Saturday, December 12, 2015

San Angelo's Economy: Expansion & Layoff


San Angelo's economic contraction occurred shortly after its rapid expansion.  Energy companies dominate the list of layoffs/closings after comprising a good chunk of corporate expansions during 2013-2014.

Half cent sales tax proceeds dropped 8% year over year for November.  Those are a few of the statistics in the Development Corporation's December board packet.

Tuesday, December 08, 2015

Funding San Angelo's Development Corporation


The City of San Angelo Development Corporation is funded by the half cent sales tax, which had been in decline for five of the last six months.  The first month of the new fiscal year found sales tax collections down over 14%.  COSADC expected sales tax revenues nearly $50,000 higher than occurred.

The oilfield bust came home in November when National Oilwell Varco announced it would leave San Angelo eliminating 120 jobs.  The price for a barrel of oil hits the lowest mark since February 2009.  Oil drilling rig counts continue dropping.

City Council recently asked COSADC Executive Director Roland Pena to explain the addition of a new staff member.  What will happen if sales tax revenues continue to fall far short of budget? 

Update 12-12-15:  November sales tax proceeds for COSADC came in (8.02)% below last year.  The estimated sales tax budget is short $137,077 and the budget called for a slight decline.  Sales tax collections are roughly $175,000 below a year ago.

Sunday, December 06, 2015

City Council Enacts Plan for 55% Water Rate Increase


City Council discussed a 55% water rate increase over a five year period, approving an initial 11.5% increase in rates for 2016.  Some Council members seemed unclear as to recent water bill increases, a 48% rise in 2011 to fund the Hickory pipeline and the later addition of stormwater and pumping fees.

Four years ago City Council was clear on their motivation.

Citing a desire to encourage conservation, council decided to generate 75 percent of the revenue needed to make payments by increasing water usage rates by $1.31 per 1,000 gallons and 25 percent of the revenue needed to make payments by increasing the base usage rate by 29 percent.
Citizens responded to council's directive cutting the average usage from 8,000 gallons per month to 4,000.  Assistant City Manager/CFO Michael Dane spoke to this possibility in 2011,

As residents cut back on water use, especially as water usage restrictions have tightened under the city's drought contingency plan, Dane said, sufficient revenue to pay for the debt service payment may not be generated, which would result in the city having to impose even higher rate increases.

"That's a wild card," Dane said of "how strong the water consumer reaction is" to cutbacks and drought.
If citizens cut back usage so dramatically why is the average water bill higher than projected in 2011? 
How did the 2011 water rate increase multiply beyond what staff projected?
 

How might Council's new promises look in five years?

It's hard to have confidence in a group that can't or won't explain why the last round of fee increases hit citizens harder in the pocketbook than promised.  This is our future.

What will bills and usage look like come 2020?  The "Dane prediction" happened once. Could it happen again?

Monday, November 30, 2015

City Goes Logomania


San Angelo City Council will consider allowing citizens to vote on new proposed logos to use for city business.  It's not clear if the current logo will be a possible vote.  Citizens kept an elected police chief.  What might they do with a logo?

Update 1-6-16:  The tally is in and the new logo is the city's old logo!

Friday, November 20, 2015

Water Bills Higher Despite Conservation

The City of San Angelo held a water rate forum Tuesday evening.  One slide showed the city's average water bill.

I wondered how the current average bill compared to the last time the City raised water rates in 2011.

Stormwater and Pumping fees were added since 2011.  It's been eighteen months since the city employed pumps at Twin Buttes to move water. The city has numerous buckets through which it moves water monies.

There are discrepancies between more than the last water rate increase and the current average water bill.  The City's Comprehensive Annual Financial Report (CAFR) for the last three years shows more water revenues and less water expenses than the consultant's figures.  These differences should be explained to the interested public.

I found it interesting that citizens cut their water use by 50% since 2011.  What assumptions does this study have for people responding to the conservation incentives highlighted in the session's question and answer period?  If citizens cut water use the last time fees rose dramatically might they do so again? 

Monday, November 16, 2015

San Angelo's Sales Tax Picture


San Angelo received less sales tax money than the prior year in six of the last seven months.  The decline accelerated in October to double digits.  San Angelo's Development Corporation board packets paint a different picture than San Angelo Live's piece based on a Chamber of Commerce interview.  What's a few months among friends?

Update 11-19-15:  The employment picture got bleaker with the loss of 120 jobs from National Oilwell Varco by the end of January 2016.  The multiplier effect cuts both ways. 

Sunday, November 15, 2015

Water Rate Increase: Study Data vs CAFR

Raftelis Financial Consultants' water revenue and expense data does not match the water revenue and expense information in the City of San Angelo's award winning Comprehensive Annual Financial Reports(CAFR) for the last three fiscal years, 2012-2014.

The 2012 CAFR shows considerably more revenue for the water fund, some $5 million more than Raftelis' data.

It also reveals a healthy water net income of nearly $8.5 million, way more than would be inferred by looking at Raftelis' two charts.

The 2013 CAFR shows the impact of the drought on water revenues, down $2 million from the prior year.

Water net income fell by half from 2012.


The water revenue situation held stable according to the 2014 CAFR.

 But water net income rebounded to nearly $10 million, the largest net margin of the three years.
.
The $5 million gap in 2014 expenses, Raftelis $20 million vs. the CAFR's $15.5 million, raises questions as to why the significant difference?

There is no 2015 CAFR to view as the fiscal year just ended.  The city does not post its preliminary annual financial statements or cover how the city closed out the year with Council.  Thus there is nothing for the public to view.

There are significant differences in the water revenue and expense pictures between Raftelis and the city's award winning audited financial statements. 

“This recognition should give our citizens a high degree of confidence that the City of San Angelo manages their tax dollars efficiently, effectively and transparently,” Finance Director Tina Carriger said. “That is always the aim of the Finance Department and all of the other City operations with which we work.”
I hoped Water Chief Bill Riley would speak to these differences in his November 3rd presentation to council.  He didn't, but maybe he will.

Update 11-19-15:  SanAngeloLive reported few citizens turned out for the initial public meeting to explain water rate increases.  

Wednesday, October 28, 2015

Water Revenues for 2014: Tale of Two Slides


San Angelo's City Council will consider increasing water rates at its November 3rd meeting.  The consultant's presentation has a slide on water revenue for the last four years (see above).

The City's FY 2014 Comprehensive Annual Financial Report (CAFR) paints a different, more robust picture of water revenues.
That's a difference of $6 million in water revenues for 2014.  Which picture is true?  It seems an important question to ask before Council meets to address the issue.

Saturday, October 24, 2015

Council Paves Way to Implement Fugro Street Study


Ruben Williams of Fugro Roadware confessed that last week's presentation was his first to a City Council.  His message was not a surprise to people who've driven San Angelo's streets the last two decades.  Williams said in describing San Angelo's pavement condition index scores:

"This puts the city with not really the best road condition/  This really is not something that happens overnight.  Something with this, it's from decades of deferred maintenance."

"Just to put this into perspective, this is one of the lower scores I have seen."


The study showed San Angelo's major roads are generally in better condition than minor collectors and local streets.  Unfortunately that isn't saying much given the significant amount of work and money it will take to restore deteriorated streets.


"The current funding of $3.5 million would be sufficient if your road network was in the 80's (pavement condition index wise).  You're about half of what I'd recommend as a minimum.  Then with as much focus on preventive if you can and with any excess I recommend doing as many mill and overlay projects as possible."
Fugro's Ruben Williams echoed former City Engineer Clinton Bailey, who introduced the idea of a preventive street maintenance program to City Council in a February 2013 strategic planning session.    Both Bailey and Williams stressed the need for timely intervention that prevents streets from entering a state where they need more costly reconstruction.  Both encouraged adequate funding and making wise decisions that lever those very resources.

Oddly the two men who supervised the abject deterioration of San Angelo's city streets, Executive Director of Public Works Ricky Dickson and Shane Kelton, will be charged with bringing them back.

Consider the minutes from October 21, 2014 when Council approved hiring Fugro:

Operations Director Shane Kelton commented the last study was conducted ten years ago. He informed no funds were budgeted for that particular project study and now have experienced an additional ten years of road repair. 
Ricky Dickson led streets nearly the whole decade in several different roles, most of that with Kelton as his right hand man.  A decade ago this pair had the opportunity to sound the siren on street maintenance.  Neither did.

Ironically Kelton said to council with Fugro's Williams at his side:

"I'm going to be up here every budget season trying to beat you up to give me more money for maintenance."
City Council seemed ready to unlock the vault doors for streets.  Many council members expressed a desire to fund street rehabilitation/reconstruction at the highest level proposed.

Even at the $16 million per year level with $3.5 million in preventive activities San Angelo's roads are projected to continue to deteriorate.  Look at how the orange to red section of the chart below grows from now until 2020.  That's the group of roads needing the most work. 


The $16 million per year hits mostly major roads, leaving untouched the vast majority of San Angelo's bad streets. Over half of the $16 million per year would go toward reconstruction, the most expensive intervention possible.


In discussing funding the city could spend $8 million per year on roads and not raise taxes or impact its bond rating.  Last year council heard borrowing more to fund road rehabilitation could require a tax increase.

Fugro's Ruben Williams gave citizens a state of address on San Angelo's roads.  Nearly everything about it was a deja vu.  The difference was the clarion call for action to begin digging out of our decades dug hole

Thursday, October 08, 2015

JMG's San Angelo Standard-Times to Join Gannett


San Angelo's Standard-Times will experience a new owner for the second time since Scripps jettisoned its newspaper assets in favor of television.  The Standard Times reported on their ownership change:

Journal Media Group was created in April 2015 after The E.W. Scripps Company and Journal Communications merged their local television operations and spun off their respective newspaper assets into an independent, publicly-traded company based in Milwaukee.
Correction by blogger:  JMG's stock began trading publicly on March 23rd, 2015 at $12.00 per share.  The stock lost nearly 20% its first day trading. Ticker symbol JMG had a rough time until the Gannet deal was announced. 


Gannett's buying JMG for $12 per share, exactly where the company initially traded.  As the deal is expected to close in the first quarter of 2016, JMG will have been an independent company for less than a year.

Standard-Times employees must be exhausted from change fatigue.  Readership plummeted by over 50% the last two decades as the company lurched from strategy to strategy to stem reader loss.  The paywall, implemented in 2013, failed to increase readership as top management theorized.   That's the same group that spun off JMG, then inked the deal with Gannet after a mere six months as a public company. To think these are the leaders of a knowledge business.

Here's what awaits the Standard-Times team


For those having trouble leading the strategic initiatives line:


The lurching continues.  Hold on folks!

Sunday, October 04, 2015

Are City Fees for Animal Registration Going Away with Microchipping?


At the last City Council meeting Animal Shelter Director James Flores said the City tag will be replaced with a microchip.   ConchoValleyHomepage reported:

After much debate the city voted initially approving mandatory spay or neuter and micro-chipping of pets. the micro-chips will replace city tags.
Many citizens assumed the fee associated with the tag would disappear as well.  The draft City Ordinance makes clear that this is not the case.  Staff, without the advice and consultation of the Animal Shelter Advisory Committee, made no changes from current ordinance in the following sections:

Sec. 3.02.001 Registration required
Sec. 3.02.002 Expiration of registration
Sec. 3.02.003 Deadline for registration
Sec. 3.02.004 Registration fee
Sec. 3.02.005 Issuance of tag
Sec. 3.02.006 Duty of veterinarian issuing tags
Sec. 3.02.007 Annual or lifetime registration
Sec. 3.02.008 Records retention
Sec. 3.02.009 Failure to pay annual registration fee; proof of ownership
Sec. 3.02.010 Exemptions
Based on City Council feedback staff updated language in Sec. 3.02.011 which deals with "Selling or giving away animals."

Clarification of registration and the tag requirement would help the public understand exactly what is being proposed.  It would help if ordinances clearly spoke to those changes before Council approves anything.  We'll see if that happens on Tuesday.

Saturday, October 03, 2015

Council to Nominate TGC Appraisal District Board Members


The last item on San Angelo City Council's October 6th public agenda is the nomination of board members for the Tom Green County Appraisal District.  Homeowners know the creep in appraisal values that have hit residential real estate since our local economy boomed, then un-boomed.  Did commercial real estate values rise similarly to keep up with actual sales prices?

The City of San Angelo inked a deal to buy the First Financial Bank building on the corner of Bryant and Beauregard for nearly $1.6 million.  City Manager Daniel Valenzuela spoke about the purchase:

“The local real estate market is ultra-competitive,” Valenzuela said. “Almost every other site we considered for a police station over the past three-plus years was purchased before we could make an offer. We feel fortunate to have secured perhaps the best site downtown San Angelo could offer at what we believe to be a reasonable cost."
The appraised value of the 301 W. Beauregard building is $225,930.  The purchase price is a mere 602% premium on the county's appraised value.   The appraisal changed every year since 2011 so the low number is not from inattention.

Why would this building have such a large differential between appraised and market value?  There are companies who work to lower commercial real estate appraisals.  Paramount Property Analysts has a division that does just that.  Paramount lists First Financial Bankshares as a client.

No matter the reason the City missed out on years of property tax receipts from an appraised value closer to market.  This raises a question.  Is the First Financial building on Beauregard an isolated case or common practice in San Angelo?  That's for the current Tom Green County Appraisal District Board and its successor, about to be appointed.

Note:  Another item on the agenda is public hunting at Twin Buttes Reservoir.   Does anyone else recall Council approving a Master Recreation Plan in May 2013?

Update 10-4-15:  Austin has a fight over commercial real estate tax appraisals.  The Travis County Tax Appraisal District attorney said "commercial property appraisals are within 90 to 110 percent of the market value. A council-commissioned study — which the district has said is unreliable — said 2015 commercial appraisals had a median undervaluation of 27 percent." Florida has a similar fight over commercial property valuations.

Update 10-8-15:  A Texas real estate man noticed the huge commercial real estate tax breaks companies get, directly and indirectly.  As a result residential property owners end up paying more than their share.

Sunday, September 20, 2015

City Engineering Drought Results in $1 Million Award


San Angelo's City Council approved an indefinite quantity-indefinite delivery contract for engineering services up to $1 million for major projects involving street and water line upgrades and replacement.  City staff proposed narrowing the list of firms to five.  Council disagreed and instructed staff to consider using any of the ten, which included two local firms, KSA Engineers and SKG Engineering.

The interaction between Russell Gully of SKG Engineering and new City Engineer Russel Pehl made me wonder if there was more underneath the surface.  I learned Pehl once worked for SKG Engineering, prior to his joining the City as a Water Utilities Engineer.  From there Pehl became City Engineer, where he now stands to serve as a general contractor for engineering services his department cannot provide.  The City gave him a $1 million checkbook.  It will be interesting to see how he spends it and if he sends any of it to his old employer.

Grindstaff Concerned about Demolishing Historic Building

San Angelo City Councilwoman Elizabeth Grindstaff expressed concern about the destruction of a historic building in downtown San Angelo and the City approving $75,000 in TIRZ funding for that very purpose.  The building at 236 W. Beauregard is part of the Butterfield Building complex.  City staff stated the building had become a nuisance, occupied by vagrants and drug abusers.

That certainly described the Roosevelt Hotel when I moved to San Angelo in 1994.  Shannon Medical Center effectively barricaded the building, using it for storage.  The Roosevelt was not destroyed and has a good chance of returning to downtown as a viable entity.  The building currently under consideration for demolition is shown below:


Grindstaff's other concern regarded the public footing much of the bill for demolition in cases where the owner failed to maintain the property.  Butterfield Plaza, Inc. owns the complex.  James and Debbie Chiu of Odessa, Texas are listed as officers of Butterfield Plaza.  They also own several restaurant companies in Odessa.


ERA Realtors' website shows the Butterfield complex for sale for $1.5 million. City documents indicate the cost of asbestos removal and demolition to be $231,000.  The TIRZ application submitted by the building's owners refers to the building as "abandoned," while staff call it "condemned". Excerpts from the TIRZ application state:

We are asking for help in demolishing the abandoned building located at 236 W. Beauregard Ave and turning it into a parking lot. The property located next door is the Butterfield Plaza I and II buildings. We are currently renovating the Butterfield buildings with a scarce budget, but have already brought in over 8 new business into area within the past year. One of the buildings don't have any tenants and will require a significant amount of money to remodel 

First, at it's current state, the apartment is depreciating to a dangerous state. It would be too costly to try and rehab the complex. It is safer to tear the property down and turn it into a parking lot that will create more open space to showcase the surrounding structures, but add utility at the same time. By helping fund this project, we will be enhancing public safety, improving vehicular infrastructure, and beautifying downtown.
Tom Green County Tax Appraisal District records show the Chiu's purchased the Butterfield complex in 1995.  The buildings deteriorated the last twenty years under their ownership.   The city, through its TIRZ structure, will help rid the community of one historic eyesore.  The project has a final hurdle before the Design and Historic Review Commission.  Then it will be history. 

Monday, September 14, 2015

City Council Bypasses Animal Shelter Advisory Committee in Spay/Neuter Ordinance


San Angelo's City Council will hear a proposed Spay/Neuter Ordinance in their meeting tomorrow without the advice and consultation of the Animal Shelter Advisory Committee, which has had its last two meetings cancelled.

The Animal Shelter Advisory Committee makes recommendations regarding Animal Services policy to the City Council.
There is no opportunity for the committee to advise Council during their September meeting as the ordinance is not on their agenda:

CONSENT AGENDA 
1. Consideration of approving the June 18, 2015 regular meeting minutes.

III. REGULAR AGENDA: PUBLIC HEARING AND COMMENT 
2. Requirement for ASAC board members to visit and tour the shelter at least once a month
3. Update on cat colonies. 
4. ASAC role on increasing the number of FTEs at the Shelter. 
5. Consideration of any Future Agenda Items. 
6. Adjournment.
Also missing is the volunteer program management said in June it needed approved ASAP.  However, Animal Shelter Advisory Committee board members have two new tasks to perform under management's orders.  Rather than recruit volunteers who expect a two-way relationship, management wants to increase the number of FTEs, hands they can command and control.  It will be interesting to see how this gets twisted into an ASAC role.  It will take someone slick to accomplish this.  

Sunday, September 13, 2015

County Indigent Health Remains Firmly in Black


Tom Green County's Indigent Healthcare Program is not in danger of overspending despite assertions from Treasurer Diana Spieker that illegal immigrant healthcare bills pose a huge threat. 

Tom Green County's 2016 budget shows nearly $376,000 for Indigent Health and $1.8 million for Transformational Waiver DSRIP IGT, which levers federal Medicaid funds.   These two expenditures total $2.18 million of the $2.88 million the state requires the county to set aside for Indigent Health, leaving a $700,000 surplus.

The County's $1.8 million turns into $3 million for local providers after the federal match.  Shannon Medical Center receives 95% or nearly $2.9 million, while SACMC gets 5% or roughly $150,000.  These percentages are a change from 1998-2000 era when Shannon provided 80% of the County's Indigent Health, while Community delivered 20%.  In exchange for these funds both hospitals agree not to bill the Indigent Healthcare program for care provided within their system.  The fund pays independent providers with its roughly $200,000 patient care budget. 

Spieker talked about the time when the program needed state help, ably provided by Representative Rob Junell, Chair of the Texas House Budget Committee.  She did not mention the volunteer group of local leaders who helped put the Indigent Healthcare program on a better course.  They included Shannon's Insurance Executive Marinan Freeman, and Community's Chief Financial Officer Ed Romero.

This group recommended a series of coverage changes that would enable the program to spend its resources more effectively.  The last year Indigent Health needed state subsidies occurred in 2000.



Budget Spent Surplus/Deficit (-)
1998  $      1,266,266  $     1,612,048  $           (345,782)
1999  $      1,282,296  $     1,969,953  $           (687,657)
2000  $      1,325,920  $     1,545,253  $           (219,333)
2001  $      1,461,856  $        925,307  $            536,549
2002  $      1,505,039  $     1,144,784  $            360,255
2003  $      1,505,039  $        700,032  $            805,007
2004  $      1,635,235  $        582,773  $         1,052,462
2005  $      1,750,555  $     1,028,674  $            721,881
2006  $      1,920,942  $     1,288,048  $            632,894
2007  $      1,920,942  $     1,221,172  $            699,770
2008  $      1,920,942  $     1,327,742  $            593,200
2009  $      2,039,178  $     1,806,595  $            232,583
2010  $      2,015,580  $     1,358,386  $            657,194
2011  $      2,086,095  $     1,432,062  $            654,033
2012  $      2,227,722  $     1,311,760  $            915,962
2013  $      2,339,750  $     1,203,472  $         1,136,278
2014  $      2,493,543  $     1,311,097  $         1,182,446
2015  $      2,788,617  $     1,597,798  $         1,190,819







 $       10,118,561

Since then it's been a cash cow, but the years under Treasurer Spieker have produced the greatest gains. It's hard to see how that's at risk with federal matching funds and existing provider contracts. 

Friday, September 11, 2015

Bold San Angelo


The Standard Times reported:

San Angelo is poised and committed to making strides in top five priorities set by the City Council two years ago: Water, streets, a police station, employee pay and development processes.

“Boldness isn’t charging forward blindly without a plan, and with a total disregard for financial responsibility,” Valenzuela said. “Boldness means making tough decisions now knowing there will be criticism for these efforts.”
Boldness is committing $4 million to a project not in the top five at the last city council meeting.  Boldness is also holding a series of strategic planning meetings outside council chambers, not recording and not sharing their deliberations with the public.

That's $4 million less for water, streets, the new police station, employee pay and the ever elusive development process. 

Wednesday, September 09, 2015

Treasurer Crying Wolf on Tom Green County Indigent Health?

San Angelo Live reported on concerns by Tom Green County Treasurer Donna Spieker the Indigent Healthcare Fund may run out of money due to high usage by illegal immigrants.  The piece stated::

At the present, Tom Green County spends an average of $2 million annually on indigent health care; currently, there are approximately 650 active clients.
The July 2015 Indigent Health report approved by County Commissioners shows the fund spending less than $100,000 year to date.  For over a decade the County budgeted 6% of its General Tax Levy, roughly $2 million a year.  It hasn't come close to spending it.

Tom Green County has enjoyed a massive surplus from Indigent Health.  It's not clear the County is even close to having one bad year, but if it did, some of the millions in the fund's longtime surplus should be considered for use. 

Monday, September 07, 2015

SAPAC Project Saved by City Auditorium's Historical Designation?


Assistant City Manager Rick Weise informed City Council that the new San Angelo Performing Arts Center could be constructed if the city mobilizes enough cash for the contractor's $10.7 million guaranteed maximum price.  Adding $800,000 in design fees the project needs $11.5 million in cash to proceed.  The project has 60 days from August 28th to garner the funds.  The City is kicking in $6.2 million:

Remaining half cent sales tax funding from prior COSADC award - $1.9 million
New half cent sales tax COSADC award - $1.5 million
New City Council funding awarded - $2.5 million (half from Hotel taxes, half from Trash Contract Royalty)
Insurance proceeds for roof repair - $300,000
Add SAPAC's $5 million in naming rights, as shown on the city presentation, and construction can start with a mere $300,000.

Weise hinted at the next big funding source, state and federal tax credits for historic preservation.  Texas tax credits will fund 25% of eligible rehabilitation costs, while the feds will pick up 20%.  That means 45% of the cost of rehabilitating the auditorium could be funded through tax credits.  Neither will pay for the costs of a new addition, a significant part of the project.

City Council has three meetings to get this project approved before the guaranteed bid expires.  

The (Texas historical preservation) tax credit is generally allowed in the taxable year that the rehabilitated property is placed in service or the project is completed. Unused franchise tax credit can be carried forward five years or transferred to another entity.
Whatever amount the project gets in preservation tax credits should be added to the total funding provided by the City of San Angelo.  It's the City Auditorium's age and character that qualify the project for historical preservation funding.

The hurdle to getting construction started is rather low.  Raising funds for the myriad of needs post construction is much larger.  That's another $2.6 million.

If tax credits can pay for a good chunk of the $10.7 million construction cost, that would free up existing funds for other purposes.  We'll see how much funding state and federal tax credits reduce the burden.



Update 12-1-15: The Standard Times reported:  "By extending the lease of office space, SAPAC could receive at least $1 million in historic tax credits."  Add another $1 million courtesy of the city.

Update 4-20-16:  Historic tax credits for the auditorium project will be at least $1.6 million.  For this to happen the city must increase its support of the project to SAPAC, so SAPAC can "spend" the money and be reimbursed via the historic tax credits.

Friday, September 04, 2015

SAPAC's Long Labor Continues


The Standard Times reported on efforts to bring to life San Angelo's Performing Arts Center in October 2011:

The coalition has raised $4.7 million in commitments from private donors and plans to raise a total $13.5 million to fulfill the vision, which includes upgrades to City Auditorium, a 300-seat theater in the warehouse, six ballet studios, offices and storage, rehearsal space and joint ticket facilities and a lobby big enough for parties.  The center is well on its way from vision to its projected completion in January 2014..
The auditorium languished as work went ahead on City Hall and infrastructure improvements to support the auditorium.

A project change order and planning issues have put the $9.1 million renovation of San Angelo City Hall and the "Old Library" building a few months behind schedule.

The project is being funded through a variety of sources: a $1.7 million bond backed by general fund revenue (i.e. sales and property tax and fees), $865,000 in stimulus funding, $974,616 from the federal Community Development Block Grant program and $7.5 million in new debt issuance.
That's over $10 million in funding without the auditorium.   Since 2011 not much has changed, other than the city kicking in an extra $4 million, $2.5 million from City Council and $1.5 million from COSADC.:

The project has an estimated price tag of $15.2 million under the supervision of Lee Lewis Construction Inc., about $1.8 million of which has been funded and completed.

About $7.1 million in funding is secure through tax dollars, fundraising efforts by SAPAC and a $2.5 million donation for naming rights. The city of San Angelo Development Corp. allocated $1.5 million for the annex project, ratified by the council Tuesday, leaving only the money put on SAPAC’s tab.

City officials are confident SAPAC can raise the $3.1 million.
SAPAC has sixty days to raise a good chunk of the $3.1 million. It will be interesting to see the final tally of private vs. public money for this project.  It's taken four years to get this far.  The projected opening is now Spring 2017.

Wednesday, September 02, 2015

MedHab Website Hefty Lift

MedHab took down their website in June 2013 with promises to construct something better.  Despite conducting two capital raises since that time a new website is yet to appear.

It's been three and a half years since MedHab CEO Johnny Ross promised City Council up to 227 jobs in return for a $3.6 million economic development incentive package.  I expect San Angelo city leaders want the silence broken soon. 

Tuesday, September 01, 2015

Six Days Produced $580,000 for OE Renewables Texas LLC


San Angelo's City Council rubber stamped the Development Corporation's recommendation of $583,814 in tax rebates for OE Renewables Texas LLC over an eight year period.  Neither body raised a question as to how OE Renewable's one primary job, characterized by the company as "mostly unmanned", qualified the company for this amount of public support

All companies receiving the abatements must meet the minimum job creation level of 5 new jobs and no less than $250,000 in new valuation in either real estate and/or personal property. Please note that tax abatements and rebates may exceed the percentages shown but must be considered on a case by case basis.
Neither asked how power generation qualified for tax rebates as it is not on the list of eligible areas.

Businesses eligible for the tax abatements are manufacturing, warehousing/distribution centers, home/regional administrative offices, data processing centers, and telecommunications services. 
Neither Council or COSADC's board asked how this deal would become a bonanza for the City of San Angelo after the first five years, as stated by Mayor Morrison in May of this year.


I imagine the rapidly declining cost of fossil fuels jeopardizes this project, even with significant federal tax credits.  Did OE Renewables threaten to pull the solar farm completely without public subsidies from the City and Tom Green County?

City Councilman Johnny Silvas had the misfortune of presiding over this vote, just as he did with MedHab's $3.6 million economic development incentive package on behalf of Mayor Alvin New.  We will see if this project comes to fruition like the long awaited MedHab production facility.   

Time will also tell if the city receives a penny of tax revenue from OE Renewables Texas LLC, especially as this developer plans to sell the project as an investment revenue stream.  The time to rubber stamp the $583,814 public subsidy began last Wednesday at COSADC and culminated today at City Council.  The public deserved some discussion, some exploration as to how this truly benefits the city.  The benefit to OE Renewables Texas LLC is clear.

Thursday, August 27, 2015

City Council to Consider $583,814 Solar Subsidy


During their September 1st meeting City Council will entertain a recommendation from the Development Corporation Board to provide a $580,000 economic development incentive to OE Renewables for a project that will add one long term job to San Angelo's local economy.  That's $73,000 per year in subsidy for a project adding a mere primary job.

The Development Corporation did not discuss how this project meets the city's criteria for tax abatement, as stated on the City's website::

Tax Abatements
The City of San Angelo and Tom Green County may provide personal property and real estate tax abatements for periods of 5 to 7 years. Abatement levels range from 20% to 75% and are determined by the number of new jobs created and/or the amount of new investment in the community. All companies receiving the abatements must meet the minimum job creation level of 5 new jobs and no less than $250,000 in new valuation in either real estate and/or personal property. Please note that tax abatements and rebates may exceed the percentages shown but must be considered on a case by case basis.


Businesses eligible for the tax abatements are manufacturing, warehousing/distribution centers, home/regional administrative offices, data processing centers, and telecommunications services. Tax abatements are not automatic; applications must be made to both the City Council and County Commissioner’s Court.
Maybe City Council will help the public understand why the city is making three exceptions.  One, the project is below the level of 5 new jobs.  Two, the term of tax rebates is eight years, exceeding the stated five to seven years.  And three, electric power generation is not listed as an eligible business.

If Council chooses not to illuminate these discrepancies, the solar power farm $580,000 subsidy will have been approved by two government bodies in less than seven days, a relative political flash of light.

Update 8-31-15:  The Standard Times noted this item will be on Council's agenda tomorrow but did not highlight the very temporary nature of the construction jobs provided by Ryan LLC, a partner for OE Renewables Texas LLC.  OE Renewables is providing one full time job for over $580,000 in public subsidy.

Wednesday, August 26, 2015

Solar Farm's Economic Development Saga


Economic Development Director Anthony Pena added information to the Development Corporation background packet regarding the $583,814 proposed economic incentive for OE Renewables Texas LLC.

The City of San Angelo and Tenant entered into a Lease Option Agreement which commenced on August 6, 2014 for 80 acres.
City Council approved this item after discussion in executive session.  The background packet made available to the public had no lease and no information on this item.  Mayor Morrison explained the idea to the public:

"What this is we are leasing ground.  This has come through COSADC, the Development Corporation.  There's a company that wants to come in here, put some solar generating equipment up and the City of San Angelo has negotiated a lease with them that would make it profitable.  We're not giving them any money.  We do have a graduated plan as for the lease for the first five years, while they build this thing and put it together.  Then it becomes a very lucrative thing for the City of San Angelo."
The City added more ground to the lease this year.
Then on May 19, the San Angelo City Council approved an amendment to the lease to add 63 additional acres.
City Council approved leasing additional acreage in the consent agenda with no discussion and no presentation.  A lease addendum in the background packet showed the city would receive a $75 grant fee for leasing 143 acres to OE Renewables over a multi-year period.  City staff provided no information showing how this project would become "very lucrative" to the city over time.   There was no public comment on the lease with OE Renewables.

A memo by Economic Development Director Roland Pena shattered the "no money" meme:

Financial Impact:  $583,814.00 – total of annual rebate payments over the course of an eight year term (2016 year ‐2023 year)
Based on Mayor Morrison's comments last year one would expect the lucrative part of the deal to show in years five through eight.   The project remains a solar farm but it's very different than the one described to the public a year ago.  COSADC has a tough job on this subsidy, given they are supposed to fund projects that add primary jobs.  Twenty to twenty five construction jobs for several months and one full time position don't feel like much in the new job arena.

Update 8-26-15:  The Standard Times reported COSADC approved the $583,000 incentive for OE Renewables.  The news report offered city staff's position as justification.  I look forward to watching the recording to see if any board members broached any concerns about 25 short term construction jobs counting as primary jobs.  I take it City Council will consider this in their September meeting.  

Update 8-27-15:  The recording showed no questions or discussion from the COSADC board before approving the incentive in public session.