8.C. Facilities update on the following projects: City Hall, Grant Street Drainage, Service Center North, Service Center Fuel Islands, Transformation Park, Civic Center Coliseum Flooring, Amarillo Police Department Regional Crime Center, and Municipal Court Building Streetscape

[8.C. Facilities update on the following projects: City Hall, Grant Street Drainage, Service Center North, Service Center Fuel Islands, Transformation Park, Civic Center Coliseum Flooring, Amarillo Police Department Regional Crime Center, and Municipal Court Building Streetscape]

FACILITIES UPDATE, HE'S GOING TO RUN US THROUGH, I DON'T KNOW, TEN PROJECTS OR SO, I HEAR IT'S A QUICK PRESENTATION, BUT VERY EDUCATIONAL.

.>> WELL, I'M NOT AS ELOQUENT OF A SPEAKER AS DONNY IS, SO WE DID A VIDEO PRESENTATION SO.

[LAUGHTER] NOT MANY ARE, SIR.

WHAT YOU'RE GOING TO SEE IS BASICALLY WHAT WE PRESENTED TO YOU ABOUT A MONTH AND A HALF AGO, WHERE THAT JOB WAS AT THAT TIME AND THEN SEE WHERE YOU'RE AT CURRENTLY.

YOU'LL SEE IT TIES IN WITH WHAT WE HAD FOR THE RIBBON CUTTING TODAY AS WELL.

AND I KNOW SOME OF YOU COUNCIL MEMBERS HAVE HAD AN OPPORTUNITY TO GO TO PD AND SEE SOME OF THAT.

SO WITH THAT BEING SAID, WE'LL GO AHEAD AND GET IT STARTED.

[MUSIC]

>> MANY OF THE PROJECTS THAT YOU SEE REPRESENTED THERE, I'LL GIVE YOU AN EXAMPLE THAT LAST ONE, WHICH WAS THE CIVIC CENTER, COMPLETELY REDOING THE ARENA FLOOR, NEW ICE, REBUILD OF THE AMMONIA PLANT.

CURRENTLY, TODAY, IF YOU WAS TO GO OVER THERE, THE HOCKEY ARENA IS READY TO GO AND READY TO PLAY HOCKEY.

THAT WAS PROBABLY ONE OF OUR MORE STRESSFUL TIME CRUNCH PROJECTS, BUT IT MOVED ALONG.

YOU DID SEE THE GRANT STREET PROJECT, THAT STORM DRAINAGE, THAT'S REALLY GOING TO BENEFIT THE CITY AS FAR AS MITIGATING A LOT OF THE FLOODING ISSUES THAT WE HAVE ON 10TH AND THIRD STREET.

ALL OF THESE PROJECTS ARE MOVED ALONG.

YOU SAW THAT MOST OF THOSE PROJECTS ARE AT 85% COMPLETE WITH THE EXCEPTION OF TRANSFORMATION PARK, THE CABIN COMMUNITY.

I WOULD SAY WE'RE CLOSE TO 70% ON THAT ONE RIGHT NOW.

MOST OF THESE JOBS, EVEN FROM THE VIDEO, HAVE CHANGED DRAMATICALLY FROM THAT POINT.

>> [INAUDIBLE] AS WE MOVE FORWARD, BUT I APPRECIATE YOU ALL SHOWING UP.

WE'RE REALLY GETTING OUT THERE THE FUEL SITE, SEEING EFFICIENCIES THAT MR. HARTMAN POINTED OUT.

ALL THESE WE CAN DO. ALL OF THESE PROJECTS [INAUDIBLE] COMMUNITY.

I'LL BE HAPPY TO ANSWER ANY QUESTION.

>> QUESTIONS FOR MR. DANFORTH.

[01:05:04]

>> [INAUDIBLE].

>> MAN, JERRY HAS TWO OF OUR FAVORITE PHRASES ON SCHEDULE AND UNDER BUDGET.

HE'S GOT THOSE DOWN. GOOD JOB, JERRY.

THANK YOU FOR EVERYTHING.

MOVING FORWARD. MOVE OVER TO ITEM 8D.

[8.D. Discuss and receive feedback on possible amendments to the Amarillo Economic Development Corporation – Type A’s Articles of Incorporation intended to better ensure operational compliance with applicable law]

DISCUSS AND RECEIVE SOME FEEDBACK ON TYPE A ARTICLES OF INCORPORATION.

BEFORE WE GET MR. HYDE UP AT THE PODIUM.

WE'VE BEEN DOING A GOOD JOB EVERY MEETING OF TRYING TO CONTINUE TO UPDATE THE RESEARCH ON THE THREE-YEAR LOOK BACK IN THE REVIEW.

U'NEILL GERBER IS OUR INTERNAL AUDITOR THAT'S WORKING ON THAT.

WE HAD IT SCHEDULED TO BRING THAT FORWARD TO YOU AGAIN TODAY TO JUST CONTINUE TO VET OUT SOME OF THE QUESTIONS THAT COUNSEL HAS BROUGHT FORWARD AND UPDATE THE PUBLIC ON WHERE WE'RE AT WITH SOME OF THE FINDINGS.

HE IS OUT OF TOWN THIS WEEK AND NOT HERE, AND SO LAST WEEK HE DIDN'T HAVE EVERYTHING READY FOR US.

MR. PATH, IF YOU DON'T MIND, COULD YOU JUST GIVE US A LITTLE BIT MORE BACKGROUND ON WHERE WE'RE AT WITH THAT AND THEN WE'LL TRANSITION.

>> INTERNAL AUDIT, THEY COMPLETED THEIR REVIEW OF THE COUNCIL REQUESTED REIMBURSABLE ITEMS AND SOME EXPENSES, AND REPORT HAS BEEN SENT TO THE CITY COUNCIL AND YOU'VE ALSO RECEIVED THE SUPPORTING DOCUMENTS TODAY AS WELL.

AGAIN, WE HAD PLANNED TO HAVE A PRESENTATION TODAY, BUT U'NEILL HAD A MUCH WELL DESERVED VACATION PLAN THIS WEEK, SO HE'S OUT, AND I DO FEEL IT'S BEST THAT U'NEILL PROVIDE SUMMARY AND ANSWER THOSE QUESTIONS, AND SO WE'LL HAVE HIM PLAN FOR THE NEXT COUNCIL MEETING.

>> REALLY GOOD, SIR. JUST TO CONTINUE WITH OUR COMMITMENT OF JUST WORKING OUT IN FRONT OF EVERYONE.

COUNSEL IS NOW IN POSSESSION OF THOSE AS OF AN HOUR AGO, TWO HOURS AGO, MAYBE.

WE'LL REVIEW THOSE, REDACT THE PRIVATE INFORMATION NEEDS TO BE REDACTED.

THAT'LL AGAIN COME TO THE PUBLIC SO YOU GUYS CAN SEE EVERYTHING WE'RE SEEING.

THEN WE'LL CONTINUE FORWARD WITH THIS AND WE REALLY FEEL LIKE WE'RE CLOSE TO GETTING ALL OF THIS TAKEN CARE OF AND BEING ABLE TO MOVE FORWARD.

MR. GEORGE HYDE, I KNOW YOU'VE GOT A PRESENTATION HERE.

YOU'VE WORKED PRETTY DILIGENTLY IF YOU COME FORWARD IN MAKING RECOMMENDATIONS.

ONCE AGAIN, THIS IS A DISCUSSION ONLY, AND WE WANT TO HEAR WHAT YOU HAVE TO SAY.

WE WANT TO HEAR WHAT COUNSEL HAS TO SAY AND TRY TO MOVE THIS FORWARD AND SEE IF WE CAN COME TO A GOOD SOLID PLAN OF ACTION.

>> FIRST OF ALL, I FEEL LIKE I'M GOING TO SWALLOW THIS A LITTLE BIT.

I WANTED TO TALK A LITTLE BIT ABOUT SOME OF THE FEEDBACK I HEARD FROM PAST DISCUSSIONS.

THE INFORMATION THAT I'M PROVIDING TO YOU TODAY IS GOING TO BE MIRRORING OR MATCHING, SO TO SPEAK, WITH POTENTIAL CHANGES THAT I'VE IDENTIFIED BASED ON THE FEEDBACK THAT I'VE GOTTEN FROM COUNSEL, AS WELL AS THE STATE LAWS.

THE CONCERN THAT HAS BEEN CONTINUING THROUGHOUT THE PROCESS IS THAT THERE HAVE BEEN A NUMBER OF CLAIMS THAT WE WE HAD NO PROTOCOLS, WE HAD NO POLICIES.

WELL, AND I DON'T MEAN ANY OFFENSE TO THIS, BUT IGNORANCE OF THE LAW IS NO DEFENSE.

WHEN YOU COME TO PUBLIC INFORMATION AND PUBLIC RULES, YOU'LL SEE THAT THERE ARE FIDUCIARY OBLIGATIONS THAT THE BUSINESS ORGANIZATIONS CODE PROVIDES THAT PLACES THE BOARD IN A POSITION THAT THEY ARE RESPONSIBLE IF THEY ARE NOT DOING THEIR JOB AS A BOARD.

THAT IS OUTLINED IN OUR DISCUSSION TODAY, AS WELL AS THE OBLIGATIONS AND AUTHORITIES OF HOW EXPENDITURES ARE MADE.

WHAT I WANT TO DO IN THIS THAT I LOOKED BECAUSE IN ONE PARTICULAR PROVISION, I WAS TRYING TO FIND LEGISLATIVE HISTORY, AND I WENT ALL THE WAY BACK TO THE INDUSTRIAL CORPORATION ACT OF 1979, AND SECTION 33, WHICH WE'LL TALK ABOUT UNDER ITS CODE NOW, WAS PART OF THAT INITIAL CREATION OF LOCAL GOVERNMENT CORPORATION RULES.

BUT BECAUSE THERE HASN'T BEEN ANY CONTROVERSIES, TYPICALLY BECAUSE YOU ARE IN CONTROL OF THE ECONOMIC DEVELOPMENT CORPORATIONS BOARD AND THEIR EXPENDITURES, THERE ISN'T A CASE LAW ON IT, BECAUSE IT WAS SOMETHING THAT THE LEGISLATURE HAS PROVIDED AND PUT INTO THE HANDS OF THE CITY COUNCIL.

WITH THAT BEING SAID, SOME OF THIS IS A LITTLE BIT SMALL, SO I APOLOGIZE IN ADVANCE.

I DIDN'T KNOW HOW BIG TO MAKE IT.

BUT FIRST OF ALL, WE ARE AMENDING AND RESTATING ARTICLES OF INCORPORATION OF THE AMARILLO ECONOMIC DEVELOPMENT CORPORATION PURSUANT TO SECTION 501.011 OF THE TEXAS LOCAL GOVERNMENT CODE, AND UNDER THE AUTHORITY PROVIDED TO THE CITY COUNCIL UNDER 501.401 OF THE SAME CODE.

THERE'S GOING TO BE PREDOMINANTLY THREE AREAS OF LAW

[01:10:01]

THAT I'M GOING TO DISCUSS, CHAPTER 501, WHICH IS THE TYPE A CORPORATE RULES FOR ECONOMIC DEVELOPMENT CORPORATION, 504, WHICH IS APPLICABLE TO TYPE A LOCAL GOVERNMENT CORPORATIONS IN THE MANNER IN WHICH THEY'RE CREATED, AND THEN CHAPTER 22 OF THE BUSINESS ORGANIZATIONS CODE, WHICH SPECIFICALLY APPLIES TO ORGANIZATIONS THAT ARE NONPROFIT CORPORATIONS IN TEXAS.

WHAT YOU'LL FIND IS THAT THE ECONOMIC DEVELOPMENT CORPORATION IS A NONPROFIT CORPORATION, BY STATUTORY EDICT.

HOWEVER, WHEN THE RULES FOR A NONPROFIT CORPORATION CONFLICT WITH THE RULES OF CHAPTER 501 OR 504, THE RULES IN 501 AND 504 TRUMP THE RULES IN THE BUSINESS ORGANIZATION'S CODE.

THAT'S BECAUSE YOU'VE BEEN CREATED A SPECIAL TYPE OF CORPORATION, WHICH IS FUNDED BY TAX DOLLARS AND CONTROLLED BY THE CITY COUNCIL.

CONNECT IT. THERE WE GO.

HERE, FOR INSTANCE, ON THE LEFT HAND SIDE OF THE ITEM IS LANGUAGE WITH REGARDS TO WHAT'S IN THERE AND THEN ON THE OTHER SIDE, THESE ARE THE TWO PROVISIONS.

I'M SORRY. LET ME DO THIS AGAIN.

IT WON'T LET ME BACK UP. I WENT TOO FAR.

HERE I REFERENCED 501.011 AND 501.401.

THIS IS ONE OF THEM WHERE 501.011 AND 501.401 ARE PROVIDED IN THEIR TOTALITY TO THE CITY COUNCIL AND TO THE PUBLIC.

THESE ARE THE PROVISIONS OF LAW THAT AUTHORIZE US TO DO WHAT WE'RE DOING TODAY.

I JUST WANTED TO POINT OUT UNDER 501.401, AND I'M GOING TO DO THIS THROUGHOUT THE CONSTRUCT IS THAT YOU'LL SEE OVER AND OVER AGAIN WHERE THE REFERENCE OF THE OBLIGATION OF THIS ORGANIZATION TO APPROVE PROJECTS AND EXPENDITURES IS IN MORE THAN ONE PLACE IN THE CODE.

HERE UNDER 501.401 TO BE THE AUTHORITY OF AN AUTHORIZING UNIT UNDER THIS SECTION IS LIMITED ONLY BY THE LAW OF THE STATE ON THE IMPAIRMENT OF CONTRACTS ENTERED INTO BY THE CORPORATION.

RIGHT ABOVE THAT, YOU'LL SEE THAT THIS UNIT, THE CITY COUNCIL HAS THE AUTHORITY TO TERMINATE THE CORPORATION.

I'M NOT SAYING THAT THIS IS A OPTION FOR YOU.

IT'S JUST AN EXPLANATION OF THE LAW.

IF THE CITY COUNCIL CHOSE TO TERMINATE THE EXISTENCE OF THE CORPORATION AND THE CORPORATION HAD MULTIMILLION DOLLAR INCENTIVE PROGRAMS AND OTHER CONTRACTS IN PLACE, YOU WOULD NOT BE ABLE TO HAVE THAT TERMINATION BE EFFECTIVE UNTIL ALL OF THOSE CONTRACTS WERE FULFILLED OR EXPIRED.

THAT'S IN ORDER TO ENSURE THE CONTRACTUAL SUPPORT FOR THE OTHER PARTIES WHO ARE INCENTIVIZED TO COME TO YOU.

NOW THE ARTICLES THEMSELVES, UNDER 501.056, THIS IS A SIMPLE EXAMPLE THAT CHAPTER 22 OF BUSINESS ORGANIZATIONS CODE HAS WHAT YOU HAVE TO HAVE TO CREATE A NONPROFIT CORPORATION.

HERE, THE CONTENTS OF A CERTIFICATE OF FORMATION, THAT'S WHAT THEY CALL ARTICLES NOW, CERTIFICATES, SO USE THOSE INTERCHANGEABLY.

THESE ARE THE REQUIREMENTS OF A CERTIFICATE OF FORMATION FOR AN ECONOMIC DEVELOPMENT CORPORATION, SO 501.056 IS THAT RULE.

NAME OF THE CORPORATION, CORPORATION IS A NONPROFIT CORPORATION, THE DURATION OF CORPORATION WHICH MAY BE PERPETUAL, THE SPECIFIC PURPOSE FOR WHICH THE CORPORATION IS ORGANIZED AND MAY ISSUE BONDS ON BEHALF OF THE UNIT, THAT THE CORPORATION HAS NO MEMBERS AND IS A NON-STOCK CORPORATION, AND SIX, WHICH I WANT TO BRING UP, THERE'S MORE.

BUT ANY PROVISION CONSISTENT WITH LAW FOR THE REGULATION OF THE CORPORATION'S INTERNAL AFFAIRS, INCLUDING ANY PROVISION REQUIRED OR PERMITTED BY THIS SUBTITLE TO BE STATED IN THE BYLAWS.

IT'S ALREADY CREATED THAT OBLIGATION OF CONTROL BECAUSE THE ORGANIZATION THAT APPROVES THE ARTICLES OF FORMATION IS THE CITY COUNCIL.

THE PROVISION GOES ON GET SQUEEZED.

SEVEN THROUGH 10, GO ON AND SAY, STREET ADDRESS, THE CORPORATION, THE NUMBER OF DIRECTORS, NAME AND STREET ADDRESS OF EACH ORGANIZER, AND THAT THE UNIT BY RESOLUTION SPECIFICALLY AUTHORIZE THE CORPORATION TO ACT ON THE UNIT'S BEHALF TO FURTHER THE PUBLIC PURPOSE

[01:15:03]

STATED IN THE RESOLUTION AND THE CERTIFICATES OF FORMATION.

HERE, IT'S ANOTHER EXAMPLE OF WHERE THE LAW IS FORESHADOWING THE FACT THAT IT IS DOING WORK ON YOUR BEHALF.

THE FUNDAMENTAL ECONOMIC DEVELOPMENT STRATEGIES AND DESIRES OF THIS COUNCIL SHOULD BE THE FRAMEWORK FROM WHICH YOUR ECONOMIC DEVELOPMENT CORPORATION WORKS FROM.

IF YOU WANT TO DEVELOP MORE INDUSTRIAL AREA, THEN THEY SHOULD LOOK TO THAT.

IF THERE'S A TYPE B PROGRAM THAT YOU WANT TO DO, WHICH TYPE A CAN DO, YOU WANT TO CALL A VOTE, THEY SHOULD LOOK AT PREPARING THOSE MATERIALS AS THIS COUNCIL ULTIMATELY DECIDES IS APPROPRIATE.

I BROUGHT THE BYLAWS UP BECAUSE THIS IS WHAT'S KEY TO DEVELOPING THIS IN THE CERTIFICATE OF FORMATION, WHICH ARE THE HIGHLIGHTED ITEMS THAT SAY, BE CONSISTENT WITH STATE LAW AND WITH THE CERTIFICATE OF FORMATION FOR THE CORPORATION AND BE APPROVED BY RESOLUTION OF THE GOVERNING BODY OF THE CORPORATION'S AUTHORIZING UNIT.

THEY CAN'T CHANGE THEIR BYLAWS WITHOUT YOUR PERMISSION.

YOU CREATE THE ARTICLES, THEY CAN'T CHANGE THEIR BYLAWS WITHOUT YOU AUTHORIZING THOSE BYLAWS TO BE APPROVED.

AGAIN, IT'S JUST ANOTHER ELEMENT OF OVERSIGHT THAT THE STATUTORY REQUIREMENTS REQUIRE THIS BODY TO DO.

ARTICLE 1, THESE ARE EASY.

THESE ARE MATERIALLY NOT CHANGED. ARTICLE NUMBER 2.

IT JUST IDENTIFIES 501.002, DEFINES THE TYPE A CORPORATION, AND THEN 501.052, THAT IT'S A NON-MEMBER NON-STOCK FORM OF CORPORATION.

THESE ARE CHECKING THE BOXES OFF.

THIS IS THE LEGISLATIVE FINDINGS AND CONSTRUCTION OF THE SUBTITLE, AND SO WE USE THE LEGISLATIVE FINDINGS THAT FIND THE ECONOMIC DEVELOPMENT CORPORATIONS ARE NECESSARY TO PROVIDE YOUR BASIS FOR YOUR AUTHORITY IN THE LEGISLATURE FINES PORTION.

THESE PORTIONS OF THE LEGISLATIVE FINDING AND CONSTRUCTION OF THE SUBTITLE ARE USED TO CREATE YOUR ARTICLES OF INCORPORATION HERE, THE POWERS, GENERAL POWERS, PRIVILEGES, AND FUNCTIONS OF THE ORGANIZATION.

AS YOU CAN SEE, WHAT WE'RE DOING IS WE'RE JUST TAKING THE LANGUAGE OUT OF THE STATE LAW, AND THEN WE'RE PUTTING IT INTO AN APPLIED LANGUAGE IN YOUR ARTICLES CORPORATION.

ONE OF THE REASONS WHY THIS IS SO IMPORTANT IS THAT YOU DON'T HAVE PEOPLE THAT ARE GENERALLY IN CHAPTER 22 OF THE BUSINESS ORGANIZATIONS CODE OR UNDERSTAND THE ECONOMIC DEVELOPMENT CORPORATION'S RULES UNDER THE LOCAL GOVERNMENT CODE ON YOUR BOARD.

HOW ARE THEY SUPPOSED TO KNOW? IF THEY DON'T HAVE THIS IN THEIR FACE, IF IT'S NOT SOMETHING THEY HAVE TO READ UPON BEING APPOINTED TO THE BOARD, THEN THEY'RE NOT GOING TO KNOW UNLESS THEY INDEPENDENTLY KNOW FROM SOME OTHER EXPERIENCE THAT THEY HAVE A FIDUCIARY DUTY.

THAT THE BOARD HAS THESE CERTAIN RESPONSIBILITIES.

BY PUTTING THIS INTO THE ARTICLES OF INCORPORATION AND ENSURING THAT ANYONE THAT GOES ONTO YOUR BOARD GETS A COPY OF THE ARTICLES OF INCORPORATION AND THE BYLAWS, IT THEN PROVIDES THEM WITH ALL THE INFORMATION NECESSARY FOR THEM TO BE ABLE TO PERFORM PROPERLY UNDER THE LAW AND PERFORM THEIR OBLIGATIONS.

WITHOUT THAT, WHAT YOU HAVE IS A LOT OF MISUNDERSTANDING, THE WAY IT'S ALWAYS BEEN MAY NOT NECESSARILY BE LEGAL.

AS I STARTED IN THE BEGINNING, WE HAVE TO BE CAREFUL THAT WE DON'T LET THAT GO INTO A POSITION WHERE THEN THERE'S MORE SIGNIFICANT FAULT.

ARTICLE 3, THE DURATION IT TALKS ABOUT THE ALTERATION AND TERMINATION BY AUTHORIZING UNIT, 501.401, 501.402, TERMINATION OF CORPORATION ON COMPLETION OF PURPOSE.

IF THE BOARD OF DIRECTORS FIND THAT ALL OF THE WORK IS DONE, THEN THEY CAN TERMINATE OR AUTHORIZING UNIT CAN TERMINATE THE CORPORATION.

THEN FINALLY, 405, EFFECTIVE ISSUANCE OF CERTIFICATE EVIDENCING FILING OF CERTIFICATION, THAT'S THE PROVISION THAT ALSO IDENTIFIES THE EXISTENCE ENDS ON THE ISSUANCE OF A CERTIFICATION EVIDENCING THE FILING OF THE CERTIFICATE OF TERMINATION AND ITS EXCEPTIONS.

[01:20:03]

AGAIN, WE TAKE ONE PART AND WE PROVIDE YOU WITH THE STATE LAW THAT SUPPORTS IT.

NOW, ARTICLE 4, WE GO THROUGH THE PURPOSE AND WE USE THE LEGISLATIVE FINDINGS IN ORDER TO DEVELOP THAT PURPOSE, AND SO IT PROVIDES THE REFERENCES TO EACH PARAGRAPH AND THE STATUTORY REFERENCE BESIDE IT.

THIS AGAIN, IS NOT SIGNIFICANTLY DIFFERENT THAN THE CONSTRUCTION AND PURPOSE OF THE CORPORATION, BUT WHAT I'VE DONE IS I'VE USED IT TO ADOPT THOSE PURPOSES THAT THE STATE LAW ALLOWS.

IF YOU TECHNICALLY BROADEN THOSE OBLIGATIONS, IT MAY NOT BE FOUND CONSISTENT WITH THE WITH THE ACT.

EVEN THOUGH SOME OF THOSE POINTS ARE ALLOWED.

I'VE ACTUALLY HEARD I THINK IT WAS ONE OF THE FIRST THINGS I HEARD WHEN I CAME IN HERE WAS ABOUT TYPE A ORGANIZATIONS AND THEIR ABILITY TO WORK ON INFRASTRUCTURE.

BASED ON YOUR PUBLIC STATEMENTS TODAY, THERE'S STILL CONFUSION AND SO I'D LIKE TO CLARIFY THAT AS AN EXAMPLE.

WHERE YOU FIND THE INFRASTRUCTURE IMPROVEMENT PROVISION IN THE LAW IS 501.103 OF THE LOCAL GOVERNMENT CODE AND AS I STATED EARLIER, 501 APPLIES TO TYPE A LOCAL GOVERNMENT CORPORATION.

BUT THAT INFRASTRUCTURE PROGRAM HAS TO BE CONNECTED TO THE DEVELOPMENT OF PRIMARY JOBS, DEVELOPMENT OF INDUSTRIAL TYPE OF MANUFACTURING PROGRAMS AND YOU HAVE A PERFORMANCE AGREEMENT THAT SET FORTH IN ORDER TO HAVE THAT COMPLETED.

SAY, FOR EXAMPLE, THE CITY HAS ZONED A PARTICULAR AREA FOR LIGHT INDUSTRIAL DEVELOPMENT.

THAT'S WHERE LIGHT INDUSTRIAL DEVELOPMENT IS GOING TO BE AND SAY THAT IT'S GREENFIELD.

WHO WANTS TO BUY PROPERTY TO CREATE A BUILDING WHEN THERE'S NOT EVEN INFRASTRUCTURE TO IT? THEY DON'T COME.

BUT IF YOU BUILD IT, THEY DO COME AND SO THAT'S WHAT 103 ALLOWS IS THAT YOU SAY YOU CAN DEMONSTRATE THAT THIS INFRASTRUCTURE PROJECT IS GOING TO BE FOR BENEFIT OF INDUSTRIAL USE PROPERTY, THEN YOU CAN DRAG THE UTILITIES UNDER 501.103 TO THE PROJECT SO THAT IT IS NOW PROJECT READY FOR SOMEBODY TO BUY, BUILD, AND CONNECT TO YOUR UTILITIES AND BE THERE.

501.103 UNDER THOSE CIRCUMSTANCES ALLOWS FOR INFRASTRUCTURE PROJECTS TO BE DONE UNDER TYPE A ORGANIZATIONS.

NOW, CAN I REPAIR SOME OF YOUR WATER AND WASTEWATER LINES? ONLY IF I HAVE THAT TIE IN THAT THESE WATER AND WASTEWATER LINES ARE SERVING INDUSTRIAL PROPERTIES.

IT HAS TO BE LIMITED TO THOSE PROJECTS.

NOW, 501.054 IS REFERENCED REPEATEDLY, AND THE REASON WHY IS BECAUSE IT TOUCHES UPON A NUMBER OF THINGS LIKE YOUR FUNCTIONS AND POWERS AND AUTHORITIES, BUT ALSO IN B2, AS IT SHOWS SORRY, I GET MIXED UP WITH ALL THE BUTTONS.

501.054 TALKS ABOUT WITH RESPECT TO A PROJECT, EXERCISE ALL POWERS NECESSARY, APPROPRIATE TO AFFECT THE PURPOSE FOR WHICH A CORPORATION IS ORGANIZED, AGAIN SUBJECT TO THE CONTROL OF THE GOVERNING BODY.

THIS ISN'T JUST A DISCUSSION OF EXPENDITURE.

THIS MEANS THAT THE ENTIRE PROJECT IS SUBJECT TO THE CONTROL OF THE ENTIRE CITY COUNCIL.

THERE ARE OTHER PROVISIONS IN CHAPTER 504 OR IN THE 400S THAT TALK ABOUT IN THE EVENT THAT THERE'S A PROJECT THAT CITY COUNCIL DOESN'T THINK THAT THE ECONOMIC DEVELOPMENT CORPORATION IS PROPERLY HANDLING, THAT IT CAN REMOVE THAT PROJECT AND TAKE IT ON ITS OWN FOR THE COMPLETION OF THAT PROJECT UNDER THE ECONOMIC DEVELOPMENT CORPORATION'S CONSTRUCT.

ONCE AGAIN, IT'S JUST ANOTHER EXAMPLE OF YOUR OVERSIGHT RESPONSIBILITIES.

THIS CONSTITUTED AUTHORITY INSTRUMENTALITY PROVISION IS SOMETHING THAT IS INTERESTING, AND UNDER 101 OF THE TEXAS CIVIL PRACTICE AND REMEDIES CODE, THAT'S THE TORT CLAIMS ACT, OF WHICH PROTECTS THE PUBLIC FUNDS FROM A RAID BASED

[01:25:05]

ON CLAIMS OF CERTAIN TYPES OF INTENTIONAL OR UNINTENTIONAL NEGLIGENT ACTS.

THE LAW FOR PURPOSES OF ECONOMIC DEVELOPMENT CORPORATIONS, IT HAS A SPECIFIC CARVE OUT THAT SAYS THAT THE TEXAS TORT CLAIMS ACT APPLIES TO THEM.

WHEN YOU READ THE BEGINNING OF THE DEFINITIONS IN THE TEXAS TORT CLAIMS ACT, IT REFERS TO THOSE THAT ARE PROTECTED BY IT AS GOVERNMENTAL ENTITIES.

WHEN I REPRESENTED THE CITY OF ROSENBERG, THERE WAS A CONFLICT WITH REGARDS TO THAT ISSUE, AND I LITIGATED IT ALL THE WAY UP TO A DECISION OF THE TEXAS SUPREME COURT IN 2019.

THE COURT LOOKED AT THE DISTINCTIONS BETWEEN THIS ORGANIZATION HAVING BEEN IDENTIFIED BY THE LEGISLATURE AS A NONPROFIT CORPORATION AND OTHER ORGANIZATIONS LIKE A LOCAL GOVERNMENT CORPORATION OR OTHER TYPES OF WHAT APPEARED TO BE QUASI GOVERNMENTAL ENTITIES AND SAID, THIS ONE'S DIFFERENT AND THIS IS WHY.

I'VE HAD THAT EXPERIENCE GOING THROUGH THIS PURPOSE OR THIS PROCESS AND SO HERE, YOU HAVE THE LANGUAGE THAT ACTUALLY DOES TALK ABOUT YOU HAVE NO EXERCISE POWER OF SOVEREIGNTY, INCLUDING THE POWER TO TAX, TO TRY TO PROVIDE SOME MORE UNDERSTANDING ABOUT IT'S NOT AN EDC TAX.

ACTUALLY, WHAT IT IS, IS IT'S A CITY TAX THAT THE CITY COLLECTS FROM THE TEXAS COMPTROLLER, AND THE TEXAS COMPTROLLER GETS 2% FOR THEIR TROUBLES.

YOU GET 98% OF IT, AND IT ALL COMES DOWN HERE, AND IF YOUR TAX IS ONE CENT AND THE EDC'S TAX IS A HALF CENT, THEN IT'S AN OBLIGATION OF YOUR FINANCE DEPARTMENT IN ACCORDANCE WITH LAW TO MOVE THAT ONE THIRD OF WHAT CAME DOWN ON TAXES TO THE ECONOMIC DEVELOPMENT CORPORATION AND SO THAT'S WHY IT'S NOT A GOVERNMENTAL ENTITY.

NOW, THERE ARE OTHER EXCEPTIONS, TEXAS TORT CLAIMS ACT, THE TEXAS OPEN MEETINGS ACT, THE TEXAS PUBLIC INFORMATION ACT, WHERE THEY'RE TREATED LIKE A GOVERNMENT ENTITY.

BUT THAT'S BECAUSE THE DEFINITIONS IN THOSE SPECIFIC LAWS INCLUDE THEM.

BECAUSE THEY INCLUDE THEM, IT'S JUST NOT COMPARING APPLES TO APPLES WHEN YOU START COMPARING AN ECONOMIC DEVELOPMENT CORPORATION WITH ANY OTHER TYPE OF ORGANIZATION THAT IS NOT GOVERNED BY 501 OR 504 AND IS NOT GOVERNED BY THE CHAPTER 22 OF THE BUSINESS ORGANIZATIONS CODE.

MR. HYDE, CAN I DRAW A LINE HERE.

I THINK WHAT I'M HEARING YOU SAY IS VERY IMPORTANT, AND I WANT TO MAKE SURE THAT WE ARE DRAWING A LINE, WHICH IS FORCING US TO TREAT THIS DIFFERENTLY.

THE MONEY COMES TO THE CITY IS THE TAXING ENTITY, AND THE CITY VOTED WITH ITS CONSTITUENTS THAT A HALF A CENT IN YOUR EXAMPLE, WILL GO FOR ECONOMIC DEVELOPMENT AND THAT IS THEN ENTRUSTED TO THAT CORPORATION AND SO THE LINE YOU'RE DRAWING AND CORRECT ME IF I'M WRONG, IS THAT THE REASON THAT THAT GOVERNMENTAL ORGANIZATION, I'M SORRY, THAT CORPORATION DOES NOT OPERATE THE SAME AS THE TAXING ENTITY IS BECAUSE OF THE WAY THE MONEY FLOWS TO IT.

IF IT WAS COLLECTING ITS OWN TAXES, IT WOULD HAVE A GOVERNMENTAL BODY THAT THEN WOULD BE ABLE TO EXERCISE ALL OF ITS OWN AUTHORITY BECAUSE THE MONEY IS COLLECTED AND COMES HERE, THE OVERSIGHT RESPONSIBILITY LIABILITY STAYS HERE, AND THAT EXTENSION NEEDS TO OPERATE ACCORDING TO THE GOVERNMENTAL BODY THAT HAS THE OVERSIGHT RESPONSIBILITY? CORRECT. THE FUNDAMENTAL POLICY BEHIND THAT LEGISLATION IS THE TAXATION WITHOUT REPRESENTATION PROVISION OF OUR CONSTITUTIONAL FOUNDINGS.

IF THE FUNDS CAME TO THE CITY AND THE CITY JUST SENT THE FUNDS OVER TO THE ECONOMIC DEVELOPMENT CORPORATION AND HAD NO OTHER CONTROL OVER THOSE FUNDS, THEN TAXPAYER DOLLARS WOULD BE PAID WITHOUT THE ABILITY TO HAVE AN ELECTED OFFICIAL RESPOND TO ITS CITIZENS ABOUT HOW THOSE MONIES WERE SPENT.

THAT'S WHY WHEN WE GET TO IT 501.073(A) SAYS ALL EXPENDITURES OF THE ORGANIZATION HAVE TO BE APPROVED BY THE CITY COUNCIL. BUT WE'LL GO BACK TO THAT.

UNDER ARTICLE 5, WHICH IS PROBABLY THE MOST INTERESTING FOR TODAY, AND I RECALL I RESPOND I WANT TO REMIND EVERYONE THAT 501.056, SUBSECTION 6 SAYS THAT IN YOUR ARTICLES,

[01:30:05]

YOU MAY PUT IN PROVISIONS CONSISTENT WITH THE LAW FOR THE REGULATION OF THE CORPORATION'S INTERNAL AFFAIRS, INCLUDING ANY PROVISION REQUIRED OR PERMITTED BY THIS SUBTITLE TO BE STATED IN THE BYLAWS.

EVEN IF IT'S SOMETHING THAT HAS TO BE IN THE BYLAWS, YOU CAN STILL INCLUDE IT IN YOUR ARTICLES OF INCORPORATION.

THEN LATER ON, YOU'LL FIND THAT ANYTHING IN YOUR ARTICLES OF INCORPORATION ARE REQUIRED TO BE IN YOUR BYLAWS.

YOUR BYLAWS CANNOT CONFLICT WITH YOUR ARTICLES.

THIS IS A MECHANISM OF WHICH YOU HAVE THE ABILITY IN INCORPORATE PARENT AND SUBSIDIARY, YOUR PARENTAL ORGANIZATIONAL POWERS TO CONTROL THE ORGANIZATION.

I HAVE THAT DOWN, 22.103, ANY BYLAW WHICH IS INCONSISTENT WITH OR IN CONFLICT WITH ANY PROVISION OF THE ARTICLE OF INCORPORATION ARE VOID AB INITIO, AS IF IT NEVER EXISTED.

THE BOARD OF DIRECTORS MUST PRESENT ALL PROGRAMS AND EXPENDITURES OF THE CORPORATION TO THE CITY COUNCIL AS A CORPORATION'S AUTHORIZING UNIT BEFORE ANY EXPENDITURE IS MADE AND BEFORE ANY CORPORATION IS OBLIGATED TO EXPEND CORPORATE FUNDS.

ANY OBLIGATION TO SPEND CORPORATE FUNDS, WHICH WAS NOT EXPRESSLY APPROVED BY THE CITY COUNCIL IS VOID AB INITIO.

THE BOARD OF DIRECTORS MUST CONSIDER THE ACT AND ACT TO APPROVE OR NOT APPROVE ALL EXPENDITURES AND THAT'S 51.073(A), AS WELL AS 22.103, WHICH IS SPECIFIC THAT STATES THAT THE LOCAL GOVERNMENT CORPORATION AS A NONPROFIT CAN ONLY ACT THROUGH ITS GOVERNING BODY.

IN ORDER TO APPROVE OR DISAPPROVE AN EXPENDITURE, THAT EXPENDITURE HAS TO BE APPROVED BY THE GOVERNING BODY WHICH IS THE AEDC BOARD, AND THEN THAT EXPENDITURE NEEDS TO BE APPROVED BY THE CITY COUNCIL.

UNFORTUNATELY, FROM YOUR PAST EXPERIENCES, STATE LAW DOES PROVIDE A MECHANISM BY WHICH THE CONDUCT AND ACTIONS OF THE BOARD CAN BE DELEGATED TO AN EMPLOYEE AND THE REASON WHY IS THAT THE BUSINESS ORGANIZATIONS QUOTE CHAPTER 22 PLACES A FIDUCIARY RESPONSIBILITY ON EVERY BOARD MEMBER TO ACT IN THE BEST INTEREST OF THE ORGANIZATION, SUBJECT TO BEING CIVILLY LIABLE FOR ANY IMPROPER ACT WHICH THEY ARE ALLOWED OR WHICH THEY VOTED FOR WHEN IT WAS NOT LEGAL.

GOING INTO THIS, TRYING TO CREATE MECHANISMS BY WHICH TO APPLY THESE PROVISIONS TO THE ECONOMIC DEVELOPMENT CORPORATION, YOU SEE 501.073(A), THE CORPORATION'S AUTHORIZING UNIT WILL APPROVE ALL PROGRAMS AND EXPENDITURES OF A CORPORATION AND ANNUALLY REVIEW ANY FINANCIAL STATEMENTS OF THE CORPORATION.

THOSE ARE TWO DISTINCT OBLIGATIONS IN THE MANNER IN WHICH THE STATUTORY LANGUAGE WAS MADE BY THE LEGISLATURE.

ONE IS APPROVAL EXPENDITURES AND PROGRAMS, AND TWO ANNUALLY REVIEW FINANCIAL STATEMENTS.

WELL, THE BUDGET IS JUST NUMBER ONE OF THOSE FINANCIAL STATEMENTS.

BUT THIS DOESN'T SAY THAT ADOPTING THE BUDGET MEANS THAT ALL EXPENDITURES THAT ARE CONTEMPLATED IN THAT BUDGET ARE APPROVED.

UNLESS YOU PUT THAT EXPRESSLY MAKE THAT COMMENT IN THE BUDGETING DOCUMENTS, THAT YOU IN ADDITION TO APPROVING THE BUDGET, HAVE APPROVED THAT THESE FUNDS ARE GOING TO GO TO THESE LOCATIONS BY THESE PAYEES, AND WE'VE DESIGNED A METHOD BY WHICH THAT CAN BE DONE.

THEN THE 22.201 PROVISION I JUST SPOKE OF, THE AFFAIRS OF A CORPORATION ARE MANAGED BY A BOARD OF DIRECTORS.

IF YOU SAID, I'M GOING TO LET THE EXECUTIVE DIRECTOR MANAGE THIS MATTER OF THE AFFAIRS, THAT WOULD BE INCONSISTENT WITH STATE LAW.

THE WAY THAT OTHER ECONOMIC DEVELOPMENT CORPORATIONS TYPICALLY WORK IN MY EXPERIENCE AFTER 22 YEARS, IS YOUR EXECUTIVE DIRECTOR AND STAFF OR GO TO THE GROUND WORK, THEY NEGOTIATE THE DEALS, THEN THEY TAKE THAT INFORMATION TO THE BOARD.

THE BOARD LOOKS AT IT.

IF IT'S SOMETHING THE BOARD'S INTERESTED IN, IT GOES TO THE CITY COUNCIL.

CITY COUNCIL, ARE YOU IN FAVOR OF US MOVING FORWARD ON THIS PROJECT? IF THEY GIVE THAT DIRECTION TO THE ECONOMIC DEVELOPMENT CORPORATION, THEN THE CORPORATION FINISHES THE NEGOTIATIONS, BRINGS THE PROJECT FOR

[01:35:02]

APPROVAL BY THE BOARD AND THEN BRINGS IT TO THE CITY COUNCIL FOR APPROVAL.

NOT HAVING THAT TYPE OF PROCESS IN PLACE HERE SEEMS TO BE A SLIPPERY SLOPE TO THE OTHER PROBLEMS THAT WE'VE HAD.

>> THIS WAS A DRAFT OF DOCUMENT FOR YOU TO CONSIDER.

SEVEN, TO OBTAIN APPROVAL OF AN EXPENDITURE, THE BOARD OF DIRECTORS MUST BE PRESENTED THE BELOW INFORMATION.

NOW I'M TALKING ABOUT THE BOARD.

THAT THE BOARD, IN ORDER FOR THEM TO CARRY OUT THEIR FIDUCIARY OBLIGATION, THEY NEED TO KNOW THE PURPOSE, THE CATEGORY, THE AMOUNT, AND THE METHOD TO MAKE PAYMENT.

IF WE KNOW THAT WE'RE GOING TO SPEND $300,000 ON A CREDIT CARD, YOU HAVE THE ABILITY TO SAY, NO, I DON'T WANT THAT TO HAPPEN, OR IF YOU DO WANT IT TO HAPPEN, BUT IT'S A COMPANY CARD AND NOT AN INDIVIDUAL PERSONAL CARD, THEN YOU HAVE THAT ABILITY TO CONTROL THAT.

THEN THE NAME OF THE RECIPIENT, EITHER THE INDIVIDUAL OR THE COMPANY, AND IF A COMPANY, THE NAME OF THE COMPANY'S REPRESENTATIVE INVOLVED IN THE TRANSACTION.

WHAT THAT DOES IS THE SAME THING THAT HOUSE BILL 1295 DID TO YOU ABOUT EIGHT YEARS AGO, 10 YEARS AGO, GOES FAST, OLD DO YOU GET? IT WAS A SENATE BILL THAT THE HOUSE GOT APPROVED.

WHAT 1395 DOES IS IT REQUIRES A DISCLOSURE OF INTERESTED PERSONS IN THE TRANSACTION BETWEEN A LOCAL GOVERNMENT AND A VENDOR.

IF YOU FIND OUT THAT THE X PLACE ONE PERSON HAS 45 RELATIVES THAT ARE DISCLOSED THAT IS DOING BUSINESS WITH THE CITY, THEN THAT MIGHT BE SOMETHING THE PUBLIC WOULD WANT TO KNOW.

THAT'S WHY YOU HAVE TO FILE THOSE WITH THE TEXAS ETHICS COMMISSION.

MY ORGANIZATION IS NO DIFFERENT, WE HAVE TO FILE THEM TOO.

>> MR. HYDE.

>> YES, SIR.

>> MAY I ASK YOU A QUESTION. WHAT'S THE DEFINITION OF AN EXPENDITURE? TELL ME WHAT THAT IS.

>> THE CHAPTER 501.073 A DOES NOT PROVIDE A SPECIFIC DEFINITION TO THE WORD EXPENDITURE.

WHAT THE STATUTORY CODE OF CONSTRUCTION REQUIRES US TO DO WITH LAWYERS IS THAT WE THEN HAVE TO GO TO THE DEFINITION, WHAT'S CALLED THE PLAIN AND ORDINARY MEANING.

YOU CAN LOOK A WEBSTERS OR DICTIONARY.COM OR WHATEVER EVERY ONE OF THOSE, AND THEN CONSIDER THE CONTEXT OF WHAT WE'RE IN, AND IT'S TO SPEND MONEY. SPEND FUNDS.

>> BASED ON THIS, IS THERE A LIMIT? THIS SEEMS EXTREMELY CUMBERSOME FOR AN ORGANIZATION TO ASK FOR PERMISSION TO SPEND MONEY.

IS THAT UP TO US TO SET A LIMIT? IT JUST SEEMS A LITTLE CUMBERSOME AS FAR AS LIKE YOU SAID, THE 501.073, THE BUDGET DOESN'T MEET THAT.

JUST APPROVAL OF A BUDGET DOES NOT MEET THAT.

I GET THAT, BUT THEN IF WE SAY, FOR EVERY EXPENDITURE, IF WE INTERPRET THAT AS EVERY EXPENDITURE, THAT SEEMS A LITTLE CUMBERSOME.

IS IT UP TO US TO SET THE LIMIT OF THAT? I DO NOT WANT TO APPROVE A BOX OF PAPERCLIPS. I DON'T WANT TO DO IT.

>> WELL, I'LL USE THAT AS AN EXAMPLE.

WE'RE TALKING ABOUT PAPERCLIPS, WE'RE TALKING ABOUT OFFICE SUPPLIES.

THAT'S A LINE ITEM IN THE BUDGET.

SAY LINE ITEM OF THE BUDGET SAYS, WE NEED $22,000 OF OFFICE SUPPLIES.

WE'RE GOING TO BUY THEM FROM THIS THIRD PARTY SOURCE.

WE'RE GOING TO BUY THEM FROM THIS LOCAL SOURCE, AND WE'RE GOING TO BUY THEM FROM THIS AREA, BUT WE'RE GOING TO NEED $22,500, AND THESE ARE THE THREE ORGANIZATIONS OF WHICH WE WILL SPENT I BUY THE MONEY FROM OR SPEND THE MONEY WITH IF THEY HAVE WHAT WE NEED.

THAT WOULD BE THE WAY THAT THEY WOULD SET UP THEIR EXPENDITURE REQUESTS FOR ALL OF THOSE THINGS THAT IF THEY WANT OFFICE FURNITURE.

LET'S SAY, I THINK WE'RE GOING TO NEED TO REPLACE X AMOUNT OF OFFICE FURNITURE.

I NEED $150,000 TO REPLACE OFFICE FURNITURE.

WE'RE GOING TO GET IT FROM EDCOFFICEFURNITURE.COM.

>> THAT GOES UNDER THE LINE ITEM OF OFFICE FURNITURE OR OFFICE SUPPLIES.

[OVERLAPPING] BUT THE ASK HAS TO HAPPEN ACCORDING TO THIS IS WHAT YOU'RE SAYING.

>> WHEN THEY PREPARE THEIR BUDGET, ALL THEY WOULD HAVE TO DO IS ATTACH TO IT,

[01:40:04]

WHAT WOULD TYPICALLY BE SEEN, AT LEAST SO MY LAW FIRM USES QUICK BOOKS.

IF I WANT TO PRINT A REPORT OF EVERY EXPENDITURE THAT I MADE, I SET THE REPORT, I HIT PRINT, AND IT GIVES IT TO YOU.

WELL, I CAN ALSO DO THAT IN A CVS MODE, WHICH MEANS I CAN AUTOMATICALLY DROP IT INTO A OUTLOOK EXCEL SPREADSHEET.

THEN I KNOW WHERE EVERYTHING WENT LAST YEAR.

>> I GET THAT.

>> WE'RE NOT GOING TO USE YOUR FIRM BECAUSE YOU DON'T YOU'RE NOT SUBJECT TO THIS.

>> BUT IN THE EDC, DO THEY HAVE TO MAKE A REQUEST FOR THAT? BECAUSE YOU'RE TELLING ME THE BUDGET DOES NOT, THE LINE ITEM THAT DOESN'T WORK.

>> WELL, I'LL USE YOUR FUTURE ITEM ON THE AGENDA TODAY WITH REGARDS TO QUESTIONS THAT I HAD ON IT.

THERE IS A PROPOSED RESOLUTION AND I CAN BRING IT UP BECAUSE IT IS ON THE AGENDA, AND IT RELATES TO THIS ISSUE FOR YOU TO APPROVE $625,000 FOR TWO MONUMENT SIGNS.

IT SAYS SPECIFICALLY IN THE RESOLUTION THAT THEY'RE ASKING FOR AN INCREASE IN THE MARKETING BUDGET.

GOING BACK TO WHAT THE BOARD DID AND COUNCIL MEMBER SHERLYN'S MOTION.

YOU LOOK AT IT ALL AND SAY, SO MARKETING IS UNDERNEATH THE OPERATING BUDGET.

IF IN FACT, YOU APPROVED THE ENTIRE OPERATING BUDGET, WHICH I DON'T THINK WAS THE INTENT OF THE CITY COUNCIL FROM THE COMMENTS MADE, BUT NEVERTHELESS, THEN WHAT THEY'RE ASKING YOU FOR IS $625,000 IN ADDITION TO THE $800,000 OF WHICH THEY BUDGETED.

WHEN YOU LOOK AT THE BACKUP INFORMATION AND THE DOCUMENTS, THIS WAS A PROJECT OF WHICH YOUR ECONOMIC DEVELOPMENT CORPORATION KNEW BEFORE THEY HAD TO PREPARE THEIR BUDGET AND BEFORE THEY HAD TO AMEND THEIR BUDGET FOR RECONSIDERATION.

IF IN FACT, THIS $625,000 COST WAS GOING TO BE SOMETHING THAT THEY PUT IN YOUR BUDGET, THEN THEY COULD PUT TWO MILLION DOLLARS OF MARKETING, 625 IS GOING HERE, 83 IS GOING HERE, 120 GOING HERE. THEY'VE GOT IT ALL DONE.

>> OF THE KNOWN EXPENSES, THEY COULD HAVE DONE THAT AT THE FIRST WHEN THE BUDGET WAS SUBMITTED.

THEREFORE, THE REQUEST WOULD NOT HAVE TO OCCUR BECAUSE THEY UNDERNEATH MARKETING, THEY LISTED THESE EIGHT ITEMS. THAT REQUEST WOULD NEVER HAVE TO BE HAD DONE BECAUSE COUNCIL WOULD HAVE ALREADY APPROVED IT WITH THOSE EIGHT ITEMS UNDERNEATH THAT CATEGORY OF MARKETING.

>> YOUR RESOLUTION THAT APPROVED THEIR BUDGET WOULD ALSO EXPRESSLY APPROVE THOSE EXPENDITURES IDENTIFIED WITHIN THE BUDGET DOCUMENTS.

THAT WAY, YOU'VE GOT THE RECORD OF THE EXPENDITURE BEING APPROVAL BY THIS BOARD.

I'VE BEEN AND I'M CURRENTLY IN LITIGATION WITH DEVELOPMENT ISSUES, MULTI MILLION DOLLAR PROJECTS, $25 MILLION TYPE OF ECONOMIC DEVELOPMENT PROJECTS WHERE WHETHER OR NOT THE BOARD APPROVED A DOCUMENT IS AN ISSUE.

WHETHER OR NOT THE ECONOMIC DEVELOPMENT BOARD PROJECT WAS APPROVED BY THE CITY COUNCIL IS AN ISSUE AS TO WHETHER OR NOT IT'S A VALID CONTRACT.

UNFORTUNATELY, IN ONE CASE, I'VE BEEN TRIED IN COURT SINCE 2020.

I'VE GONE ALL THE WAY TO THE TEXAS SUPREME COURT.

THEN THEY SAID, WELL, WE WANT THE LOWER COURTS TO RECONSIDER THIS ISSUE.

THEY REMANDED IT BACK TO THE TRIAL COURT TO START OVER.

NONE OF THE STUFF WE DID FOR FOUR YEARS COUNTED.

WE'RE BACK STARTING COMPLETELY OVER LIKE THE SUIT JUST GOT STARTED.

THAT'S A PROJECT THAT'S TAKING SEVEN DIGITS TO LITIGATE, FOUR YEARS, ALL THE WAY UP THROUGH AND BACK AGAIN.

THAT'S ONE OF THOSE LESSONS WITH MY EXPERIENCE AND MY BACKGROUND.

I CAN SHARE WITH THE CITY COUNCIL AS TO WHY MY RECOMMENDATIONS FOR THESE ARE IMPORTANT.

THEY'RE IMPORTANT TO AVOID THAT EXPERIENCE OF WHICH I'VE HAD THE OPPORTUNITY SINCE I'VE REPRESENTED ECONOMIC DEVELOPMENT CORPORATIONS ALL OVER THE STATE.

>> WELL, I FEEL LIKE WE'RE GETTING INTO SOME INUTIA AND I DON'T MEAN TO, BUT I JUST WANT CLARIFICATION ON THIS.

WE SAY OFFICE SUPPLIES.

HOW SPECIFIC DO THEY NEED? I GET THE MARKETING, YOU MADE A GREAT POINT.

THERE'S SOME BIG ITEMS. WE KNOW WHAT'S GOING TO BE THERE, BUT WE SAY OFFICE SUPPLIES. WE DON'T KNOW WHAT THOSE ARE.

WHEN DO WE COME TO THE DEFINITION OF AN EXPENDITURE? HOW BROAD IS THAT CATEGORY AND HOW CAN IT BE USED? I JUST DON'T WANT TO CREATE SOMETHING THAT IS JUST TOO CUMBERSOME.

DO YOU UNDERSTAND WHAT I'M GETTING AT?

>> EXACTLY. LET'S GO THROUGH THIS REAL QUICK.

UNDER SEVEN, THE PURPOSE OF THE EXPENDITURE.

WE NEED OFFICE SUPPLIES TO WORK.

THE CATEGORY OF THE EXPENDITURE IS INTERNAL CONSUMABLES, THE AMOUNT OF THE EXPENDITURE.

WELL, BASED ON LAST YEAR,

[01:45:02]

WE USED $25,000 OF OFFICE SUPPLIES.

BASED ON LAST YEAR, WE USED THESE THREE VENDORS TO GET OUR OFFICE SUPPLIES FROM.

THEN E, THE METHOD USED TO MAKE THE PAYMENT.

WE'RE GOING TO CUT A CHECK.

WE'RE GOING TO SEND A WIRE.

WE'RE GOING TO USE A P CARD.

BECAUSE HERE, BUYING STUFF LOCALLY, YOU MAY BE GOING OUT THERE, SWIPING YOUR P CARD AND GET THE MATERIALS YOU NEED FOR THAT WEEK OR THAT DAY.

THEN THE NAME OF THE RECIPIENT.

THAT'S THE THREE PEOPLE.

>> THE REQUEST DOES NOT HAVE TO BE MADE FOR THAT EXPENDITURE, IS WHAT YOU'RE SAYING?

>> NO. THEY HAVE TO MAKE THAT REQUEST, $22,500 IS GOING TO BE USED FOR OFFICE APPLIES.

>> IN THE BUDGET.

>> RIGHT. WELL, WITH THE BUDGET.

>> MR. HYDE, IF I CAN JUST MAKE SURE.

I WANT TO ASK THE SAME QUESTION, BUT IN A DIFFERENT FORM.

DO YOU FIND THAT IT IS CUMBERSOME TO PRE-APPROVE EXPENDITURES AT THE BEGINNING OF EACH FISCAL YEAR?

>> NO.

>> OKAY. ONCE APPROVED, WOULD THE ADDITIONAL WORK IN FACT BE IN COST OVERRUNS? WE DIDN'T KNOW THAT WE NEEDED ANOTHER $22,000 IN OFFICE SUPPLIES SO THEN THAT ONE ITEM WOULD BE WHAT'S COMING TO COUNCIL, MUCH LIKE EVERY OTHER PROJECT THAT THEY WORK ON COMES TO COUNCIL?

>> CORRECT.

>> SO WE WOULD NEVER BE IN THE SITUATION OF APPROVING EACH BOX OF PAPER CLIPS?

>> RIGHT. IF THEY SEE IN THE FIRST QUARTER THAT THEY'VE USED 50% OF WHAT YOU'VE APPROVED, THEN ANY REASONABLE ADMINISTRATOR WOULD KNOW THAT THEY'VE GOT TO INCREASE THAT NUMBER IF THEY'RE GOING TO GET TO THE END UNLESS SOMETHING'S GOING TO CHANGE IN A MONTH.

>> IN YOUR EXPERIENCE DO MULTIPLE TAXING ENTITIES WORK LIKE THIS AND DO OTHER EDCS, IN FACT, WORK THIS WAY AS WELL?

>> YES. THE TWO THAT CURRENTLY I AM INVOLVED IN OR ACTUALLY, I'M NOT INVOLVED IN ANYMORE IS THE BUTA ECONOMIC DEVELOPMENT CORPORATION, WHICH IS ONE OF THE FASTEST GROWING SMALL CITIES IN TEXAS, AS WELL AS THE CITY OF HUDOS ECONOMIC DEVELOPMENT CORPORATION, TYPE A AND TYPE B THAT ALSO HAS A SIMILAR ORGANIZATION.

>> I AGREE WITH COUNCILMAN TIPS, WE DO NOT WANT TO CREATE SOMETHING THAT CREATES SO MUCH PAPERWORK AND IT'S CUMBERSOME AND IT SLOWS THINGS DOWN.

WHAT WE WANT TO DO IS CREATE GREATER SPECIFICITY.

MUCH LIKE IN ANY CONTRACT, I WANT TO SPEND SOME TIME WORKING OUT THE DETAILS.

I WANT LINE ITEMS LISTED, I WANT TO KNOW WHERE THE MONEY'S GOING.

I DON'T WANT TO BE SO LOOSE AND VAGUE THAT WHEN WE LOOK BACK AT THE CONTRACT, ONCE THERE'S A LIABILITY, THERE'S A LAWSUIT, WE CAN'T TELL IF IT WAS EVER APPROVED OR NOT.

IF WE DID SAY WITH REASONABLE CERTAINTY, WE ARE CREATING MORE WORK ON THEIR EXPENDITURES, ON THEIR BUDGET REQUEST SO THAT WE CAN THEN APPROVE THOSE EXPENDITURES ILLEGALLY AND MORE CONSISTENTLY WITH STATE LAW.

THEN FROM THERE, WE WOULD HOPE THAT BUSINESS AS USUAL CONTINUES.

>> CORRECT. THE ONE THING THAT EVERYONE DOESN'T LIKE IS CHANGE, AND THE ONE THING THAT IS ABSOLUTELY POSITIVELY GOING TO OCCUR IS CHANGE.

HERE, ULTIMATELY, ONCE YOU GET THROUGH THE TRANSITION, THEN LAST YEAR'S PRESENTATION IS ALREADY SET UP FOR ALL OF THE ROUTINE EXPENDITURES YOU HAD THE YEAR BEFORE.

IF IT'S NOT A ROUTINE EXPENDITURE, AND YOU COULD ALSO SEE THAT IF YOU USE 225 AND THAT WASN'T ENOUGH LAST YEAR, THIS YEAR, I'M GOING TO PUT 35 DOWN.

THEN THAT WAY, IT BECOMES MORE AND MORE FACILITATED, MORE EFFICIENT, MORE EFFECTIVE, AND MORE TRANSPARENT.

THEN YOU KNOW WHAT YOU'RE APPROVING BECAUSE WE DON'T WANT TO APPROVE $625,000 FOR A MONUMENT SIGN AND IT GO AS A MEMBERSHIP FEE TO ANOTHER ORGANIZATION.

>> LET'S SAY THAT THIS COUNCIL FOUND THAT IT'D BE E. THERE'S TWO ES IN THERE, BUT THE SECOND E, LET'S SAY THAT WE FOUND THAT TO BE THE PROBLEM.

YOU HAVE TO GIVE US THE NAME.

YOU GOT TO SAY OFFICE DEPOT INSTEAD OF OFFICE MAX.

SORRY, YOU WENT TO OFFICE MAX, THAT DOESN'T COUNT.

IF WE REMOVED THAT BACK AND WE PULLED THAT OUT, DOES THIS COUNCIL HAVE THE ABILITY, THE LATITUDE TO WORK THROUGH SOME OF THESE IF WE DIDN'T NEED THAT LEVEL OF SPECIFICITY?

>> ABSOLUTELY. THE LEVEL OF SPECIFICITY IS ENTIRELY UP TO THE CITY COUNCIL.

THAT'S WHY I STOPPED AT THIS POINT AND CAME TO THE CITY COUNCIL FOR DIRECTION BECAUSE I THOUGHT THIS WAS THE MEAT OF THE THINGS THAT YOU WANTED TO CONSIDER.

>> DO YOU DO YOU FIND IT MORE HELPFUL TO CONTINUE WITH THE REST OF YOUR PRESENTATION AND COME BACK TO THIS GUY OR DO YOU WANT TO GO AHEAD AND WORK THIS ONE OUT WITH A DISCUSSION?

>> ACTUALLY, LET ME FINISH ARTICLE 5 AND THEN SOME OF IT MAY BE HELPFUL FOR THE DISCUSSION.

[01:50:04]

EIGHT IS REALLY THE HOW TO PROVISION FOR COUNCIL MEMBER TIPS AS TO WHAT THEY WOULD DO.

ADEC'S BUDGET WILL BE PREPARED IN A LINE ITEM FORMAT.

A LINE ITEM BUDGET IS A DETAILED LIST OF THE VARIOUS EXPENSES THAT WILL BE MADE DURING A GIVEN PERIOD.

THE EXPENDITURE IS PRESENTED SEPARATELY.

A LINE ITEM BUDGET IS NECESSARY TO ILLUSTRATE HOW MUCH MONEY IS ANTICIPATED TO BE SPENT AND WHAT FOR AND HOW MUCH REVENUE IS ANTICIPATED DURING A PARTICULAR PERIOD.

THE ADOPTION OF THE BUDGET DOES NOT APPROVE ANY EXPENDITURE.

THE BUDGET MUST BE PREPARED TO CLEARLY IDENTIFY AND PROVIDE AN ACCURATE ACCOUNT OF HOW MUCH MONEY IS BEING PLANNED TO BE SPENT AND WHAT MONEY IS TO BE SPENT ON, ALONG WITH THE AMOUNT OF REVENUE ANTICIPATED TO BE RECEIVED.

C, WHICH IS IN THE WRONG SPOT, NO BUDGET LINE ITEM ADJUSTMENTS ARE PERMITTED WITHOUT FIRST DOCUMENTING PROPER APPROVAL FOR THE ADJUSTMENTS BY THE BOARD OF DIRECTORS AND THE CITY COUNCIL.

THE BOARD OF DIRECTORS IN ITS DISCRETION MAY SUBMIT WITH ITS ANNUAL LINE ITEM BUDGET, INFORMATION RELATED TO THE TYPE AND NATURE OF EXPENDITURE AS LISTED IN PARAGRAPH 7, WHICH WE JUST DISCUSSED.

INITIALLY, FINANCIAL RECORDS OF TRANSACTION MADE IN THE PAST 12 MONTHS MAY BE USED TO PREPARE THE EXPENDITURE LIST FOR THE BOARD OF DIRECTORS AND THE CITY COUNCIL'S CONSIDERATION.

ANY EXPENDITURE FOR EXISTING CORPORATE INDEBTEDNESS OR KNOWN ANTICIPATED EXPENSES, ANNUAL DEBT PAYMENTS, CONTRACTUAL INCENTIVE PAYMENTS, PERSONNEL COSTS, OR OTHER KNOWN AND OBLIGATED COSTS, WHICH MUST BE INCLUDED IN THE ANNUAL BUDGET FOR EFFICIENT AND EFFECTIVE CORPORATE OPERATION FOR APPROVAL CAN BE APPROVED AUTOMATICALLY.

>> BUT ALL WE NEED IS ANOTHER SENTENCE IN YOUR RESOLUTION THAT SAYS THOSE EXPENDITURES IDENTIFIED ON PAGES 5-9 ARE APPROVED.

INCLUDED IN THE ANNUAL BUDGET, WILL BE A FINDING BY THE BOARD OF DIRECTORS AS TO WHETHER AFTER SUFFICIENT PROVISION OF FUNDS HAS BEEN MADE FOR THE FULL PAYMENT OF THE CORPORATION'S EXPENSES, BONDS, OR OTHER OBLIGATIONS, ANY NET EARNINGS OF THE CORPORATION SUBSEQUENTLY ACCRUING EXIST, AND IF SO, THE BUDGET SHALL INCLUDE AN EXPENSE TO REFLECT THOSE FUNDS BEING PAID TO THE CORPORATION'S AUTHORIZING UNIT AS REQUIRED BY LAW.

THIS IS THE ONE THAT'S PUT NEXT TO IT, SECTION 501/503, [NOISE] CORPORATE NONPROFIT NET EARNINGS.

THIS IS ONE OF THOSE PROVISIONS THAT I LOOK BACK FOR SPECIFIC INFORMATION ON HOW IT WAS CREATED, BUT IT WAS ACTUALLY CREATED IN SECTION 33 OF THE 1979 INDUSTRIAL CORPORATION ACT.

IT'S BEEN ON THE BOOKS SINCE THIS ORGANIZATION WAS CREATED.

WHAT THIS IS FROM A POLICY STANDPOINT IS THAT WHEN A GOVERNMENT BODY TAXES A CERTAIN AMOUNT OF ITS PUBLIC AND THEN SITS ON THE MONEY AND DOESN'T USE IT FOR PUBLIC PURPOSES AND DOESN'T USE IT IN ACCORDANCE WITH THE PROJECTS AND PROGRAMS THEY NEED TO USE IT, THEN THAT MONEY IS EITHER ONE, OVERLY TAKEN, YOU'RE TAKING TOO MUCH MONEY FROM YOUR CITIZENS TO TAX, ROBIN HOOD AND ALL THAT, OR NUMBER 2 IS THAT YOUR ECONOMIC DEVELOPMENT CORPORATION IS NOT BEING CREATIVE ENOUGH TO FIND PROJECTS AND INCENTIVES OF WHICH THEY CAN MOVE FORWARD IN THIS PROCESS.

NOW, FOR INSTANCE, I HAD ECONOMIC DEVELOPMENT CORPORATION THAT DID $32 MILLION OF BONDS FOR A LARGE PROJECT, AND THAT WAS A $32 MILLION EXPENSE THAT THEIR $7 MILLION ANNUAL INCOME DIDN'T PAY EACH YEAR.

THEY HAD AN OBLIGATION TO PAY THIS $25 MILLION.

NOW, IF THE NEXT YEAR, THEY HAD PROPERTY AND THEY SOLD IT FOR $25 MILLION AND THEY BANK THAT $25 MILLION AND NOT DO ANYTHING WITH IT, BUT THEY DON'T OWE THE EXPENSE ANYMORE.

ALL THOSE OTHER FUNDS SHOULD GO TO THE CITY COUNCIL FOR THE CITY'S GENERAL FUND FOR PURPOSES OF USE IN OPERATIONS AND SHOULD BE USED FOR OPERATIONS.

THAT'S WHAT THIS STATUTE PROVIDES, AND ALL WE DID IN SUBSECTION G IS GIVE EVERYONE NOTICE THAT THIS IS OUT THERE.

BECAUSE, I'VE NOT UNTIL SOMEBODY POINTS THIS OUT, AND I'VE BEEN THE ONE POINTING IT OUT FOR A WHILE, ECONOMIC DEVELOPMENT CORPORATIONS DON'T EVEN KNOW THAT THEY HAVE TO DO THAT, OR THIS IS A THING, AND CITY COUNCILS DON'T KNOW.

IT'S JUST ANOTHER ONE OF THOSE CIRCUMSTANCES WHERE WE'VE ALWAYS DONE IT ONE WAY, BUT THE LAW SAYS SOMETHING DIFFERENT.

THIS PART IS ONE THING I THINK YOU DO YOUR BOARD MEMBERS A DISSERVICE, IF YOU DON'T LET THEM KNOW WHAT THEY'RE GETTING INTO AND WHEN ANYBODY SERVES AS A NONPROFIT BOARD MEMBER,

[01:55:05]

THESE BUSINESS ORGANIZATION CODE CHAPTER 22 PROVISIONS APPLY.

BECAUSE STATE LAW SAYS THE AFFAIRS OF THE CORPORATION ARE MANAGED BY THE BOARD OF DIRECTORS, THE DIRECTOR SHALL DISCHARGE THE DIRECTOR'S DUTIES, INCLUDING DUTIES AS A COMMITTEE MEMBER IN GOOD FAITH WITH ORDINARY CARE, AND IN A MANNER THE DIRECTOR REASONABLY BELIEVES TO BE IN THE BEST INTEREST OF THE CORPORATION.

A DIRECTOR WHO HAS PROVEN TO HAVE NOT PERFORMED THESE DUTIES TO ACT IN GOOD FAITH WITH ORDINARY CARE, AND IN A MANNER THE DIRECTOR REASONABLY BELIEVED TO BE IN THE BEST INTEREST OF THE CORPORATION IS LIABLE TO THE CORPORATION.

IF BOARD MEMBERS DON'T DO THEIR DUTY, THEN THEY ARE RESPONSIBLE TO THE CORPORATION UNDER CIVIL STATUTE FOR WHATEVER DAMAGES OR CONSEQUENTIAL LOSSES OCCUR.

THE ACTUAL STATUTE IS RIGHT BESIDE IN CHAPTER 22 TO 21, AND I PUT THIS IN HERE BECAUSE I'M NOT MAKING IT UP.

I WANTED TO MAKE SURE EVERYONE KNEW WHERE THIS LANGUAGE WAS COMING FROM, AND SO IT HAS THE DIRECT TIT FOR TAT, SO TO SPEAK, ON WHAT LAWS ARE BEING CITED.

LOANS TO DIRECTOR IS PROHIBITED AND THIS IS THE LANGUAGE THAT I WANTED TO USE FOR PURPOSES OF INTERPRETING.

ANY DIRECTOR OF A CORPORATION WHO VOTES FOR OR ASSENTS TO JUST LETTING IT HAPPEN, THE MAKING OF A LOAN TO A DIRECTOR AND ANY OFFICER WHO PARTICIPATES IN THE MAKING OF A LOAN OR JOINTLY AND SEVERALLY LIABLE TO THE CORPORATION FOR THE LOAN UNTIL THE LOAN IS REPAID.

ALL INFORMATION HELD BY THE CORPORATION, WHETHER HELD BY ANY DIRECTOR, EMPLOYEE OR THE REPRESENTATIVE ACCESS OF THE CITY COUNCIL MEMBER UPON REQUEST IN THEIR OFFICIAL CAPACITY ONLY.

THE FIRST PART IS AN EXAMPLE OF WHAT TYPE OF CIRCUMSTANCES COULD BE USED TO DEFINE OR CHALLENGE WHETHER A BOARD MEMBER MET THEIR FIDUCIARY RESPONSIBILITY.

THE SECOND PORT NUMBER 13 IS THE 173 OR 501.73(B) PROVISION THAT SAYS THAT THE BOOKS AND RECORDS OF THE ORGANIZATION SHALL BE AVAILABLE TO THE AUTHORIZING UNIT AT ALL TIMES.

WHAT WE'RE DOING HERE IS THAT WE'RE TAKING IN ADVANCE, SAYING, IF ANY COUNCIL MEMBER IS INTERESTED IN LOOKING AT THE BOOKS OR THE RECORDS OF THE AEDC, THEY CAN AND SO IT AVOIDS HAVING TO BRING A RESOLUTION TO THE CITY COUNCIL, HAVE THE CITY COUNCIL APPROVED THAT THAT EVERY BOARD MEMBER HAS THAT AUTHORITY BECAUSE IT'S ALREADY IN THE DOCUMENT.

THAT AGAIN, MAKES IT MORE TRANSPARENT, MORE AVAILABLE FOR THE CITY COUNCIL. FIVE DONE.

>> OKAY.

>> SEVEN.

>> DEFINITELY HAVE A FEW QUESTIONS ON THAT.

DO YOU WANT TO TAKE QUESTIONS ON ARTICLE 5?

>> SURE. HOWEVER THE COUNCIL WANTS TO TAKE QUESTIONS.

>> WELL, IT'S A LOT TO DIGEST.

WE'RE GETTING CLOSE TO FIVE O'CLOCK.

I DON'T WANT TO PUSH US TOO FAR WITHOUT A RECESS.

BUT I WOULD LIKE TO JUST PAUSE HERE FOR A MINUTE.

THESE ARE RECOMMENDATIONS.

WE CAN MODIFY THESE, WE CAN ACCEPT THESE, WE CAN REJECT THESE.

MAYBE LET'S DO THIS BEFORE WE TAKE A RECESS, WE CAN GO THROUGH 0.53.

MAYBE YOU UNDERSTAND A LITTLE BIT MORE OF WHAT YOU'RE DRIVING AT THERE.

MAKE SURE WE UNDERSTAND WHAT WE'RE LOOKING AT, AND THEN PROBABLY COME BACK IN AFTER THE RECESS, CONDUCT A DISCUSSION WITH FURTHER QUESTIONS.

BUT COUNCIL, I HAVE A FEW QUESTIONS ON THAT ONE, AND I WOULD JUST OPEN IT UP FROM OTHER COUNCIL FOR QUESTIONS FOR MR. HYDE ON ANY OF THIS AND THEN IF THERE ARE NONE, I'LL ADDRESS THEM.

>> WHICH ONE ARE WE TALKING ABOUT GOING BACK TO 05?

>> I'M GOING TO 053.

>> YOU GO AHEAD, WHATEVER YOU'VE GOT.

>> I'LL WAIT A MINUTE.

>> ANYBODY ELSE HAVE ANYTHING?

>> NO ONE.

>> OKAY. I WANT TO KNOW.

SO EDCS REQUIRED BY LAW TO HAVE RESERVES REQUIRED BY LAW AND TO NOT CARRY RESERVES, LIKE WHAT'S THE LAW?

>> WELL, THE ECONOMIC DEVELOPMENT CORPORATIONS PROVISIONS OF STATE OF LOCAL GOVERNMENT CODE DO NOT IDENTIFY A RESERVE NECESSARY OR HOW MUCH THAT RESERVE WOULD BE.

>> LIKE A MUNICIPALITY WE MUST KEEP 90 DAYS RESERVES IN ORDER TO STAY IN GOOD STANDING, AND I THINK IT'S EVEN 60 DAYS MINIMUM.

BUT EDCS DO NOT HAVE A RESERVE REQUIREMENT.

>> NO, IT DOESN'T. WHAT THAT MEANS IS IT WAS DEFERRED TO THIS BODY.

IF IT SO ELECTS TO SET A RESERVE FOR IT, OR THE BYLAWS CAN SET A RESERVE FOR THEM.

[02:00:03]

>> DO WE HAVE ANYTHING IN THE BYLAWS THAT YOU'VE REVIEWED THAT SET UP A RESERVE ACCOUNT FOR THE EDC?

>> I DON'T RECALL.

>> YOU COULD CLARIFY?

>> YES. [NOISE]

>> THEN DO YOU RECOMMEND THAT IT'S GOOD BUSINESS PRACTICE OR BEST PRACTICES TO HAVE RESERVES FOR EDCS?

>> I THINK THAT A NUMBER OF CIRCUMSTANCES REQUIRE IT.

FOR INSTANCE, IF YOU DID A BOND, THERE MAY BE AN AMOUNT, EVEN A LOAN TO A BANK, THEY MAY WANT TO HAVE RESERVES OF 1.5 YEARS OF PAYMENTS IN THEIR BANK AT THEIR FINANCIAL INSTITUTIONS. YES.

>> WE DEFINITELY WANT TO HAVE THE HEALTHIEST EDC THAT WE CAN.

WE BELIEVE THAT BY TAKING THIS EXERCISE THROUGH THE ARTICLES, WE'RE IMPROVING ON THE OVERALL HEALTH AND WELLNESS AND FUTURE OF IT, NOT RETRACTING OR RESTRICTING THAT.

WOULD YOU GIVE A RECOMMENDATION OF WHAT YOU'VE SEEN AROUND THE STATE THAT IS A GOOD RESERVE?

>> I THINK THAT THE RESERVE DEPENDS ON WHAT YOUR DEBT LOAD IS.

IF YOU HAVE 20 PROJECTS OUT THERE THAT YOU ARE GOING TO MAKE A MILLION DOLLARS INCENTIVE EVERY YEAR, THEN YOU MAY NEED $50 MILLION OF A RESERVE.

BUT IF YOU ONLY HAVE FIVE MILLION DOLLARS OF PROJECTS, YOU MAY NOT NEED 50. YOU MAY ONLY NEED FIVE.

>> WOULD IT BE WITHIN YOUR EXPERTISE AND YOUR SCOPE IN HAVING YOU LOOK AT THIS AND WORK ALONGSIDE THE EDC TO DEVELOP THE PRE APPROVED EXPENDITURE LIST THAT GOES IN WITH THEIR BUDGET REQUEST FOR YOU TO LOOK AT THEIR DEBT CAPACITY DEBT LOAD AND MAYBE WHAT WOULD BE A RECOMMENDED RESERVE, AND WE COULD ALSO UTILIZE US AS THE FISCAL AGENT HERE WEIGHING IN ON THAT.

I THINK WHAT I WOULD WANT TO RESTRICT OR REALLY SHY AWAY FROM IS FEELING LIKE, WELL, 053 SAYS [NOISE] THAT ONCE WE PAY THE PENNY OF THE LAST BILL, EVERYTHING IS.

IF WE DETERMINED, WELL, WE ARE NOT RESERVED APPROPRIATELY, THEN WE WOULD SET THAT GOAL AND WE WOULD MOVE TOWARDS THAT.

IF WE DETERMINED WE WERE OVER RESERVED, THEN WE WOULD HAVE A DIFFERENT LATITUDE, I THINK, IN HOW WE WOULD PUSH ON 053.

IN 053, ARE THOSE MONIES RESTRICTED FOR ECONOMIC DEVELOPMENT?

>> NO.

>> OKAY. WHY WOULD THEY NOT BE IF THE CITY VOTED IN A HALF A CENT AND WE'VE COMMITTED TO OUR CONSTITUENTS THAT WE WOULD USE THAT HALF CENT AND WE GO AND WE USE IT, BUT THEN OPPORTUNITY IS JUST NOT THERE?

>> WELL, IT GOES BACK TO STATUTORY CONSTRUCTION.

IN THE INFINITE WISDOM OF OUR LEGISLATURE, IF THEY HAD INTENDED TO LIMIT THE USE OF THOSE FUNDS, THEY WOULD HAVE SAID SO.

BECAUSE THEY DO IN OTHER STATUTES, THEY [NOISE] SPECIFICALLY IDENTIFY HOW LIMITED FUNDS.

BECAUSE THEY DID NOT, THEY WERE SUPPOSED TO BELIEVE THAT THE LEGISLATURE INTENTIONALLY DID NOT PUT THAT IN THAT LAW.

IF THEY DIDN'T PUT OR IF THEY DID PUT CERTAIN WORDS, WE'RE SUPPOSED TO SAY THAT THOSE WERE THE WORDS THEY INTENTIONALLY PUT IN.

IN THIS CASE, THE PROVISION THAT TRANSFERS IT DOES NOT PROVIDE [OVERLAPPING]

>> IF WE'RE RUNNING OUR ECONOMIC DEVELOPMENT CORPORATION VERY WELL, AND WE'RE BEING FRUGAL WITH THE MONIES, BUT WE'RE GROWING AS FAST AS WE CAN, AND WE WERE TO END UP WITH A FINDING, SO THE WAY THIS WOULD WORK IS, SHOW ME WHAT YOU PLAN ON DOING, AND THEN A YEAR LATER, SHOW ME WHAT YOU DID.

THAT WOULD PRODUCE A FINDING OF ALL THE BILLS HAVE BEEN MET.

EVERYTHING HAS BEEN SATISFIED AND AS AN EXAMPLE, LET'S SAY THERE'S A MILLION DOLLARS OF REVENUES THAT WERE UNEXPECTED.

SALES TAXES WERE HIGHER THAN WE THOUGHT OR WE SOLD A PIECE OF PROPERTY, WHATEVER IT MAY BE.

IN THIS NEW ARTICLE, 053 WOULD THEN REQUIRE THE BOARD TO MAKE A FINDING THAT THAT MILLION DOLLARS WAS NOT NEEDED TO SATISFY THOSE YEARS, IF WE HAD IT FURTHER, THAT THAT BOARD WOULD MAKE A FINDING OR A RECOMMENDATION THAT IT NEEDS TO GO TO RESERVES.

BUT IN ASSUMING AND THEN YOU CAN TAKE ME BACK TO THAT ASSUMING THEIR RESERVES ARE ADEQUATE, THAT MILLION DOLLARS COULD GO BACK TO THE GENERAL FUND AND COULD BE SPENT ON AN EXAMPLE, SAY SENIOR CITIZENS WORKING TOWARDS A FOOD PROGRAM OR WHATEVER.

IT WOULD BE UNRESTRICTED.

>> NOW, THE TWO THINGS THAT I WANTED TO POINT OUT.

NUMBER 1 IS, AS YOU SAID, THE BOARD IS THE ONE THAT MAKES A FINDING.

THE BOARD'S TO FINDING IS A LEGISLATIVE ACT.

IN ORDER FOR ANYONE TO CHALLENGE THE BOARD'S FINDING, THEY WOULD HAVE TO SHOW THAT IT WAS ARBITRARY OR CAPRICIOUS.

IF I HAD AN ORGANIZATION WITH $250 MILLION OF THE BANK, THEY'RE GETTING $50 MILLION A YEAR AND THEY HAVE NO PROJECTS, THEN I THINK IT'S VERY APPARENT THAT YOU'RE BEING ARBITRARY AND CAPRICIOUS AND SO I WANTED TO POINT THAT OUT.

THEN THE SECOND THING I WANTED TO POINT OUT IS THIS DOES NOT ALSO EXCLUDE PROJECTS THAT YOU'RE UNDER CURRENT NEGOTIATION, AND ANTICIPATING THESE PROJECTS TO HIT IN YOUR BUDGET YEAR AND SO IF THIS HITS, WE'RE GOING TO NEED $10 MILLION FAST.

[02:05:03]

WE'RE GOING TO LEAVE THAT IN OUR RESERVE FOR THAT PROJECT IN SPECIFIC.

>> WITH EDCS HAVING TO BE SO FORWARD THINKING AND WE EVEN HAVE A STRATEGIC BUSINESS PLAN MEETING TOMORROW, [NOISE] YOU'RE PROJECTING FUTURE GROWTH, YOU'RE HOPING FOR THE WINDFALL, EVERYTHING COMING.

WOULD YOU LOOK AT THIS IN A WAY WHERE IT'S NOT ANNUALIZED, BUT MAYBE YOU'RE WORKING IT A YEAR BEHIND? LIKE YOU WOULD BE ABLE TO SAY THAT YOUR RESERVES ARE JUST ADEQUATE.

YOU'VE PAID ALL YOUR BILLS, BUT YOU HAVE MONIES LEFT OVER, AND THAT YOU WOULD PROJECT A GOOD YEAR COMING UP, SO THEN THEY WOULD MAKE THAT RECOMMENDATION OF LEAVE THE MILLION DOLLARS HERE BASED ON FUTURE PROJECTS.

>> SURE.

>> OKAY.

>> FOR PURPOSES OF THAT PROJECT LINE ITEM IS THAT IT WOULD BE ANTICIPATED PROJECTS, AND IF IT'S $20 MILLION, IT'S $20 MILLION.

NOW, THAT'S NOT APPROVED FOR THOSE PROJECTS BECAUSE THE INCENTIVE AGREEMENT HAS TO COME TO THE COUNCIL HAS TO BE APPROVED, AND AT THAT POINT, THE EXPENDITURE TO SUPPORT THAT CONTRACT WOULD BE APPROVED IN THE RESOLUTION, AND YOU'RE GOOD TO GO.

>> EVERYTHING WOULD BE SPELLED OUT IN THE ARTICLE SO THAT MOVING FORWARD, EVEN THOUGH THIS MAY SEEM A LITTLE COMPLEX NOW TO US BECAUSE OF THE WAY WE'VE BEEN DOING BUSINESS, MOVING FORWARD, THIS IS GOING TO BE VERY CLEAR AND LEGALLY DEFINED SO THAT WE HAVE LESS MISUNDERSTANDING.

COUNCIL, I THINK THAT GETS ME WHERE I NEED TO GO.

COUNCILMAN KRAFT, DID YOU HAVE SOMETHING?

>> WAS IT THE METHOD? CAN YOU GO MORE IN DEPTH ON THE METHOD OF [NOISE] HOW IT'S TO BE EXPENDED? CAN YOU TALK ABOUT P CARDS AND CREDIT CARDS?

>> YEAH. THAT WAS ACTUALLY PUT IN BECAUSE OF SOME FEEDBACK FROM COUNCIL.

WE MAY BE ABLE TO CREATE A BLANKET EXCLUSION, FOR INSTANCE, THAT PERSONAL CREDIT CARDS WILL NOT BE USED UNLESS SPECIAL CIRCUMSTANCES AND YOU'VE GOT TO GET THOSE CIRCUMSTANCES APPROVED BY THE BOARD IF YOU'RE GOING TO GET REFUNDED.

STUFF LIKE THAT BECAUSE IF IT HAS TO COME TO THE BOARD AND YOU'RE GOING TO SPEND THE MONEY, YOU ALREADY KNOW YOU'RE GOING TO HAVE TO BE ABLE TO LEGITIMATELY SUPPORT IT BECAUSE IT'S GOING TO OCCUR AT A PUBLIC MEETING.

IN THE PAST, WHEN I'VE USED THAT TYPE OF PROGRAM, IT REALLY KEEPS PEOPLE IN COMPLIANCE WITH YOUR RULES.

>> ANYTHING FURTHER, COUNCILMAN?

>> NO, GEORGE, I APPRECIATE YOUR WORK ON THAT.

>> WE DON'T HAVE TO LET YOU OFF THE HOOK.

UNLESS WE HAVE ANOTHER QUESTION WE WANT TO ADDRESS NOW. GO RIGHT AHEAD.

>> THE GATEWAYS.

I JUST HAD A QUESTION ON THE GATEWAYS.

IS THAT CONSIDERED A TYPE A PAVEMENT?

>> WELL, I HAVE TO ANSWER THAT AS STATED, AND MY ANSWER IS NO.

IT'S NOT A TYPE A PROJECT, BUT THEY'RE NOT BRINGING A PROJECT TO YOU AND THAT'S PART OF WHAT THE OTHER COMMENT I HAD.

IF YOU LOOK AT THE FINANCIALS FOR PURPOSES OF PAYMENT ON THIS PROJECT, IT'S A COMBINATION OF MARKETING AND PROJECT SUPPORT, I GUESS IS WHAT THEY CALL IT.

[NOISE] WELL, PROJECT SUPPORT RELATES TO A PROJECT, THIS ISN'T A PROJECT, SO I DON'T KNOW THAT PROJECT SUPPORT MONEY WOULD BE APPROPRIATE FOR THIS.

BUT WHAT ECONOMIC DEVELOPMENT CORPORATIONS DO, AND THE STATE LAW DOES REGULATE THIS THAT AN ECONOMIC DEVELOPMENT CORPORATION, WHETHER YOU'RE TYPE A OR TYPE B, BECAUSE REMEMBER THE TYPE A STUFF ALSO APPLIES TO TYPE B'S TOO.

>> CAN USE UP TO 10% OF THEIR ANNUAL REVENUE FOR MARKETING PURPOSES.

PUBLICIZING AND ADVERTISING LIKE PAYING FOR BILLBOARDS AND SO FORTH, ALONG THE FREEWAYS IS ADVERTISING.

A MONUMENT SIGN IF THE BOARD FINDS IT TO BE ADVERTISING, THEY CAN SPEND THAT MONEY ON ADVERTISING, SUBJECT TO THAT ARBITRARY AND CAPRICIOUS WORLD.

I THINK THIS IS AN APPROPRIATE EXPENDITURE OR AN AUTHORIZED EXPENDITURE UNDER MARKETING, NOT UNDER PROJECT SUPPORT, AND IT IS A LEGAL EXPENDITURE OF FUNDS FOR THAT PURPOSE.

WITH 2.5 MILLION AS THEIR CAP, SINCE THEY HAVE A $25 MILLION REVENUE SOURCE ANNUALLY, THEN IF $800,000 IS IN THE BUDGET FOR MARKETING, AND THIS IS $625,000 TO GO ON TOP OF THE 800, YOU'VE GOT MORE THAN HALF OF THEIR MARKETING FUNDS EXPENDED.

[02:10:05]

IF THIS IS THE ONLY MARKETING PROJECT THEY CURRENTLY HAVE, THEN 625 WOULD BE WITHIN THE 800 AND NO AMENDMENT TO THE BUDGET WOULD BE NECESSARY OR APPROVAL OF THOSE FUNDS FOR USE.

THE WAY THAT IT'S BEEN PRESENTED AND THE LANGUAGE USED THAT THEY WANTED TO INCREASE THE MARKETING BUDGET BY THIS AMOUNT, IT'S A LITTLE CONFUSING TO ME.

>> TO CLARIFY ON THIS ONE PARTICULAR ITEM, YOU SET APPROVAL FROM THEIR BOARD?

>> YES.

>> THEY VOTE ON IT FIRST, IT PASSES, THEN WE WOULD VOTE ON IT.

>> RIGHT AND THAT IS SHOWN IN THE IN THE DOCUMENT ON THAT ITEM.

>> THAT'S A LEGAL REQUIREMENT UNDER STATE LAW FOR AN EXPENDITURE, JUST LIKE THEIR BUDGET, OVERALL BUDGET, THEY'RE GOING TO VOTE FOR IT, THEN THEY'RE GOING TO BRING IT.

WE'RE GOING TO APPROVE IT ALONG WITH THE EXPENDITURE LIST.

>> RIGHT.

>> OKAY, COUNSEL? QUESTION. WITH THE ARTICLES INCORPORATION, AND AS I READ THEM, NOT KNOWING ANY OF THE BACKGROUND THAT YOU HAD TOLD US TODAY, I INTERPRETED THIS AND YOU SAY THERE'S REALLY NO DEFINITION IN THE LAW OF WHAT PROGRAMS AND EXPENDITURES ARE, SO THAT'S SOMETHING WE HAVE TO IDENTIFY WHAT THOSE ARE?

>> WELL, THE COURTS DIRECT YOU TO THE DICTIONARY FOR A DEFINITION OF A TERM THAT'S NOT DEFINED IN THE STATUTES.

>> BUT IN THIS CASE, IT WOULD BE ANY MONEY THAT IS SPENT HAS TO BE APPROVED BY THE BOARD AND HAS TO BE APPROVED BY COUNSEL?

>> YES, SIR.

>> NO MATTER WHAT IT'S FOR.

THEN MY QUESTION IS THE FORM OF WHICH IT HAS TO BE DONE.

BECAUSE I READ IT TO SAY, WELL, YOU APPROVE IT IN THE BUDGET, BUT EVERYTHING STILL HAS TO COME BACK TO COUNCIL AGAIN FOR A SECOND APPROVAL.

>> WELL, NOT EVERYTHING, BUT YOU CAN DO IT IN CORPORATION WITH THE BUDGET, BUT IN FACT, THE STATE LAW DOESN'T REQUIRE YOU TO APPROVE THEIR BUDGET AT ALL.

IT ONLY REQUIRES YOU TO APPROVE EXPENDITURES.

IF YOU LOOK AT 501073(A), IT SAYS, YOU WILL APPROVE ALL EXPENDITURES AND REVIEW THEIR FINANCIAL STATEMENTS.

THAT'S IT. THERE IS NO APPROVAL OF A BUDGET REQUIRED UNDER STATE LAW.

IT'S PUT IN THE CART BEFORE THE HORSE IN THAT YOUR ONLY OBLIGATION, YOU DON'T EVEN HAVE TO LOOK AT A BUDGET IF YOU DON'T WANT TO.

WELL, NO, YOU HAVE TO LOOK AT IT.

THE LAW SAYS YOU HAVE TO REVIEW IT, BUT YOU DON'T HAVE TO TAKE ACTION ON IT, YOU DON'T HAVE TO DO ANY OF THAT, BUT WHEN THEY'RE GOING TO GO WRITE THE CHECK, YOU HAVE TO APPROVE IT.

>> BUT IF THE BUDGET MEETS THE THRESHOLD OF INFORMATION REQUIRED AND WE APPROVE IT, SUCH AS THE $20,000 FOR OFFICE SUPPLIES?

>> CORRECT.

>> DO THEY HAVE TO COME BACK TO US AGAIN BEFORE THEY PURCHASE THEM OR OKAY.

THE BUDGET APPROVAL AS LONG AS IT PROVIDES THE ADEQUATE DETAIL THAT WE NEED IS AN APPROVAL OF THE EXPENDITURE?

>> CORRECT, ABSOLUTELY.

>> THEN SO WHERE DO YOU GET INTO THE DETAILS OF SPELLING THAT OUT MORE SPECIFICALLY.

EVERYBODY IS ON THE SAME PAGE OF KNOWING WHAT IS THE PROCESS THAT WE'RE GOING TO USE? BECAUSE THAT'S NOT REALLY SPELLED OUT IN THE ARTICLES OF INCORPORATION, SAYS HOW YOU DO IT, BUT IT SAYS YOU HAVE TO DO IT, BUT IT DOESN'T SAY HOW YOU DO THIS.

>> WELL, IF THE CITY COUNCIL WOULD LIKE, WHAT I'VE DONE IN ONE OTHER ORGANIZATION THAT WANTED THAT WE ADOPTED FORMS, AND THAT FORMAT WAS SOMETHING THAT WAS DESIGNED IN CONJUNCTION WITH AND IN COLLABORATION WITH THE ECONOMIC DEVELOPMENT CORPORATION SO THAT IT MET WHATEVER NEEDS THEY NEEDED BASED ON THEIR METHOD OF ACCOUNTING, AS WELL AS MEETS THE LEVEL OF TRANSPARENCY THAT I THINK THAT THE COUNCIL IS LOOKING FOR HERE AS WELL.

INSTEAD OF HAVING LANGUAGE WITH REGARD TO INSTRUCTIONS, WE CAN DO IT LIKE AN IRS FORM.

HERE'S YOUR FORM AND HERE'S THE INSTRUCTIONS.

>> WOULD THAT BE SOMETHING THAT YOU WOULD ADDRESS IN THE BY LAWS OR IS THAT NOT SOMETHING ASSOCIATED WITH BY LAWS, THE MORE SPECIFICS ON HOW YOU EXECUTE ON THE ARTICLES OF INCORPORATION?

>> WELL, TYPICALLY, THIS ONLY BECOMES AN ISSUE WHEN THERE'S BEEN AN INAPPROPRIATE USE OF FUNDS, AN UNAUTHORIZED USE OF EXPENDITURES AND ONCE THAT HAPPENS, THEN YOU DON'T WANT YOUR CORPORATION OF WHICH YOU ARE THE PARENT OF TO EXPEND FUNDS THAT ARE INCONSISTENT WITH THE LAW.

YOU TRY TO DO THINGS TO PROVIDE THEM MORE AND MORE NOTICE AND SELF SELF COMPLIANCE BY DOING THE TYPE OF INSTRUCTIONS AND FORM.

[02:15:01]

>> A QUICK QUESTION JUST ON THE HISTORY OF THE AEDCS.

DO YOU KNOW WHY BACK WHEN THEY WERE ESTABLISHED, THEY WERE SET UP THE WAY THEY ARE ACROSS THE STATE OF TEXAS IS, IN OTHER WORDS, ECONOMIC DEVELOPMENT IS NOT DONE DIRECTLY IN HOUSE IN THE CITY, BUT IT WAS SET UP THIS WAY.

WHY WAS IT SET UP WITH A SEPARATE BOARD, SEPARATE STAFF, A LITTLE BIT OF A DETACHMENT, BUT STILL CONNECTED WITH THE CITY?

>> ONE IS THAT IF THE ECONOMIC DEVELOPMENT CORPORATION IS ENTERING INTO CONTRACTS WITH THIRD PARTIES, IT DOES NOT TRIGGER THE FULL FAITH AND CREDIT AND DOES NOT PUT THE TAXPAYERS DOLLARS AT RISK.

THAT'S A BIG CHANGE BECAUSE OTHERWISE, THE CITY COUNCIL IF THERE WAS A $50 MILLION PROJECT THAT WENT BAD AND YOU GOT A JUDGMENT, THE TAXPAYER'S MONEY WOULD BE AT RISK.

YOU MAY HAVE TO INCREASE TAXES TO PAY THAT JUDGMENT.

WITH THE ECONOMIC DEVELOPMENT CORPORATION BEING A DIFFERENT CORPORATION, THE PUBLIC'S TAX DOLLARS ARE SAFE.

NOW, THE SECOND PART OF DOING IT THIS WAY IS SOMETHING THAT I'VE DONE WITH A NUMBER OF MY ECONOMIC DEVELOPMENT CORPORATIONS IS THAT UNDER CHAPTER 380 OF THE LOCAL GOVERNMENT CORPORATION, THE CITY COUNCIL HAS THE AUTHORITY TO DO INCENTIVES, BUT SOMETIMES WHEN YOU DO INCENTIVES WITH TAX DOLLARS, IT BECOMES A SIGNIFICANT POLITICAL ISSUE.

CHAPTER 380.004 OF THE LOCAL GO OR THE TEXAS LOCAL GOVERNMENT CODE, IS THE PROVISION THAT SAYS, THIS BODY, AND THIS IS THE ONLY REASON WHY YOU CAN'T SAY BECAUSE 501007 SAYS YOU CAN'T AID A CORPORATION IN ANY WAY SHAPE OR FORM.

THE EXCEPTION IS 380.004, AND IT SAYS, FOR PURPOSES OF AN INCENTIVE, YOU CAN GIVE MONEY TO AN ECONOMIC DEVELOPMENT CORPORATION TO PAY AN INCENTIVE.

WHAT THAT DOES, WHAT I DO, THEY'RE CALLED FUNDING AGREEMENTS, AND IT'S AN AGREEMENT BETWEEN THE ORGANIZATION, THE CITY AND THE EDC, THAT A HALF CENT OF THE SALES TAX FROM THIS AREA IS GOING TO BE FUNDED AS AN INCENTIVE TO THE EDC BECAUSE THE DEAL IS NOT JUST THEIR HALF CENT, BUT THEY WANT ANOTHER HALF CENT.

THEY WANT TO SPLIT 50/50.

THE WAY I DO THOSE IS THAT'S A CONTRACT BETWEEN THE ECONOMIC DEVELOPMENT CORPORATION AND THE CITY, SO THAT THERE'S ONLY ONE CONTRACT WITH THE INCENTIVE.

THAT WAY, THERE'S NO ARGUMENT AS TO THESE TERMS MEAN A DIFFERENT THING THAN THESE TERMS. YOU'RE IN BREACH OVER HERE, BUT YOU'RE NOT IN BREACH OVER HERE, SO WE'VE GOT TO GIVE YOU THE MONEY OUT HERE WHEN THEY'RE IN BREACH WITH THE CITY.

WE AVOID ALL OF THAT BY DOING IT THAT WAY, AND IT ALSO RELIEVES THE CITY COUNCIL FROM OTHER THAN THE FUNDING AGREEMENT FROM MAKING THOSE DECISIONS UP FRONT.

>> THEN THERE ARE CERTAIN EXPENSES THAT WE KNOW WE WILL HAVE, BUT WE MAY NOT KNOW THE DETAIL OF THEM GOING INTO A BUDGET YEAR.

FOR EXAMPLE, WE MAY NOT KNOW WHICH COMPANIES DURING THAT YEAR WE'RE GOING TO BE OFFERING INCENTIVES TO.

>> CORRECT.

>> HOW DO YOU HANDLE THAT?

>> WELL, THAT'S WHERE WHAT I TALKED ABOUT TO BE THE PROJECT FUND.

WE ANTICIPATE IF EVERYTHING THAT WE HAVE IN OUR INCUBATOR IS GOING TO OCCUR, WE'RE GOING TO NEED $25 MILLION THIS BUDGET YEAR, TO MEET THE REQUIREMENTS OF THESE PROJECTS.

WE PUT THAT AND WE ALLOCATE THAT $25 MILLION PROJECT.

NOW, WHEN YOU HAVE A PROJECT, YOU HAVE TO DO A PERFORMANCE AGREEMENT.

IT'S REQUIRED UNDER STATE LAW.

THAT PERFORMANCE AGREEMENT HAS CERTAIN REQUIREMENTS IN IT, AND THEN IT HAS TO BE APPROVED BY BOTH THE ECONOMIC DEVELOPMENT CORPORATION BOARD AND THIS BODY.

WHEN THAT COMES TO BE APPROVED, WHICH THEN ALLOWS THE EXPENDITURE TO OCCUR, YOU INCLUDE THE AUTHORIZATION TO EXPEND THE FUNDS TO SUPPORT THE CONTRACT IN THE RESOLUTION SO THAT YOU HAVE A WRITTEN DOCUMENT SHOWING THE CITY COUNCIL APPROVED THE EXPENDITURE AND APPROVED THE PROJECT.

BECAUSE WITH CONTRACTS, INSTEAD OF HAVING TO SPEND 10 HOURS DIGGING THROUGH MINUTES TO TRY TO FIND THE MINUTE ORDER THAT SAID THAT THE CONTRACT WAS APPROVED, MY RECOMMENDATION IS ALWAYS TO DO A RESOLUTION THAT A APPROVES THAT CONTRACT.

THAT WAY, YOU HAVE AN IMMEDIATE THING YOU CAN FIND WHEN SOMETHING GOES BAD 10 YEARS AGO OR 10 YEARS LATER.

>> THEN ANYTIME YOU'RE WORKING ON ECONOMIC DEVELOPMENT, THE LAW ALLOWS YOU TO BE ABLE TO DO CERTAIN THINGS THAT DON'T HAVE TO BE RELEASED TO THE PUBLIC UNTIL A CERTAIN TIME, CORRECT?

>> CORRECT.

>> BECAUSE TO PROTECT YOU MAY HAVE NON DISCLOSURE AGREEMENTS, YOU MAY HAVE COMPETITIVE ADVANTAGES.

YOU MAY HAVE THINGS THAT YOU DON'T WANT GETTING OUT THAT YOU MAY BE DOING, BUT AT SOME POINT, THAT INFORMATION

[02:20:01]

IS REQUIRED AND HAS TO BE RELEASED TO THE PUBLIC, CORRECT?

>> ONCE THE PROJECT IS APPROVED, OR IF THE PROJECT IS DEAD, THEN IT WOULD BE SUBJECT TO PUBLIC DISCLOSURE, BUT LET ME BE CLEAR.

THE PUBLIC INFORMATION ACT AND THE OPEN MEETINGS ACT DOES NOT RESTRICT THE DISCLOSURE OF INFORMATION THAT WOULD OTHERWISE NOT BE CONFIDENTIAL UNDER ANOTHER LAW.

LET ME GIVE YOU AN EXAMPLE, AND I DON'T WISH THIS ON GRACE WHATSOEVER, BUT SAY THAT YOUR CITY MANAGER HAS SOME INCURABLE DISEASE.

YOU HAVE AN 074 PERSONNEL EXECUTIVE SESSION FOR HIM TO SAY, LISTEN, I'M GOING TO BE OUT BECAUSE I HAVE TO TREATMENTS AND SO FORTH, AND BUT ULTIMATELY, PROBABLY WITHIN A YEAR FROM NOW, WE'RE GOING TO NEED TO FIND A NEW CITY MANAGER.

THAT WOULD BE THE PROFESSIONAL THING TO DO.

NOW, IF YOU WALK OUT AND GO UP IN FRONT OF THE NEWS AND SAY, CITY MANAGER HAS TOLD ME HE HAS AN INCURABLE DISEASE.

WELL, YOU JUST VIOLATED HIPAA.

IN YOUR POSITION AS HIS EMPLOYER, HE HAS CONFIDENTIALITY AS TO HIS MEDICAL INFORMATION, AND HE DID NOT WAIVE THAT CONFIDENTIALITY.

IT'S HIPAA THAT KEEPS YOU FROM TALKING ABOUT HIS MEDICAL SITUATIONS OUT IN THE PUBLIC.

IT'S NOT THE OPEN MEETINGS ACT.

WHEN YOU DEAL WITH ECONOMIC DEVELOPMENT, THERE TECHNICALLY IS NOT A PROVISION IN THERE THAT SAYS THAT YOU'LL KEEP PROJECTS CONFIDENTIAL.

WHAT I USUALLY DO IS WHEN WE TALK ABOUT PROJECTS BECAUSE THEY'RE SO LEGALLY INTERTWINED, IS I DO A 071 WITH THE 087 TOGETHER.

I DO THAT SO THAT THE DISCUSSION IS NOW PROTECTED BY ANOTHER LAW, CHAPTER 503 OF THE TEXAS RULES OF EVIDENCE THAT SAYS, ATTORNEY CLIENT COMMUNICATIONS, INCLUDING THE REPRESENTATIVES OF THOSE OF YOUR CLIENT, THE CITY, AND THE INFORMATION THAT THEY PROVIDE TO SEEK ATTORNEY'S ADVICE IS PART OF THE CONFIDENTIAL LANGUAGE.

IF SOMEBODY COMES OUT OF THAT EXECUTIVE SESSION, YOU DON'T WRITE OPEN MEETINGS.

WHAT YOU'VE DONE IS YOU'VE VIOLATED THIS BODY'S CONFIDENTIAL OBLIGATION.

THIS BODY THEN CAN TAKE ACTION AGAINST YOU IN THE EVENT THAT YOU'VE SCREWED SOMETHING UP.

I HANDLED THAT FROM THE CITY OF GALVESTON.

THEY RELEASED A 12 PAGE ECONOMIC DEVELOPMENT LETTER THAT PUT THEM IN A BAD PLACE WITH THE FEDERAL GOVERNMENT.

>> THESE ARTICLES OF INCORPORATION THAT YOU PRESENTED TO US IS THAT THE STANDARD ACROSS THE STATE?

>> WELL, I TRIED TO EXPLAIN THAT EARLIER, IT'S SIMILAR TO THOSE THAT HAVE HAD TO CREATE SOME MECHANICAL WAY TO TRY TO STOP THE WAY WE ALWAYS DID IT TO CREEP BACK INTO THE ORGANIZATION.

IF YOUR BYLAWS AND YOUR PROVISIONS INCLUDE THIS TYPE OF LANGUAGE, AND YOU REQUIRE THAT YOUR BOARD MEMBERS WHEN THEY GET APPOINTED TO READ, REVIEW, AND WRITE SOMETHING THAT THEY UNDERSTAND THEM.

SOME OF THEM MIGHT SAY, LISTEN, I'M NOT IN FOR THIS BECAUSE THEY MIGHT NOT LIKE TO DO SOMETHING THAT SAYS THAT THEY MIGHT GET CIVILLY LIABLE FOR, BUT THEN EVERYONE SITTING IN THE ROOM KNOWS WHAT'S SUPPOSED TO BE DONE.

NOW, WHEN I TAUGHT THE FBI ON ETHICS IN 2006, EVERYONE SAYS THAT DOING SOMETHING RIGHT WHEN NOBODY'S LOOKING IS THE RIGHT THING TO DO.

THAT'S WHEN YOU KNOW. I'VE ALWAYS SAID, DOING THE RIGHT THING WHEN EVERYBODY'S LOOKING, AND IT'S THE UNPOPULAR THING TO DO IS WHAT'S ETHICAL, AT LEAST IN LAW ENFORCEMENT, BECAUSE SOMETIMES YOU HAVE TO DO THINGS THAT ARE VERY UNPOPULAR, AS IS ANY PERSON JUST AS YOU HAVE SWORN TO UPHOLD THE LAWS OF THE STATE.

THOSE ARE THE TYPE OF MECHANISMS I'VE SEEN THIS USED FOR IN THE PAST, IS WHEN YOU'RE TRYING TO PUT A STOP BEHIND YOU SO THAT YOU CAN GO FORWARD WITH SOME LEVEL OF CONFIDENCE THAT THIS WILL NOT BE CHANGED.

NOW, A CITY COUNCIL, THE NEXT CITY, YOU CAN'T BIND THE FUTURE CITY COUNCIL.

CITY COUNCIL FOR A YEAR FROM NOW, IF THEY WANT TO CHANGE THE ARTICLES OF INCORPORATION AND REMOVE ALL THESE THINGS, THEY COULD DO IT, BUT THEY WOULD JUST HAVE TO UNDERSTAND THAT THEY'VE ALSO HAVE A DUTY TO FOLLOW THE LAW.

IF THEY DON'T WANT THEM HERE, THERE'S STILL THE LAW.

WE'RE JUST PUTTING THEM IN HERE SO THAT THE PEOPLE YOU APPOINT AND THE PEOPLE THAT WORK THERE KNOW THE LAW, EVEN IF THERE ARE NO POLICIES OR PROCEDURES, OR WHEN THEY'RE CREATING POLICIES AND PROCEDURES, LIKE A $50,000 LIMIT.

THEY KNOW THEY COULDN'T DO THAT IN THE FIRST PLACE BECAUSE THEY KNEW THE LOSS AT ALL,

[02:25:01]

AND THAT WAS AT LEAST BEEN THE INTENT IN THE PAST.

>> THANK YOU. GOOD DISCUSSION.

LET'S TAKE A 10 MINUTE RECESS.

COME BACK IN HERE. SORRY, HOLD ON 1 SECOND.

DO YOU WANT TO WAIT UNTIL WE COME BACK? WE'RE NOT DONE WITH THE DISCUSSION. GO RIGHT AHEAD, SIR.

>> IF WE'RE DOING A PROJECT, AND SHOULD WE HAVE SO MANY BIDS, WHETHER IT BE ADC OR SUBSIDY?

>> WELL, THE CITY HAS A BID REQUIREMENT, PROCUREMENT RULES THAT APPLY.

THOSE DON'T APPLY TO THE ECONOMIC DEVELOPMENT CORPORATION.

WHAT I'VE DONE BEFORE IS I'VE IN YOUR ARTICLES OR IN YOUR BYLAWS, YOU LIMIT THEIR APPROVED OR THEIR EXPENDITURES FOR THOSE TYPES OF PROJECTS TO PEOPLE THAT THE CITY HAS ALREADY ENGAGED.

IF FREEZE AND NICHOLS OR WHAT ENGINEERING IS YOUR PERSON HERE THAT YOU'VE DONE A LOT OF WORK WITH, AND THERE'S FIVE OTHERS THAT YOU'VE DONE A LOT OF WORK WITH, THEN THEY CAN PICK ANY ONE OF THOSE AND GO.

>> WE'RE GOING TO TAKE A 10 MINUTE RECESS. WE'RE GOING TO COME BACK.

WE'RE GOING TO WRAP THIS DISCUSSION AND THEN GIVE DIRECTION, 10 MINUTES. THANK YOU.

>> NO, YOU'RE OKAY. IT DOESN'T MATTER.

>> I THINK IT IS IMPORTANT AS IT IS IS TO HAVE UPDATES.

I THINK WE TRY TO BE BRIEF AND KEEP THEM PRETTY POINTED TO ACCOMPLISHMENTS AND UPDATES AS TO WHERE WE ARE ON CERTAIN PROJECTS.

THEN WE WILL TRY TO WRAP THIS UP WITH YOU, MR. HYDE.

WE GREATLY APPRECIATE YOUR TIME HERE IN AMARILLO AND WILLINGNESS TO TRAVEL UP HERE AND ALL YOU'VE BEEN DOING FOR THE COUNCIL.

IT'S BEEN VERY VALUABLE.

>> IT'S AN HONOR. THANK YOU.

>> CALL OURSELVES BACK INTO SESSION HERE, AND I THINK IT WAS COUNCILMAN SHERLYN THAT HAD THE MICROPHONE LAST.

DID YOU GET EVERYTHING?

>> YES, SIR.

>> DO I HAVE ANY OTHER QUESTIONS OR CONCERNS FOR MR. HYDE?

>> A COUPLE OF THINGS.

IN THE ORIGINAL ARTICLES OF INCORPORATION, IT SEEMED TO TALK ABOUT THE BOARD.

I GUESS THERE WAS SOME SPECIFICS ON, I GUESS IT HAD IN THE NUMBER OF BOARD MEMBERS, BUT THERE'S NOTHING IN THIS ARTICLES OF INCORPORATION ABOUT THE BOARD, HOW THE BOARD IS SELECTED, THE TERMS, THOSE TYPES OF THINGS.

>> I HAD MENTIONED THIS TO THE MAYOR RIGHT BEFORE THE MEETING.

BECAUSE I FELT THAT THE FOCUS THAT THE COUNCIL REALLY WANTED WAS THESE ISSUES OF INTERNAL CONTROLS, I DID NOT PREPARE A RESTATEMENT COMPLETELY.

BUT MOST IF NOT ALL OF THE REST OF THE MATERIALS, ONCE YOU PUT THESE PROTOCOLS IN, THERE NEEDS TO BE SOME REORGANIZATION.

FOR INSTANCE, THE SIGNATURES FOR THE CHECKS AND HOW MANY SIGNATURES IT TAKES FOR WHAT AMOUNT, ALL OF THOSE THINGS WOULD BE PUT IN HERE.

THEY MAY BE REORGANIZED.

BUT WHAT I'M PROPOSING IS THAT WE DO AN AMENDED AND RESTATED ARTICLES OF INCORPORATION.

THAT WAY, IT'S LESS CONFUSING TO THOSE PEOPLE BECAUSE IF YOU JUST DO AN AMENDED THAT ONLY AMENDS TWO OR THREE PROVISIONS, THEN YOU GOT TO GET THE OLD ONE AND SEE WHAT THE OLD ONE SAYS AND THEN SEE WHAT THE NEW ONE SAYS.

>> WHAT WE'RE PROPOSING IS TO TOTALLY REPLACE THE CURRENT ARTICLES OF INCORPORATION.

>> BUT IF THERE ARE ANY OTHER MATERIAL CHANGES OTHER THAN WHAT I'VE SHOWN HERE, THOSE WOULD COME TOO.

I DON'T ANTICIPATE THOSE TO BE THERE UNLESS I FIND SOMETHING IN THE PROCESS OF DOING THE RESTATEMENT.

ALL THE OTHER LIMITS AND PROVISIONS WOULD BE THE SAME.

>> CAN I CLARIFY BECAUSE I DON'T WANT TO MISCOMMUNICATE TO OUR PUBLIC? WE ARE NOT REDRAWING ALL OF THE ARTICLES AND REDRAFTING EVERYTHING NEW STARTING FROM SCRATCH.

THAT IS NOT WHAT WE'RE DOING.

WE WOULD BE ABLE TO PROVIDE A RED LINE IS WHAT YOU AND I TALKED ABOUT.

>> RIGHT.

>> THEY WOULD TAKE THE EXISTING ARTICLES, REORGANIZE, MAYBE UPDATE SOME OF THE THINGS THAT AREN'T SPOKEN TO THAT WE WOULD WANT CLARIFICATION ON, AND THEN PUT THE AMENDMENTS IN.

YOU'D BE ABLE TO SEE THOSE RED LINES PRIOR TO THE NEXT MEETING IF WE WERE TO CALL A VOTE AT THAT TIME.

>> YEAH, IT'S DIFFICULT BECAUSE WHEN, LIKE, FOR INSTANCE, ARTICLE 5 HAD A DIFFERENT SUBJECT MATTER.

IT WOULD JUST BE ALL RED BECAUSE IT HAD AND SO THAT TO THE EXTENT THAT IT DIDN'T HAVE THIS IN IT, IT WOULD BE A COMPLETELY WIPE OUT.

WHEN THERE'S SOME ALTERATIONS OF THAT CAPACITY, IT MAKES RED LINES A LOT HARDER TO UNDERSTAND.

>> I THINK I'M STILL CONFUSED.

IS THIS TOTALLY REPLACING OR EXISTING?

>> NO. WHAT I HAVE PRESENTED ON ARE ONLY THE FIRST FIVE ARTICLES.

THE REMAINING ARTICLES FOR YOUR ORIGINAL ECONOMIC DEVELOPMENT CORPORATE OR YOUR NOW EXISTING ECONOMIC DEVELOPMENT CORPORATION WOULD NOT NECESSARILY CHANGE OTHER THAN BE REORGANIZED IN THE PROCESS OF RESTATING THE PROVISIONS.

[02:30:07]

>> WE WOULD GET ANOTHER DOCUMENT THAT WOULD COME BACK THAT WOULD HAVE EVERYTHING IN ONE DOCUMENT?

>> YES.

>> OKAY.

>> HE'LL HAVE MORE TIME TO DO THE RED LINES.

IF WE THOUGHT WE HAD TIME, WE WOULD TRY TO WORK HIM WITH THE EDC IN ORDER TO GO AHEAD AND WORK FOR THAT BUDGETARY LINE ITEM REQUEST SO THAT IT WOULD ALL COME BACK TOGETHER, IN THE HOPES THAT WE'RE MOVING AS FAST AS WE CAN TO GET OUR EDC EVERYTHING THAT WE CAN GET THEM TO MOVE FORWARD.

NOW, IF YOU WEREN'T READY AND SAY THE NEXT MEETING, I DON'T HAVE THE DATE, BUT SECOND TUESDAY, WE WOULD STILL HAVE MR. HYDE'S ARTICLES READY AND COULD TAKE ACTION ON THOSE.

AS LONG AS COUNSEL GIVES GOOD DIRECTION HERE TODAY.

>> JUST TO CURIO, WHAT OTHER CITIES HAVE YOU DONE THESE SIMILAR TYPE EDC ARTICLES OF INCORPORATION FOR?

>> WELL, EITHER PREPARING OR AMENDING, THIS IS AN AMENDMENT OF ARTICLES.

I TRY TO THINK ABOUT IT.

ROSENBERG, BAY CITY, THE [INAUDIBLE] ECONOMIC DEVELOPMENT CORPORATION, THE BETA ECONOMIC DEVELOPMENT CORPORATION, THE VAN HORN ECONOMIC DEVELOPMENT CORPORATION, THE HAMILTON ECONOMIC DEVELOPMENT CORPORATION.

I'VE CONSULTED ON ECONOMIC DEVELOPMENT CORPORATION WORK FOR THE CITY OF EL PASO.

THERE'S OTHERS SOMERSET WAS THE FIRST ECONOMIC DEVELOPMENT CORPORATION THAT I HANDLED IN 2001.

THOSE ARE THE ONES THAT COME TO MIND.

>> DO YOU HAVE SOME OTHER OTHERS FROM SOME OF THOSE CITIES THAT YOU COULD SEND FOR US TO I'D JUST LIKE TO LOOK AND SEE WHAT THOSE LOOK LIKE.

>> SURE. I'D BE HAPPY TO.

>> THEN CITIES THAT WE'RE IN COMPETITION WITH, LUBBOCK, ABILENE, MIDLAND, DO THEY HAVE THE SAME TYPES OF ARTICLES OF INCORPORATION THAT WE DO.

>> WELL, I MEAN, TYPICALLY, THE ARTICLES OF INCORPORATION WILL BE VERY MINIMIZED WITH REGARDS TO THE REGULATIONS OF THE INTERNAL AFFAIRS, WHEN THERE IS A COHESIVE BOARD AND CITY COUNCIL.

WHEN THERE HAS BEEN A DIVIDE BETWEEN THE BOARD AND THE CITY COUNCIL AS IN HERE, WHERE YOU HAVE, HUNDREDS OF THOUSANDS, IF NOT OVER A MILLION DOLLARS OF UNAUTHORIZED SPENDING, THOSE ARE THE CASES WHERE ADDITIONAL REQUIREMENTS LIKE THIS HAVE BEEN USED.

I DON'T KNOW LUBBOCK OR WHETHER THEY'VE HAD A PROBLEM AND HAVE USED THIS PROCESS OR NOT.

>> IT'S NOT A LEGAL REQUIREMENT THAT THE ARTICLES OF INCORPORATION HAVE THIS IN THERE?

>> IT IS A LEGAL REQUIREMENT.

IF YOU ARE GOING TO DETERMINE AND I'LL GO BACK TO THE IT'S NOT THERE.

SORRY. IT'S THE ARTICLE 5.

IT'S SMALL HERE, YOU CAN ZOOM IT IN.

BUT WHAT IT SAYS IS SECTION 501.056, THE SIXTH THING THAT GOES INTO AN ECONOMIC ARTICLES OF INCORPORATION OR ANY PROVISION CONSISTENT WITH LAW FOR THE REGULATION OF THE CORPORATION'S INTERNAL AFFAIRS, INCLUDING ANY PROVISION REQUIRED OR PERMITTED BY THIS SUBTITLE TO BE STATED IN THE BYLAWS.

THIS WAS AN OPPORTUNITY THAT THE STATE LEGISLATURE CREATED FOR THIS PURPOSE.

IF YOU WANT TO CONTROL THE AFFAIRS OF THE ORGANIZATION, IT IS SPECIFICALLY EXPECTED THAT NUMBER 6 WAS PUT IN THERE FOR THAT PURPOSE.

>> IF AN EDC IS OPERATING WITH THE ARTICLES OF INCORPORATION THAT ARE DIFFERENT ARE NOT THE SAME AS YOURS, THEN YOU WOULD SAY THEY'RE NOT FOLLOWING THE INTENT OF THE LAW?

>> NO. IT'S JUST THAT THEY HAVE NOT IN THEIR EXPERIENCE WITH THEIR EDC, BEEN IN A POSITION SIMILAR TO WHAT YOU'RE DEALING WITH NOW.

USUALLY WHEN THERE'S A BLOW-UP IS WHEN THESE KIND OF THINGS COME IN.

>> THANK YOU.

>> YOU DON'T FIX IT, I GUESS IF IT IS IT BROKEN.

>> ANY OTHER QUESTIONS FOR MR. HYDE?

>> NO, SIR.

>> MR. HYDE, I GOT ONE FINAL QUESTION FOR YOU.

ALL THE RECOMMENDATIONS THAT YOU'VE MADE WILL BRING US INTO ALIGNMENT THAT IS MORE CONSISTENT WITH STATE LAW.

>> CORRECT AND PROVIDE THE BOARD MEMBERS A RESOURCE WITHOUT HAVING TO DIG INTO THE [INAUDIBLE]

>> CAN YOU THINK OF ANYTHING THAT WOULD BE A NEGATIVE FOR US COMING INTO MORE ALIGNMENT WITH CURRENT STATE LAW?

>> NO. THESE REQUIREMENTS WOULD BE OBLIGATED TO THEM WHETHER OR NOT YOU INCLUDE THEM IN YOUR ARTICLES.

[02:35:02]

>> REALLY APPRECIATE YOU BEING HERE.

THEN I KNOW WE HAVE ANOTHER ITEM THAT YOU'VE WEIGHED IN ON.

IF WE HAVE ANY FOLLOW-UPS, WE'LL CATCH YOU AT THAT TIME.

>> GREAT, THANK YOU.

>> CAN I ASK A QUESTION?

>> SORRY MR. HYDE WAIT.

>> JUST AS FAR AS WHEN YOU SAID DIRECTION.

WHAT IS THE DIRECTION HERE?

>> I APOLOGIZE. THAT'S A GREAT QUESTION.

THANK YOU, COUNCILMAN TIPS FOR GETTING US GOING.

WE NEED TO GIVE DIRECTION BEFORE WE WRAP THIS ITEM HERE.

COUNSEL, DOES ANYBODY FEEL THAT ANY OF THESE SPECIFIC ITEMS ARE OUT OF BOUNDS OR SOMETHING WE SHOULDN'T LOOK TO DO? IF SO, IF YOU COULD IDENTIFY ANY OF THOSE ITEMS THAT YOU'RE UNCOMFORTABLE WITH, WE THEN COULD GIVE DIRECTION TO MR. HYDE TO MOVE FORWARD WITH THE REST.

OR WE COULD GIVE MR. HYDE THE DIRECTION TO WORK WITH OUR EDC, ALLOW THEM TO WEIGH IN ON THESE ITEMS AS WELL AT THEIR BOARD LEVEL AND BRING THIS BACK TO COUNCIL.

WE HAVE TWO PATHS.

ONE WOULD BE TO DIRECT MR. HYDE TO THE EDC TO WORK WITH THEM, OR THE OTHER WOULD BE TO CONTINUE ON THE ROAD WE'VE BEEN ON FOR THIS COUNCIL TO GIVE DIRECTION OF WHAT WE WOULD LIKE TO SEE, AND THEN AT THAT POINT, WE WOULD DELIVER IT TO THE EDC.

BOTH ARE OKAY.

THEY GET US WHERE WE'RE GOING.

I WOULD GREATLY APPRECIATE ADVISEMENT FROM COUNSEL ON EITHER ONE AND WHAT YOU GUYS WOULD THINK TO DO.

>> MR. MAYOR, BASED ON THE CONVERSATION THAT I'VE HEARD RIGHT NOW, WHAT I'VE HEARD IS THAT THESE ARE THE KINDS OF THINGS THAT THE CITY COUNCIL WAS INTERESTED IN SEEING.

OBVIOUSLY, JUST BECAUSE WE'RE NOT IN A MEETING, EACH OF YOU INDIVIDUALLY NOW THAT IT'S COME, I'VE RATTLED YOUR BRAIN A LITTLE BIT WITH THIS, YOU MAY THINK OF SOMETHING TOMORROW THAT YOU DIDN'T THINK OF TODAY.

I WOULD STRONGLY ENCOURAGE YOU TO SEND THAT TO ME SO THAT I CAN ADDRESS IT.

BECAUSE IF YOU HAVE DIFFERENT POSITIONS, I WOULD RATHER PUT BOTH POSITIONS IN THE DOCUMENT THAN LEAVE ONE OUT AND THEN LET THE CITY COUNCIL DECIDE WHICH ONE TO PUT IN, LIKE A CAFETERIA PLAN.

LASTLY, IS THAT IF THIS IS THE RIGHT DIRECTION THAT I'M GOING, THEN I WOULD COMPLETE THE RESTATED AND THEN BRING THAT FINAL DRAFT BEFORE THIS BOARD AFTER HAVING IT FOR A WEEK TO REVIEW SO THAT ANY FINAL CHANGES COULD BE MADE.

>> WOULD YOU RATHER HAVE THAT FINAL BEFORE BECAUSE I WOULD I WOULD PREFER YOU GO WORK WITH THE EDC TO GET CLARIFICATION ON SOME THINGS.

JUST TO MAKE SURE THAT THAT BODY IS VERY CLEAR ON HOW IT'S INTERPRETED AND ALL THAT KIND OF THING BEFORE WE MOVE FORWARD.

THAT'S WHAT I WOULD ASK.

BUT ARE YOU SAYING THAT YOU WOULD RATHER GIVE US A WEEK TO DIGEST THIS AND THEN COME TO YOU WITH SOME OTHER THINGS OR GIVE YOU THAT AND THEN GO TO THEM? IS THAT WHAT YOU'RE SUGGESTING?

>> NO. WHAT I WAS SUGGESTING IS THAT I CREATE THIS PROPOSED FINAL DRAFT.

I ENCOURAGED EARLIER IN MY PRESENTATION THAT WE COLLABORATE WITH THE ECONOMIC DEVELOPMENT CORPORATION, AND I'M VERY WILLING TO DO THAT.

IF YOU WANT ME TO PREPARE THE DRAFT, THEN I CAN CIRCLE IN WITH THE EDC, GET ANY COMMENTS OR INFORMATION THEY HAVE, AND THEN BRING THAT FINAL TO YOU.

I JUST WANT TO BRING YOU SOMETHING THAT YOU CAN APPROVE FINALLY AT THE NEXT TIME I'M UP HERE.

>> I THINK THAT THAT'S WHAT I WOULD LIKE TO SEE IS COLLABORATE WITH THOSE GUYS, COME UP WITH YOUR FINAL DRAFT, AND THEN MAYBE THAT'S SOMETHING THAT YOU CAN PRESENT THAT THE NEXT TIME, ALONG WITH ANY ISSUES.

I GUESS WE CAN COMMUNICATE WITH YOU AS WELL.

>> SURE.

>> YOU CAN SEND US AN EMAIL TO SAY, HEY, THEY HAVE WORKED WITH THEIR BOARD AND THEY HAVE ISSUES WITH THIS AND THIS AND THIS OR WE CAN WORK THROUGH THAT BEFORE YOU COME WITH THE FINAL DRAFT FOR THE NEXT TIME TO TAKE ACTION ON.

THAT'S JUST MY THOUGHT.

>> I THINK IT'S A GOOD DIRECTION.

ANYONE ELSE WANT TO WEIGH IN ON THAT?

>> I WOULD ECHO. I WOULD REALLY LIKE THE OPPORTUNITY TO GET FEEDBACK AND QUESTIONS ANSWERED REALLY NOT ONLY FROM THE EDC AND THE BOARD BUT FROM CITY STAFF AS WELL, BECAUSE REALLY IT'S GOING TO BE THE CITY STAFF WORKING WITH THE EDC THAT IS GOING TO EXECUTE ALL THESE THINGS THAT YOU'RE TALKING ABOUT AND TO MAKE SURE THAT THEY GET A GOOD UNDERSTANDING.

WHAT I WOULD ALSO BE LOOKING FOR, IN ADDITION TO THIS IS TO ME, THE DEVIL'S IN THE DETAILS.

THIS IS OVERARCHING DOCUMENT.

BUT I'D LIKE TO KNOW A LITTLE BIT MORE OF, HOW ARE WE ACTUALLY GOING TO EXECUTE ON THAT.

BECAUSE YOU TALKED IN VAGUE TERMS OF HERE'S HOW IT WOULD LOOK LIKE OR HERE'S HOW.

BUT I'D LIKE TO GET A LITTLE BIT MORE DEFINITION BEFORE WE ENACT THIS UNTIL LET'S GET SOME SPECIFICS ON EXACTLY HOW WHAT IS THE OPERATIONAL PROCEDURE TO MAKE SURE THERE'S NOTHING THAT'S GOING TO AND I DON'T SEE ANYTHING,

[02:40:02]

BUT THE LAST THING WE WANT TO DO IS DO SOMETHING THAT'S GOING TO HAMPER THE EFFECTIVENESS OF THE EDC IN THE FUTURE.

I'D JUST LIKE TO MAKE SURE THAT EVERYBODY IS ON THE SAME PAGE, PARTICULARLY WITH CITY STAFF AND THE BOARD.

THE ONE OTHER THING IS, AND THIS WAS BROUGHT UP BEFORE IS THE POSSIBILITY OF MAYBE GETTING A SECOND OPINION ON THIS, JUST TO SEE.

THERE'S DIFFERENT ATTORNEYS THAT HAVE DIFFERENT EXPERIENCES.

YOU'VE GOT YOUR EXPERIENCES IN SOME OF THE COMMUNITIES THAT YOU WORK WITH, SINCE THIS IS SO IMPORTANT FOLLOWING UP ON THE POSSIBILITY OF GETTING A SECOND OPINION ON THIS TO MAKE SURE THAT BECAUSE OF THE IMPORTANCE OF IT, WE'RE NOT MISSING ANYTHING, THAT EVERYTHING IS GOING TO BENEFIT.

>> WELL, I'M GOING TO GO RIGHT ALONG WITH BOTH COUNCILMEN, AND I THINK THAT'S A GOOD DIRECTION MOVING FORWARD.

WOULD ASK, DO YOU HAVE A RECOMMENDATION OF A SECOND OPINION?

>> I DON'T REALLY. I KNOW THE EDC THAT HAD SOMEONE.

I WOULD LIKE TO MAYBE ASK STAFF TO MAYBE DO THEIR DETERMINATION.

I DON'T HAVE ONE MYSELF.

BUT IF STAFF CAN HELP US EXECUTE ON THAT OF FINDING SOMEONE THAT THEY FEEL HAS GOT THE EXPERIENCE, AND IT COULD BE THE INDIVIDUAL THAT THE EDC RECOMMENDED.

I HAVE NOTHING WRONG WITH THAT OR IF STAFF WOULD SAY, WELL, THERE MAY BE SOMEONE BETTER OUT THERE.

I DON'T KNOW THE ANSWER TO THAT.

>> I THINK THAT'S THAT WE'RE MAKING PROGRESS.

MR. PATH WOULD WANT TO KNOW IF THIS WOULD BE SOMETHING YOU WOULD WANT TO WORK WITH MR. HYDE ON OR IF YOU WOULD WANT MAYBE TO ASSIGN IT TO ANOTHER STAFF MEMBER LIKE LAURA AND SHE'S INTRICATE OVER THERE.

>> LET ME TALK TO MR. HYDE ABOUT [INAUDIBLE] AND I CAN TAKE IT FROM THERE.

>> ALSO, IF THERE IS ANOTHER ATTORNEY THAT I MEAN, I WOULD RATHER WORK IN COOPERATION WITH ANOTHER ATTORNEY TO BE ABLE TO BRING SOMETHING TO YOU THAT THERE IS NOT A CONFLICT WITH REGARDS TO THE OPINION OR THOSE THINGS HAVE BEEN FULLY ADDRESSED RATHER THAN THE ADVERSARIAL TYPE OF RELATIONSHIP, BECAUSE THAT'S NOT GOING TO GET YOU ANYTHING EXCEPT AN OPPORTUNITY TO ARGUE.

IF YOU CHOOSE TO DO THAT, BECAUSE MOST OF THE THINGS THAT I'M DOING ARE DEVELOPING WAYS OF WHICH FOR YOU TO FOLLOW STATE LAW.

THE STATE LAW IS THE STATE LAW.

IF YOU GET AN OPINION WHAT STATE LAW IS, IT'S STATE LAW.

THIS IS EXACTLY WHAT'S OUT OF THE BOOKS.

THE REST OF IT IS YOUR POLICY.

HOW TRANSPARENT DO YOU WANT TO BE? WHAT LEVEL OF ABILITY DO YOU WANT TO HAVE TO BE ABLE TO UNDERSTAND HOW THE MONEY IS BEING SPENT? WHATEVER THAT IS BY A MAJORITY OF THE BOARD IS WHAT WE'LL DO?

>> YEAH.

>> I THINK THAT IS POTENTIALLY, YOU'VE HAD YOUR EXPERIENCE WITH THIS AND WORKING WITH OTHER COMMUNITIES.

I JUST THINK HAVING ANOTHER SET OF EYES LOOK AT IT, AS WELL AS MAYBE THERE'S SOME GUIDANCE TO GIVE US ON THESE POLICIES, THESE BYLAWS, ALL THESE THINGS TO MAKE SURE THAT EVERYBODY'S CLEAR ON HOW WE'RE OPERATING ON BOARD.

>> I WOULD PROPOSE THEN OUR BOARD, OUR EDC BOARD, WOULD REACH OUT TO THEIR ATTORNEY AND SEE IF THEY WOULD LIKE TO HAVE AN ATTORNEY OR THEIR ATTORNEY COLLABORATE WITH MR. HYDE.

I BELIEVE THAT WE'RE ALL TRYING TO MOVE QUICKLY IN ORDER TO GET YOU WHERE YOU NEED TO BE SOONER RATHER THAN LATER.

BUT WE WANT TO MOVE AT THE SPEED THAT YOU MOVE AT.

MR. CARTER, I THINK YOU COME UP AND ADDRESS THAT.

IF YOU HAVE SOMETHING TO LEND TO IT, WE WANT TO MAKE SURE WE'RE WORKING WITH YOU.

>> PRESENTLY, WE DON'T HAVE AN ATTORNEY OTHER THAN JOHN ATKINS.

LAST COUNCIL MEETING, WE WERE INSTRUCTED NOT TO ENGAGE WITH THE ATTORNEY, SO WE DID NOT ENGAGE WITH MR. MOORE.

I VISITED WITH HIM.

WE'VE GOT NO EXPENSE THERE BECAUSE WE DID NOT GET AN ENGAGEMENT LETTER.

THAT WOULD BE JOHN ATKINS, OUR PRESENT ATTORNEY, THAT WOULD BE IF YOU WANT US TO ENGAGE WITH HIM AND MR. HYDE.

>> DO YOU HAVE A PREFERENCE TO WORK ALONG WITH MR. MOORE VERSUS MR. ATKINS? BECAUSE IF YOU'RE OKAY WITH MR. ATKINS, IT GOES MORE IN LINE WITH THE BUDGET THAT IS CURRENT, AND SO YOU WOULD THEN HAVE ATKINS, HYDE WORKING ALONG WITH STAFF.

MR. PATH COULD EITHER ASSIGN IT OR HE COULD HANDLE IT.

YOU GUYS WOULD BE ABLE TO COLLABORATE ON WHAT DOES THIS LOOK LIKE IN THIS LINE ITEM BUDGET, FILL IN A LOT OF THE BLANKS.

THEN WHEN MR. HYDE BRINGS THIS BACK, IF WE HAVE SOMETHING THAT EVERYBODY CAN PRESENT COMMENT ON AND WE ALL AGREE, THEN I THINK IT'S A VOTABLE ITEM.

WE PROBABLY WOULD PUT IT ON FOR AN ACTION, BUT THEN ALWAYS BE WILLING TO PULL IT OFF IF FOR SOME REASON, WE'RE STILL NOT THERE YET.

WE HAVE A CONFLICT, MAYBE FROM LAWYER TO LAWYER, OR WE HAVE AN ISSUE WITH BOARD TO COUNCIL IN THE WAY THIS IS GOING TO WORK.

I APPRECIATE THAT, MR. CARTER.

>> THANK YOU. I JUST WANTED TO POINT THAT WE HAD NOT ENGAGED WITH MR. MOORE.

>> WELL, I DON'T THINK THAT WE FORMALIZED THAT POINT,

[02:45:01]

SO WE APPRECIATE YOU GUYS HOLDING OFF AND MAKING SURE THAT WE'RE ALL GOING AT THE SAME PACE AND IN THE SAME DIRECTION.

I THINK IF WHAT WE'RE SAYING, COUNCIL, UNLESS ANYBODY WANTS TO LEND TO THIS CONVERSATION, WE'RE DIRECTING MR. HYDE TO COMPLETE THESE ARTICLES, BUT IN COLLABORATION WITH THE EDC'S ATTORNEY, AS WELL AS THE BOARD AND STAFF FROM THE CITY COUNCIL, BRING IT BACK IN REALLY BE THREE WEEKS.

WE HAVE ALMOST THREE WEEKS TO GET TO THAT NEXT MEETING, AND IF IT'S READY AS AN ACTION ITEM, WE'LL TAKE IT IF IT'S NOT, THEN WE'LL CONDUCT A MEETING AND MAKE SURE THAT WE MAKE IT AS STRONG AS WE CAN, AND THEN WE'LL MOVE FORWARD FOLLOWING MEETING.

>> WITH THAT, WE'RE PROBABLY GOING TO NEED A BUDGET AMENDMENT TO PAY FOR THOSE LEGAL FEES WITH JOHN BECAUSE I DON'T KNOW HOW MUCH LEEWAY WE'VE GOT IN THAT PROFESSIONAL SERVICES.

>> WE WILL GLADLY GET THAT APPROVED.

>> WHEN WE TALK ABOUT MR. HYDE COLLABORATING WITH EDC, IS THAT GOING TO BE WHERE ALL THE BOARD MEMBERS HAVE A CHANCE TO HEAR THIS PRESENTATION, ASK QUESTIONS TO YOU IN PUBLIC, OR HOW IS THAT GOING TO WORK?

>> I'M OPEN TO WHATEVER THEY WANT.

UNDERSTANDING IS REALLY THE BIGGEST POINT ABOUT THIS, IS UNDERSTANDING WHAT THEIR OBLIGATIONS ARE AND DEVELOPING A PROCESS OVER THERE SO THAT EVERYBODY'S ON THE SAME PAGE.

I HAVE NO PROBLEM WITH WORKING WITH LAWYERS OF THE UNDERWOOD LAW FIRM.

I KNOW SOME OF THOSE LAWYERS OVER THERE IN PASSING THROUGH DOING THIS WORK, AND SO I WOULD PROBABLY TALK TO THEIR LAWYER FIRST AND SAY, "HOW YOU WANT TO DO THIS? THEY COULD TELL THEIR LAWYER WHAT THEY WANTED TO DO, AND THEN WE'LL HAVE THAT PLANNED AND CARRY IT OUT.

>> WHEN IS THE NEXT EDC MEETING? DO YOU HAVE YOUR NEXT BOARD MEETING SCHEDULED?

>> [INAUDIBLE]

>> COULD YOU ALL CALL SPECIAL MEETING?

>> [INAUDIBLE].

>> THANK YOU. APPRECIATE THAT, KEVIN.

>> WE PROBABLY NEED A LITTLE BIT OF TIME TO JUST GET THE PROCESS PUT TOGETHER, AND THEN WE'D BE READY TO GO.

>> I JUST THINK IT'D BE THE EDUCATIONAL PART, AS WELL AS ALLOWING BOARD MEMBERS TO ASK QUESTIONS AND GET MORE INFORMATION AS WELL.

>> IF THEY WANT TO FILTER THOSE THROUGH THEIR ATTORNEY OR IF THEY WANT TO SEND THEM TO ME DIRECTLY, EITHER WAY, I'LL BE HAPPY TO PROVIDE THEM WHATEVER ANSWERS THEY'RE LOOKING FOR.

>> UNLESS COUNCIL HAS ANYTHING FURTHER, MR. HYDE, PLEASE WORK WITH THE EDC BOARD AND THEIR STAFF AND THEIR ATTORNEY TO BRING THIS BACK TO US AS SOON AS YOU CAN.

>> AND THE CITY.

>> AND THE CITY. MR. PATH, ARE YOU COMFORTABLE?

>> YEAH. REAL QUICK CLARIFICATION.

I WILL BE LOOKING FOR ANOTHER ATTORNEY TO WORK WITH THIS, SO WE WILL USE AN EC'S ATTORNEY.

I THINK WITH THIS MYSELF AND I'LL PROBABLY RECRUIT TO ANDREW FREEMAN, I MAY EVEN TAP INTO BRIAN A LITTLE BIT ON THE CITY SIDE.

>> BRING THE TEAM THAT YOU NEED AND THEN THE BALL IS IN YOUR HANDS.

YOU SEND IT OUT, REACH OUT TO STAFF FOR ALL CONTACTS, AND THEN IF YOU'LL USE THE HYDE KELLY FIRM TO FACILITATE EVERYTHING, WE'LL PUT YOU IN THE LEAD ON IT.

>> GREAT. THANK YOU.

>> THANK YOU FOR BEING HERE. GOOD DISCUSSION ON 8D.

8E, UPDATES FROM COUNCIL MEMBERS SERVING ON OUTSIDE BOARDS,

[8.E. Updates from Councilmembers serving on outside boards and commissions i. Beautification and Public Arts Advisory Board ii. Parks and Recreation Advisory Board iii. Metropolitan Planning Organization Policy Committee iv. Amarillo Local Government Corporation v. Convention and Visitors Bureau]

PUBLIC ARTS ADVISORY BOARD [INAUDIBLE] COUNCILMAN CRAFT.

>> THIS ONE WILL PROBABLY TAKE ABOUT 10 MINUTES.

I'M ACTUALLY GOING TO TURN OVER TO MR. KASHUBA.

HE HAS A PRESENTATION FOR US TODAY.

>> COME ON UP.

>> [OVERLAPPING] MAYOR COUNCIL MICHAEL KASHUBA, DIRECTOR OF PARKS AND REC.

WE ACTUALLY PUT TOGETHER JUST A QUICK VIDEO THAT WALKS THROUGH A LOT OF THE CAPITAL PROJECTS AND SOME OF THE THINGS WE'VE DONE OVER THE LAST YEAR PLUS.

[MUSIC]

>> MY NAME IS MICHAEL KASHUBA.

I AM THE DIRECTOR OF PARKS AND RECREATION FOR THE CITY OF AMARILLO.

[MUSIC]

>> ONE OF THE THINGS THAT WE'VE BEEN CHALLENGED WITH OVER THE LAST FEW YEARS HAS BEEN JUST LACK OF CAPITAL FUNDING.