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

Vote NO on Prop A Resources

 Please Share Resources. Encourage People to Vote NO.

Vote No on Prop A by Brie Ann 

MC2C Reasons to Vote NO

Tom's Reasons to Vote NO - Tom came up with the NO signs. Citizens helped with Tom's GoFundMe page to pay for the signs.

Current Airport Reinvestment Zone's Financial Plan

$4M Worth of Consultant Reports Paid for with Taxpayer Money

Mayor's pro-airport PAC website - The PAC has over $40k in contributions from commercial real estate interests, developers, and construction companies. 

Mayor's PAC City Filing as of April 6th

Full disclosure: I volunteer my time and money to do all research, writing, etc. for McKinney Citizen to Citizen

FIVE Reasons to Vote NO on Prop A

1.  Too Many Questions and Questionable Answers for this Venture

·       Taxpayers will be paying the debt service on the $200M (total cost with interest will be ~$380M) for at least the next 24 years IF the stars align and all variables work out: like if a big airline carrier comes, if TKI offers comparable and competitive flight options to lure away DFW and DAL travelers if they park their cars and eat food at TKI, etc. 

·       The debt service we pay for this bond will be money that could have gone to police, fire, streets, parks, etc.

·       Prop A can be a tax increase! No one can promise it won’t happen. The venture can fail. The venture could happen slower than projected.
PROPOSITION A “THE ISSUANCE OF $200,000,000 GENERAL OBLIGATION BONDS FOR A COMMERCIAL AIR SERVICE TERMINAL AND RELATED IMPROVEMENTS AT THE CITY’S AIRPORT AND THE IMPOSITION OF A TAX SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS.”

·       The city and City Council have not provided most voters an opportunity to ask questions in public and on the record about any business or financial plans. George Fuller’s PAC has held meetings advocating for the bond—big difference. 

·       The environmental assessment (paid for by the city) has not been completed with the required input from the public, TxDOT, or the FAA. Environmental mitigation could be costly. Those costs are not baked into the business plan.

·       The mayor is using corporate and PAC funds paid for by construction and real estate company donors to promote the bond while making many contradictory statements on social media:

-Fuller said the FAA controls what times the airport operates and whether we have cargo or passenger service. 

-He also said that if we vote yes on the bond, we’ll be saved from cargo and freight service.

-He also said that if we don’t vote yes, we could end up with an Alliance-type airport that is all cargo at all hours of the day, even though Alliance airport has two 11,000 ft runways. TKI does not.

-Fuller also said that flight schools and their small plane flights could be the cause of more pollution than 737s.

2.  Few Direct Benefits to the City Taxpayers Footing the Bill

·       In 2010, the airport and the commercial areas around the airport were made into a reinvestment zone (TIRZ#2). See the map here. See the project plan here.

·       The amount of property, sales, and use taxes the city gets is a static base amount, generally under $1M. This base amount will not change much—even if the airport is successful.

·       Any profits made over that base amount established in 2010 stay in the reinvestment zone and must be spent on the airport, per the plan.

·       Other taxing entities will benefit, but they will share no part of the bond burden.

3.  The Airport Does Not Have to Be Expanded

·       It does not have to be converted into passenger or cargo either. It can stay a general aviation airport continuing to make money.

·       The city can attract retail and commercial with much less than a $200M + taxpayer investment.

·       Nothing in the Airport Master Plan requires expansion. Airport master plans are required by the FAA, and they must address potential options for the future of the asset: get rid of it or stay the same, do some things, or fully expand.

·       The 2019 Airport Master Plan specifically says that an airliner like Southwest will not come to McKinney. See pages 2-45 and 2-46. It also said smaller carriers, like Spirit, would most likely come. All the financial and economic benefit models are based on at least one large carrier coming. 

·       Since 2013, taxpayers have paid about $100M to get the airport to become mostly self-sufficient. Maybe it’s time to take a breather.

·       A select few have always wanted to build out the airport. Voters do not have to bear the burden of their ventures, visions, or schemes.

4.  The Entire Plan is Based on a Weak Demand Analysis

·       The airport business plan and all economic impact projections ($4M total in consultant fees) are based on a small study commissioned by the city of McKinney of potential demand in our area for a commercial airport done in 2020 called the Traveler Insights Survey.

·       The survey found 75% of travelers might consider using TKI (which is a combination of three answer choices).

·       The study was based on a survey of 302 people around North Texas. The results indicate travelers would consider using McKinney’s airport (TKA) if certain requirements are met: competitive pricing, non-stop flights, and multiple flight options. If those requirements are not met, travelers will just keep going to Dallas Love and DFW. Voters will still have to pay back the $200M bonds.

·       Is a “might” or a “would consider” reason enough to spend $200M? 

·       Travelers fly out of DAL and DFW because they have options for flights, prices, and carriers.

·       The corporation & PAC sending out fliers with backing from construction and real estate interests, wrote that this airport would be a “boutique passenger terminal.” See the flyer sent out around 3/7/23.

·       If TKI aims to be a boutique airport, it will be smaller and more expensive. It will not attract people who want multiple flight options, competitive pricing, and carrier options.

5.  Vote NO If You Do Not Want McKinney to Become an Airport Town

·       If the bond fails, McKinney will have a chance to stay a Unique By Nature city that balances the tax base between residential, industrial, and commercial.

·       If the bond passes, McKinney will become a town focused on construction, passenger air traffic, and freight.

·       McKinney ISD has lost nearly 1,500 students since 2018 as it is. All other districts around McKinney are growing, while MISD slowly bleeds students:

In 2018, MISD’s enrollment was 24,791

By 2022, enrollment had fallen to 23,379 see report here, p. 120

·       The Heard Natural Science and Wildlife Sanctuary is a 289-acre museum, natural preserve, wetlands, and bird sanctuary located close to the airport. Bird conservation has been a mission of the Heard since its founding in 1967. Airports, and their flight paths, are incompatible with nature preserves. No in-depth environmental assessment will be completed regarding the impacts on the Heard until the city applies for Part 139 with the FAA. 

·       Will families want to move to a city with a busy passenger/freight airport? Or will they move to the cities surrounding McKinney because they offer a more person-friendly, less polluted atmosphere?

 

 

Adding Context to the 1st Non-Official Filmed Airport Bond Q&A

George Fuller, acting as a citizen, hosted a McKinney Area Democratic Club Q&A at his business in support of the incumbent MISD school board members up for re-election and the $200M airport bond. The video is here.

I’m adding context to several things he said.

1.  (starting about 3:25) GF asserted that if the McKinney ISD school board members on the ballot are not re-elected, “…watch our school district go down in the tank and watch every company run for the hills.”

I’m sure he feels passionate about reelecting these incumbents, but MISD already has a lower rating than the surrounding districts (B instead of A). The district has also been slowly losing students since 2018, while surrounding ISDs continue enrolling more students. Maybe companies have been running for a while. Maybe their employees are choosing to be in other districts already.

Enrollments at MISD over the years

 Find this here, pg. 120

2.  (about 7:00) GF says, “It [the airport] kicks off about $3.5M in taxes, property, school, college, and county. Does everyone know why it’s important to everyone in the room? That means if they’re paying $3.5M worth of taxes, we’re not.”

How? How are taxpayers getting that back? The city and MISD collected more in taxes this last year than the previous year (even though the tax rate was lower due to property valuations being higher). Additionally, the money brought in through the airport reinvestment zone (TIRZ) is not even part of this calculation for the city. How does that fit in? 

City of McKinney

MISD

3.  (at about 14:00) GF says, “The FAA has reviewed and put out a first draft that they [garbled]…first open house, the second on April 19^th, but they look at what’s the impact on water, wildlife, air quality, ground transportation…”

This statement is not correct. It is also misleading. The FAA is not performing this environmental assessment. McKinney Airport’s engineering firm of record, Garver, is performing the study that is still ongoing. According to the timeline given by Garver and all city information, the FAA has not gotten the preliminary report yet.

These two open houses GF talked about are hosted by Garver and the city. They are only open houses. Public hearings are required for public input, and those will not be completed until AFTER the bond election. The FAA is supposed to review the findings after the bond election too.

Here’s the city's explanation of the process:

Click here to see it on the city website.