County moves to secure funds for failed Lake Towns development
(Post sponsored by Tinsley Title, Holt Wrecker, R&R lawn specialists, Gibson Pharmacy.)
With no roads built and lot owners already at risk, Henderson County Commissioners stepped in Tuesday to protect taxpayers by claiming $1.7 million set aside for the stalled Lake Towns at Lake Palestine development.
The 258-acre project was approved in September 2024 with plans for 149 high-end waterfront lots. The developer was required to secure a $1.7 million letter of credit for roads and streets, along with a performance bond for other infrastructure. But commissioners said “zero construction of any streets or roads” has taken place.
The letter of credit is set to expire Sept. 9, just eight days before the construction deadline on Sept. 17. Commissioners called this an “anticipatory breach” under the Texas Uniform Commercial Code.
A change in state law in 2019 allowed developers to sell lots after final plat approval without building infrastructure first, as long as bonds were in place. That left counties in a difficult position when projects stalled.
“You can lay this at the feet of the Texas Legislature,” County Judge Wade McKinney said. “They designed this to alter this process, effectively returning development practices to the 1970s.”
McKinney also said “developers are not friends to the taxpayer.”
The court weighed several options, including taking no action, filing a lawsuit, or drawing on the letter of credit. Commissioners expressed concern that the $1.7 million would not cover the full cost of building the roads and that lot owners could sue the county if nothing was done.
In the end, the court voted unanimously to draw the funds. The money will not be used to build roads immediately but will be placed in the registry of the court for safekeeping.