Audio- Rough Transcript of Somervell County Commissioners Meeting Hawking SR20


 

Audio- Rough Transcript of Somervell County Commissioners Meeting Hawking SR20
 


13 March 2014 at 2:14:50 PM
salon

Here is the link to the audio (excuse the following typos and there are plenty while quickly typing while listening)

Here's an article from the Glen Rose Reporter from March 10 regarding this.

My own comments are interspered in here, in italics

Meeting starts, Ford says he is glad to see all the people there.

"Let me kind of tell you the process here.. About a month ago Wes Jury for the Center of Innovation who is an organization that we have partnered with for economic development sent Mike Clemmons and some of his crew, with SR20, down to visit with me. At that meeting I brought in our county attorney, our county auditor, we had one of commissioners there, myself, and then asked the mayor and the city administrator to join us that day because at that point we had no idea what we were talking about"

(COMMENT: Seems like the cart gets put before the horse. Wouldn't it be far more appropriate for a company to come make it's pitch  first, publicly, by asking to get on the agenda and speaking before the commissioners court, so that the public can first be made aware of the start of this instead of this little back door meeting in the judge's office?)

We saw a presentation very similar to what you are about to see here

(Comment: Again... so why the fool wasn't this done FIRST before the public? Abuse of power. )

That was about a month ago. What I want to be sure you understand is the process that it takes for economic development because it has been intimated that this has all been secret and all of a sudden now this is coming out

(Comment: Alleviated by having the company do a patch at a public commissioners meeting first)

The truth is far from that. Here's the process. When I'm approached by a business to come into this county, there is a certain amount of checking that I do or those that I invite into that meeting and we start to look at it. Mr Clemons came, we asked a lot of questions at that point and then I asked Mr Clemons to sit down with each of the commissioners and walk through the process with them. They have done some checking as far as they can. And ultimately what happens is, this is our first opportunity as a court to sit down and talk about this

(oh, except for the private meetings in the judge's office. What baloney. Talk about a process)

We have invited you, very specifically, to hear what's going on here but the truth is this is for the court to get this information and see it once again and to talk about it and decide what the next steps are

(Gee, thanks, Judge Ford, for allowing peons to come see what you're doing. Shame on all of us taxpayers for wanting to know what's going on and have a part in the decision, even if it's telling your commissioners what you think. Shut up and sit down and let CEO Ford handle it)

So at the very least this is the beginning of our due diligence.

(And yet we have already heard that SR20 had approached a landowner with a real estate deal BEFORE this meeting... Beginning... really?)

And I need for you to understand that from the beginning. Any decisions that are made today are decisions that allow us to move forward with due diligence

(We''ll come back to that, but why the decision to create a public corporation that can issue bonds, then?)

There is a lot of due dligence to do with any economic development that happens so what I'm going to ask today is, when we, when I turn it over to Mr Clemmons, we are not going to ask questions during the presentation, let's let him go all the way through the presentation At that point the members of the court are more than welcome, if you have questions that you haven't already asked, we will certainly allow you to do so, and then questions from the audience here if you have specific questions. It is our custom to allow you to ask those questions. I do want to remind you that we have a rule in this court and that is we do not denigrate persons or organizations so we're going to be very adult about this and go through this process that way

(In other words, free speech is not for you and we are going to tell you what you can or can't say)

I will allow questions when we get done but it will be limited, when we start plowing old ground, we're gonna move on. You will have the opportunity to ask some questions when we get done with this, okay?

(Note that this is NOT listed this way on the agenda, so Mike Ford continues to violate the Open Meetings Act)

introduce Mike Clemmons...

Clemmons- thank you commissioners,.... thank you for being here today to share opportunity. .. introduce the team and show you what we do. Try not to put us,... uh, we get stereotyped and put in a box that's  a negative connotation ... I'm going to ask you not to put me in that box yet until you look at what we have.

(uh, oh, always a bad thing when someone tells you to avoid negative stuff. Maybe stuff like how they have no credit, they've already been turned down by 2 other city councils, and their business has a bad reputation from where they operated it for 3 years previously in Oklahoma)

Clemmons-this is a scaled rendering of the facilities, everything is inside other than the storage containers outside.. terminals where the diesel is offloaded.. we have paid a lot of attention to detail to keep everything enclosed...I started this eight years ago.... (touting references)We wanted to get into recycling and create jobs. Introducing Andre-President (financial numbers), Lance Oaks, senior vice president (janitor), James Meddleson(?) engineer. Tire-biggest return on investment, turned into different fuels. Pmetz (Mexico) using same equipment. Waste recovery, lot of value, lots of things live on subsidy in this industry, no government subsidy whatsover

(unless we can get Somervell County to subsidize us)

Vince, John Gabbern, engineer, oversight, Average salary $40,00 with benefits put it at $60,000, they oversee that. PPE copartners, building refineries, zero liability claims in the history of the company, never had a lawsuit, work for major companies, first company they have come in to partner with. Eric Nolan, design firm build firm out of Houston, general contractor, build everything -this project responsible for design and construction, we will provide all engineering, equipment, on site general contractor. 100 million dollar construction project. We are bringing some speciality subcontrators but on things that we can hire local, we will. Will have a job fair bring in sub contractors that will be hiring local, work with EDC people to make sure word is out, start off trying to hire local and work our way out, lots of concrete here. Concentrate on trying to get local.

Insurance and risk management, Higgenbotham and Associates, working with us for awhile, George Owens, Jerry Howlet. (Fort Worth). Will answer questions on pollution. George Owens reviews construction documents. They understand the risk side of this.

We plan on putting 8 faciilties in. Global US footprint Paid a lto fo attention to waste and keeping facility clean. Vehicle comes in, brings rubber in, all kinds of reubber coming in, trailer comes in, dumps and exits. 53 foot , pick up an empty and exit. Processed and shredded in the facility here. 45 days of storage, slows down during Xmas season, process chips in slowdown time. Facility designed to last over 30 years. Houston reccyling center having trouble getting (?) due to slowdown. no jet fuel done, second stage activates higher temperature, 200 pound a day, scaled up. Keep everything hot, 4 shift a day process. 2 inch tire chips with a reasonable size for he kilns limit to how much heat you can put in a chip to put in, so we are a smaller chip size for no change in equipment size. We are putting two lines in parallel. Bought some stuff on the cheap due to a stock loss issue (1:18 on the audio)

(homemade videography -you can listen here, skipping this)

1:08. You have to have funding, insurance,  some federal incentives, state incentives and local incentives,If the county decides to do it  they have to put out a proposal, and I mean, uh, we don't know.  We have the non-recourse tax exempt bond package. What comes with that, you have a world class municipal solid waste recovery project, can be sponsoered by teh city or the county,  131 plus direct jobs with benefits, 8 million dollars in salaries that would come into the country, indirect jobs through construction, support, hundreds of jobs, temporary construction jobs. The revenue for the county can be    If the county was to own it and rent it back to us

(NOT just the land, the equipment too? and since this is way out, who says these people woulnd't live, eat and work in Granbury since it's so far out of town?)

we're gonna pay property taxes on it and then there would be a revenue share. Commodities do go up and down. If we were a private company with private money we would come in here looking for tax abatements, tax incentives

(Right. Because god forbid a company want toi Build It Themselves)

Florida donated property to them. So they would look to see if, if private, if a location would donate property to them.

(Sorry, taking a moment to laugh)

This type of financing is becoming very popular

(hah! no doubt!)

I think the county would like this

(Of course Mike Ford, Mr Welfare Queen of Somervell County, does)

Mike Ford. Several things I think would be of interest, can you talk about non-recourse bonds, are they sellable?

Special counsel. Thank you, Hull Youngblood. The bonds are tax exempt, that means if you buy a bond, mainly commercial investors, they get interest paid on those bonds each year. When the bondholders get interest, they don't have to pay income tax on that interest. Non -recouse. we use the word revenue bonds, the only money that must be used to pay these bonds is revenue produced on a project, county taxes are not obligted to pay these bonds, they are revenue because the only way to pay these bonds is revenue from a project. If the only way to pay for the bonds is revenue from the project, there is no recourse against the county, the bondholders have no recourse. Bondholders can only look to the revenue facility to pay off the bonds. Example, sewer bonds, and everyone has to pay their fee to use the sewer, the money generated by the sewer system is used to build the sewer system. Money generated by the sewer bonds can only be used to pay off the sewer, also used for water system, power system, tollways, airports, municipal solid waste going into recylcling to keep it out of a landfill.

County would create a special purpose corporation and that corporation would issue the bonds and own the faciility and own to SR20., from revenue lease payment made, 20 year lease, at end of 20 years would run it themselves. These special purpose corporations that corporation would issue special use bonds, no tax money obligated to pay these bonds. ONly revenue generated by the project used to pay off the bonds.

Ford. If the worst happens...

Bondholders are like a bank, have a lien on the plant, they have the right to foreclose on that plant and can sell it or operate but cannot after the county, county taxes, etc to pay off the bonds, all they can do is use the revenue used to foreclose on the plant. If they do foreclose on theplant, privately owned and now they pay taxes. If they don't foreclose, county can sell equipment, etc.

HERE IS THE PART ABOUT NON_RECOURSE BONDS AUDIO CLIPPED

Insurance Tornadoes, etc.

Special funds, reserve. Monthly payment due, not enough revenue to do that in a given money and the bonds are sold, one year reserve, trustee can go there and get the one months' payment, they will get 3 more years of reserve in 2 different accounts., Also if specialty repairs hae to be made, can go into taht reserve. Sounds like the county would hve to write a lot of chekcs, but bondholders require that we hve a national bank (usually use US Bank) which would be the trustee. All revenue generated by the project goes to the trustee and on first of the month, trustee makes debt payment service, if not enough money, trustee can get into the reserves, makes distributions. County does not have to deal with writing the checks or dealing with money, county gets reports, audited each year.

What's the liablity to the corporatoin. Any revenue has to use it as agreed. Has to be used to pay the debt service, go to trustee. Otherwise not obligated on the debt. Corporation is part of taht non-recoruse bond.

Barnard, how many days a week operation? 24x7. 10 percent shutdown rate intended for ongoing maintenance. What aobut the noise, smell, air pollution, blowups.

Everything done under vapor recovery or in a vaccuum. Allowed a certain nubmer of tonw of Co2 per year. Permit by rule, not emitting anything that is not combusted, no odor, 72/73 decibel range. Water consumption calculated at about 36,000 gallons per day, makeup water for heat exchangers, have requested about 50,000 gallons per day. The water supply is adequate with no impact for on the surrounding neighbors that we have contacted

(and I"m sure you have let eveyrone know, right? Before this?)

Effluent is potable water, we've spoken with the county, we do not have access to sewer, will have to be septic system, aerobic sprinkler system, do manufacture water, surface water discharge capable, holding pond on site. even if gets into poinds and streams, is within requirements.

Holding pond holds effluent for evaporation, civil engineering design has not yet been finished. Designed for winter tyep months. final design not completed.

Barnard. Any chemicals?

Ford: I'm going to let the commissioners talk first.

Small drums of chemicals that will be stored inside the faclity, water based.

If they go out of business, is bondholder liable for the cleanup? we have environmental insurance on the facility

(but what if they can't pay their insurance and they go under?)

Reclamation bond. Designed so that no rubber is on the ground at any time.

TCEQ  would require responsiblity for removing any excess materials. Who owns the liability for mediation of the site?

There are no byproducts. Can be part of the PFC.

The PFC is going to require SR20 to clean up if there is an environmental process.

(Of course that's IF SR20 is in business. if they go OUT of bueinss, what then? didn't answer)

All grinders done under water. Spark detection, fire suppression, special spray foam

Curtis-is water recaptured and reused -then what goes into retention ponds? Can you draw back out of the retention ponds, probably not, costs more to do that versus getting water from the county. Will these be lined retention ponds? Doesn't have a final design.

Curtis. Non-recourse bonds. If this is such a good deal, why can't you get venture capitalist to go into it? Because wall street would ge tmore money

(sure-has nothing to do with your credit rating-Bullchit alert! )

Revenue stream. We'll be funding 2 accounts, explain how that will pan out for the county.

First account one year debt reserve, principal and interest. Over next 36 months, will be deferring 1million 8 of income to special reserve so after about 36 months that will be completely funded, county revenue will go up. County's revenue will realize apprxomately 163,000 a month for the first 36 months then once reserve funded, 500,000 a month after that. Property taxes.

Plant is owned bya  public facility corporation and leased bgy SR20. Planning to pay property taxes as if it were privaely owned. SR20 has said they will pay the taxes owed if this were privately owned, once owned and operated. $150,000 per year when taxes due. For first 3 years, about 150,000 a month but paid in taxes, after 3 year reserve is funded, taxes continue to be paid plus fee. Taxes continue to be paid.

The amount that we figured is on all tax incomes

(ALL taxing entites get this-school, water district, hospital district AND then the county)

Bill from audience:We don't know that it will work. According to him we'll have to send an armoured car out there to get the money. When you sell bonds, we've got a golf course center, expo center, the promise, do we need another company? If you sell municipal bonds, you're going to sell twice as much so you have reserve, how much are these people going to get a month? I think they ought to go somewhere else and get the money (can't understand the next something about General Motors bonds, etc and maybe "I've lost a millioin dollars")

Audience: When you go to issue these bonds, you're going to have to have someone issue a rating.. who's rating?

These are unrated bonds.

Then what kind of interest rate are you going to pay? Right now the current rate is estimated to be 7 1/2 to 8 percent but that will be deteremined at the time the bonds are sold.

I'm not that familiar with unrated bonds. What market? Private?

That's the question I get whenever I talk about this. Who on earth would buy these bonds? Not newcomers

How can they be tax-exempt? I assume you mean federal income tax. Yes. Municipal bonds are not tax exempt.. There is a special exemption for a municipal solid waste recycling center, then a lot of those limitations do not apply. You're saying since these are unrated, not an obligation of the county, 20 year bond plus time of contstruction. Amount 125-250 million. What other investment either debt or equity is the (project? pricing?) If you mean who's putting the money up, there's no other private equity being put into this project. Bondholders want a first lien on everything, hard to get private equity to come in when bondholders in. SR20 has no equity in the deal, other than the investment to develop this deal, no separate cash being put by SR20 in the company. Everything is bonds.

How mahy of these plants in operation now? Ther are none. This would be the first. 18 months before getting money, once the plant goes operational. You don't have the money in your pocket to build it right now.

Technlogiy's been around for a long time, takes a lot of energy to make this happen, how can we be sure this works, when there are no plants. Research, touting personal credentials

Perpetual energy

(haha. Right! I'm next in line to sell the county something then)

Plants going to operate 24 hour a day. Light pollution, will not radiate into the night sky.

How many trucks coming and going out on the road, about one an hour 25 trucks a day

If judge decides not to go into another business, but tax abatements, etc Do you have some proerty you will donate?

(oh hang on have to laugh again)

If you went through the bond issue on your own, you would move forward? We do not today agree to go forward with private funding. We've looked at some properties, lot of factor.

(OF COURSE they have to share the revenue, they have NO funding on their own. That wall street stuff is BULLCHIT)

5 days of storage of diesel fuel

Going to get ISo-17 certified? No.

Plant in Harlingen, that plant does not exist anymore. Kiln out of china, got out of compliance with tire storage -Built all on government subsidies.

Jerry Lee When the financial man can tell me X amount per month but cannot tell the capital investment? May I answer that, no I"m talking. For the last 2 years we've been storing spent fuel
. Also promised that TXU would always pay their taxes. TXU paying taxes here because they're scared to death of us not being able to perform emergency response plan.

Bottom line is we don't know how much you're getting out of this. The reason we don't have a final document is that we don't have a piece of property yet to do a feasbility study on. Will probably generate 26 million, county will get about 20 percent of our rate annually once all the reserve done. How much of that is payroll? 8 milion dollar payroll

As a property owner nearby this facility, emissions, Texas low standards. More dangerous than a fertlizier plant, do we really want this right across from the nuclear power plant? No mercury, no pressure, we operate in a vacuum, sholdn't be brought into a public forum if you don't have the facts. That seal can be broken, yes? Yes. You cannot take us to see it working. I'd like to go see this and raise my kids and know there isn't going to be emissions. You're making her feel dumb for bringing up good questions but really you brought up something that isn't accurate either. CLAPPING

FAVORITE CLIP O DAY-this should tell you all you need to know about the attitude of the SR20 people.

 

 


 

 


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