Saturday, October 22, 2022

McKinney Airport Money Spent Timeline to 2022

Edited: Updated the costs of the airport to the citizens. As of 10/2022, we've spent a ballpark of about $90M-$100M on the airport. 

Since the FBO (airplane gas station, hangars, etc.) purchase in 2013, most of us have not really understood that the city of McKinney treats the FBO and the rest of the airport as two entities. Consequently, when the city says the FBO is making a profit, many think the whole airport is making a profit. The FBO makes money off of the existing airport infrastructure. The FBO also makes money with every airport upgrade or investment in hangars, runways, parking, land purchases, etc. We forget, though, that the airport side is getting millions of our tax dollars sunk into it every year. If our general fund has put in millions of dollars into the airport infrastructure, subsidizing the FBO operations, and subsidizing the FBO by paying its loans, an announced $565k profit by the FBO isn't that impressive. 


If some taxpayers are hoping the entire airport entity will someday be self-sufficient, they will be very disappointed. If some other taxpayers are hoping some trickle-around economic development comes from the airport being subsidized by us forever,  they'll be happy. There is no end date for subsidizing the airport. We'll never know for sure the real economic impact that the airport does or doesn't provide either. This makes it difficult for us to decide if if the continued expense is worth it or not. 

It is important to remember that the 2004-2012 city CIP was at $71M. This spending is since that $71M. 

Below is a running total and financial timeline of our contributions to the entire McKinney National Airport. The bold amounts total at the end. This is the updated version on 1/22/18.

Date

Description of Event/Purchase/Funding Source

Cost

Pre-FBO Purchase

The city spent a lot of money on the airport before the FBO purchase in 2013 too.

 

2013

Flight Based Operations (FBO) Purchase by city for plane gas station, passenger terminal, 5 large box hangars, 93 T-hangars, and office building.

Property tax money is made off the planes in the hangars. The property tax on planes fluctuates because the value of planes decreases over the years. Fuel sales fluctuate due to price of fuel and demand.

From the Sept 3, 2013 CC meeting on item number 13-902 (for the FBO purchase), these are the minutes:
“Mr. Gray stated that there is a revenue stream that includes the real estate side with the leasing of hangars and the fuel sale side which would fund the debt service of the airport to close this transaction. The City’s projections indicate that the airport will become more self-sufficient and be able to match some of the federal grants with airport dollars as we look to improve the airport over time. This purchase would allow the City flexibility to sell the FBO at some point, if we wanted to, or lease or sell any of the hangars that are currently out there.”
At the same City Council meeting, Councilman Harris asked Jason Gray directly if the profits from the FBO would pay for the debt service costs of the FBO purchase. Jason Gray said that was correct.

According to the minutes, Councilman Ussery was the only one to vote against the purchase (it was a 6-1 vote). However, Councilman Ricchi stated that he didn't think the city should be in the gas station business. He said he'd rather the airport assets be strategically sold.


The first of 20 debt service payments of $1. 3M each was due in 2016. The city paid it, not the airport FBO. The Airport Operations Fund kept the payment they were to pay and put it in the Airport Construction Fund. (per City email 11/28/2016).

2017 debt service payment was also paid by City. Both loan payments paid by city (instead of by the FBO) were authorized by City Council both years when the budgets were passed.  

 

$25M

2014

Airfield Maintenance Building – in CIP and done

$67k

2014

Start of year budget supplementals – for new car, computer, fuel tank, and sprayer.

$41k

2015

Start of year budget supplementals from 8/7/15 for food, training, supplies, overtime, etc.

$77k

2015

$50M airport bond failed to get taxpayer approval

 

2016

MCDC paid $1.5M and the city paid the rest of the purchase of a 15,000-sq. ft. hangar (per 12/12/16 email). Hopefully, this is the transient hangar

$1.69M

2016

Start of year budget supplementals from 7/27/2016 for large box tug, golf cart, hanger floor scrubber, fox cart, security camera.

$70k

2016

Mid-year budget supplementals for various maintenance projects (HVAC, water leaks, siding & valves).

$420k

2017

Airport Parking Ramp Reconstruction – in CIP and done

$5.8M

2017

Construction of Hangar #2-paid for with CIP city money

$1.37M

2017

Toyota Hangar- city took out a loan from the Solid Waste Fund to pay for it

$6M

2017

Budget supplemental from 8/4/17 aircraft tug, city paid

$91k

2017

City is involved in a lease-to-own type of public private partnership (like the downtown parking garage) with a company to refurbish the existing FBO and add some parking, etc.
MEDC is providing $4M. MCDC is providing $4M. And, an $6M investment by a private company to build and then lease to us for 20 years with the option to buy.

$16M

2018

City spent general fund cash on the purchase of 190 acres of land on the southeast side of the airport (they want to purchase a total of about 500 acres eventually).

~$23M

2018

Airport Master Plan Update – in CIP

$333k

 

 

 

2020

Private company, Western LLC, contracted in 2017 to build FBO, terminal, and hangar files for bankruptcy leaving project unfinished and exposed to elements for a year

$Oops

2020

City contracted with McRight-Smith Construction and the city used emergency funding and process to finish the project.

$6.8M

2022

SECOND company working on FBO, terminal, and hangar files for bankruptcy leaving 6 weeks of work left and workers unpaid

$Oops

 

Total ballpark because there was more spending than this up to 2022 (without fixing the costs of the twice bankrupt public private partnership venture)

~$90M-100M+

Monday, January 31, 2022

Baker v. City of McKinney Civil Lawsuit Update

Last November, a judge in the US District Court denied the city of McKinney’s motion to dismiss Ms. Baker's case. Please review the ruling and history of this case here.  

Please see the background of the case here. Ms. Baker is represented by the Institute for Justice, a non-profit that takes abuse of government cases. 

Vicki Baker's house after it was destroyed (Institute for Justice).

The city offered Ms. Baker a settlement at some point recently. Ms. Baker rejected the settlement. I contacted someone with IJ’s communications department, Mr. King, to ask why Ms. Baker rejected the settlement. I also asked about a few rumors I have heard about this case.

1.  Why did Ms. Baker reject the settlement?  


Mr. King sent me back the following to be attributed Jeffrey Redfern, the IJ attorney representing Ms. Baker sent via email:

The city did eventually offer to pay for the full costs of Vicki’s repairs, but not until after she had already filed suit and won the motion to dismiss (the city’s attempt to have her case thrown out).

 

Vicki did not accept this settlement offer from the city because she wants them to include an assurance that individuals who are in similar situations in the future can be compensated without having to sue the city. They’ve refused to grant her this assurance, so she’s continuing her case to protect other McKinney residents from having to go through a similar ordeal in the future.”

 

If the city of McKinney had compensated Ms. Baker when she asked for compensation—anytime between the time her house was destroyed in July of 2020 to March of 2021 when she sued for compensation— there would be no lawsuit. As of December 17th, the taxpayers are $50k in the hole for something that should have never gotten this far.

 

2.  Was Ms. Baker responsible for this whole thing because she was “harboring a criminal?”


"Neither Ms. Baker nor her daughter are remotely at fault for what happened. Ms. Baker’s daughter let the armed fugitive into the house because she was quite reasonably terrified of him, but she also immediately fled and contacted the police."

According to the redacted police reports, the IJ, and the judge’s opinion from November 18th denying the city’s request for dismissal, there was no harboring of a criminal involved in this ordeal. 

 

3.   Is this suit now something the city must see to the end because certain immunities (tort?) are at stake for all cities?

 

“Tort immunity has nothing to do with this case, and the federal court has already held that this is not a tort suit. This is a suit demanding just compensation under the U.S. and Texas constitutions because the city intentionally destroyed Ms. Baker’s property for the public purpose of apprehending a dangerous criminal. If the city takes your house to build much-needed school, road, or jail, the city has to compensate the owner, even though the city did nothing wrong. As the Supreme Court has explained, “[t]he Fifth Amendment's guarantee that private property shall not be taken for a public use without just compensation was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Armstrong v. United States, 364 U.S. 40 (1960).

 

Remember, just 5 short years ago, the city of McKinney justified a continued legal battle with Arch Resorts because of the impact it would supposedly have on the future of the city and all home rule cities. The city finally ended the Arch Resorts battle after over $500k in legal fees and a $1.9M settlement. The incoming mayor, the current mayor, was very eager to get the case settled because it was a waste of money. This case is no different. 


CORRECTION: All comment attributions go to Jeffrey Redfern, IJ attorney for Ms. Baker.

Monday, November 29, 2021

A For Real Cement Batch Plant Application to TCEQ (to go right above the soon-to-be cement recycling plant)

Many residents of McKinney warned about this when the recycling plant was in front of city council last month because TXI bought land above it earlier in the year. It was pointed out to the city council. 

The worry was that once the city approved of something related to concrete right by it, TXI would be emboldened to move their concrete batch plants there. Less than a month later, this is what has happened. The recycling plant was approved on 10/19/21. TXI applied for a TCEQ permit for a concrete batch plant on 11/1/21.



History: TXI has a concrete batch plant on Hwy 5 that has been a lot of trouble to local residents over the years including operating during off hours, noise, dust, and a dust explosion all over on houses and an elementary school (even with TCEQ oversight...hmmm). The city has tried to get them out of the city through some rule changes that may or may not hold water. Last year, TXI sued the city. Please see TXI Operations, LP, Plaintiff vs. City of McKinney, Texas, Defendants, Civil Action No. 4:20-CV-00353, United States District Court for the Eastern District of Texas from an August 4, 2020 work session in Legistar. There have been ongoing negotiations...with the city losing a recent request to dismiss in the courts. 

This TXI land is still in McKinney's ETJ, so it isn't city. It is county. I asked a county person how these things are approved and the county person said all TXI has to do is get TCEQ approval and that's it. 

The cynic in me imagines the future will go something like this...the city will work with TXI to also get annexed while also giving them approval for the concrete batch plant because someone will say doing it this way will allow the city to have some control on the zoning side. They will also say that since a concrete recycling plant is already going up right next to it, a concrete batch plant will be a good fit there. 

Please see the application. 


Batch Plant Letter[1]Tceq TXI by Bridgette

Sunday, April 18, 2021

Citizens Should Track Streams of Influence in City Politics, Part 2

To recap from part 1, Tupps opened its doors in 2015. A local PAC in McKinney called McKinney Team also started in 2015. Three members of the McKinney Team PAC are also on the board of Tupps. Tupps has gotten over $15 million in city dollars through the MEDC, MCDC, and the TIRZ#1 fund since 2015.

Who is the McKinney Team? From their website:

"McKinneyTEAM was formed by a group of business and civic leaders who acknowledge the previous success of our city, but have a vision to raise the bar for the future. As a coalition of seasoned executives we will attempt to establish an honest forum for issues to be discussed and strong leadership to advocate for our community’s future. McKinneyTEAM is a nonpartisan, nonprofit political action committee organized and operating under section 527 of the Internal Revenue Code, reporting to the Texas Ethics Commission as a General Committee.” 

McKinney Team started out in 2015 with five members: Bill Darling, co-founder of Darling Homes and Tupps board member; David Brooks, former city council member, CEO of Independent Bank and Tupps board member; Pete Huff, former city council member and chairman of WattMaster Controls; Ernest Lynch, Medical Center of McKinney CEO; and Jack Radke, Ag Power owner and CEO. Two others were later added: Roger Harris, former city council member and business owner; Bruce Mead, a retired executive and Tupps board member.

In 2017, David Brooks, McKinney Team member, Tupps board member, and CEO of Independent Bank, helped get Independent Bank a relocation (from one part of town to another) and incentive package worth over $6 million from the MEDC and city. In 2019, Independent Bank got its low-income health clinic over $2.5 million in city and MCDC funding even though there were already several needy low-income health clinics in the area. This is all in addition to the over $11 million Tupps deal. This year, the McKinney Team is monetarily backing a city council candidate for District 1 who is an employee of Independent Bank. If this person wins his race, will he be required to recuse himself from any and all Independent Bank dealings that come before city council?

PACs can make direct monetary donations to specific candidates that are easier to track. PACs can also make in-kind donations to candidates in non-monetary forms: campaign strategic services, design services, website services, mailing lists, stickers, email blasts, endorsement brochures, voter lists, press releases, videos, professional pictures, meet & greet organization, catering, venue rentals, billboards, and more. 

The McKinney Team is really the only local PAC in McKinney that provides campaign-changing monetary support, organization help, and the goods necessary to have a hefty advantage over any opponents. PAC filings for McKinney Team can be found here

When the McKinney Team first started, it was not successful with its initial candidate picks for local office in the 2015-2016 period. It has been successful, however, with its support of nearly all city and MISD bond elections. 

Starting in 2017, the McKinney Team helped elect 3 out of their 4 picks: George Fuller for Mayor (won), Charlie Philips for At-Large (won), Dusttin Pearson for District 1 (lost), and Scott Elliot for District 3 (won).

2017 McKinney Team Candidate Direct and Indirect Contributions*:
$,2000 to Fuller in direct contributions & about $6,500 in-kind type support
$1,000 to Philips in direct contributions & about $10,000 in-kind type support
$1,000 to Elliot in direct money & about $9,000 in-kind type support
$1,000 to Pearson in direct money & about $5,000 in-kind type support

In 2019, the McKinney Team backed Rainey Rogers for District 2 (won), Frederick Frazier for At-Large (won), and Richard Franklin for District 4 (won).

2017 McKinney Team Candidate Direct and Indirect Contributions*: 
Rogers -- $500 in direct contributions & about $1,500 in-kind type support (he ran unopposed)
Franklin--$2,500 in direct contributions & about $1,000 in-kind type support
Frazier--$2,500 in direct contributions & about $1,500 in-kind type support

Here are the candidates the McKinney Team is supporting this year: George Fuller for Mayor, Charlie Philips for At-Large, Gere Feltus for District 3, and Jason Beller for District 1. Beller is also an employee of Independent Bank.

2021 McKinney Team Candidate Direct and Indirect Contributions* (indirect contributions will not be reported until at least the end of April):
$2,000 in direct contributions to Fuller (a small part of Fuller's roughly $58,000 in donations so far)
$2,000 in direct contributions to Philips
$2,000 in direct contributions to Feltus
$2,000 in direct contributions to Beller

*Note: If anything, I under-reported the in-kind type donations to each candidate. I did round down often. I did not include anything I suspected as duplicates. I also did not include anything that was vague as to what candidate was getting a specific donation (see example below).

  

Thursday, April 15, 2021

Citizens Should Track Streams of Influence in City Politics, Part 1

Note: Using influence within the law is not wrong. Using money to affect politics within the law is not wrong. Using our taxpayer dollars to help certain people and businesses without transparent or fair processes is a murky mess that should be avoided at all costs. 

Useful websites, like OpenSecrets.org, track federal-level campaign contributions to federal candidates. Political action committee (PAC) donations, lobbying group donations, and dark money donations meant to influence politicians should be out in the open. Most people want to know who is donating to whom and whether those donations could be leading to any paybacks that include beneficial legislation, government contracts, public/private partnerships, or other tangible rewards. We want to know—and we should want to know—if our federal dollars are benefiting certain people over others. 

Why do we suddenly stop wanting to track streams of influence in our own cities? Or worse, why do some get offended if questions are even asked about who is influencing whom and to what end? Is it less polite to want transparency closer to home because people we know might start to get uncomfortable or offended? 

Below is an illustration of how campaign contributions and connections among various people, politicians, and groups could lead to, at the very least, problematic optics. 

Tupps is a small brewery that has been open for business for five years in McKinney, Texas. At the time of their most recent application to the local community development corporation in July of 2020, Tupps had about 18 full-time employees and 20 part-time employees that were self-reported on their application. So far in our illustration, Tupps looks like any struggling five-year-old small business. 
 
What makes Tupps a perfect case study right now is because of all the questions about the deal and all the defensiveness as to why there would even be questions. It could also be because it is city council election time. These sorts of disagreements generally bubble up at these moments. 

In the span of five short years, Tupps has benefited from multiple city funding opportunities that other small businesses most probably have not gotten: 

  • $27,000 loan and forgiveness if they hire 11 full time workers. This deal was from the McKinney Economic Development Corporation (MEDC) using sales tax dollars. Contract was signed in November of 2014. See here for info 

  • $20,000 loan and forgiveness if they hire 6-8 full time workers. Again, this deal was from the MEDC. Contract was signed July of 2015. See here for info

  • $600,000 loan and forgiveness from the MEDC for equipment in 2020 paired with a larger incentive listed below 

  • $11.3 million lease with option to buy deal with the McKinney Community Development Corporation (MCDC), funded with our sales tax dollars, to relocate and build a very expensive brewery center with no parking lot (see next incentive below) on land the city bought in 2019 (so they could most likely sell it to the MCDC for this deal). Tupps is not required to put any of its own money into this deal. Tupps is only required to create around 5 full time jobs by the end of the forty year lease. Since the land is owned by the MCDC, there will be no property tax revenue. See here for info

  • ~$3.5 million from the Tax Increment Reinvestment Zone #1 (TIRZ#1) so the city could use its eminent domain powers to take away affordable housing and pay for the relocation of the low-income occupants. This was done so Tupps could have a parking lot. Look in the plans for Tupps, there is no parking lot on the site plan. See here, here, and here  
How many other incubating businesses have gotten this kind of long-term monetary hand-holding from the city of McKinney? If not, why not? 

Tupps, it turns out, is well-connected. Three of the board members of Tupps are prominent business owners and residents of McKinney. We do not know how long they have been board members or how much of a stake they have in Tupps because the MCDC does not require those sorts of relevant details in their application packets. 

If any city is giving a business large amounts of citizen money and is going into a long-term lease agreement with them, the board members of the business, how long they have been on the board, and what their stake and/or investment is in the business should be a mandatory part of the application process. 

Those three board members are also members of municipal PAC that has been in operation for as long as Tupps has had its doors open—since 2015. Their PAC, the McKinney Team, is focused on endorsing city council candidates and school board elections. 

To be continued in part 2

Friday, January 1, 2021

TIRZ #1 Funds to Pay for TUPPS Parking Lot?

On January 5th, 2021, the city of McKinney, City Council, and the TIRZ #1 board (made up mostly of City Council members) will most likely approve the use of nearly half of TIRZ #1 available funds for the new TUPPS brewery parking lot--$3.5 million dollars of the $6.8 million dollar TIRZ #1 fund balance. 

It has taken nearly ten years for the TIRZ #1 to amass its current balance minus paying administration fees and helping to pay for smaller downtown business repairs, etc.  Is a parking lot for a brewery (please see the trailer park eminent domain action here) worth it? Several other major city-led economic development deals didn't use TIRZ #1 funding that should have, like the downtown parking garage and the apartments/shopping with city garage parking underground. 

Here is the cost breakdown from the legislative text:

FINANCIAL SUMMARY: · The City is requesting up to $3,500,000 in TIRZ funds for the East Louisiana Parking Project. These funds will cover the following costs: 

  • o Property Purchase - Approximately $1,900,000 
  • o Relocation Expenses - Estimated $500,000 
  • o Parking Lot Design - Estimated $115,000 
  • o Parking Lot Construction - Estimated $985,000 

· TIRZ #1 Fund Balance - 

  • o The TIRZ #1 Fund currently has a balance of $6.8 million

Here's the plan for the east side of downtown including the very expensive parking lot:



Misuse of Eminent Domain in McKinney?

It looks like the city of McKinney initiated eminent domain proceedings against a private property owner so a brewery moving to the area could have a parking lot. Yes, the land to be eminent domained is a trailer park that might make the redevelopment of the east side look "incomplete." However, the eminent domain resolution doesn't use blight or redevelopment as reasons for the city's action. 

eminent domain

The resolution claims that the property is subject to eminent domain action to make room for an "East Louisiana Public Parking Lot." This is another example of the city missing the opportunity to look more above board while also risking more city money loss in potential lawsuits (remember the $10 M+ settlement the city had to pay out to JND because the city used eminent domain wrongly to favor one developer over another during the failed gateway debacle?). This looks like another messy rush job. Sure, the property owner will probably sell to the city and we can avoid further court action. But, the landowner would only be selling because of the threat of eminent domain action. Threatening property owners is not a good look for McKinney.

The site plans for the new brewery complex do not include a parking lot. The brewery will be relocated as part of a $11.3 M grant from the McKinney Community Development Corporation (MCDC) that would allow for the renovation of McKinney's historic grain site. The agreement between Tupps and the MCDC includes a long-term lease of the space with an option to own. It also includes a 2% revenue share with the city. The city of McKinney will have to sell the grainery site to the MCDC. See more details in the article herePlease continue reading for the documentation below.

Back on September 1st, 2020, the city council passed this resolution:

WHEREAS, the City Council of the City of McKinney, Texas, has determined that a public need and necessity exists for the East Louisiana Public Parking Project (“Project”), generally located to the East of Highway 5 between East Louisiana Street and Anthony Street. The properties associated with the Project are generally set forth on the map attached hereto as Exhibit A; and 

WHEREAS, the City Council has considered this Project and has determined that a public necessity exists for the acquisition of the properties (in fee simple), as described on Exhibit B, attached hereto and incorporated herein for all purposes (“Property”). 

See above for the picture of the property (trailer park) subject to the eminent domain action with Tupps added for clarity. 

Here's the site plan submitted to the MCDC on June 25th, 2020 with the trailer park/parking lot added.


:
No one is saying the TUPPS deal is not a good idea. But, a city pulling out the eminent domain card (when this is clearly a brewery parking lot pretty far away from the future new city hall) because it does not want to take the time to use other methods (health code violations for the trailer park and taking the time to work with the property owner) is wrong. Or, TUPPS could have simply scaled down their mega complex to add parking spots. 

Here is the Texas Government code on proper uses of eminent domain:


CHAPTER 2206. EMINENT DOMAIN


SUBCHAPTER A. LIMITATIONS ON PURPOSE AND USE OF PROPERTY ACQUIRED THROUGH EMINENT DOMAIN


Sec. 2206.001. LIMITATION ON EMINENT DOMAIN FOR PRIVATE PARTIES OR ECONOMIC DEVELOPMENT PURPOSES. (a) This section applies to the use of eminent domain under the laws of this state, including a local or special law, by any governmental or private entity, including:

(1) a state agency, including an institution of higher education as defined by Section 61.003, Education Code;

(2) a political subdivision of this state; or

(3) a corporation created by a governmental entity to act on behalf of the entity.

(b) A governmental or private entity may not take private property through the use of eminent domain if the taking:

(1) confers a private benefit on a particular private party through the use of the property;

(2) is for a public use that is merely a pretext to confer a private benefit on a particular private party;

(3) is for economic development purposes, unless the economic development is a secondary purpose resulting from municipal community development or municipal urban renewal activities to eliminate an existing affirmative harm on society from slum or blighted areas under:

(A) Chapter 373 or 374, Local Government Code, other than an activity described by Section 373.002(b)(5), Local Government Code; or

(B) Section 311.005(a)(1)(I), Tax Code; or

(4) is not for a public use.

(c) This section does not affect the authority of an entity authorized by law to take private property through the use of eminent domain for:

(1) transportation projects, including, but not limited to, railroads, airports, or public roads or highways;

(2) entities authorized under Section 59, Article XVI, Texas Constitution, including:

(A) port authorities;

(B) navigation districts; and

(C) any other conservation or reclamation districts that act as ports;

(3) water supply, wastewater, flood control, and drainage projects;

(4) public buildings, hospitals, and parks;

(5) the provision of utility services;

(6) a sports and community venue project approved by voters at an election held on or before December 1, 2005, under Chapter 334 or 335, Local Government Code;

(7) the operations of:

(A) a common carrier pipeline; or

(B) an energy transporter, as that term is defined by Section 186.051, Utilities Code;

(8) a purpose authorized by Chapter 181, Utilities Code;

(9) underground storage operations subject to Chapter 91, Natural Resources Code;

(10) a waste disposal project; or

(11) a library, museum, or related facility and any infrastructure related to the facility.

(d) This section does not affect the authority of a governmental entity to condemn a leasehold estate on property owned by the governmental entity.

(e) The determination by the governmental or private entity proposing to take the property that the taking does not involve an act or circumstance prohibited by Subsection (b) does not create a presumption with respect to whether the taking involves that act or circumstance.

Added by Acts 2005, 79th Leg., 2nd C.S., Ch. 1 (S.B. 7), Sec. 1, eff. November 18, 2005.

Amended by:

Acts 2011, 82nd Leg., R.S., Ch. 81 (S.B. 18), Sec. 2, eff. September 1, 2011.

Acts 2011, 82nd Leg., R.S., Ch. 693 (H.B. 364), Sec. 1, eff. September 1, 2011.