Taxpayers' Funds at Risk, Possible Coverup?

From:

To: Jim Ross <jim.ross@arlingtontx.gov>; Helen Moise <helen.moise@arlingtontx.gov>; Raul Gonzalez <raul.gonzalez@arlingtontx.gov>; Nikkie Hunter <nikkie.hunter@arlingtontx.gov>; Andrew Piel <andrew.piel@arlingtontx.gov>; Rebecca Boxall <rebecca.boxall@arlingtontx.gov>; Long Pham <long.pham@arlingtontx.gov>; Bowie Hogg <bowie.hogg@arlingtontx.gov>; Barbara Odom-Wesley <barbara.odom-wesley@arlingtontx.gov>

Sent: Tuesday, July 19, 2022 at 11:38:35 AM CDT

Subject: Legal Draft Beer

Dear Mayor and City Council Members:

On March 30, 2021, the City Council approved, 8-1, a 380 Grant Agreement with Legal Draft Beer, for $200,000, Resolution 21-067.

Less than one year later Legal Draft Beer went out of business, having failed to meet the conditions of the agreement.

Public Information Request W132195-032722 requesting some of the financials used to issue the grant produced the following: "After reviewing your request and advising with legal, it is concluded that the City of Arlington has no responsive records."

This “response” certainly gives the appearance that there were no financials given to the city by Legal Draft Beer, and obviously not even courteously reviewed, much less really vetted.

Public Information Request W132500-040122 requested the application by Legal Draft Beer for the grant. The result was: "Your public information request to the City of Arlington, received 4/1/2022, has been referred to me for response. We have searched our records and have been unable to locate any records maintained by the City responsive to your request for records. Please feel free to contact me if you have any questions regarding this matter. Sincerely, Economic Development"

The “response” strongly suggests that there was NO application made by Legal Draft Beer.

How is this even possible?

It certainly gives the appearance that some officials were extremely "loosey-goosey" with taxpayers’ funds. Why are those officials apparently being protected?

Questions:

1. Should the public be informed about what happened with Legal Draft Beer?

2. How did Legal Draft Beer apparently get a grant without even filing an application?

3. How much of the $200,000 in grant money awarded to Legal Draft Beer, if any, was recovered?

4. What, if any, policy changes are being made to avoid such a loss of taxpayer funds in the future?

5. Is this city council going to be transparent?

 

Thank you very much for your help on this issue.

 

I have been told by one of the council members that there is a very good chance none of the funds will be recovered. (Question 3)

 

None of the other questions have ever been answered by any of the council members.

 

On September 27, 2022, the city council was addressed on the subject during citizen participation (starting approximately 1:14:01, link to council meeting)

 

The October 11, 2022, agendas had two related items. There was a work session item (3.2) on the afternoon agenda titled, “Economic Development Tax Abatement/380 Policies”. The evening agenda had a public hearing-resolution item (11.5), “City of Arlington Policy Statement for Tax Abatement”. State law requires them to update/approve their policy every two years.

 

On the evening of October 10, the following e-mail was sent to the council members. I have not received a single answer or even the decency of a response from any of the city council members.

 

 

From:

To: Jim Ross <jim.ross@arlingtontx.gov>; Helen Moise <helen.moise@arlingtontx.gov>; Raul Gonzalez <raul.gonzalez@arlingtontx.gov>; Nikkie Hunter <nikkie.hunter@arlingtontx.gov>; Andrew Piel <andrew.piel@arlingtontx.gov>; Rebecca Boxall <rebecca.boxall@arlingtontx.gov>; Long Pham <long.pham@arlingtontx.gov>; Bowie Hogg <bowie.hogg@arlingtontx.gov>; Barbara Odom-Wesley <barbara.odom-wesley@arlingtontx.gov>

Sent: Monday, October 10, 2022 at 08:08:22 PM CDT

Subject: Work Session Item: Economic Development Tax Abatement/380 Policies

During the afternoon session you have a work session item: Economic Development Tax Abatement/380 Policies. I have waited to see if the presentation would be loaded online, but it has not.

I have several questions I hope are asked.

1. Is there a policy requiring the applicant to actually apply before receiving the benefits? If not, should there be such a policy?

2. Can someone please explain Legal Draft Beer. Public Information Request W132500-040122 requested the application by Legal Draft Beer for their grant. The result was, "Your public information request to the City of Arlington, received 4/1/2022, has been referred to me for response. We have searched our records and have been unable to locate any records maintained by the City responsive to your request for records. Please feel free to contact me if you have any questions regarding this matter. Sincerely, Economic Development".

3. Should there be some vetting of the companies getting the taxpayers' funds? Would it be wise to establish such a policy? If not, why not?

4. What errors have occurred in the past? What changes have been made to prevent these errors in the future? Should there be some policy changes to help prevent errors?

On the evening agenda is item 13.1, a resolution regarding 420 E. Lamar Boulevard. Based on the estimated numbers, the tax abatement is to cost taxpayers $843,470 in future potential revenue (the tax abatement portion), but also $100,741 in fees be waived, which is a cost that will coming from general fund to cover the permits and related activities.

5. Should we have a policy to not also waive permit fees on deals like this? These fees are a direct cost, not a future revenue that is being forgone.

Also on the evening agenda is a public hearing regarding policies for Chapter 312 Tax Abatements.

6. Should we consider policies to be added regarding my questions above?

Thank you for your help on this issue.

 

At the October 11 work session, the presentation was given, and the council members did NOT ask a single question, mine, or any of their own. (presentation begins about 3:06:17, link to meeting).

The presentation (link) was posted on the city's website during the morning of October 11. On .pdf page 7, it does state that a written application is required to apply. [No idea if that means tax abatements only, since that is what was on the evening agenda for approval, or also includes 380 agreements.]

At the October 11 evening meeting (presentation begins about 1:30:15, link to meeting), the item was presented and approved, again with no questions or comments from the council members.

 

The wording of W132195-032722: Please provide an electronic copy of the last three years income statements for Legal Draft Beer that were used to determine the issuance of $200,000 corporate welfare by the city council on March 30, 2021.

 

The wording of W132500-040122: Please provide an electronic copy of the complete application for Legal Draft Beer for its Chapter 380 agreement. The city council approved the Chapter 380 agreement on March 30, 2021 [just over a year ago]. Please include any additional sheets and attachments.

 

 

So,What Does This Mean?

* Evidently there is NO vetting of the companies that the City of Arlington makes their Economic Development deals with.

* The current city council has NO interest in requiring vetting.

* Regarding the Legal Draft Beer deal, either the city: a) failed to follow their own policy that required a written application; or b) the current city council has no interest of requiring a written application for 380 agreements. [To me it seems the that the current council is: a) in on the coverup and has no interest of being transparent; or b) enjoys being “loosey-goosey” with our taxpayer funds.]

 

 

Speculation

With the current lack of transparency, we are only left to speculate.

Email#1, Q1: Should the public be informed what happened? Evidently not. I've asked several times and they not only do not answer, but they also refuse to respond.

Email#1, Q2: How did they get a grant without even filing an application? I would speculate that the city broke their policy in the Legal Draft Beer situation, but with the lack of transparency, and the potential coverup, we do not know.

Email#1, Q3: How much of the $200,000, if any, was recovered? Probably none.

Email#1, Q4: What, if any, policy changes are being made to avoid such a loss of taxpayer funds in the future? None. Changing policies should have happened on October 11 and all nine council members refused to ask simple questions that might have led to policy changes, much less actually take action in that direction.

Email#1, Q5: Is this city council going to be transparent? It certain appears that they will not be transparent.

Email#2, Q1: Is there a policy requiring the applicant to actually apply before receiving the benefits? A policy requiring application does exist for tax abatements; we are unsure about whether or not an application exists for 380 agreements.

Email#2, Q2: Can someone please explain Legal Draft Beer? Evidently not to me. It sure appears as a coverup.

Email#2, Q3: Should there be some vetting of the companies getting the taxpayers' funds? The council members' silence screams, NO.

Email#2, Q4: What errors have occurred in the past? As Sergeant Schultz would say, “I see nothing! I hear nothing!” There is a definite lack of interest in protecting taxpayer funds.

Email#2, Q5: Should we have a policy to not also waive permit fees on deals like this? Again, the council seems to have no interest in protecting and/or saving taxpayers' funds.

Email#2, Q6: Should we consider policies to be added regarding my questions above? Certainly not.

 

So why does the council not want to strengthen policies? They like being able to fund their privileged comrades the way the rules are now and do not want to rock the boat. For example, on August 2, 2022, they approved another 380 agreement for “friends”, paying for $35,000 of $80,000 in projected expenses for a downtown restaurant. (link to meeting) The item starts at 1:49:56. At 1:50:57 the mayor tells all about the owner (giving the appearance it is a matter of who you know as opposed to the value of the deal). 1:53:52 the opposition speaker starts. He even asks, “What type of vetting did this project go through?” Of course, he never got an answer. [This deal was later rescinded because the obtaining of the lease did not go through.]