City Council to Address TIRZ Nonprofit Access

San Angelo City Council will entertain the following agenda item in next week's meeting:

Consideration of amendments to the Tax Increment Reinvestment Zone (TIRZ) incentive policy regarding non-profit organizations.

The background packet states:

At a recent meeting, the City Council asked staff to take an item to the TIRZ Board to discuss the option of amending the TIRZ Incentive Policy to eliminate the option of funding a project on a property of a non-profit organization.

This item was discussed by the TIRZ Board at their February 28th regular meeting. After some discussion, the Board voted to recommend keeping the policy as is and to continue to allow funding for a non-profit organization.

No member of City Council attended the February TIRZ meeting to share their concerns about nonprofit funding.  

At their February 28, 2023 meeting, the Tax Increment Reinvestment Zone Board voted 5-3 to NOT amend the current policy (i.e., to continue to allow funding for a non-profit organization in the North TIRZ). 

At their March 28, 2023 meeting, the Board voted 6-3 to amend the current policy to allow funding for non-profits in BOTH the North and South

Prior to the March vote expanding nonprofit funding to the South the TIRZ board approved funding for three projects, one from a nonprofit.   Those are not on City Council's agenda for next week.

Normally in a policy change staff submits draft wording for City Council to consider.  That is not the case with this item.  Under staff recommendation it simply states "direction from Council."

I will venture City Council eliminates nonprofit access to TIRZ funding in the North as it refuses to consider adding it to the South.  This could be at least the third recent TIRZ board decision that Council countermanded.  That would be a bitter pill for TIRZ board members to swallow.

Update 4-4-23:  City Council has a motion on the floor to deny non-profit funding in both the North and South TIRZ.  The Mayor attempted to limit public comment from TIRZ board member Tony Villareal.  Later in the discussion there was much interchange between citizens making public comment and Council members.

The motion to deny nonprofits in both TIRZ zones failed 4-3.  A motion was made to keep the current policy which allows nonprofit funding in the North and denies it in the South.  The Assistant City Attorney recommended a vote endorsing current policy so the minutes would make it clear the TIRZ board's recommendation to add nonprofits in the South had been denied by Council.

Update 4-13-23:   The TIRZ incentive for the nonprofit The Bridge on MLK is not on City Council's agenda for 4-18.  The other two projects approved in the March TIRZ board meeting are on Council's agenda.

Update 7-11-23:  The TIRZ board meets today.

Update 8-28-23:   The TIRZ board discussed City Council's removal of interest funds from the two South TIRZ projects.  Members sought information from staff as to why.  Member and former City Manager Stephen Brown stated the city counts on interest revenue for a number of other funds and did not understand why TIRZ is being treated differently.  Brown indicated his interest in restoring those funds to the two projects.

TIRZ Board Recommendations Ignored by City Council

San Angelo City Council and the Tax Increment Reinvestment Zone (TIRZ) Board have been at odds recently.

In December 2022 Council approved TIRZ funds be used for streetscape maintenance after the TIRZ board declined the project.  Council specified the North TIRZ pay 80% of the annual cost and the South TIRZ 20%.  City staff recommended a 50-50 split.  TIRZ board members asked how the project got on City Council's agenda after they rejected the project.  The answer was not clear. 

In early March City Council declined the use of North TIRZ funding for a nonprofit on Martin Luther King Boulevard, Gethsemane Missionary Baptist Church.  The TIRZ board approved the project under existing criteria as nonprofits are eligible for funding in the North zone.  

Discussion at Council focused on rejecting a prior nonprofit application and the need to keep TIRZ money away from Shannon Medical Center after it formed a nonprofit corporation for its real estate holdings.  TIRZ Board Chair Jon Mark Hogg wrote a piece declaring his opposition to City Council's rejection.

This week's TIRZ board meeting approved North TIRZ funding for The Bridge, a different nonprofit project on MLK.   The board had much discussion on City Council's rejection of their recommendations and the need for clear criteria for nonprofit project funding.  During public comment Rev. Craig Meyers challenged Council's basis for rejecting the Gethsemane project in their last meeting.  He thought their reasons were not relevant to stated TIRZ criteria and plans to ask Council to reconsider their decision.

The conflict will likely increase as the TIRZ board recommended nonprofits be eligible to funding in the South zone.  Former City Manager and TIRZ board member Stephen Brown pushed for nonprofit eligibility in the South.  Brown wants there to be one TIRZ zone, with no division between North and South.  The board will consider whether to undertake a process to explore Brown's preference.  City Council made several runs at combining the two zones, as the North Zone has significantly greater funding ($1.6 million vs. $71,000 for the South).

Council recently battled with the Development Corporation over a number of issues, bylaws, the service agreement with the City for services, the Chamber of Commerce contract, and the independence of the Development Corporation board.  Council pushed out First Vice President John Bariou after one term.  Council dropped a closed session item for disciplining Bariou in an October 2022 agenda.  It did so after Bariou asked that it be moved to open session for the public to hear.

City staff resolved one issue with the TIRZ board, the payment of interest revenue on committed funds not yet expensed.  The TIRZ board learned in January that those funds earned no interest and asked for a change.  Two days ago Development Director John James indicated the Finance Department made a change so committed but not spent TIRZ funds would earn interest.

It's good one issue got resolved, but a number remain to be worked through. 

Update 7-11-23:  The TIRZ board meets today.

Update 8-28-23:   The TIRZ board discussed City Council's removal of interest funds from the two South TIRZ projects.  Members sought information from staff as to why.  Member and former City Manager Stephen Brown stated the city counts on interest revenue for a number of other funds and did not understand why TIRZ is being treated differently.  Brown indicated his interest in restoring those funds to the two projects.

Update 9-19-23:  City Council voted 5-2 for a nonprofit TIRZ project in the North zone.   The item needed six yes votes for approval so the nonprofit project was rejected.  The two "no" votes were Mayor Gunter and Councilman Thompson.  The Mayor raised the failure to streetscape North Chadbourne in her comment while Thompson raised the prospect of a flood of nonprofit applications should this one be approved. 

TIRZ Chair to Get Bariou Treatment?

San Angelo City Council rejected a recommendation for the Tax Increment Reinvestment Zone (TIRZ) Board to fund a project from a Northside nonprofit.  TIRZ Board Chair Jon Mark Hogg disagreed with the decision, calling the decision "unjust" and said citizens "deserve is a consistent set of rules that do not change arbitrarily depending on who is sitting on the TIRZ Board and who is sitting on City Council."

Four members of Council voted to deny the project, Tom Thompson, Harry Thomas, Larry Miller and Mayor Brenda Gunter.  Three members wished to fund the project Lucy Gonzales, Karen Hesse-Smith and Tommy Hiebert. 

City Council disagreed with proposed bylaws revisions from the Development Corporation Board and placed First Vice Chairman John Bariou on its closed session agenda for disciplinary action.  Bariou asked that the item be moved to the open agenda for the public to hear.  Council dropped the item but replaced Bariou who was eligible to serve more terms.  

The Development Corporation Board recognized Bariou's service at their recent meeting.   

Assistant City Manager Michael Dane and Bariou showed lots of smiles during the recognition.  That was in contrast to heated interactions with City Manager Daniel Valenzuela last September.

The TIRZ board meets on March 28th and the item is on the agenda.  It remains to be seen how Council responds to TIRZ Chair Hogg's published statement challenging their decision.   Will Hogg get Bariou'd?

Update 3-28-23:  The City's YouTube channel is not live streaming the TIRZ meeting which started at 2 pm.  It may be tomorrow before citizens can view the video.

Update 3-29-23:   A review of the February TIRZ meeting video revealed City Council approved streetscape maintenance that the TIRZ board denied.  Council also asked the TIRZ board to consider moving the boundary of the North TIRZ further south.  Director of Planning John James said Mayor Brenda Gunter and Councilman Tom Thompson made the request in the December 13, 2022 meeting.  TIRZ Chair Hogg shared his concerns about treatment from City Council in the February meeting.  

City staff said the March 28th TIRZ meeting video will be available for the public "this evening or sometime tomorrow."

The TIRZ board meeting was last live streamed in January.

Council Approves Spending $112,700 to Borrow $2 Million for Six Months

San Angelo City Council approved borrowing $1,995,000 to renovate Animal Shelter renovations and fund upgrading an intersection.  

The item came after discussion on over $5 million in improvements for the Bill Aylor Sr. Memorial River Stage.  At least one council member encouraged staff to think thirty years ahead on River Stage improvements.

City Council took the opposite tack with Animal Shelter facilities.  They ignored Animal Services in the strategic planning process, despite horrific hoarding conditions and a severe roach infestation. 

Funds approved to renovate the facility are merely to bring the current square footage to an acceptable level.  Council members made it clear there was no forward vision in making facility improvements.

The City of San Angelo is yet to bid out shelter renovations, budgeted at $1.7 million.  

 

I will wager the $2 million tax note will be paid back before shelter renovations are completed.

During the TIRZ discussion the Mayor said Council needed to make fiscally responsible decisions.  Spending $55,000 in note issuance fees and $57,700 in interest costs to borrow nearly $2 million for six months seems a waste of taxpayer money.  

That $112,700 would be better spent on low cost spay/neuter services than financing short term borrowing. City Council did not see it that way.  They had an extra $112,700 to spend on money changers.

Update 3-22-23:  It took a public information request to get actual costs for the notes Council approved.  Issuance fees are $49,000, bond counsel fees $3,500 and interest costs $41,327 (as the city shortened the term of the note to August 15, 2023).  Those total $93,827, a significant amount that could fund may a low cost spay/neuter surgery program.

Update 3-25-23:  The TIRZ Board Chair criticized Council's decision to deny the application of a nonprofit organization, saying it acted unjustly.  Will Jon Mark Hogg get the John Bariou treatment, discipline or outright replacement?

Update 12-15-23:  The city is yet to bid those urgent Animal Shelter renovations.  A November 27th story at Best Friends Animal Society on the shelter stated:

The shelter is also gearing up to recruit more short-term foster volunteers during an upcoming facility improvement project.

The city paid no, as in zero, Animal Shelter renovation invoices during the period they borrowed nearly $2 million.  The only "progress" was the hiring of an engineering firm for $118,000 in May.

Update 3-7-24:  The latest schedule information is:

....the bid phase is delayed to May 2024 with estimated construction completion in November 2024.

City Council to Approve Ever Changing Tax Notes

San Angelo City Council will consider approving short term tax notes to fund Animal Shelter renovations and another traffic related project.  The Council background packet cites three different numbers for the tax notes, $1.7 million, nearly $2 million and just over $2.5 million.  

A public information request revealed a $55,000 cost to issue the notes and $32,000 in interest expenses over the six month life of the note.  Given the interest rate in the document the six month cost is nearly $60,000.  Staff should update the issuance cost and expected interest expense for Council next week.

The City has ample fund balances and could avoid these financing costs.  A low cost spay/neuter program could fix many pets with $100,000.  It would be a far better use of those funds.

Update 3-22-23:  The City's bond attorney wrote in an e-mail after Council person Tommy Hiebert forwarded my e-mail to City Council regarding the conflicting numbers:

The $2,560,000 is a typo (my apologies) and should have been bracketed. $1,995,00 is the estimated amount, but we bracketed that because it will depend on the bids received.  I’m not sure what the “financing schedule” is?

No member of City Council replied to my communication raising this issue.  It took a public information request to obtain this information.

Update 3-7-24:  The latest schedule information is:

....the bid phase is delayed to May 2024 with estimated construction completion in November 2024.

Update 5-21-24:   Construction Manager Al Torres told City Council the construction documents would be completed in 30 days and then the project could be put out to bid.  That's late June 2024.

A new project is $120,000 make ready for the temporary shelter facility and $113,000 in staff to operate both facilities.

Update 12-3-24:  Mr. Torres informed City Council that an electrical change order is needed for the permanent shelter renovation.  Morgan will bring that change order to Council on December 17th.  Once approved the engineers need four weeks to complete the redesign.  The project can then go out for bid.  Construction is expected to begin in February 2025 and will take six to nine months to complete.  The temporary shelter is expected to be completed prior to construction starting on main shelter operations.  

Bariou Gone from COSADC Board

The City of San Angelo website indicates First Vice President John Bariou is gone from the Development Corporation Board.  City Council expressed their desire to discipline Bariou last October.  He stemmed that discussion by requesting the item be considered in open session where the public could hear.  That move enlarged the target on Bariou's back.

Economic Development San Angelo is yet to change their page regarding board composition.

That could happen in the coming week as directions are given from the City Manager's office.

Update 3-18-23:  The Development Corporation plans to recognize John Bariou for his service at their upcoming meeting on March 22nd.

Update 3-23-23:  COSADC recognized Bariou for his service on the board.  Council appointed him in their April 20, 2021 meeting.  He went from being disciplined in October 2022 to recognition in March 2023.  The city classified Bariou's April 2021 appointment as his "first term", meaning he could have served more terms.  City leaders were not interested in that.

Council Slapdown of COSADC Nears End

On March 7th San Angelo City Council will consider Development Corporation bylaws revisions under their Consent Agenda.  The changes have been reduced to Executive Director purchasing authorities.

There should be no need for First Vice President John Bariou to speak on the matter, not that Council had any interest in hearing concerns about Development Corporation independence under Texas law.  

The next task is get an Executive Director hired and update the City Services agreement.  Former Economic Development Director Guy Andrews had concerns about the fairness of the City Services agreement and dysfunction in the City Manager's office.  Those remarks and initial bylaws changes stoked City Council's ire.

Assistant City Manager Michael Dane noted this in the last COSADC meeting"

"How will we approve/propose items that will be well received by Council?"

"We are good with her (the Mayor) as of 4:30 pm yesterday."

Time will tell if this conflict has been managed or buried, only to rise again in a major storm.

Update 3-7-23:  City Council approved the minor bylaws change.  After Executive Session Council approved a number of Development Corporation Board members.  John Bariou's name was not among the nominees approved.  City Council enacted their desired discipline on behalf of Dane and Valenzuela.