McKinney’s Community Development Corporation Changes Focus

The current mayor and council members have slowly refocused the McKinney Community Development Corporation’s (MCDC) focus in what it funds and doesn’t fund. At MCDC’s recent strategic planning meeting held July 9^th, the president of the MCDC, Cindy Schneible, said the following about the changing priorities:

“…I think our projects have that economic development cast, so we really need to think about how we want to report this out going forward. The larger percentage of our grants are outside of parks...It used to be a lot going to non-profit organizations for museum and entertainment, Heard Wildlife Museum, or Heard Craig, or Chestnut Square, and those are a smaller percentage of our overall grants that are being awarded. The big ones are airport and things like City Hall Plaza, Tupps, so…”

Three members of the City Council, Mayor Fuller, Pro Tem Feltus, and At Large Jones, were present and participated in the strategic planning process. This was an audio-only meeting that lasted over two and a half hours. I listened to the meeting and had it transcribed by an AI transcription service. 

Here are the key discussions and decisions from the meeting:

1. Airport–According to the Mayor, the airport will continue to get some funding from the MCDC. The recent $3.6M given to the airport for infrastructure was not a one-off.

2. Tunnel Park—The MCDC will also be asked to fund the underground tunnel park under Highway 5.

3. City Parks Funding—the ten-year requirement or directive for the MCDC to fund city parks a certain amount every year ($5.5M or so) will be ending soon. The directive will not be renewed; MCDC will just continue to fund it. A lack of a directive or requirement means that city leadership can decide at a future time to stop financing city parks. If the MCDC stops, citizens will have to cover the cost through their taxes.

4. The MCDC board made it clear that the relationship with MISD is broken. MISD makes it very difficult to rent space. MISD will also kick out those who rent space on short notice to make room for a school group. 

5. MCDC got the green light to pursue economic development deals, just like the MEDC. They will issue requests for proposals for what city leaders decide are priorities.

6. City leadership wants the MCDC to pursue convention space when that has traditionally been the job of the MEDC.

7. Leadership seems to want a luxury hotel. 
 
8. They want a community gathering place that is also a development of some sort.

Mayor Fuller spoke about a resort/hotel/convention space and the airport both being top priorities for the MEDC and MCDC. This audio was captured around the 1:30 range.

At Large Jones stressed the need to prioritize the following:

“I think, honestly, the airport, and just remember what the D stands for, whether it's EDC or CDC, it's development. Development. So when we talk about community development, what are we lacking? We lack hotel space. We lack entertainment venues. That's key. We can mow a lawn for parks all day long, but it's community development and economic development. So that should be the key priorities always. And it should be...You don't have a number on this. You just kind of list them out. Development.”

Mayor Pro Tem Feltus wanted to make clear that the MCDC should seek out developments to fund:

“I would definitely say I would like to see us be a little more proactive about finding the developments that are really right for McKinney. I think a lot of times, and this is not just CDC, but we kind of wait for things to come to us instead of us going to look for what really fits for us. How many of you guys have flown somewhere else, looked at a development, looked at an entertainment venue, a hotel, anybody on this board?”

MCDC’s current $35M fund balance reflects a clear change in funding priorities. Clearly, less money is going to community-type causes, and more money is being saved for development-type causes.

Because CDCs have such broad legal provisions governing how sales tax funds can be spent, city leaders can tailor goals at will. The MCDC board members are all appointed by the City Council. The City Council tells the MCDC what priorities should be pursued. 

Last February, the City Council voted 6-1 to ask the MEDC and the MCDC to fund the cost of infrastructure needed for a commercial airport (or maybe the expansion of the general aviation airport if the commercial airport does not pan out). This vote came nearly a year after the citizens of McKinney decisively voted down a $200M bond election to fully fund a commercial airport.

City officials spent nearly a year trying to figure out how to pay for a commercial airport without bonding through the citizens before finally settling on these two revenue streams. This city council resolution was for $3.6M from the MCDC.

The city council meeting was heated. Many in the community sent emails and spoke in person. They feared this one-time diversion of money to the airport would become the norm. They wondered what community events and non-profits would miss out on funding if the MCDC started paying for the airport as well as the MEDC. City Council chastised citizens from the dais for believing that the MCDC's commitment to the community would be changed.

Unfortunately, city residents' fears turned out to be reasonable. The MCDC's priorities have changed at the behest of city leadership.

Please see this past article regarding MCDC's funding denial of McKinney's own Heard Natural Science Museum & Wildlife Sanctuary here.

 

 

McKinney Leadership’s Heard Problem

The 289-acre non-profit Heard Natural Science Museum and Wildlife Sanctuary is located on McKinney's east side. It is the definition of the kind of open space that fits McKinney’s “Unique by Nature” motto. It is a tourist attraction and a hidden gem for nature lovers.

Visitors canoeing, photo from The Heard's website 

Community groups meet at the Heard. School district and homeschool students learn about nature year-round. The Heard’s founder, Bessie Heard, was a woman ahead of her time and a downtown McKinney icon. With all the Heard has to offer, one would think the city of McKinney and its leadership would partner with Heard as they eagerly do with places like Tupps Brewery and the airport. Instead, the city of McKinney and its leaders push the Heard to the side.

The reason the Heard Natural Science Museum and Wildlife Sanctuary is problematic for McKinney’s leadership is simple— the airport. City leadership is on a mission to convert the general aviation airport into a commercial airport. Last year, citizens voted down a $200M bond meant for that purpose. This November's charter election will decide if the current mayor can have his term extended to continue his pursuit of a commercial airport. It is hard for the city and its leaders to concentrate money and effort on expanding the city’s airport when it is located right next to a nature preserve with a mission to educate, preserve, and conserve the environment. These two projects are close in proximity but worlds apart in their missions.

McKinney goes quite far to pretend the Heard does not exist. In the city’s 2040 comprehensive plan, the Heard is swallowed up in the so-called “Airport and Aviation District.” 

The Heard is located in the black circle at the bottom left of the aviation area.

The McKinney Community Development Corporation (MCDC) has been the primary financial support for non-profits like the Heard. The MCDC has given minimal yearly grant support to the Heard, similar to the grants the MCDC gives to fundraisers and cultural events in downtown McKinney.

Here's the history and purpose of the MCDC according to its website:

“In 1996, McKinney voters approved a half-cent sales tax to be used to provide grants to projects and events that would enhance McKinney’s aesthetic, cultural, and leisure amenities. Over the past 25 years, MCDC has invested nearly $225 million back into the community.”

The MCDC’s mission statement:

“Staying true to voter intent, we work proactively, in partnership with others, to promote and fund community, cultural and economic development projects that maintain and enhance the quality of life in McKinney.”

This year, the Heard applied to the MCDC for a $148,000 project grant to restore the Blackland Prairie area of its nature preserve. The application was formally presented to the MCDC board in April. The board asked five questions of the Heard representatives, ranging from interest in controlled burns to whether they could get a used tractor instead of a new one. Not one word was said indicating anything was wrong with their application. No other comments indicated a potential denial based on MCDC priorities or the inappropriateness of the application. *Oddly, project grants for community purposes, not just economic development, are now being discussed in MCDC's closed executive sessions. 

At the next MCDC meeting in May, the Heard’s project grant application came up for a vote. Not one person from the board said a word. After a lengthy silence, a member requested a vote to deny. The denial of Heard’s project grant request passed7-0. At the same meeting, the MCDC board approved a $3.6M project grant for airport infrastructure. The Notes Live for-profit outdoor amphitheater project was given $3M. Right now, the MCDC has a fund balance of about $30M. The Heard application looks like it was the only project denied this past fiscal year. 

Whether McKinney’s leadership likes it or not, the Heard is an asset to the city. It attracts tourism, educates citizens of all ages, and conserves and preserves open spaces. The Heard ticks all the boxes city leaders profess they want to support and promote. Whether a commercial airport is in McKinney's future or not, city leadership must find a way to work constructively with the Heard, just like it does with other non-profits in the city. 

Justified or Not, McKinney's Leadership Finds Other Taxpayer Funded Ways to Pay for a Commercial Airport

City leadership is advancing other city funding sources for the airport even though taxpayers voted down a commercial airport bond less than a year ago. They have decided that taxpayers voted down the commercial airport bond ONLY because voters did not want to pay for it with general obligation (GO) bonds.

1. This interpretation of the bond loss assumes taxpayers really want a commercial airport. Do they?

2. This interpretation of the bond loss also assumes taxpayers want to continue paying for the airport’s infrastructure and more; they just do not want to use GO bonds to do it.

Are the conclusions reached by city leaders legitimate, or are they a series of rationalizations made so they can continue pursuing airport expansion without firm taxpayer backing? 

The city of McKinney commissions reputable survey companies every other year to get the pulse of the residents. The 2017 and 2019 surveys asked questions about the airport. 

The results suggested a split city, much like the failed airport bonds in 2015, failing at 50.99% (for hangars and to purchase land on the east side of the airport), and a 2023 bond failed with 58.6% voting no (to build a commercial airport on the east side). Unsurprisingly, the 2021 and 2023 surveys asked no questions about the airport. 

Yearly, an unofficial budget priority survey allows citizens to rate their budget priorities 1-10 (1 being the most important and 10 being the least important). Nearly every year, the airport is rated at or near the bottom of importance for residents.
Citizen Survey | McKinney, TX - Official Website (mckinneytexas.org)

At the 2/6/24 regular city council meeting, the Mayor of McKinney, George Fuller, doubled down in his interpretation. He said he commissioned his own survey with his own money. He read out the questions and results at the meeting. He claimed the results justify his interpretation of what voters said and did not say by defeating the bond. Here are the questions (based on my transcription of the video since the study he commissioned is not available):

1. Are you aware that McKinney owns TKI National Airport, located approximately five miles east of Central Expressway? 82.96% said yes, 17.4% said no.

2. Are you aware that 737 aircraft land and take off at the airport now? 44.93% said yes, 55.7% said no.

3. Are you aware that school and property taxes are collected on corporate assets, primarily jets, at TKI totaling more than $3 million a year, reducing our residential tax burden? 46.38% said they were aware, and 53.62% said no, they were not.

4. Would you support $200 million in bond debt paid for with property tax revenue for the development of a commercial passenger service at the airport? The question sounds familiar was on our last bond election. 40.58% said yes. 59.42% said no. I believe that's within about a percentage point of what the results were of the election if I’m not mistaken.

5. Would you support commercial passenger service at TKI if that service were negotiated with an airline and was provided without the use of any property tax backed bonds? 61.97% said yes and 38.3% said no.

His survey questions, particularly Q3 and Q5, were leading, limited in scope, and very telling in what information was omitted in the narrative. Unsurprisingly, his survey was tailor-made to get him the responses he wanted.

Notice that Q3 provided a supposed positive of the airport--$3M in property tax benefits to the city and MISD--without mentioning the other factors involved in the complicated funding structure of the airport:

•  Not a mention that while bankrolling the entire airport, the city gets only about $800,000 of that $3M property tax benefit. That number has barely changed over the years, no matter how many new hangars the city builds. Why?
• Not a mention that taxpayers put over $100 million into the airport since 2013.
• Not a mention that the airport and surrounding commercial businesses are kept in a reinvestment zone (TIRZ2) while all city services inside the zone are paid for by the city. The potential tax benefit might be a wash after the city pays the liabilities for the TIRZ2 zone.
• Not a mention that MISD is considered a tax-rich district with a large share of tax revenue it collects sent to the state due to recapture anyway.

Q5 fails to mention that taxpayers would possibly continue paying for commercial airport infrastructure and more through other means: general fund payments, payments through excess fund balances, draining the MEDC and MCDC of sales tax money that could be going to other high priorities for the city. What would the respondents have said if they had been given the complete picture in that question?

Armed with a carefully crafted survey done by Mayor Fuller, city leadership appears to feel justified in taking advantage of any taxpayer-funded source available to pay for the commercial airport (as long as it isn't GO bonds). Without skipping a beat, they will now ask the MEDC and MCDC (with members appointed by the city council) for undisclosed funding for undisclosed airport expenses using collected sales tax dollars. It is a stretch to use the MCDC, McKinney Community Development Corporation, money to pay for anything related to an airport. Community-related expenses that could be paid with MCDC will now have to be paid by other funds taxpayers have paid into.

How many commercial airport expenses does city leadership think the taxpayer will be paying to ready the site for an airline? When will the payments end for McKinney's taxpayers?

 

After bond fails, McKinney looks at other ways to improve airport (dallasnews.com)
McKinney voters pass five of seven bond propositions | Community Impact

FY2024 Budget Work Session

Overall, the city's proposed tax rate is not bad. The city suggests a 3.0 cent reduction in the tax rate. Our property taxes will still increase because of the higher property appraisals. We will still be paying more in taxes.

I’m always looking for where we are based on the no-new-revenue rate simply because I know the city has money coming in that is not included in the tax rate calculations. For example, the tax rate calculations do not include new construction and the two TIRZs. That means the city has a lot of extra money that is not reflected in that tax rate. When cities have extra money, that is money that can be used on pet projects. Excess fund balances have been another way this city has squirreled away money to fund certain expenditures. The city council came up with over $20M in excess fund balances to buy airport land after the failed 2015 airport bond.  

Here are a few things of note from the budget session (see the presentation here and the budget book here):

THE AIRPORT--The airport runway construction on the south end will continue. The northern segment of the airport runway is set to start early next year. 

Because our city council still has passenger airport service listed as a top priority, the city staff will continue spending money and energy to get Part 139 designation for passenger service. They will continue doing whatever they can to get a public-private partnership deal for passenger service. This is where extra money the city has can come in...

As mentioned in a previous post, a bond election for essential city services will have to happen in May of 2024 because some people didn’t plan for it with this last airport bond. 

The MEDC and MCDC are set to get about $23M each in sales tax money over the year. That is extra money for the airport, parks, economic development, etc.

A city council member suggested that more should be spent on low-income housing. Over the past few years, the city has used multiple sources and tools to establish programs that do not require general fund money.

Through the McKinney Housing Finance Corporation, we now have a new development for low-income (various targeted levels). The MHFC will use any money made through that co-development to put into more low-income housing co-developments. We will have another large apartment being built because of the Public Facilities Corporation that was just established. The city spent money establishing a community land trust. We also have the MEDC, the MCDC, and the TIRZ #1 which can all use their money to fund more low-income housing. The McKinney Housing Authority is also working on improving its properties and funding new ones. 

The Airport Bond Postmortem – Were There Warning Signs?

A lot of taxpayer money was wasted on the idea and execution of the airport bond from the moment the first consultant was hired in 2019. Were there signs that the city council would go on to spend $4M on consultants alone? Did we just miss the signs?

Were public hearings missed? Are there even public hearings for consultants? If not, would there be a total amount that might trigger a public hearing? Are there explicit wording requirements for the spending that can be seen on agenda items that aren’t public hearing items? Does the secret nature of this kind of economic development actually prevent public input and involvement?

The good news is that Mr. Grimes, the city manager, helped answer my questions. The bad news is that there was really no way for us to know what was coming. I know that when looked into the agenda items they were vague. Nor were there any ways we could have gotten involved in the decision-making process. That must change, or we’ll end up in this situation again.

I will just cut and paste his emailed answer because it is inclusive of all my questions:

"I have reviewed the approvals you reference below.  The consent agenda is where you will find many of our ordinances amending the budget and resolutions authorizing the City Manager to sign contracts.  While there is not a set contract amount threshold that, when crossed, requires an item to be moved to the regular agenda, larger contracts sometimes do get placed on the regular agenda to allow for a staff presentation.  Consent items are still on the public agenda, and the City Council can always request that a consent agenda item be pulled down for discussion.  If a member of the public wished for an item to be pulled down from consent and be considered individually, they can certainly speak at the public comment period and/or send a note to the council in advance requesting so.  My hunch is that at least one member of the council would grant such request, and every council member has the ability to exercise that discretion.

 

Below are the agenda items relating to the east side EA and the east side programming documents.  Of these items, the only public hearing was held during the TIRZ 2 Board meeting where $2 million was approved towards the programming document process.  Airport Director Ken Carley presented during this meeting and explained the request for TIRZ funding.

 

12/7/21 City Council Meeting – Agenda Item #21-1072 (consent) – Ordinance amending budget providing $550,000 for East Side Environmental Assessment

12/7/21 City Council Meeting – Agenda Item #21-1080 (consent) – Resolution approving contract with Garver for East Side Environmental Assessment

 

1/4/22 TIRZ 2 Board Meeting – Agenda Item #21-1183 (public hearing) – Resolution authorizing $2.0 million in TIRZ funds for East Side Programing Documents

1/4/22 City Council Meeting – Agenda Item #21-1170 (consent) Ordinance amending budget providing $1.5 million from Airport Operating Fund Balance and $2.0 million from TIRZ 2 Fund Balance for East Side Programming Documents.

1/4/22 City Council Meeting – Agenda Item #21-1173 (consent) – Resolution approving contract with Garver for East Side Programming Documents

 

3/7/23 City Council Meeting – Agenda Item #21-0166 (consent) – Ordinance amending budget appropriating $234,000 from the Airport Construction Fund balance to Airport Long Range Planning"

How many people would know what "East Side Programming Documents" meant? I know I thought they were talking about the runway extension that we already knew about.

If we asked our city council members what was going on at the time of the first or second consultant authorization, how many would have told us that they were in the planning stages of another airport bond, especially if they considered the airport an economic development that possibly included secret negotiations? It would be interesting to get their thoughts on this question. 

Transparency must be improved, especially in the case of consultants—any consultants.

What's Wrong with McKinney's Public Facility Corporation (MPFC), Part 1

McKinney Citizen to Citizen (MC2C) advocates for government transparency, sound fiscal policies, citizen education, and citizen participation. It is with all the above in mind that MC2C will be looking at PFCs or Public Facility Corporations. McKinney has one now. McKinney has also made its first PFC deal (hint: it is very bad and will be the subject of Part 2).

PFCs can be used as a tool to bring more affordable housing to cities, OR they can be used to develop areas for other reasons (as long as there are some lower-income units at 80% of the area median family income or AMI). The purpose of PFCs is really that vague. Note many concerns about PFCs from a policy report called Public Facility Corporations and the Section 303.042(f) Tax Break for Apartment Developments: A boon for affordable housing or windfall for apartment developers? Full report here. Executive Summary here. 

from 2020-ECDC-PFC-Report.pdf (utexas.edu)

Because the mission of PFCs is broad and there is no real oversight, PFCs can be taken advantage of by developers and/or the taxing entities that create them. Two bills aimed to remove loopholes floundered at the state level in this year’s legislative session. Read here and here.

PFCs allow entire properties to be taken off the tax rolls for very long periods of time, even from school districts. The public and other taxing entities are often left out, even though their tax base is adversely impacted by PFCs. The costs of any reporting or audits will fall on the shoulders of the taxing entity if there is to be any transparency. Unlike PFCs, more traditional low-income housing tools available must be approved in a public process and monitored through the TDHCA (Texas Housing and Community Affairs). 

What is our city doing to ensure this corporation is as transparent and fair to the public and other taxing entities as possible? Nothing in the boilerplate articles of incorporation is meant to restrict this tool's overly broad uses. This PFC will be here when your favorite and trusted city council member is gone. PFCs can take a favored developer’s property off tax rolls for more than 90 years, and no one will be able to do anything about it. 

For example, if you look at the articles of incorporation, nothing even specifies low-income housing as a focus for McKinney's PFC:
“The Corporation is organized to carry out the purposes of the Act and shall have and possess all powers enumerated in the Act. The sole purpose of the Corporation is to assist the City in financing, refinancing, or providing public facilities that are located within the city limits of the City of McKinney, Texas (“Public Facilities”).”

Other articles to read:

Are Public Facility Corporations a Boon For Affordable Housing? (candysdirt.com)

Dallas Approves New Approach for Affordable Housing – NBC 5 Dallas-Fort Worth (nbcdfw.com)

An Airport Bond Failed, Again

Results are in, and the airport bond of 2023 failed worse than the last failed airport bond of 2015. 

Saturday's failed final bond vote (not official) showed a total of 21,846 votes cast. Of those votes, 41% were cast for the bond, and 58% were against the bond. It looks like a doubling of voters in an off-year election too!

Here are the results from the failed $50M airport bond election from November 2015 48% for the bond and 51% against the bond. A total of 10,473 votes were cast in that election.  

In this particular election, there were 7 propositions on the ballot:

Prop 1 Passed - street projects

Prop 2 Failed - airport improvements for land acquisition and hangar construction

Prop 3 Passed - public safety facilities

Prop 4 Passed - municipal building improvements for a library expansion

Prop 5 Failed - downtown parking structure

Prop 6 Passed - flood protection in some areas

Prop 7 Passed - to revoke $13M in park bond capacity (MCDC pays instead)

See the Community Impact article about the 2015 bond election