On Thursday night the Forney City Council and the Forney TIF Board held a Joint Workshop in which they first heard a revealing presentation on the formation of the Gateway TIF development agreement provided by Hawes, Hill & Associates LLP, Managing Partner David Hawes.
The founder of a highly respected and experienced economic development consulting firm, David Hawes provided a thorough evaluation of the TIF development agreement and painstakingly detailed several problems related to the formation and administration of the ten year old development contract.
After briefly introducing himself and speaking about his qualifications, Hawes said “I’m going to put this right out front. In absence of an ordinance that states otherwise, you have an ordinance that is creating a zone and attached is an exhibit presented as the Project Plan and Finance Plan, its three pages. When I get through with the TIF presentation you will see that this doesn’t come anywhere close to meeting the requirements of the statue under Chapter 311 of the Tax Code.”
He stated “The other concern I have is that what typically happens is there is a public hearing for preliminary financing. I don’t have certain information so maybe that happened, or not. But as far as I’m concerned, if this is the attachment for the ordinance, than this is a Preliminary Financing Plan, not a Project Plan.
Explaining he said “Because a municipality must have a public hearing on the Preliminary Financing Plan and Project Plan and they must identify the TRIZ Board. Then the TRIZ Board formulates the actual Finance Plan and Project Plan and they send it back to the City Council to be approved by ordinance.”
He stated “I don’t have any records to indicate any of that, so we have some issues here that we’re going to have to live with. I don’t see a Project Plan and Finance Plan that was approved by the TRIZ Board and sent to Council for approval by ordinance, so with that, this TRIZ plan doesn’t meet the requirements of Chapter 311.”
Consultant Hawes said “I doubt very seriously that you’d be able to issue any debt because they send these transcripts to the Attorney General so that any debt can be reimbursed to the developer. I just want to say this upfront. This should all have been done back about ten years ago. It should have been a Project Plan and Finance Plan. If there was one that was approved by the council I don’t have it and I don’t think you have it.”
City Attorney Jon Thatcher confirmed that the city was not in possession of any other documents or meeting minutes that pertain to the project, before Consultant Hawes moved on to discuss issues relating to the 12% interest rate written into original development agreement.
Consultant Hawes explained, “The problem with this is, and I ran into this in Missouri City, the developer got a high interest rate and never got paid back because you must pay the interest first. So it just doesn’t work. It doesn’t work for the developer. But at the same time we have to have a mechanism in place to pay the developer back.”
He said “But 12%, I’m not sure but as they say ‘it may be legal but it’s not right’. It’s not sustainable. It doesn’t work. It’s not equitable. Look at the amount of interest against the cost, it’s just ridiculous. It tells you where you’re headed. And you’re not going to get there. You’re never going to pay this off.”
Explaining Hawes said, “Plus I think there will be some problems at the Attorney General’s Office about paying interest beyond the actual cost of interest. Quite frankly, that is not something the statute allows for. It allows for interest, but I don’t believe it allows for interest that’s over what interest actually is.”
The Forney City Council, less Member Robbie Powers who was unexplainablely absent, voted unanimously to hire Hawes, Hill & Associates LLP to conduct an in-depth analysis of the TIF development agreement, which will include researching the formation procedures used for the development agreement.
Following the Council, the four members of the city appointed Tax Increment Finance Board, County Commissioner Skeet Phillip, County Commissioner Jakie Allen, former city council member David Holler and Mitch Owens, also voted unanimously to support the hiring of Hawes, Hill & Associates.
Written by: Denise Bell