Sunday, June 15, 2014

San Angelo: Where Streets Have No Maintenance

A Standard Times' editorial discouraged the use of half-cent sales tax funds, a rapidly increasing pot, for street repairs.

Only a small portion of the money has ever gone to economic development
What's the impact of economic development monies the last fifteen years?  How much has been awarded since 1999 and what's the return on those dollars?  We know federal, state and local economic development funds went to Martifer-Hirschfeld with few promises coming to life.

City Council had the Hirshfeld incentive on its agenda for April 15, 2014, but moved the item to Executive Session.  After asking for the update on Hirschfeld's performance on this incentive, the City petitioned the Texas Attorney General to keep this information nonpublic.

Back to the editorial:

Few companies relocate to San Angelo just because their leaders have heard what a wonderful city it is. It takes money to spread the word about what the city has to offer and to put together incentive packages that make moving here worthwhile.
Texas Pacifico Railroad moved from Brownwood to San Angelo in 2011 without an economic development package.  It's expanded greatly due to demand for its products and services, serving growing businesses in our region.

Interestingly, earlier this year City Council turned down an economic development grant award to Texas Pacifico for moving its headquarters, despite a strong recommendation from the Development Corporation.

Texas Pacifico has a clear role in economic development and new City Councilwoman Elizabeth Grindstaff, a Texas Pacifico Vice President, recently shared her recommendation to not divert a portion of economic development funds toward streets.

The Standard Times editorial compares San Angelo to other cities spending:

San Angelo always has underfunded economic development compared to the amount other cities invest. Too many people regard it as an afterthought, something to pay for if there’s money left over after funding everything else.

The City rarely funded everything else.  Ask city workers how prior commitments to pay at competitive levels turned out?  Police and fire fighters find themselves in a deja vu on city pay.  First it was City Manager Tom Adams, then Harold Dominguez and now Daniel Valenzuela.  Each has promised to pay competitively sometime in the future. 

City leaders underfunded public infrastructure, streets and water lines for the last fifteen years.  That's why City Council faces huge bills, $100 million for new water mains in North San Angelo and $155 million for streets.

The city has other huge bills on the horizon, expanding water resources through a regional partnership, funding the city's huge pension liability and likely a nasty surprise for employee/retiree health insurance given the large number of high dollar health claims.

Sometimes a vibrant economy happens without effort and money, and San Angelo is experiencing that with the oil boom. But everyone knows that won’t last. What will last is an ongoing process for generating more economic activity — but we have to pay for it.

San Angelo's vibrant economy is happening due to the location of geological formations bearing oil and natural gas.  With new people moving to town rents have risen dramatically.  A recent spate of rains kept us from cramming more people into a town ready to run out of water.

Economic development is akin to rain.  City leaders should want a healthy level of it.  Our economy is growing now and predictions are for healthy drilling activity for a decade or more.  That means rain is here and falling.  How do you feel when you see your neighbor's sprinkler system going in a storm?  That's one way to look at increasing economic development funds during our oil boom.

Economic development, at whatever level, should help San Angelo achieve our vision.  What are city leaders trying to achieve?

By the year 2027, San Angelo will measurably be the most desirable mid-sized city in Texas.

That vision is buried in the City's Comprehensive Plan on page 48.  It was amended in early 2011.  The vision is front and center in the City's Annual Operating Budget for 2013-14, but I don't think I've heard a leader state it on a regular basis.  The vision entails "growth," which is why the paper believes a continued increase in economic development funds is essential.

The vision intersects with San AngeIo's historical underinvestment in its people and infrastructure.   Therefore, I expect city leaders will ask what departments are essential and what level of services are appropriate and affordable.

COSADC farms out much of their work to the Chamber of Commerce.  They recently paid for an outside firm's software to conduct economic development impact analyses and proposed to hire a realtor to push land sales in the city's Industrial Park. When given the choice to make or buy, i.e. conduct the work internally or contract it out, new Economic Development Director Tony Pena chose to buy it. 

So far, San Angelo economic development packages have generally avoided tax abatement.  Should that change one has to wonder how the city will get money for streets from growth (increased taxes) if those increased taxes are waived?

Nearly everything is looking for a funding source, so economic development should be nervous.  It's about to get interesting in City budget discussions.

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