Saturday, January 31, 2015

COSADC's Interesting Developments

The City of San Angelo Development Corporation (COSADC) held a marathon board meeting in January.  A number of interesting developments were shared by Economic Development Director Roland Pena and Chamber of Commerce Vice President Michael Looney.

Five potential employers are considering San Angelo.  They include:

Heavy Equipment Manufacturer
Call Center
Organic Dairy
Brokerage Firm
Home Builder/Contractor

As our oil boom deflates the West Texas Energy Consortium is "currently under reorganization and refining its focus area."

Three local employers received Business Retention and Expansion Program funding.  Staff did not identify the employers or the nature of public support.  The Board packet indicated funds went for training but did not identify which employers benefited. 

A specific airline was mentioned as considering flights from Houston.  At that point Mr. Pena acted like the named airline should not have been listed and asked the board and the public to be judicious with "confidential information." 

COSADC Pena sought permission from the board to not use the city's purchasing process to select a vendor for project management services for the next phase of AEP Certification of the City's Industrial Park.  They approached three local engineering firms, KSA Engineering, SKG Engineering and Bleyl Associates. The board heard two firms wrestle over what services would be provided locally.

The board awarded the work to KSA Engineering for $134,677.  Should San Angelo be successful in Phase 3 it would join Victoria, Harlingen and Mount Pleasant as certified AEP Quality Sites in Texas.  Not mentioned in the meeting was the fact that Pena once worked for AEP.

It appears COSADC also skipped the city's purchasing process in developing a new website.  The background packet stated:

Chamber of Commerce - Fourth Quarter Accomplishments
Leading the creation and maintenance of a cross-branded, COSADC and Chamber Marketing & Recruitment website, with links to all partner web portals including: Downtown San Angelo, Inc., The Business Factory, Concho Valley Workforce Solutions, ASU SBDC, Howard College and San Angelo Chamber of Commerce. Website will also include links to separate micro-websites for 1) San Angelo Business & Industrial Park; 2) Business Retention & Expansion Program (BREP). A local web designer has been.selected and will be engaged to create the sites for a February 28, 2015 completion and deployment.
Pena talked about a compliance audit with the board seemingly aware of its findings.  This audit explored the city's economic development agreements with local companies and the extent to which the city and the employer had fulfilled their contracted obligations.  The Martifer-Hirschfeld contract has been under study for years.  The board took this up under executive session but had no report to the public afterwards.  City Council will address Hirschfeld's obligations in its meeting next week, also in executive session.

Pena stressed the need to change the way COSADC's bills and approved incentives are paid.  The board used to meet every two weeks and this provided the opportunity for checks over $1,000 to be signed.  Now that the board meets monthly Pena is concerned about timely payments to vendors, partners and companies receiving assistance.

He closed with three new capital projects for COSADC.  They include funding new buildings at the airport, the industrial park and a corporate office downtown.  The last two items brought back memories of Shawn Lewis, former Assistant City Manager and Economic Development Czar.  He pressed similar issues before riding off to Longmont, Colorado.

Change is in the air.  Or, is it?

Update 7-13-15:  The new COSADC website is a few additional pages on the City's website with links.  The three pages with lots of links doesn't come close to providing the historical information from the old COSADC website, which could be mined for information back to the late 1990's.  Once again the city pursued style over substance in its web offerings. 

Friday, January 30, 2015

Hirschfeld Energy Topic of Two Executive Sessions

For two years the City of San Angelo has not released information on Hirschfeld Energy's maintaining its employment targets under a $5.6 million economic development agreement.  The original deal was with Martifer-Hirschfeld but Hirschfeld bought out Martifer's 50% share in July 2012.

Hirschfeld Energy's 2013 and 2014 performance under the terms of the agreement should be clear by now.  The 2012 COSADC Annual Report stated:

COSADC and Legal staff are currently working with the company to determine the long range employment goals for the company and a schedule for repayment of any funds due.
From city documents it appears Hirschfeld paid back the city $140,000.  The question is what happens moving forward.  Governor Rick Perry renegotiated numerous economic development agreements outside the light of day.

COSADC Director Roland Pena requested board members not reveal information about companies to the public.  If a company is requesting public money sunshine should apply.   That information should be openly and freely shared with the public.

COSADC's executive session did not report any changes to the city's agreement with Hirschfeld Energy.  City Council will entertain their unstated action.  I expect a public accounting in the future, if not at this meeting. 

Update 3-7-15:  Add two more Executive Sessions for City Council, their regularly scheduled meeting on 3-3 and a called meeting on 3-11.  The Mayor recused himself and will not be at the called meeting.

Saturday, January 24, 2015

Who Will Fill San Angelo's Room Boom?

San Angelo has a number of apartments and hotels ready to come online.  They were planned and constructed during our local economic boom, fueled by oil and gas exploration.  The picture has changed and is expected to become more dire.  Bloomberg reported:

Oil drillers will begin collapsing under the weight of lower crude prices during the second quarter and energy explorers who employ them will shortly follow, according to Conway Mackenzie Inc., the largest U.S. restructuring firm.

Companies that drill wells and manage fields on behalf of oil producers will be the first to fall after the benchmark American crude, West Texas Intermediate, lost 57 percent of its value in seven months, said John T. Young, whose firm led the city of Detroit through its 2013 bankruptcy. 

Oil companies have slashed thousands of jobs, delayed billions of dollars in projects and dropped or scaled back expansion plans in response to the prolonged rout in crude prices. For oilfield service providers that test wells and line the holes with steel and cement, the impact of price reductions forced upon them by explorers will start to pinch hard during the second quarter, Young said Thursday. 

“The second quarter is going to be devastating for the service companies,” Young said in a telephone interview from Houston. “There are certainly companies that are going to die.” 

How will the reduction of primary jobs impact secondary ones?  Traffic on the Mertzon highway is less crazy and more oilfield equipment is parked in company yards.

Hotel rooms might be more available for San Angelo's Stock Show and Rodeo.  This year attendees may be a room at a decent price.

Update 1-31-15:   Texas' rig count continues to decline.

Update 3-5-15:  Bloomberg raised the question as well.

Sunday, January 18, 2015

Upscale Harbor Village Returns After MLK Holiday

San Angelo's City Council will meet the day after city staff enjoy a holiday in honor of  Reverend Martin Luther King.  This council will entertain development of Lake Nasworthy public park land, an area envisioned as Harbor Village.  This Harbor would include a hotel, restaurants, beach and marina.

Consultants and staff suggest the public only provided positive input.  This is patently false.  I attended numerous sessions to represent local windsurfers.  I spoke during the public meetings and followed up afterwards when it was clear consultants had not heard or understood our position.  It is simple:  local windsurfers would like to keep the access we've enjoyed for years and would be happy with any improvements.

Both the Lake Nasworthy and Twin Buttes Master Plans stuck windsurfing in the worst possible locations.  They had deep drop offs, limited access to the main body of water or were in a prevailing wind shadow.   Please city leaders, if you eliminate our current windsurfing access don't tell us how great we're being treated.

Be straight up with people.  The City of Lake Jackson took away the popular Dow Park in the late 1980's for development of luxury homes.  The city made no bones about it. 

That may be what consultants and staff mean by their recommendation to City Council:

We recommend an initial build of an upscale full-service property of at least 200 room.
Windsurfers have been crowded out of two reports, despite clearly speaking. 

"Everything that we see is a shadow cast by that which we do not see." - Rev. Martin Luther King 

It appears windsurfers will be an afterthought as the city moves ahead with lake development.  Who else might be crowded out by upscale, full service property with a hotel, restaurants, and marina?  The beach can only accommodate so much.

Engineering Drought Hurts City

City Council discussed the city's planned debt issue for capital projects during its December 17 meeting.  The topic of streets arose and whether to borrow now for expected street improvements or reconstruction. Assistant City Manager Micheal Dane said a 90 day lead time would be necessary to obtain bond financing.  That time frame grew dramatically when Dane added contracting time to obtain outside engineering services.

Director of Operations Shane Kelton said the street study would be complete by July or August.  At that point City Council will know the condition of all city streets and the recommended maintenance for each street, which could include complete reconstruction.  Prior City Councils under invested in city infrastructure and the team of Ricky Dickson and Shane Kelton failed to advise them of the costs of a long term failure to maintain.  For their "go along - get along" silence both men have been promoted under City Manager Daniel Valenzuela.

Oddly, ex. Assistant City Manager and City Councilwoman Elizabeth Grindstaff spoke directly to this issue:

"Unfortunately our city has been very negligent in keeping up with any infrastructure needs on an ongoing, sort of annual basis."

Shane Kelton told Council if they voted today to do Bell Street " based on our current staffing in Engineering, where we are today, we are looking at 12 months to go to bid."  Kelton added it could be go six to eight months faster with contracted engineering.  Assistant City Manager/CFO Michael Dane added in a series of remarks:

"He's got to hire an engineer...  If you go out of house for engineering, you're going to need money to pay for those engineers to do the work.  It takes three or more months to get a professional services contract...  It we're going to go outside for engineering we need to get the professional services purchasing process going now."

Repairing streets in San Angelo will get more expensive if contract engineering firms do the design. Design fees can range from 5 to 12% of the project.  That can quickly turn $60 million for streets into $65 million. 

Council's history of underfunding infrastructure combines with our current engineering dearth in expensive ways.