Thursday, August 27, 2015

City Council to Consider $583,814 Solar Subsidy

During their September 1st meeting City Council will entertain a recommendation from the Development Corporation Board to provide a $580,000 economic development incentive to OE Renewables for a project that will add one long term job to San Angelo's local economy.  That's $73,000 per year in subsidy for a project adding a mere primary job.

The Development Corporation did not discuss how this project meets the city's criteria for tax abatement, as stated on the City's website::

Tax Abatements
The City of San Angelo and Tom Green County may provide personal property and real estate tax abatements for periods of 5 to 7 years. Abatement levels range from 20% to 75% and are determined by the number of new jobs created and/or the amount of new investment in the community. All companies receiving the abatements must meet the minimum job creation level of 5 new jobs and no less than $250,000 in new valuation in either real estate and/or personal property. Please note that tax abatements and rebates may exceed the percentages shown but must be considered on a case by case basis.

Businesses eligible for the tax abatements are manufacturing, warehousing/distribution centers, home/regional administrative offices, data processing centers, and telecommunications services. Tax abatements are not automatic; applications must be made to both the City Council and County Commissioner’s Court.
Maybe City Council will help the public understand why the city is making three exceptions.  One, the project is below the level of 5 new jobs.  Two, the term of tax rebates is eight years, exceeding the stated five to seven years.  And three, electric power generation is not listed as an eligible business.

If Council chooses not to illuminate these discrepancies, the solar power farm $580,000 subsidy will have been approved by two government bodies in less than seven days, a relative political flash of light.

Update 8-31-15:  The Standard Times noted this item will be on Council's agenda tomorrow but did not highlight the very temporary nature of the construction jobs provided by Ryan LLC, a partner for OE Renewables Texas LLC.  OE Renewables is providing one full time job for over $580,000 in public subsidy.

Wednesday, August 26, 2015

Solar Farm's Economic Development Saga

Economic Development Director Anthony Pena added information to the Development Corporation background packet regarding the $583,814 proposed economic incentive for OE Renewables Texas LLC.

The City of San Angelo and Tenant entered into a Lease Option Agreement which commenced on August 6, 2014 for 80 acres.
City Council approved this item after discussion in executive session.  The background packet made available to the public had no lease and no information on this item.  Mayor Morrison explained the idea to the public:

"What this is we are leasing ground.  This has come through COSADC, the Development Corporation.  There's a company that wants to come in here, put some solar generating equipment up and the City of San Angelo has negotiated a lease with them that would make it profitable.  We're not giving them any money.  We do have a graduated plan as for the lease for the first five years, while they build this thing and put it together.  Then it becomes a very lucrative thing for the City of San Angelo."
The City added more ground to the lease this year.
Then on May 19, the San Angelo City Council approved an amendment to the lease to add 63 additional acres.
City Council approved leasing additional acreage in the consent agenda with no discussion and no presentation.  A lease addendum in the background packet showed the city would receive a $75 grant fee for leasing 143 acres to OE Renewables over a multi-year period.  City staff provided no information showing how this project would become "very lucrative" to the city over time.   There was no public comment on the lease with OE Renewables.

A memo by Economic Development Director Roland Pena shattered the "no money" meme:

Financial Impact:  $583,814.00 – total of annual rebate payments over the course of an eight year term (2016 year ‐2023 year)
Based on Mayor Morrison's comments last year one would expect the lucrative part of the deal to show in years five through eight.   The project remains a solar farm but it's very different than the one described to the public a year ago.  COSADC has a tough job on this subsidy, given they are supposed to fund projects that add primary jobs.  Twenty to twenty five construction jobs for several months and one full time position don't feel like much in the new job arena.

Update 8-26-15:  The Standard Times reported COSADC approved the $583,000 incentive for OE Renewables.  The news report offered city staff's position as justification.  I look forward to watching the recording to see if any board members broached any concerns about 25 short term construction jobs counting as primary jobs.  I take it City Council will consider this in their September meeting.  

Update 8-27-15:  The recording showed no questions or discussion from the COSADC board before approving the incentive in public session.

Saturday, August 22, 2015

City of San Angelo's Solar Subsidy Heats Up

OE Renewables LLC, the developer of a 143 acre solar farm capable of generating 10MW of electrical power, is hitting up the City and Tom Green County for public subsidies.  The City already committed land for the solar project.  San Angelo's Development Corporation is proposing a $583,184 economic development incentive for OE Renewables Texas LLC

OE Renewables Texas, LLC, intends to create a Twenty to Twenty-five (20-25) construction jobs and One (1) new Full Time Equivalent (FTE) position
On August 11th OE Renewables and Partner Ryan LLC presented the project to Tom Green County Commissioners Court.  San Angelo Live reported:

As for funding, OE project manager Shane Sobotka and Ryan LLC construction representative Evan Horn told the commissioners they hope to negotiate local tax incentives provided by Tom Green County and the City of San Angelo. 

San Angelo Economic Development Director Roland Peña said the potential for tax incentives is feasible and would be a good idea.
The Development Corporation Board and City Council will entertain the prospect of subsidizing OE Renewables and Ryan LLC.  The definition of primary jobs according to the Texas Municipal League:

“Primary job” is defined to mean a job that is “available at a company for which a majority of the products or services of that company are ultimately exported to regional, statewide, national, or international markets infusing new dollars into the local economy” and that meets any one of a specific list of sector numbers of the North American Industry Classification System (NAICS).35. 
Utilities, like power generation, are enumerated under NAICS sector 221.  Will the majority of the generated solar power be sold to regional, statewide, national or international markets?  How many "new dollars" will be infused into the local economy if the company has but one full time employee, possibly located elsewhere?

The Standard Times reported:

The project would mostly be unmanned but would generate construction jobs, Sobotka said.
The twenty to twenty five construction jobs could infuse new money into the community. 

“Right now we’re looking at engaging local contractors. The vast majority of local contractors and management will be our existing partners, and they will oversee the project, but anyone can help us with any portion of this really,” Sobotka added. 
OE's Project Manager said the vast majority of new construction jobs will come from partner Ryan Construction, not One Energy Texas.  How long are those construction jobs expected to last?  Jen Bradford told City Council on July 7th:

"Construction should not take more than a few months for a project of this size."
OE Renewables Texas LLC, with its Austin address, intends to develop the project and sell it.  So whatever deal the city reaches may end up being fulfilled by another company. 

The City of San Angelo's website provided the following information on public assistance for private projects.

Tax Abatements
The City of San Angelo and Tom Green County may provide personal property and real estate tax abatements for periods of 5 to 7 years. Abatement levels range from 20% to 75% and are determined by the number of new jobs created and/or the amount of new investment in the community. All companies receiving the abatements must meet the minimum job creation level of 5 new jobs and no less than $250,000 in new valuation in either real estate and/or personal property. Please note that tax abatements and rebates may exceed the percentages shown but must be considered on a case by case basis.

Businesses eligible for the tax abatements are manufacturing, warehousing/distribution centers, home/regional administrative offices, data processing centers, and telecommunications services. Tax abatements are not automatic; applications must be made to both the City Council and County Commissioner’s Court.
Utilities, like power generation, are not on the list.  Also, OE Renewables is only creating one new full time position after construction is completed.  It's not clear how much of the recommended $580,000 subsidy is tax abatement or public sales tax funding.

Sales Tax for Economic Development
San Angelo voters have approved a 1/2 cent increase in the sales tax for community and economic development projects. The San Angelo Development Corporation has established priorities for manufacturing, warehousing/distribution, telecommunications services, data processing, and home/regional offices. Loans and grants are available for buildings, land, equipment, training, site infrastructure, moving expenses, lease subsidies, and other expansion costs. The minimum job and investment thresholds are 5 new jobs and $125,000 in new investment. Job retention may also be considered. The project must meet state mandated NAICS codes and “a definition of primary employees.”

Depending upon the wages and types of jobs created, the Development Corporation may provide assistance from $1,000 to $5,000/new job. High skill-high wage jobs may carry a higher incentive level. New and existing companies are eligible.
The City already executed leasing land to OE Renewables Texas LLC.  Might the lease subsidy be in the $583,184 total?  It will be interesting to hear the discussion, if any, on the 20-25 temporary construction jobs vs. the one full time position, as the Development Corporation Board and City Council consider their mandate to use public funds to provide primary jobs.  That discussion deserves to be in public, after the Board has done their work in Executive Session.  We'll see if we hear.

Update 8-25-15:  The information in the board packet on OE Renewables changed since its original posting, which only had a board resolution.  Staff added a memo from Economic Development Director and two maps showing the location of the solar power farm.

Update 6-11-16:  A COSADC update showed the project "in due diligence, in process of securing PPA."

Monday, August 17, 2015

Small Volume Water Users Face Big Increases Under New Rate Study

For years San Angelo's City Council said it wanted to encourage ways for citizens to conserve water.  Those who did their part by using low water volumes stand to see their water bills increase dramatically, yet again.

Citizens using the lowest volume of water could see their bills increase 75% just on the water side.  A 61% increase could be added on the wastewater side.

City Council will take up this issue at their meeting tomorrow morning.  I wonder if the City will finally drop the Pumping Fee, especially as it's been seventeen months since city crews pulled the pumps from Twin Buttes South and North Pools.

Update 8-23-15:  San Angelo Live reported local social service agencies have little money to help citizens unable to afford a 70% increase in their water bills over the next five years.

Sunday, August 16, 2015

No Video for July City Council Meeting with Development Corporation Board

San Angelo's City Council has been busy working on the budget for 2015-2016.  It did manage to work in a joint meeting with the Development Corporation Board on Tuesday July 21st. The agenda had a single item:

Discussion of matters related to the issues, duties, and responsibilities of the City of San Angelo Development Corporation
Documents distributed to Council and COSADC included the Development Corporation's bylaws and City Ordinances relative to COSADC board.  Economic Development Director Roland Pena shared a document with topics for the meeting.  Major areas included:

1.  Strategic Plan Goals
2.  Organizational Goals
3.  Business Retention and Expansion
4.  Industrial Park
5.  LVN to RN Bridge Program
6.  On the Horizon
Curious about the meeting I requested to view the video   Despite holding the meeting on the second floor of the convention center there is no video to watch.

For the second time this year City Council conducted a strategic meeting without recording it.  This is important as direction has been given by Council members in meetings not recorded.  Several years ago City Councilman Kendall Hirschfeld said staff had been given the expectation that employee health insurance would remain flat relative to the prior year.  That secret expectation brought in Aetna with San Angelo Community Medical Center and its affiliated physicians as the sole local provider.

There were several interesting tidbits in Mr. Pena's document.  It indicated a feasibility study for rail access for the Industrial Park was underway.  Grants for rail made the "On the Horizon" list.  Create and update Incentives had Tax Abatement Program in parenthesis.  The solar farm on city land lofted the idea of tax abatement at Tom Green County Commissioners Court last week.

The City plans to shutter the Concho Valley Center for Entrepreneurial Development.  That showed up as "CVCED transition of accounting."  COSADC is exploring the creation of Certified Development Corporation, a nonprofit corporation that could leverage economic development support from local, state and federal sources.

Two additional items made the minutes of the meeting, extension of Interstate 27 and the ability of the Development Corporation Board to vet projects before they come to Council for approval.  The minutes do not mention the Bylaws or City ordinances relative to the Development Corporation.

One curious part of the bylaws is the required annual report from the Development Corporation to City Council.

The Board shall make an annual report to the City Council outlining the following:
1. A review of the progress and accomplishments of the Board in implementing the Development Projects; and
2. The activities of the Board for the budget year addressed in the annual report, together with any proposed change in the activity.
The annual required report shall be made to the City Council no later than May 1st of each year.
I asked if the development corporation in compliance with this bylaw requirement.  If so, how?  If not, what's the plan to get in compliance? Here's the reply from Economic Development Director Roland Pena:

I believe that the abstract information that you are asking about in the by-laws refers to the Corporation Capital Improvement Plan.   The COSADC Board to my knowledge has not had a Capital Improvement Plan.   It is my intention to do so upon being able to identify capital development projects.  At that point, I believe the Plan is rolled into the City's Capital Improvement Plan for review by the city council.   In addition, I do intend to produce annual reports to provide to COSADC and the City Council.

I searched the bylaws for the word "abstract" and this word does not appear at all in COSADC's bylaws.  However, an annual report requirement is in the bylaws and that was my question.  I've yet to see or hear a COSADC annual report since October 2013.  

Council authorized $325,000 for a new audio visual system that will enable recording in any environment.  It will be up and running in September.  Hopefully, that will end the recent series of untaped Council meetings.

Update 1-30-17:  The Development Corporation Board approved Annual Reports for 2013, 2014 and 2015 during their January 25, 2017 meeting.  There was no presentation of the reports.  City staff referred board members to the link on the city's website.  The 2016 Annual Report will be published after staff takes the Board picture.  There were no questions from board members on the item. 

Update 2-11-18:   The City did not record the Development Corporation strategic planning meeting held 1-5-18.  I learned this when I requested a copy of the video from the meeting.

Sunday, August 09, 2015

City Seeks Engineering Contractors & Water Master Plan Consultant

New City Engineer Russell Pehl and recently promoted Water Utilities Assistant Director Allison Strube face huge engineering demands as the City of San Angelo races to make up for lost decades in infrastructure upgrades and maintenance.  Both promotions came from within at a time when the city has struggled to recruit and retain engineering talent.  Pehl served as the Water Utilities engineer and Assistant Director Water Utilities prior to his promotion, while Strube worked as a project engineer before jumping to Water Utilities. 

The City put out two Request for Qualifications, one for Infrastructure Engineering and Surveying Services and another for a Water Master Plan.

The RFQ stated contracts will be awarded to a pool of 3-5 engineering firms in each area of expertise specified.  Under term the city seeks an engineering contract for five years, with up to three two-year extension, a possible extension of six more years.  The city's engineering shopping list is rather comprehensive.

The anticipated scope of services shall include, but not be limited to, the following:

• Train applicable City staff about the project details including applications, materials, and processes
• Prepare, attend, and present items or presentations to City staff or City Council
• Consultation, design, engineering, drafting, planning, and costing processes relating to Infrastructure Services
o Streets and street-related infrastructure to include curbing, pavement rehabilitation or replacement, sidewalks, lighting, and traffic control
o Water infrastructure to include rehabilitation or replacement of water mains, valves, fire hydrants, and water lines
o Sewer infrastructure to include rehabilitation or replacement of sewer mains, manholes, and sewer lines
o Surveying services to include GPS and conventional surveying
o Traffic study will examine the suitability of proposed improvements and analyze direct and indirect impacts related to the enactment of proposed improvements in support of the city’s transportation plans and needs. 
o Utility coordination of existing and proposed franchise utilities with utility, public, and private agencies.
• Public notice and public hearing assistance 
• Other duties as appropriate relating to Infrastructure/Capital Improvement Project (CIP) Services

The Water Master Plan engagement is only for one year but it's engineering heavy in content.

The City of San Angelo Water Utilities Department is seeking a response to this Request for Qualifications (RFQ) for a qualified consulting firm, with their team, to furnish a water master plan to include: 

• a water system model compatible with the City’s existing GIS software 
• determine projected water demands, hydraulic analyses and capacity requirements and provide Capital Improvement Plan (CIP) update 
• Master Plan Report and Council Presentation(s)
The Water Master Plan document did not mention the West Texas Water Partnership, a regional group the city supports financially for water master planning.

Both of these RFQ engagements should be pricey for a city with limited numbers of experienced engineers.  Executive Director of Public Works Ricky Dickson is the czar over all these major projects.  He's been scarce from City Council meetings since his promotion.

Ricky Dickson, director of the city’s water utilities department, will be promoted to the new role of executive director of public works in a move that reorganizes the City Council’s top two priorities — water and streets.

The move takes advantage of Dickson’s managerial experience in the two departments he will oversee — water utilities and operations, according to a city news release.

Dickson assumes his new role Nov. 1, 2014.  Dickson’s new position allows a sharper focus on planning and implementing infrastructure improvements, particularly those involving water. 
Some citizens recall Ricky's prior implementation of street maintenance and new water meters.  Both were substandard. The water meter project was to have been completed by 2015  Somehow the project went from 65% complete in the 2013-18 Capital Improvement Plan to 50% complete in the 2014-19 version.  The city sought bids on 3,200 more Neptune water meters with HD Supply the apparent winner.

I believe Ricky's term as leader of streets, water and engineering department cost area citizens greatly.  We stand to pay dearly San Angelo's leadership longstanding neglect and inattention to our streets and water infrastructure.  We will pay even more for our inability to recruit and retain qualified engineering staff, a more recent phenomena. 

Update 9-6-16:  A year later finds the Water Master Plan lingering as staff did not narrow the vendors for the Water Advisory Board to CDM Smith until May 2016.

Thursday, August 06, 2015

Grindstaff's Street Maintenance Talk Deja Vu

San Angelo City Councilwoman Elizabeth Grindstaff echoed points made by former City Engineer Clinton Bailey years ago.  The Standard Times reported her remarks to the West Texas Legislative Summit, which took up the abysmal state of our roads.

The cost to maintain a street for 25 years under a five-year maintenance plan can be $15.75 a square yard, and it can be milled and overlaid for $45 a square yard to extend its life. Without proper maintenance, the road base and surface fail, driving the cost to $140 a square yard to repair, she said.
The key is to act on streets at the lowest cost level, i.e. before they deteriorate to the next more expensive state for recovery.  City Manager Daniel Valenzuela has an eight year preventive maintenance plan, less than the five year one cited above.  Early street study results indicated San Angelo also has a massive number of streets requiring more expensive interventions to improve drive-ability.

"Simply turning our heads and pretending the problem is not there is going to be detrimental to the future of our community as well as our state.”

That's been San Angelo's past, which included seven years of service by Elizabeth Grindstaff as Assistant City Manager.  Streets were under the purview of Ricky Dickson and Shane Kelton.  I recall no dire warnings from any of these officials under City Managers Tom Adams and Harold Dominguez.  The people who stood watch over San Angelo's streets during their several decade decline are the people to bring them back to a state of health.  That will be an interesting thing to experience.  

Sunday, August 02, 2015

No Outside Bids to Develop Mary Lee Park

San Angelo's City Council will take action in the August 4th Consent Agenda to nix the only bidder to develop Lake Nasworthy's Mary Lee Park into a resort/marina area.  Council hired Gateway Planning in 2012 for $335,000 with the hopes that Gateway's connections would bring an outside developer.

The Standard Times reported in 2012:

Councilman Kendall Hirschfeld said the group could look beyond the city's connections and bring in "new money."

Hirschfeld said there could be many returns on investments, including new property taxes.
The city sent the RFP to twenty one potential developers. 

Not one replied.  The only bid came from Concho Cruises and Marina, the local group running charter boat services from Mary Lee Park.  City officials are recommending that bid be thrown out for not meeting all bid criteria.  The city is back to square one on Lake Nasworthy Development, but out $335,000.

Update 8-5-15:  San Angelo Live wrote "Cruise Boat Warrior Cut Out of Mary Lee Park Development. State of the Division reports that Concho Cruises was eliminated from consideration in its proposal to develop Mary Lee Park. You may recall Concho Cruises, whose representative urged city council to shut down the competing little steamboat operator at Lake Nasworthy in the opening salvos of the Cruise Boat War of 2014? Anyway. SoD suggests that local money is not wanted for the Nasworthy development initiative, and according to SoD, the vote to approve the consent agenda today will kill Concho Cruise's dreams forever."  Wow, I wrote the piece and didn't think most of that.  That said, I am grateful for Live linking to my piece.