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 fund 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 Shannon moved its real estate into a nonprofit corporation.  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 project 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.

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.

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?

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.

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.

Shelter Financing Costs Better Spent on Spay/Neuter

San Angelo City Council approved a $2 million note to finance urgent updates to the Animal Shelter.  Staff did not present the cost of issuing the notes or the interest that will be paid on that borrowing.  No member of City Council asked about those costs.

A public information request showed the cost to issue the notes is $55,000 and interest paid to investors will be $32,000.  There was nearly an additional $5,000 in rounding.  These items total $92,000 and are an expense solely due to borrowing the money vs. using the city's ample cash reserves.

Staff noted that Animal Services would have to reduce services further during a four to six month construction period.  Council discussed the funds would only update the existing facility and not result in any strategic changes in shelter operation.

$92,000 would fund a healthy low cost spay/neuter program.  It's disappointing that city leadership and elected officials didn't raise the cost of borrowing and how those funds could instead be used to help citizens spay/neuter their pets.  

Update 3-16-23:  The City Council background packet indicates the tax note amount increased to $2,560,000 which will likely drive up both the issuance cost and interest expense.  The notes mature on September 30, 2023.  This could be an error in light of the same document showing principal repayment of $1,995,000.   Hopefully Council will clear up the discrepancy in their upcoming meeting.