Sunday, September 20, 2015

City Engineering Drought Results in $1 Million Award

San Angelo's City Council approved an indefinite quantity-indefinite delivery contract for engineering services up to $1 million for major projects involving street and water line upgrades and replacement.  City staff proposed narrowing the list of firms to five.  Council disagreed and instructed staff to consider using any of the ten, which included two local firms, KSA Engineers and SKG Engineering.

The interaction between Russell Gully of SKG Engineering and new City Engineer Russel Pehl made me wonder if there was more underneath the surface.  I learned Pehl once worked for SKG Engineering, prior to his joining the City as a Water Utilities Engineer.  From there Pehl became City Engineer, where he now stands to serve as a general contractor for engineering services his department cannot provide.  The City gave him a $1 million checkbook.  It will be interesting to see how he spends it and if he sends any of it to his old employer. 

Update 9-9-23:  The city's engineering drought continues.

Grindstaff Concerned about Demolishing Historic Building

San Angelo City Councilwoman Elizabeth Grindstaff expressed concern about the destruction of a historic building in downtown San Angelo and the City approving $75,000 in TIRZ funding for that very purpose.  The building at 236 W. Beauregard is part of the Butterfield Building complex.  City staff stated the building had become a nuisance, occupied by vagrants and drug abusers.

That certainly described the Roosevelt Hotel when I moved to San Angelo in 1994.  Shannon Medical Center effectively barricaded the building, using it for storage.  The Roosevelt was not destroyed and has a good chance of returning to downtown as a viable entity.  The building currently under consideration for demolition is shown below:

Grindstaff's other concern regarded the public footing much of the bill for demolition in cases where the owner failed to maintain the property.  Butterfield Plaza, Inc. owns the complex.  James and Debbie Chiu of Odessa, Texas are listed as officers of Butterfield Plaza.  They also own several restaurant companies in Odessa.

ERA Realtors' website shows the Butterfield complex for sale for $1.5 million. City documents indicate the cost of asbestos removal and demolition to be $231,000.  The TIRZ application submitted by the building's owners refers to the building as "abandoned," while staff call it "condemned". Excerpts from the TIRZ application state:

We are asking for help in demolishing the abandoned building located at 236 W. Beauregard Ave and turning it into a parking lot. The property located next door is the Butterfield Plaza I and II buildings. We are currently renovating the Butterfield buildings with a scarce budget, but have already brought in over 8 new business into area within the past year. One of the buildings don't have any tenants and will require a significant amount of money to remodel 

First, at it's current state, the apartment is depreciating to a dangerous state. It would be too costly to try and rehab the complex. It is safer to tear the property down and turn it into a parking lot that will create more open space to showcase the surrounding structures, but add utility at the same time. By helping fund this project, we will be enhancing public safety, improving vehicular infrastructure, and beautifying downtown.
Tom Green County Tax Appraisal District records show the Chiu's purchased the Butterfield complex in 1995.  The buildings deteriorated the last twenty years under their ownership.   The city, through its TIRZ structure, will help rid the community of one historic eyesore.  The project has a final hurdle before the Design and Historic Review Commission.  Then it will be history. 

Monday, September 14, 2015

City Council Bypasses Animal Shelter Advisory Committee in Spay/Neuter Ordinance

San Angelo's City Council will hear a proposed Spay/Neuter Ordinance in their meeting tomorrow without the advice and consultation of the Animal Shelter Advisory Committee, which has had its last two meetings cancelled.

The Animal Shelter Advisory Committee makes recommendations regarding Animal Services policy to the City Council.
There is no opportunity for the committee to advise Council during their September meeting as the ordinance is not on their agenda:

1. Consideration of approving the June 18, 2015 regular meeting minutes.

2. Requirement for ASAC board members to visit and tour the shelter at least once a month
3. Update on cat colonies. 
4. ASAC role on increasing the number of FTEs at the Shelter. 
5. Consideration of any Future Agenda Items. 
6. Adjournment.
Also missing is the volunteer program management said in June it needed approved ASAP.  However, Animal Shelter Advisory Committee board members have two new tasks to perform under management's orders.  Rather than recruit volunteers who expect a two-way relationship, management wants to increase the number of FTEs, hands they can command and control.  It will be interesting to see how this gets twisted into an ASAC role.  It will take someone slick to accomplish this.  

Sunday, September 13, 2015

County Indigent Health Remains Firmly in Black

Tom Green County's Indigent Healthcare Program is not in danger of overspending despite assertions from Treasurer Diana Spieker that illegal immigrant healthcare bills pose a huge threat. 

Tom Green County's 2016 budget shows nearly $376,000 for Indigent Health and $1.8 million for Transformational Waiver DSRIP IGT, which levers federal Medicaid funds.   These two expenditures total $2.18 million of the $2.88 million the state requires the county to set aside for Indigent Health, leaving a $700,000 surplus.

The County's $1.8 million turns into $3 million for local providers after the federal match.  Shannon Medical Center receives 95% or nearly $2.9 million, while SACMC gets 5% or roughly $150,000.  These percentages are a change from 1998-2000 era when Shannon provided 80% of the County's Indigent Health, while Community delivered 20%.  In exchange for these funds both hospitals agree not to bill the Indigent Healthcare program for care provided within their system.  The fund pays independent providers with its roughly $200,000 patient care budget. 

Spieker talked about the time when the program needed state help, ably provided by Representative Rob Junell, Chair of the Texas House Budget Committee.  She did not mention the volunteer group of local leaders who helped put the Indigent Healthcare program on a better course.  They included Shannon's Insurance Executive Marinan Freeman, and Community's Chief Financial Officer Ed Romero.

This group recommended a series of coverage changes that would enable the program to spend its resources more effectively.  The last year Indigent Health needed state subsidies occurred in 2000.

Budget Spent Surplus/Deficit (-)
1998  $      1,266,266  $     1,612,048  $           (345,782)
1999  $      1,282,296  $     1,969,953  $           (687,657)
2000  $      1,325,920  $     1,545,253  $           (219,333)
2001  $      1,461,856  $        925,307  $            536,549
2002  $      1,505,039  $     1,144,784  $            360,255
2003  $      1,505,039  $        700,032  $            805,007
2004  $      1,635,235  $        582,773  $         1,052,462
2005  $      1,750,555  $     1,028,674  $            721,881
2006  $      1,920,942  $     1,288,048  $            632,894
2007  $      1,920,942  $     1,221,172  $            699,770
2008  $      1,920,942  $     1,327,742  $            593,200
2009  $      2,039,178  $     1,806,595  $            232,583
2010  $      2,015,580  $     1,358,386  $            657,194
2011  $      2,086,095  $     1,432,062  $            654,033
2012  $      2,227,722  $     1,311,760  $            915,962
2013  $      2,339,750  $     1,203,472  $         1,136,278
2014  $      2,493,543  $     1,311,097  $         1,182,446
2015  $      2,788,617  $     1,597,798  $         1,190,819

 $       10,118,561

Since then it's been a cash cow, but the years under Treasurer Spieker have produced the greatest gains. It's hard to see how that's at risk with federal matching funds and existing provider contracts. 

Friday, September 11, 2015

Bold San Angelo

The Standard Times reported:

San Angelo is poised and committed to making strides in top five priorities set by the City Council two years ago: Water, streets, a police station, employee pay and development processes.

“Boldness isn’t charging forward blindly without a plan, and with a total disregard for financial responsibility,” Valenzuela said. “Boldness means making tough decisions now knowing there will be criticism for these efforts.”
Boldness is committing $4 million to a project not in the top five at the last city council meeting.  Boldness is also holding a series of strategic planning meetings outside council chambers, not recording and not sharing their deliberations with the public.

That's $4 million less for water, streets, the new police station, employee pay and the ever elusive development process. 

Wednesday, September 09, 2015

Treasurer Crying Wolf on Tom Green County Indigent Health?

San Angelo Live reported on concerns by Tom Green County Treasurer Donna Spieker the Indigent Healthcare Fund may run out of money due to high usage by illegal immigrants.  The piece stated::

At the present, Tom Green County spends an average of $2 million annually on indigent health care; currently, there are approximately 650 active clients.
The July 2015 Indigent Health report approved by County Commissioners shows the fund spending less than $100,000 year to date.  For over a decade the County budgeted 6% of its General Tax Levy, roughly $2 million a year.  It hasn't come close to spending it.

Tom Green County has enjoyed a massive surplus from Indigent Health.  It's not clear the County is even close to having one bad year, but if it did, some of the millions in the fund's longtime surplus should be considered for use. 

Monday, September 07, 2015

SAPAC Project Saved by City Auditorium's Historical Designation?

Assistant City Manager Rick Weise informed City Council that the new San Angelo Performing Arts Center could be constructed if the city mobilizes enough cash for the contractor's $10.7 million guaranteed maximum price.  Adding $800,000 in design fees the project needs $11.5 million in cash to proceed.  The project has 60 days from August 28th to garner the funds.  The City is kicking in $6.2 million:

Remaining half cent sales tax funding from prior COSADC award - $1.9 million
New half cent sales tax COSADC award - $1.5 million
New City Council funding awarded - $2.5 million (half from Hotel taxes, half from Trash Contract Royalty)
Insurance proceeds for roof repair - $300,000
Add SAPAC's $5 million in naming rights, as shown on the city presentation, and construction can start with a mere $300,000.

Weise hinted at the next big funding source, state and federal tax credits for historic preservation.  Texas tax credits will fund 25% of eligible rehabilitation costs, while the feds will pick up 20%.  That means 45% of the cost of rehabilitating the auditorium could be funded through tax credits.  Neither will pay for the costs of a new addition, a significant part of the project.

City Council has three meetings to get this project approved before the guaranteed bid expires.  

The (Texas historical preservation) tax credit is generally allowed in the taxable year that the rehabilitated property is placed in service or the project is completed. Unused franchise tax credit can be carried forward five years or transferred to another entity.
Whatever amount the project gets in preservation tax credits should be added to the total funding provided by the City of San Angelo.  It's the City Auditorium's age and character that qualify the project for historical preservation funding.

The hurdle to getting construction started is rather low.  Raising funds for the myriad of needs post construction is much larger.  That's another $2.6 million.

If tax credits can pay for a good chunk of the $10.7 million construction cost, that would free up existing funds for other purposes.  We'll see how much funding state and federal tax credits reduce the burden.

Update 12-1-15: The Standard Times reported:  "By extending the lease of office space, SAPAC could receive at least $1 million in historic tax credits."  Add another $1 million courtesy of the city.

Update 4-20-16:  Historic tax credits for the auditorium project will be at least $1.6 million.  For this to happen the city must increase its support of the project to SAPAC, so SAPAC can "spend" the money and be reimbursed via the historic tax credits.

Friday, September 04, 2015

SAPAC's Long Labor Continues

The Standard Times reported on efforts to bring to life San Angelo's Performing Arts Center in October 2011:

The coalition has raised $4.7 million in commitments from private donors and plans to raise a total $13.5 million to fulfill the vision, which includes upgrades to City Auditorium, a 300-seat theater in the warehouse, six ballet studios, offices and storage, rehearsal space and joint ticket facilities and a lobby big enough for parties.  The center is well on its way from vision to its projected completion in January 2014..
The auditorium languished as work went ahead on City Hall and infrastructure improvements to support the auditorium.

A project change order and planning issues have put the $9.1 million renovation of San Angelo City Hall and the "Old Library" building a few months behind schedule.

The project is being funded through a variety of sources: a $1.7 million bond backed by general fund revenue (i.e. sales and property tax and fees), $865,000 in stimulus funding, $974,616 from the federal Community Development Block Grant program and $7.5 million in new debt issuance.
That's over $10 million in funding without the auditorium.   Since 2011 not much has changed, other than the city kicking in an extra $4 million, $2.5 million from City Council and $1.5 million from COSADC.:

The project has an estimated price tag of $15.2 million under the supervision of Lee Lewis Construction Inc., about $1.8 million of which has been funded and completed.

About $7.1 million in funding is secure through tax dollars, fundraising efforts by SAPAC and a $2.5 million donation for naming rights. The city of San Angelo Development Corp. allocated $1.5 million for the annex project, ratified by the council Tuesday, leaving only the money put on SAPAC’s tab.

City officials are confident SAPAC can raise the $3.1 million.
SAPAC has sixty days to raise a good chunk of the $3.1 million. It will be interesting to see the final tally of private vs. public money for this project.  It's taken four years to get this far.  The projected opening is now Spring 2017.

Wednesday, September 02, 2015

MedHab Website Hefty Lift

MedHab took down their website in June 2013 with promises to construct something better.  Despite conducting two capital raises since that time a new website is yet to appear.

It's been three and a half years since MedHab CEO Johnny Ross promised City Council up to 227 jobs in return for a $3.6 million economic development incentive package.  I expect San Angelo city leaders want the silence broken soon. 

Tuesday, September 01, 2015

Six Days Produced $580,000 for OE Renewables Texas LLC

San Angelo's City Council rubber stamped the Development Corporation's recommendation of $583,814 in tax rebates for OE Renewables Texas LLC over an eight year period.  Neither body raised a question as to how OE Renewable's one primary job, characterized by the company as "mostly unmanned", qualified the company for this amount of public support

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.
Neither asked how power generation qualified for tax rebates as it is not on the list of eligible areas.

Businesses eligible for the tax abatements are manufacturing, warehousing/distribution centers, home/regional administrative offices, data processing centers, and telecommunications services. 
Neither Council or COSADC's board asked how this deal would become a bonanza for the City of San Angelo after the first five years, as stated by Mayor Morrison in May of this year.

I imagine the rapidly declining cost of fossil fuels jeopardizes this project, even with significant federal tax credits.  Did OE Renewables threaten to pull the solar farm completely without public subsidies from the City and Tom Green County?

City Councilman Johnny Silvas had the misfortune of presiding over this vote, just as he did with MedHab's $3.6 million economic development incentive package on behalf of Mayor Alvin New.  We will see if this project comes to fruition like the long awaited MedHab production facility.   

Time will also tell if the city receives a penny of tax revenue from OE Renewables Texas LLC, especially as this developer plans to sell the project as an investment revenue stream.  The time to rubber stamp the $583,814 public subsidy began last Wednesday at COSADC and culminated today at City Council.  The public deserved some discussion, some exploration as to how this truly benefits the city.  The benefit to OE Renewables Texas LLC is clear.