporting local needs are actually subsidizing a business that may only have a minor footprint somewhere far from your schools and roads and parks,” Hegar wrote.

For example, in 2016, when Amazon was considering opening a second fulfillment center in Coppell, the City Council approved two deals with the online behemoth. One granted Amazon a 75 percent rebate on its property taxes for 10 years. The other called for Coppell to make 20 annual payments to Amazon representing a portion of the sales taxes the company generates each year.

Are You Ready for Some Volleyball?

Gymnastics, swimming, and track typically draw the most eyeballs during the Summer Olympics, but many Coppell residents will be focused on women’s volleyball, because one of our own is representing the United States in that sport.

Last month, Chiaka Ogbogu was named to the U.S. team for the Tokyo Games, which begin this week. Although this will be the Coppell High School graduate’s Olympic debut, it will not be her first international competition. In 2018, Ogbogu was on the U.S. team that won gold in the Pan American Cup. In 2019, her squad finished second in the World Cup.

(That’s her getting some air during a 2019 match against China. Photo courtesy of the International Volleyball Federation, or FIVB.)

During a recent phone interview, I asked Ogbogu how she expects the Olympics might differ from those experiences.

“It’s obviously just a bigger stage,” she said. “Something that’s comforting to know is that the game is the same, so as long as I remember that, I should be fine.”

Ogbogu started playing the game as a seventh-grader at Coppell Middle School North. She tried out for the North team, she said, basically because all of her friends did. At first, she wasn’t very good.

“I didn’t have the skill base down,” she said. “I was tall and long, but not very coordinated, which is not a great combination for volleyball.”

Perhaps because she was always one of the tallest kids in her age group – she’s 6 feet, 2 inches today – the coaches at North encouraged her to play club volleyball in addition to the school team. Although Ogbogu was intimidated at the time, her experience with Texas Advantage Volleyball opened her eyes to how the sport could be a long-term opportunity. She’s still playing it full-time at the age of 26.

“I’ve been blessed enough that every opportunity I’ve had since graduation has had to do with volleyball,” Ogbogu said.

During her junior and senior years at Coppell High School, her Cowgirls squads captured back-to-back Class 5A state championships. That success paved the way to a volleyball scholarship from the University of Texas.

The Longhorns made it to the national semifinals in Ogbogu’s freshman and sophomore seasons, and they lost to Nebraska in the national championship match when she was a junior. Ogbogu holds the Texas record for blocks in a career.

Since leaving Austin, Ogbogu has played volleyball professionally for two clubs in Italy, one in Poland, and most recently, Eczacıbaşı VitrA, a club based in Istanbul, Turkey. When I asked how many languages she speaks by now, she said with a laugh, “Fluently? One. I can get by, barely, with some Italian.”

Ogbogu’s parents, Henry and Victoria, are natives of Nigeria who were living in New York when she was born. They moved to Texas shortly thereafter and still live in Coppell, where they raised Ogbogu and her two younger brothers.

“I’m really grateful that I grew up in a town like Coppell, where I’m getting support from people I don’t even know or people I haven’t seen in years,” she said. “It’s a testament to the kind of city I grew up in.”

Team USA’s first match is scheduled to start at 9:05 p.m. Central on Saturday. Click here to download a PDF of the complete schedule, with notes on which TV networks will show which matches.

Police Story Has Chilling Ending

On Wednesday, for the second time in four weeks, residents of northeast Coppell reported via social media that they heard flash-bang grenades and saw police using the Lakeside Elementary parking lot as a staging area.

When I contacted Officer Paul Gonzales, who speaks for the Coppell Police Department on Facebook, to ask what was up, he told me the Dallas Police Department served a warrant, but I would need to get more information from them.

When I contacted the DPD, I got an email from Senior Corporal Brian Martinez that made me laugh. He wanted to know if I could provide a block number and a specific time of day. I stopped myself from writing back with my knee-jerk reaction: “Dude, I already said Coppell on Wednesday morning. How many houses are y’all busting into over here?” Instead, I respectfully told him all of the information I was able to glean from Facebook and Nextdoor.

His response was no laughing matter: Martinez told me that the DPD’s vice unit, assisted by its narcotics unit and Coppell police, executed a search warrant on Laguna Drive as part of a human trafficking investigation.

Human. Trafficking.

“This investigation is still ongoing, and no further information will be released at this time,” Martinez wrote.

Dirt Turns for Housing Development

A couple of readers have emailed me recently about the construction activity they've noticed on Sandy Lake Road, east of MacArthur Boulevard. I've watched enough City Council and Planning and Zoning Commission meetings to know the work is related to Blackberry Farm.

Blackberry Farm is a long-gestating housing development that Holmes Builders has had in the works since 1999. Plans have been denied and delayed for various reasons over the years, but this past January, the City Council approved an ordinance that allows the development of 74 single-family lots and nine common-area lots on nearly 55 acres.

I spoke to developer Terry Holmes yesterday, and he said what’s happening at the moment is just site work or “earth disturbance.” He said about half of the 55 acres is being raised to place it above the floodplain.

Holmes obviously knows that residents of Hollywood Drive to the west have concerns about flooding, because he mentioned a “100-year flood,” and the fact that FEMA has signed off on his plans, before I could bring those topics up.

“We can’t raise the elevation of the water one-hundredth of an inch,” he said. “We’re not going to cause any harm to anybody.”

Blackberry Farm will be accessible only via Sandy Lake. The 74 houses will be on one of three streets: Blackberry Drive, Persimmon Drive, or Windmill Drive. There will be a farm house at the entrance to the subdivision, but the ordinance says it cannot be used or occupied as a residence or business “except occasional sales of seasonal botanical gardening materials.”

A quick glance at the Coppell ISD attendance zone boundaries shows that any students residing in Blackberry Farm would go to Lakeside Elementary. I asked Holmes for his optimistic, blackberry-pie-in-the-sky estimate of when the first residents would move in. He said Holmes Builders plans to start building homes in about a year, after the streets and other infrastructure are in place. The houses should take 12 to 14 months to construct.

“We really haven’t put it out to the public yet, but a lot of people know about it and want to put be on the list to select a lot,” Holmes said.

In other news …

▪ Brianna Hinojosa-Smith is Coppell’s new mayor pro tem, after a unanimous vote by the City Council on Tuesday. She succeeds Mark Hill.

▪ The City Council also unanimously approved the plans for the new Let It Shine boutique that I detailed in the June 20 edition of the Coppell Chronicle.

▪ Remember how confused I was in the June 27 edition of the Coppell Chronicle about the Irving Rambler being Coppell’s official newspaper? I’m even more confused after seeing this in today’s Coppell Gazette: