Monday, March 30, 2015

City Seeks Bids for Mary Lee Park Development

The City's Purchasing Department issued a Request for Proposals for Lake Nasworthy development.  The site is Mary E. Lee Park:

The City of San Angelo, Texas invites all qualified individuals, firms or joint venture entities to submit qualifications to ground lease and repurpose a portion of Mary E. Lee Park, approximately 19.547 acres, located at 7409 Knickerbocker Road, San Angelo, Texas 76904 into a vibrant resort and entertainment destination on Lake Nasworthy.
The term of the lease is 60 years.  Deeper into the RFP one finds:

In this assortment of small branded mid-market hotels that arrays like common candy bars, a lakefront branded suite hotel property at May Lee Park represents an opportunity to establish a new, better, top of the market property in a regional center community without one. It singularly can offer premium lake and marina views where all of the other properties offer roadside west Texas views.

It can offer recreational activities for weekend getaways in a region where few hotels can genuinely offer that opportunity. All existing and under-construction properties are limited service or select service properties. Even with the new crop of properties, there is no full-service property in the city and there is no other hotel site on a lake in the region.

Our recommendation for the site would be a full service property, in part because an attractive lakeside site with great views, backed by a hotel full of guests, can support a full-service “event” destination restaurant for area residents as well as a casual dining facility. Great onsite restaurants and bars are the missing link separating full and limited service hotels today. Similarly such a site could have attractive meeting and event spaces with balconies, decks and views of a marina – unlike any property in town.

As Lake Nasworthy has grown in the number of boat races and other events in recent years and can be expected to in the future, we see this property as the host hotel for all of these events, i.e., the property with the press rooms, where competitors and sponsors stay.

Since the upscale full-service positioning in the market is unoccupied at this time (none of the four properties listed as Upscale are full-service), we recommend an initial build of an upscale full-service property of at least 200 rooms with a possible expansion. The expansion would be triggered in part by what we expect will be a successful meetings business.
A 200 room hotel needs ample parking:

Suburban hotel, 1.2 to 1.4 parking spaces per guest room
Conference center hotel, 1.0 to 1.3 parking spaces per guest room

That's 200 to 280 parking spaces, which may not leave much room for the public to access the beach area.

The RFP has sections for:

1.  Business Plan and Development Program
2.  Preliminary Lease Terms
3.  Conceptual Site Plan and Operations
4.  Proposed Incentives
5.  Experience/Qualifications
6.  Project Timing
As for lease terms the RFP states:

The property will be conveyed by lease of not less than 60 years, subject to any easements, reservations, conditions for termination, covenants and restrictive covenants affecting the property.

The City will retain subsurface mineral rights to the property, but will waive the surface rights in order to not interfere with its use.
Under incentives the language reads:

Description of the type and magnitude of any incentives required to achieve the proposed venture. If public infrastructure is required to be installed by the city, cost and description is required. Describe why the incentives are necessary. The pro forma of the venture shall indicate the role of the incentives.
I highlighted but a few interesting aspects of the bid document.  I encourage others to peruse it, especially citizens concerned about development pushing out local users of the lake.  There's much to learn about the city's intent.  Actual bids will reveal the developer's desires.

It's a West Texas showdown on Lake Nasworthy.  Who will win?.  

Saturday, March 28, 2015

Trash Contract's True Value for City of San Angelo

San Angelo Live reported:

The City of San Angelo negotiated higher prices for trash pickup last year than the winning bidder, Republic Services of Texas, originally proposed.
Republic proposed $11.54 per month for residential curbside trash pickup with recycling.  In negotiations the city took that amount up $2.93 per month to $14.47.  Most negotiations have the vendor giving on price or throwing in extra services.  This went the opposite way.  Why?

City Council minutes from November 2013 stated:

Mr. (Shane) Kelton noted this process would allow staff to know the true value of the City’s asset and what is best for citizens. He noted upon review, the proposals maybe rejected and staff may renegotiate the contract with Republic Services
Was Republic's bid of $11.54 per month rejected and then the city renegotiated the contract with Republic for $14.47?  Don't count on a clear answer from city officials.

The City of San Angelo colluded with Republic to hide how unauthorized charges were foisted on commercial customers over a decade's time.  The City never released its investigation as to how these charges occurred, i.e. who knew what within City Hall.  It's was the city's responsibility to ensure Republic was compliant with contract terms.

The "true value" of the City's trash franchise came via large upfront cash payments in the renegotiated contract.  The parties colluded to charge 32,200 customers more over the contract period so the city could obtain $8.7 million upfront.

Residential customers paid 25.4% more than Republic's original proposal, while commercial customers paid 17.7% more than the original bid.  These dramatic increases funded the city's nearly $9 million cash back option.  Think about that the next time you pay your integrated utility bill.

Update 4-29-15:  Trash is a major subject in San Angelo's Mayoral race.   Texas Disposal Systems President and CEO Bob Gregory felt a need to weigh in.  It's worth the read.

Update 9-19-18:  Winning bidder Republic Services wants to back away from its recycling contractual commitments.   City staff and Republic will host public meetings on possible changes.  Might this open the door for TDS to submit a bid for San Angelo's trash franchise?

Tuesday, March 24, 2015

Development Corp to Address MedHab Fire

San Angelo's Development Corporation will address MedHab's fire in their monthly meeting. 

6.  Consideration and possible action regarding the restoration of the incubator annex located at 2009 West Beauregard and any other action in connection thereto 7. ( Presentation by Economic Development Director Roland Peña) 

It's been nearly two months since the fire broke out.  There has been no news as to the fire's cause.  What might the public learn tomorrow?  It's hard to predict given the background packet lacked information on this agenda item.

City economic development staff were not forthcoming on MedHab in January 2012 when they misrepresented Mayor Alvin New's position on the governing board as merely advisory.  Staff also hid his two affidavits from 2011 signifying his investments in the company.

It's a different economic development crew than the group that pushed through MedHab three years ago.  Hopefully, they'll be more forthcoming with critical information.

Update 3-25-15:  San Angelo Live reported: "The cause of the fire was a computer peripheral, possibly a printer, on a desk in one of the offices. It caught fire and burned the desk severely, according to Fire Marshal Ross Coleman. There was no controversy. It just overheated when no one was there and caught fire, but it did set off an alarm and the building was saved.

Update 4-2-15:  This item was moved to Executive Session, then tabled until a future meeting.   There may be no controversy, but the city's Development Corp has avoided talking about the situation publicly.

Friday, March 20, 2015

City's Increased Fees for Delayed Recycling

San Angelo's City Council talked trash this week.  Citizens learned Republic Services curbside recycling will start in July.  Consider the company's contractual commitment from a July 2, 2014 newspaper article. 

Republic has nine months to implement the recycling program, which will include public education. Recyclable materials include paper products, plastic containers, steel, tin and aluminum. Glass will be accepted once Republic constructs a materials recovery facility in the area.

A mid-July start is three and a half months past Republic's promise to recycle by the end of March.  The city's website stated:

The San Angelo City Council on July 1, 2014, approved solid waste contracts that will result in new curbside recycling and bulk trash pickup services

Recycling will start over a year after the City approved the deal.

The glass situation also changed.  Republic contracted with Butts Recycling for the materials recovery facility.  The equipment they're installing does not handle glass.  Part of the delay involved Planning Commission approval for Butts' expanded facility.  This included a waiver for their street, which is unpaved.

This is surprising San Angelo, where a few steps forward come with a few steps back, usually in management and communications.  Nothing's perfect but corporate promises and contractual agreements are legal commitments.

Councilwoman Elizabeth Grindstaff spoke directly to Republic's failures in implementation.  Public comment produced information that Republic and Butts began working in earnest on recycling in October of last year.

Councilwoman Grindstaff said she would've preferred if this happened in August.  It did not because Republic needed to settle a decade of charging commercial customers unapproved fees.

Republic Services will begin issuing refund checks to San Angelo commercial and industrial customers in October — in excess of $6 million.

“Republic is voluntarily refunding certain fees paid by affected commercial and industrial customers in San Angelo, going back to Aug. 1, 2004,” the release stated. “This 10-year period covers the full term of Republic’s prior contract with the city.”
Just as commercial customers paid ghost fees for a decade, San Angelo citizens paid higher rates for the elusive promise of curbside recycling.  Both the city and the company created the nine month expectation.  How will they make citizens whole for fees paid for service not provided?  It's disturbing pattern with the City and its trash contractor..

On August 1, 2015 trash fees will go up 2.9%.  Citizens have paid $15.12 a month for a level of service not provided.  That fee will rise to $15.56 just as the overdue service comes on line.  What service recovery will Republic undertake for their recycling delays?  What action might the City, consider, with its designated employee focusing on contract compliance? 

Update 9-19-18:  Winning bidder Republic Services wants to back away from its recycling contractual commitments.   City staff and Republic will host public meetings on possible changes.

Saturday, March 14, 2015

Standard Times to Join Journal Media Group April 1

E. W. Scripps will spin off the Standard Times and its other newspapers into Journal Media Group on April 1, 2015.  Yahoo Finance reported:

On the closing date, Scripps and Journal will simultaneously spin off and merge their newspaper operations to form Journal Media Group and immediately thereafter merge their broadcast operations, making Scripps the fifth-largest independent TV station owner. 
I've long been a fan of the Standard Times.  It's been hard to see a once great local paper get squeezed into something lesser, but that is the way of the digital and corporate world.  An E.W. Scripps SEC filing showed the company's latest circulation numbers (which include print and E-edition):

1996 - 32,000 Daily paid,  39,000 Sunday
2000 - 29,000 Daily paid,  35,000 Sunday
2008 - 24,000 Daily paid,  28,000 Sunday
2012 - 18,000 Daily paid,  22,000 Sunday
2014 - 16,000 Daily paid,  18,000 Sunday
It appears the paywall, implemented May 1, 2013, did not turn around declining readership.

Failure of a theory requires its modification, thus the spinoff. With no debt and "free of substantially all pension obligations" the Standard Times may be able to hold on to what it has under JMG.

I wish they'd chosen a date other than April Fool's Day for the closing.

Friday, March 13, 2015

Hirschfeld Goes on Lawsuit Offense

The Standard Times ran Hirschfeld's stance in the economic development agreement dispute with the City of San Angelo: 

“Our partnership with Martifer to build wind towers failed due to factors outside of Hirschfeld’s control.”

If the partnership truly failed the joint venture would've declared bankruptcy and the city would've joined the line of creditors seeking funds.  That didn't happen.  Hirschfeld bought out Martifer, likely for pennies on the dollar. 

This decision had the approval of Hirschfeld's private equity owner, Insight Equity.  Private equity firms love buying distressed assets.  It doesn't get more distressed than a wind tower market with no customers.  That happened in 2010.  Hirschfeld took over Martifer's stake in 2012.

Hirschfeld and the City couldn't agree on the company's performance under the contract for the last two years.  Without agreement on performance measures Hirschfeld hasn't had to live up to their end of the contract.  That ended two days ago when the Development Corporation board and City Council approved suing Hirschfeld to compel performance under the contract. 

Hirschfeld's owners refunded $473,242 of a $500,000 Texas Enterprise Fund grant from 2008.  This 95% refund shows the project has not come close to fulfilling its promise.  Local taxpayers are just as important as state taxpayers.  Refunds or contract performance are in order for a firm providing 93 jobs (TEF report) instead of 225.

Companies are happy to take public money but considerable effort seems necessary to get them to repay.  Take Vought Aircraft Industries, a Carlyle Group subsidiary when the state awarded the company $35 million in Texas Enterprise Funds in 2004. 

Carlyle promised 3,000 new jobs, but instead cut 35 by 2010.  The state gave Vought $1 million per job lost.  Carlyle sold Vought to Triumph Group.  Vought has repaid $10.1 million of Texas taxpayer money, a mere 29% for contract nonperformance.     

I hope Hirschfeld does better by San Angelo taxpayers.

Thursday, March 12, 2015

Hirschfeld Energy: San Angelo's Public Subsidy

City of San Angelo documents revealed details of the public's subsidy of Hirschfeld Energy Systems, LLC.  Texas Attorney General Greg Abbott eventually compelled the city to release the above information.  Here's the chain of events:

4-18-14:  I asked the city to provide a copy of any documents the City Council considered regarding Martifer-Hirschfeld's performance on their economic development agreement.  This item was on the public agenda for 4-15-14 before being moved to Executive Session.

4-25-14:  City Attorney Lysia Bowling asks the Texas Attorney General to withhold such information from requestor

6-20-14:  The Attorney General wrote "the city has not established any of the submitted information consists of a certified agenda or tape recording of a closed meeting.  Thus, the city may not withhold the remaining information under Government code.  As you raise no further exceptions to disclosure, the city must release the remaining information."

The City sent a printout of their spreadsheet, which lacked Hirschfeld's 2013 performance data.    The City's Hirschfeld investment can be seen below:

If the city paid the 2013 grant estimate the amount would grow to $674,063.  Between COSADC and the City of San Angelo that's $2.8 to $3 million in public subsidies.

Hirschfeld's performance for 2013 and 2014 remains a mystery despite numerous attempts to get such information.  One can only hope the Attorney General compels the city to release the COSADC compliance audit to the public.  San Angelo officials are yet to do so willingly.

The back-to-back COSADC board and City Council meetings on Wednesday produced news reports that city would file a lawsuit against Hirschfeld for nonperformance.  

Update 3-13-15:  The Standard Times ran Hirschfeld's defense.  

Sunday, March 08, 2015

Lysia Bowling to Be Named Pensacola City Attorney

Pensacola's City Council will take up the hiring of Lysia Bowling as City Attorney at their March 12th meeting.  It is item #45 on the Regular Agenda.  Rick's Blog reported:

Mayor Ashton Hayward announced late Friday afternoon his choice for Pensacola City Attorney, Lysia Bowling, the city attorney for the City of San Angelo, Texas.

“Lysia is extremely impressive, well-qualified candidate, and I am thrilled to nominate her as our City Attorney,” said Mayor Hayward in a press release. “Her dynamic nature, distinguished experience, and dedication to public service stood out immediately, and I believe she will be a great fit for our City government.”

Bowling has been San Angelo’s city attorney since 2009.

I wish Rick better luck than I've had getting certain public information requests fulfilled.  Three times Ms. Bowling appealed to the Texas Attorney General to keep public information confidential.  Twice the Attorney General sided with the public's interest, with the city compelled to share requested information.  The third contention is underway and I await word from the city on the AG's decision.

Unfortunately, Ms. Bowling may have more to worry about than intrepid local bloggers.

The federal bribery investigation involving Pensacola Mayor Ashton Hayward has just passed the six-month mark with no end in sight, nor any indication of its outcome.

And we thought San Angelo was surprising!  Lysia lived through City Council changing economic development criteria in order to fund MedHab, when Mayor Alvin New had a conflict of interest as investor and board member.  She likely will survive whatever happens between Pensacola's Mayor and the federales.  Here's wishing Lysia smooth sailing!

Update 3-14-15:  The Standard Times found the story. An update from Pensacola News Journal stated, "Attorney Jim Messer, who recently said he is leaving that job, is paid $155,000 a year, and his proposed successor, Lysia Bowling, will earn the same salary."

Saturday, March 07, 2015

Council & Development Corp. to Hold Called Meetings on Hirschfeld Energy

San Angelo's City Council called a meeting for Wednesday, March 11 at 9:00 am to deal with the city's development agreement with Martife-Hirrschfeld Energy Systems.  This comes thirty minutes after the Development Corporation meets in the same room on the same topic.  Both the COSADC Board and City Council will address the city's agreement with Hirschfeld Energy in Executive Session.

The City's contract with Hirschfeld has been the subject of numerous executive sessions since October 2013.  The City stated at that tine:

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.
Sixteen months later the city is still working with the company to resolve the matter.  A tag team Executive Session indicates closure may be near.  It could also portend a sale of Hirschfeld Energy by the company or its private equity owners, Insight Equity.

Insight Equity acquired a controlling interest in Hirschfeld Holdings LP on April 27, 2006.
The public may wonder why Hirschfeld's owners need local taxpayer subsidies:

From 2006-2009 Hirschfeld paid out nearly $100 million to owners via partner distributions.  In 2009 they floated debt, part of which funded partner payouts.

Should Insight Equity be ready to cash in on Hirschfeld any buyer would want clarity on the company's economic development obligations.

Council and the COSADC board have been quiet on this issue for some time.  The Development Corporation is yet to produce a 2013 Annual Report, even as the due date nears for giving the 2014 Annual Report.  COSADC bylaws state:

The Board shall make an annual report to the City Council outlining the following:

1.  A review of the programs and accomplishments of the Board in implementing the Development Projects 
2.  The activities of the board for the budget year the annual report together with any proposed change in the activity.

The annual required report shall be made to the City Council by May 1st of each year.

There is no record on the city's website of a 2013 COSADC Annual Report to City Council, which was due by May 1, 2014.  This language is not in any City Council agendas or minutes, nor does the search show a specific presentation on this topic.  However, I did find  where Council accepted the Annual Report of the Records Management Program on February 4, 2014..

COSADC's website links to the 2012 Annual Report.  Did the City and the Development Corporation hold up all updates nearly two years because of one poor performer?

Hopefully the Hirschfeld story will become clear to those puzzled by the city's failure to communicate with the public on all economic development agreements.

Update 3-11-15:  The City of San Angelo is suing Hirschfeld Energy for failure to fulfill their economic development agreement.

Update 2-1-17:  Lo and behold the Development Corporation produced three annual reports for the board to approved in their January 2017 meeting.  With no discussion the board approved reports for 2013, 2014 and 2015.  They're waiting on a picture for the 2016 report.

Update 2-11-18:  Economic Development Director Roland Pena made a 2017 year end report to City Council on 2-6-17.   The City announced his resignation on 2-8-18.