Sunday, April 30, 2017

City to Spend Big on Phase 2 of Industrial Park

The City of San Angelo Development Corporation board approved items for Phase 2 expansion of the Industrial Park.  The first act was the hiring of a grant writer/administrator to pursue federal funding.  The Grant Writer Request for Proposal (RFP) indicated the scope of the project:

The purpose of this project is to obtain assistance in developing a successful proposal in submission to Economic Development Administration’s Grant and response to all aspects of the grant implementation regarding the Economic Development Administration’s (EDA) grant for water, sewer, street, and drainage infrastructure improvements for Phase 2 of the City of San Angelo Business-Industrial Park. The total cost of the project is estimated at between $2.5 and $3 Million.
City staff selected GrantWorks, an Austin based company.  Grantwork proposed a $4,000 fee to write the grant plus 4% of the amount awarded for administration.

EDA documents show criteria for federal funding from 80% of the total project to 50%.  Using the city's numbers the maximum amount Grantworks could earn would be $96,000 for grant administration.  Add the $4,000 writing fee and the city could pay Grantworks $100,000.  The minimum amount Grantworks could be paid for administration is $50,000.  With the $4,000 grant application the total could be $54,000.

Oddly COSADC board member Todd Kolls questioned paying experts $100,000 a year when the city could hire someone for less to perform those duties.  Assistant City Manager Michael Dane responded, saying this would be the only grant the city has not administered by staff.  The city's accounting department and internal auditor assist departments with grant management duties but it is the department's responsibility to oversee any grant. 

No board member asked how Phase 1 came about, how the city pursued grants and managed those activities?  Economic Development Director Roland Pena informed the board that COSADC did not have staff to administer the grant.  Oddly, Mr. Pena's LinkedIn page states:

Director of Economic Development
City of San Angelo Texas January 2014 – Present (3 years 4 months) 

Plan, coordinate, and direct the City's economic and business development activities; develop and implement Strategic Plan, recruit, identify and develop new NAICS eligible businesses; develop and maintain economic development partnerships; negotiate contracts administer grants; oversee municipal economic development projects. 
After approving Grantworks the Development Corporation board tackled engineering services for Phase 2 expansion.  BREP Coordinator Bob Schneeman presented a two year timeline for project completion.   Schneeman revealed a Rail Spur will not be part of Phase 2. 

Staff chose Parkhill, Smith Cooper over three local engineering firms.  Staff did not project a dollar amount for engineering services for the $2.5 to 3 million project.

I take it the $110,000 sewer extension already approved by the COSADC board fits within the numerous activities to expand the Industrial Park.  It will be interesting to see a total for all these associated projects and the cost to buy engineering and grant administration, services the city could conceivably supply from within.

It was odd watching Roland Pena try to spin Grantworks as a local firm as they have an employee/contractor in the area.   The Texas Comptroller shows Grantworks as an Austin company with a President/Director in the Houston suburb of Sugar Land.

Pena tried to highlight PSC as local.  He said PSC's land surveyor lives in the area and would be coordinating the project for its Midland office.  RFQ documents show PSC in Lubbock.

More than one board member wanted the City to use local engineering firms when possible.  The city's depleted engineering department and massive demands for expertise (roads, sewer, water) means the vast majority of engineering work is outsourced.

I understand the need to bring in outside expertise at times, however the City of San Angelo seemingly needs consultants for almost any substantial project.  The Development Corporation is the latest evidence of this practice.

Update:  COSADC board also approved $165,000 for additional fiber optic telecommunications for the Industrial Park.

Update 8-20-17:  The Development Corporation board will take up the hiring of Grantworks and  Parkhill, Smith Cooper in the August meeting.

Saturday, April 08, 2017

San Angelo's Town & Country to Stripes to ?

San Angelo Live teased readers with the prospect of 7-Eleven taking over the town through a buyout of Stripes convenience stores. 

Town and Country Food Stores sold out to Susser Corporation in 2007.  New owners re-branded convenience stores with the Stripes name.

Susser monetized the company by selling a portion to Wellspring Capital Management and planned to spin off its petroleum supply business in 2012.  Susser sold all its divisions to Sunoco LP/Energy Transfer in 2014. 

A new moniker is on the horizon as Sunoco plans to sell separately San Angelo's Stripes stores, along with 200 odd stores that didn't make the cut for 7-Eleven ownership.  Two days ago the company reported:.

Assets being sold to 7-Eleven include approximately 1,110 convenience stores in 19 geographic regions primarily along the East Coast and in Texas, and the associated trademarks and intellectual property of the Laredo Taco Company and Stripes.  As part of the transaction, SUN will enter into a 15-year take-or-pay fuel supply agreement with a 7-Eleven subsidiary under which SUN will supply approximately 2.2 billion gallons of fuel annually.  This supply agreement will have guaranteed annual payments to SUN, provides that 7-Eleven will continue to use the Sunoco brand at currently branded Sunoco stores and includes committed growth in future periods.

Approximately 200 convenience stores in North and West Texas, New Mexico and Oklahoma will be sold in a separate process
San Angelo's Stripes stores will learn of their new owner before the end of the year.  I wonder if former Town and Country CEO Alvin New will pull together an investment group to bid on the 207 stores 7-Eleven did not buy.  New is behind the Jack's convenience stores in San Angelo.  Might Stripes get jack'd?

Update 12-7-17:  Sunoco will lease, not sell, the 207 stores to a "proven operator."  No word yet from Sunoco if Alvin New is part of the new proven operator group.  Sunoco is seeking a 50 percent reduction in operations costs.

Wednesday, April 05, 2017

Water Department Needs $25 Collection Fee

San Angelo City Council talked water finances without referring to the city's most recent comprehensive annual financial report (CAFR).  The issue concerned the $25 late fee charged by the Water Department for late bills.  City Councilwoman and Mayoral Candidate Charlotte Farmer said the late fee was intended to help with conservation.  Council incentivized citizens to conserve years ago with a 45% rate hike.  It worked amazingly well.   

The city doubled down on rate increases with its five year plan to hike rates another 55%.  Money is flowing in.  The 2016 CAFR shows the city had $27.4 million in water and sewer fund investments (on page 31).  It also showed both the water and sewer funds had a great year.

Yes, the city is building reserves to fund future capital projects but it behooves council to recall that significant dollars are being generated that end up in a bucket different from the targeted 75 day cash position.  Could the city have hit the 75 day target if it did not put such a large amount, $9,744,418 into investments (page 33)?

Saturday, April 01, 2017

Council to Deliberate Lease for 1146 City Farm Road

San Angelo's City Council will take up a lease the city has for 1146 City Farm Road in Executive Session on Tuesday.  The Tom Green County Appraisal District shows this address to have 651 acres with no buildings or improvements.  A search of the city's website produced no results for this address.

Not far from this address is a lease the city negotiated with OE Renewables for a 143 acre solar energy production farm.

The city approved the OE Renewables lease in August 2014 and expanded the amount of property in May 2015.  That project is at least six months overdue and there's been no word from the City or City Council on its status.

The property leased to OE Renewables overlaps with a 2012 proposed lease between the city and Lucas Off Road Racing.  That $1 annual lease was for 100 acres in the City's Industrial Park.  That project never came to fruition.

It's not clear when or if citizens will learn the issues regarding 1146 City Farm Road.  Last month City Council took no action in Executive Session on the Spillman contract.  Later that day the city announced it was suing Spillman for $3.875 million.   One would think projected attorney's fees would total more than $50,000 and need City Council's approval to go forward with the Spillman lawsuit. 

I doubt 1146 City Farm Road has anything to do with Lucas Off Road Racing or OE Renewables Solar Farm.  It's too far away from property shown in prior proposals to City Council.  There's more to learn about the city's plans in this area.