UPDATED because there is a loophole for certain types of expenses that do not have to be projects, thus have ZERO public input, but still have to be associated with projects. I wrote a letter to the editor regarding this; after speaking to the comptroller's office, some of what I was asking is apparently wrong, and some needs clarification.

Kind of boggles the mind.This was an agenda item to take action on hiring an events coordinator, to be paid by 4b funds FOR private organization Glen Rose Chamber of Commerce (we have mentioned repeatedly before that Mr Best is not only chairman of the 4b board but also chairman of the Chamber). But Best told the city that they didn't have to vote, because they had already okayed the budget. AND NO ONE ON CITY COUNCIL ASKED HIM ABOUT THAT. UPDATE: He pre-allocated 4b money to pay for an events coordinator from the 4b budget. See below for information about promotional uses.

Here's the problem with that. Best is NOT taking any money from the city budget. None. The money for the events coordinator is coming from 4b funds which come from 4b sales tax which is added to the state sales tax when you buy anything from Glen Rose. When he showed his budget to the city this summer, he was doing it not on the basis of needing for them to know how much money they would need to allocate from the master, but as sort of a "Grease the Skids" for when he decided to go for the events coordinator project. IN other words, you might consider that budget a *wish list* for what the 4b/GREDC would hope to spend money on IF IT IS APPROVED AS A PROJECT.  (Go ask Peggy Busch if you are in doubt about this. I did) Just because the city was fine with what he was planning to spend from 4b doesn't mean that's the process for approving an events coordinator. Unless you decide to go around the public project/hearing process. UPDATE: But Best could say that he wanted to use up to 10 percent of his income for administrative/promotional expenses and get approval from city council for that, since they have the oversight.That would be from the 4b budget, and the city voted to approve his budget.

He is also not taking money out of 4b funds to PAY for someone to work for 4b. He is wanting to give money to a PRIVATE company. (At a previous 4b meeting, other 4b members were NOT fine with that). UPDATE: And I continue to say that while Best may not be personally profitting from this action, it is inappropriate for him to be doing so, and particularly when we have a CVB paid by city taxes that does much the same thing.

What do the rules say? From the Texas Attorney General's website, Economic Development Handbook 2008. (Start looking on page 40 of the printed page, page 45 by Adobe) All money that does out must be AS A PROJECT (UPDATE: promotional or administrative expenses are not projects, however those monies must be spent in connection with a project).

Section 4B tax proceeds may be spent on land, buildings, equipment,
facilities, expenditures, targeted infrastructure and improvements for items that fit the definition
of “project” under Sections 2(11)and 4B(a)of the Act. It is important to emphasize that any
activities of a development corporation must always be in furtherance of and attributable to a
“project.

IF it it's a JOBS project, it has to fit the definition of a primary project, which is detailed and defined.

Accordingly, most Section 4B projects must now create or retain primary jobs. Yet not all
projects contain this requirement. “Primary job” is defined to mean a job that is “available at a
company for which a majority of the products or services of that company are ultimately
exported to regional, statewide, national, or international markets infusing new dollars into the
local economy;” and meet any one of a certain enumerated sector numbers of the North
American Industry Classification System (NAICS).

The 4b board would vote on that project and then, IF the project doesn't fit the criteria for a Section 2, have to have a PUBLIC HEARING. After a public hearing, the city would then take a vote to approve or disapprove the PROJECT. ..Why? Because they get last say since the 4b is an appointed board that is a subsidiary of the CITY.

Best has already said that ALL projects would get a public hearing. Yet he did NOT make getting an events coordinator, a position that does NOT fit the criteria for a job (go look at the list for yourself), into a project. And this baloney idea that because he said in the summer that he hoped to budget for this makes it not mandatory that the city VOTE for it is just that... baloney.

UPDATE: Spoke to Russell at the Texas Comptroller's office about this. Seems that there are some very lax rules about being able to spend a certain amount of money for promotional expenses, which avoids the rules about projects and public input. In other words, this is a loophole from a complaint Texas Legislature. From page 51

Promotional Expenses
In the 2001 Legislative Session, the Texas Legislature clarified the use of Section 4B proceeds
for promotional expenses. Now, Section 4B(b) limits Section 4B corporations to spending no
more than 10 percent of the corporate revenues (Section 4B tax proceeds) for promotional
purposes.197 Yet, the Attorney General has concluded a promotional expenditure “must advertise
or publicize the city for the purpose of developing new and expanded business enterprises.”198

Isn't that what Billy Huckaby of the CVB is already doing? What the heck are all those ads going out in magazines, etc to promote Glen Rose and Somervell County if that's not promotional? Why in the world would money be taken for a private organization to do promotions when there's already a government entity that does that with hotel/motel tax? All that does is leave less money for legitimate *projects* that may have a real need for 4b money that is now gone to put in ONE job at the Chamber.

Further, a corporation is limited to spending not more than 10 percent of its current annual
revenues for promotional purposes in any given year. Nonetheless, unexpended revenues
specifically set aside for promotional purposes in past years may be expended along with 10
percent of current revenues without violating the cap.199 Additionally, a city council may
disapprove a promotional expenditure.200 If there is some question as to whether a particular
expenditure should be considered a promotional or an administrative expense, the development corporation should consult with its local legal counsel. (Here's the link to the footnote for 198-AG GA0086) Here's what they said about a hippo statue in Hutto.

As this office has noted in the past, the determination whether a particular expenditure serves a promotional purpose is a question of fact that this office cannot resolve. See Tex. Att'y Gen. LO-94-037, at 3 ("whether any particular expenditure purportedly for 'promotional purposes' is indeed for 'promotional purposes' and is otherwise consistent with the provisions of the act and applicable state law would depend on the precise factual nature of the particular expenditure"). (4) For example, you inform us that the Mayor takes the position that the proposed statue would "promote and advertise the City to potential businesses and industries and create an interest in the City for businesses and industries to locate there" and that "the advertisement value of the Hippo will be immense." Taylor Brief, supra note 2, at 2. Whether the proposed statue would serve a promotional purpose is a question of fact for the HEDC board of directors to resolve in the first instance, subject to judicial review, and, as we discuss below, the Hutto City Council's supervisory authority.

and

Administrative Expenses of a Section 4B Project Maintenance and Operating
Expenses
Section 2 (4) of the Act states that the cost of a project may also include administrative and other
expenses that are incident to placing the project into operation. The law provides that these
expenses could include administrative expenses for the acquisition, construction, improvement,
expansion and financing of the project. It is this authority that could be cited for the hiring of
administrative staff to implement the work of the Section 4B development corporation with
regard to its projects.

There is a case to be made here that there is no project associated with festivals, etc run by the Chamber of Commerce. There was a reference made recently to the city asking the chamber to run Beck field, but I do not remember that as an agenda item that was voted on. If one said that the festivals were in connection with the Oakdale project, then the projects should be *held* at Oakdale. Likewise, Barnard's Mill, etc. There is no project associated with Beck Field. In other words, WHERE'S THE PROJECT IF any part of this is considered administrative.

Accordingly, cities that perform some of the administrative functions for
the corporation could cite this authority for reimbursement from Section 4B funds for
administrative costs related to projects that city staff oversee. Additionally, Section 4B(b)
specifically permits a Section 4B corporation to contract with other private corporations to carry
out industrial development programs or objectives. Effective June 20, 2003, should a Section 4B
corporation contract with a broker, agent or other third party for business recruitment, a written contract approved by the board of directors is required for any payment of a commission, fee, or other thing of value to the third party.196 Failure to enter into a written contract could result in a civil penalty not to exceed $10,000.
Additionally, Section 4B(a-2) states that the costs of a publicly owned and operated project may
include the maintenance and operating costs for the project. The Act, however, allows the voters
to object to such an expenditure by submitting a petition of 10 percent of the registered voters of
the city. The public has 60 days from the date when notice is first given that the tax will be used
for this purpose to submit the petition. Such a petition would ask the city to hold an election to
approve the payment of maintenance and operating costs for projects. An election is not required,
however, if the voters had previously approved the use of Section 4B tax proceeds for this
purpose at an earlier election under the Act.

The question that mirrors this is, what if the 4b doesn't create a project, has no votes, no public hearing? If the pbulic can only object TO A PROJECT, then that's a problem.

IF all it takes to get money from a piggybank 4b board is to have someone just say "Hey, we're going to take out this money, no project (which is breaking the LAW) , and the city doesn't have to vote on it", what's to stop the 4b from doing this all the time?  Seems to me that the responsible people on city council ought to be checking for a legal opinion on this because it sure smells funny. UPDATE: I asked the comptroller's office spokesman what recourse citizens have IF there is no project and no thus no public hearing. The recourse is to vote the city people who have ultimate responsibility for this out, and also citizens can vote to disband the 4b committee. The money, of course, would still have to be paid back by the city for that millions of dollar bond, but the committee could take on no new projects.

As a contrast, note what Best told Tom Osborne, councilmember, when Osborne asked about the 80 thousand for Land of the Dinosaurs. Best emphasized that the money had been  approved properly and procedurally. So why isn't the events coordinator being done the same way? UPDATE: Because 4b can, without citizen input, take 10 percent of the money to use for promotional money.

In summary, I believe that the law regarding this is vague enough that it could be challenged.

P.S. It does seem to me that this whole deal with the 4b needs to have complaints filed about it, needs to go back to the Texas Legislature to tighten up and clarify the law, including more citizen input, not just about this but also about the $80,000 that was given to LOD LLC without a contract (as required by law)

P.P.S. Had a nice long conversation with Darrell Best yesterday. We actually, at least I think so, get along pretty well, but we don't have to agree. I believe there are significant problems with the latitude provided to EDCs that can only be fixed either through legislation or court. And I continue to believe that having the 4b pay for ONE position within the chamber is a bad idea.