Council, EDC discuss incentives programs, need for clarity

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By Rachel Madison

During a joint meeting of the Liberty Hill City Council and the Economic Development Corporation on July 28, Council Member Chris Pezold said more transparency is needed into the EDC’s incentive programs including why some businesses are selected as recipients over others.

Pezold said when the EDC board was formed in 2003 after a special election, it looked a lot different than it does today, which led him to state six “facts” before asking one pertinent question.

First, Pezold said EDC Executive Director Matt Powell made a comment in a June EDC meeting that you had to know somebody on the EDC to get something approved; and second, Mike Beevers, the developer of Heritage Ridge where Starbucks is located, paid former Mayor Rick Hall to be a consultant for that project.

“I know this because Beevers came over to my house and told me,” Pezold added. “I’m not going to go with rumors, just the facts.”

The third “fact” was that the EDC gave Bevers $160,000 for his development.

Pezold’s “Fact No. 4” was that the EDC had a line item on its 2017-18 budget for a “downtown connection fees” program, which had $45,000 in it that year; and No. 5 was that at least one past member of the EDC board took advantage of that program, Pezold said. Finally, he said that James Prince, owner of Main Street Social, has attempted to reach out to the EDC for help with his living unit equivalents (LUEs) through an incentive program. He is currently being charged for 27 LUEs, which is nearly $300,000.

“My question is, why does an establishment that checks off every requirement in our comprehensive plan not get told about a program the EDC has when he asks for help specifically?” Pezold asked.

Powell said the City has numerous incentive programs, some that have been better advertised than others, and some that have no real documentation stating their parameters.

“The Heritage Ridge project was brought to me, and I was told it was based on an existing program,” Powell said.

He added that a lot of the EDC’s incentive programs have been utilized in the past even though it’s been a challenge to find documentation showing exactly what those programs are.

“I have been full time in this role since January, and it’s been a challenge to find what a lot of these programs are,” Powell said, adding that just a couple of days before the meeting he had finally received some information showing details of the EDC’s LUE incentive program. “It’s been hard to find black-and-white descriptions of what the programs are.”

Pezold said because the EDC is its own taxing entity, the EDC needs to be more proactive. Pezold also told Powell that his $124,000 annual salary is high enough that if someone comes to him asking for help via an incentive program, he should be providing that help.

Powell responded that the average business owner, who doesn’t know anyone within the city or that these incentive programs exist, was the impetus behind the EDC working to come up with new programs.

“Our hope was that all previous programs would be eliminated, and all the new programs would be for everyone, and not based on who you know,” he said. “They will be transparent, fair and equitable.”

EDC Director John Clark said Powell has tried over the last several months to make an incentive program work for Main Street Social, because it’s a downtown project the EDC “can hang its hats on.”

“Matt tried creating another program to get a higher amount to be a part of this project,” Clark said. “Anything we’ve done was to try to get more for that establishment.”

Pezold’s response was that until now, Prince has not received any help, even though his business is bringing in over 200 jobs to downtown Liberty Hill.

“I’m championing him because he’s one of my constituents,” he said.

Pezold added that it doesn’t look right that a development where Starbucks is being constructed received an incentive from the EDC, but Main Street Social did not.

“We did not give money to a Starbucks developer,” said EDC Director Jamie Etzkorn. “That did not happen. It was given to a developer under a program that’s very similar to the LUE program that nobody knew about. It was found in [meeting] minutes, and it was honored per the minutes. It was given for infrastructure.”

Pezold added that Beevers needed that additional infrastructure to attract national brands to Heritage Ridge. He reiterated that Hall was paid money to present this project to the EDC on behalf of Beevers.

“I don’t believe any of us have any knowledge of that,” Etzkorn said.

Powell added that he never met with Hall on the Heritage Ridge project.

“He hasn’t approached me on any project so far,” he said. “Sometimes when you don’t have full documentation and records have been hard to get, you have to rely on counsel, and let them advise us on what is the best course of action.”

John Johnston, president of the EDC and owner of Dahlia Cafe, said there were eight lots available in this project, and all were spoken for but one, but because things with COVID have gone on so long, the developer has lost those.

“He came to us because he needed to put in a lift station that the city required, and he was going to have to come up with extra money,” Johnston said. “I don’t know how he found out that any business coming into town could get up to $20,000 per business for construction, but his idea was that he’d use $20,000 for each lot to put in that lift station, and then when new businesses came in they would not be eligible for the $20,000. He was basically taking the $160,000 up front to get the infrastructure completed rather than letting each individual business come in and ask for the money. That’s how that came about.”

Pezold said it just didn’t look right because the money went to Beevers, who had paid money to Hall for consulting services, and then he got in front of Johnston’s board and was granted $160,000, particularly because Hall and Johnston are friends. Johnston said while Hall is his friend, Hall never asked for him to put anything on the agenda or to vote one way or another.

“We were totally separate in our roles,” Johnston said. “If he had pressured me, then we wouldn’t be friends.”

Council member Angela Jones said to the lay person, under the documentation provided on the Heritage Ridge project, that it was really a stretch for the EDC to give Heritage Ridge $20,000 per lot for infrastructure, because the wording isn’t there.

“I was surprised by the interpretation as well,” Powell said. “I think Heritage Ridge should have been done differently. I would have preferred seeing it done differently. It’s still a deal that will bring profit to the city, but it’s going to make less than some of the others are. If there was a deal I think could have been done better, it would be this one. Our board has had extensive discussions since then about eliminating that program.”

Powell admitted the language on that program is vague, and that all he had to go on at the time was legal advice from the city’s attorney at the time, Tad Cleaves, who was hired by Hall in March 2020.

“He came back and made the recommendation of what he felt was on the books at the time,” Powell said. “We didn’t have more enabling documents. There was lots of uncertainty with that program, which is why it was presented to the council with reservations.”

Clark agreed that the EDC relied heavily on legal counsel because it was a big stretch.
Powell said the EDC has been operating without a lot of direct feedback from the council, and their goal is to come to an agreement on incentive programs with council that everybody embraces.

“The link on our website [to apply for incentives] will be launched as soon as the incentive programs are approved,” Powell said. “That is the info we are all desperately seeking. We all hate that program [used for the Heritage Ridge development]. I suspect it won’t do well when it comes up for a vote in front of EDC and council. We want to offer something that’s very fair; programs you don’t need to hire a consultant for and anyone can understand.”

Pezold said he raised the topic because he wants to find the truth.

“Moving forward, we need to come in and have it so everyone knows what’s going on, and we’ve got to go through the proper channels,” he said. “When you have someone bringing in documents no one else can find, that is stuff we’ve got to get past. Right now, you guys with our help, should write a new set of bylaws and have another special election, and let the people of the town decide [what they want from the EDC]. Right now it’s not a good look. This is stuff I’m here to clean up. If anyone is going to be on any board, you can’t just show up, you’ve got to question things like crazy because it’s not your money.”

Council Member Crystal Mancilla said having this discussion was the first step to greatness within the city and what will set Liberty Hill apart from other cities.

“We need to have trust between one another so our constituents can have trust in us,” she said. “I know it’s difficult and tough and things are going to get nitty gritty and we’ll be finding things like this we have to deal with, but as long as we all stay transparent and on the up-and-up, and when we mess up we own it, then the best thing we’ll be doing is building trust in the community.”

By the end of the meeting, Powell said he was feeling a lot of progress had been made.

“It’s direction and feedback we’ve been craving,” he said. “We would like to schedule another joint meeting as soon as possible to focus on these incentive programs so we can move forward with well-established programs and eliminate ones we hate or those that have caused potential scandal in the past. A lot of businesses in town want to take advantage of the EDC’s incentive programs.”

City staff was directed to put the EDC on the schedule for an upcoming workshop.

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