Thursday, February 06, 2014

Texas Pacifico Incentive Replay

City Council took up a recommended $247,500 economic development incentive for Texas Pacifico Railroad in their February 4 meeting.  Here's the logic presented by Economic Development Director Bob Schneeman:

As the Council is aware, this is an item that came from the COSADC board, the Development Corporation board, recommending an incentive or grant to Texas Pacifico Railroad for moving their headquarters here and for creating jobs here, also for bringing a building that previously had been off the tax rolls in a nonprofit situation back onto the tax rolls where they now have their headquarters.  

Under our guidelines a company moving their headquarters to San Angelo is eligible for up to $10,000 per job, by our guidelines based on jobs created or retained.  COSADC in addition felt that this particular item was something of a relationship builder, that we're looking to support local businesses and that we're trying to establish a longer term, sort of goodwill relationship with Texas Pacifico, who is going to be a very large contributor to our local economy over the years to come, whether that be through oilfield or through moving other goods and services through the city.  

This is an item that was voted on by COSADC and was unanimously approved by the board and so staff brought it to council.  At this time we'll open it for any questions the board may have for me.

Councilwoman Charlotte Farmer spoke first in support of the proposal:

It's a proven fact to me that this firm has created secretarial jobs, payroll jobs, yard jobs, considerable jobs, jobs that weren't there and the people that are there are very thankful that these jobs have been created.  I see participation from us and taking the recommendation of the COSADC board is something that we can do to create goodwill for this company moving their headquarters here.  It certainly has been a long process and has taken awhile to get here.  I'm not for the full incentive amount.  I am against that and would like to see that cut back to only $2,000 per job.  And I'll make the motion, move to make the motion that we approve that amount for those jobs, per the COSADC's recommendation, but only less than what they recommended.

Schneeman, in clarifying the motion, noted for the first time the number of jobs incentivized, thirty three.  Farmer's motion received no second, thus it failed.  Councilman Winkie Wardlaw moved to deny any economic development incentive to the railroad, which Councilman Johnny Silvas seconded.  After no council or public discussion the motion to deny passed 5-1.

Council may have had a highly informative discussion on this item in Executive Session, but the presentation lacked substance for members of the public interested in COSADC's or Texas Pacifico's case for giving/receiving public money.

Take the headquarters move.  The Standard Times reported in October 2011:

The Texas Pacifico headquarters moved recently from Brownwood to new offices at 3814 Sherwood Way in San Angelo, Hammond said. The line employs 18 people, with another eight full-time positions contracted on two full-time maintenance crews.
Texas Pacifico had a headquarters in San Angelo for more than two years, a fact not mentioned by COSADC, Bob Schneeman or Councilwoman Farmer.

Yes, it did make a later move to the old WTU building downtown, 106 South Chadbourne Street.  Ironically, the City used the old WTU building for offices while contractors renovated City Hall, a project also managed by Elizabeth Grindstaff. 

I expressed my concern regarding the timing of former Assistant City Manager Grindstaff's employ with Texas Pacifico and the term of the economic development proposal.  The 33 jobs were for 2013-2014, one year of which has already occurred.  Elizabeth Grindstaff joined Texas Pacifico in October 2012, a mere three months before the start of the proposed economic incentive period.  I also felt Grindstaff had a clear role in the Furniture Fiasco, which she publicly denied to City Council as a Texas Pacifico Vice President.

According to Grindstaff in a May 2012 e-mail the $100,000 in Water Department furniture was needed ASAP to avoid expending "any additional funds on rent and utilities at WTU." Grindstaff and Interim City Manager Michael Dane put off the big furniture presentation in March 2012 and the issue did not come back until City Manager Daniel Valenzuela's first Council meeting in October, where it exploded.

I have long had concerns about the lack of complete information staff brings to council and the public.  This week the public saw not one slide with supporting logic from Bob Schneeman on a Texas Pacifico economic development incentive package.

While this is not the most egregious case I've seen, the public deserves a clear rationale with supporting information on how an employer deserves nearly $250,000 in public funding, especially for deeds long accomplished.

Update 2-10-14:  San Angelo Live did a story on Texas Pacifico's investment in the South Orient Rail Line.  Texas Pacifico has a lease on the track through 2091, so the company will get full value of any money it invests.  Also, track updates have been subsidized with state and federal funds.  The state legislature gave $5 million to the company in its last session, which Texas Pacifico plans to use in San Angelo.

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