Overview of McKinney's FY26 Budget Session

The city of McKinney held its annual budget session in August for the upcoming fiscal year, which begins in October. The August 8th meeting can be watched here. The public input on the budget continues at the next City Council meeting on September 2nd. 

Here is the Ad Valorem summary blurb:

"The City Council adopted a $.415513 tax rate per $100 of property valuation for the current 2024-25 fiscal year, which was just over 1 cent lower than the fiscal year 2023-24 rate. With tax base growth in new construction of $1.7 billion and increases in existing property values of 5.0%, the estimated taxable value will grow from approximately $39.6 billion in fiscal year 2024-25 to $43.4 billion in fiscal year 2025-26. The average market home value will grow from $574,579 in fiscal year 2024-25 to $578,991 in fiscal year 2025-26. This budget proposes to lower the tax rate to $0.412284."

This is what goes into (and not into) the no new revenue tax rate, see pg 95 of the budget:

1.     Police/Fire – 5 new police and 5 new fire. I’m not sure if that is enough or just adequate. No matter what survey, residents rate public safety at the top of their budget priorities. See details here.

2.      TIRZ 1 (downtown) – at least they are using funds to pay for fire suppression in the downtown zone and not using the general fund.

3.      TIRZ 2 (airport) – they will be moving less from the operating fund to airport construction fund to cover the costs of the commercial airport and the 9 people they will be hiring to work there.

4.      Airport – expecting operational losses for the first 3-4 years. Talked briefly about why there is ad valorem loss for the airport in 2024: depreciations, relocations, a hangar out of commission, etc. No questions on it.

5.    Low-income/affordable housing – Absolutely NO strategy for the past 5+ years. They want to develop one. This is after years of throwing money, consultants, and newly found tools at the problem. City Council continues to push co-developments with multifamily developers and the MHFC (McKinney Housing Finance Corporation).

A newer entity, the McKinney Public Facility Corporation (MPFC), was established a couple of years ago, and a developer was selected without competitive bidding to construct additional apartments. The City Council elected itself to this board.

There will be no formal evaluation of any low-income/affordable housing for single-family housing using the newly created Community Land Trust (CLT). I don't even see an item for the CLT in the budget. 

The city will be paying the Root Policy Research group to make recommendations again. The city did not adopt a formal policy after this same consultant was paid in 2020. That study advised exactly what affordability price points to target and what the city had enough of. Was that followed?
The only two City Council members I've seen ask any strategy questions are Beller and Cloutier.

Below are the low-income/affordable housing CC goals for FY26 FY26Strategic Goals - Department Objectives

Taxpayer Input is Repeatedly Ignored in McKinney

The city of McKinney is inviting citizens to a public input session about the amenities they would like to see in the underground tunnel park (the inverted park), despite not being listened to when they expressed their opposition to a tunnel park in 2022. The invite on the city's social media page says, "We are planning a new community space under Hwy. 5, and we want your input!" Who wouldn't want community space under a highway?

The city says it wants input. Does it truly want taxpayer input, or is this public participation just a formality, as it was the last time the public was asked to weigh in on how east and west downtown could be connected?

McKinney's taxpayers might not remember, but there was a public hearing in July of 2022 regarding how to improve the pedestrian access between the west and east side of downtown. The public was quite decisive in its condemnation of the tunnel park option. The public voted to put the tunnel park idea nearly at the bottom of all other options presented, just above doing nothing.

A tunnel park requires additional funds for upkeep and extra money for security due to the inherent safety concerns associated with a tunnel park. Downtown McKinney continues to battle problems with homelessness and safety as it is. The additional yearly M & O costs of the tunnel park continue to fluctuate between $1M-$2.5M. Does that funding include the extra police needed? Are they using today's dollars to estimate, or will the price tag go up in the future when the additional police are actually needed?

The 2022 public input consisted of 4 options: Option 1 - deck Park like Klyde Warren Park in Dallas- an above-the-highway park Option 2 - tunnel park (an inverted deck park under a highway) Option 3 - improving the pedestrian crossings on Hwy 5 at a cost of under $1M Option 4 - doing nothing

Results of the public input from 7/22, click to enlarge

Public comments at the 2022 public input session showed a pattern of concerns regarding the expense and safety issues associated with the tunnel park option. As of the last City Council meeting on July 15th, regarding this issue, no plan has been discussed because it is said to be too far in the future. If that's the case, why are we being given a yearly M&O estimate now? Improvements to the existing crossings would have been less expensive with negligible additional yearly costs for taxpayers.

The tunnel park plan has never been a dream of the city's taxpayers. This vanity project was all the idea of the former mayor, George Fuller, during his time in office. When he first brought up the idea, it was presented as a Klyde Warren-type park with a park above the highway. Once the out-of-reach costs of this kind of park came to light, City Council just pivoted to the second most costly idea--a tunnel park. This decision by City Council was reached after the public input consensus was shared with them. In 2024, Pete Buttigieg, Secretary of Transportation during the Biden administration, visited McKinney to celebrate the awarding of funds from the Reconnecting Communities and Neighborhood Grant Program, part of the Investing in America initiative, for this project. This grant is not for the yearly costs to the city. 

The commercial airport is another example of taxpayer input being ignored in Mckinney. The city just held a secret airport groundbreaking for a commercial airport that was voted down twice by taxpayers. This was not an invitation-only, groundbreaking event that taxpayers knew about, but required limited attendance due to security. This groundbreaking was held in secret, only to be disclosed after the event took place. 

McKinney leadership's Citizen Survey ratings have declined over the years in key metrics, including honesty, transparency, treating residents fairly, and acting in the best interests of the community. Nevertheless, it does not appear that leadership is pausing to understand what caused the decline that began in 2021. 

Click to enlarge, results of the last citizen survey

McKinney Seeks $73M for Budget Commercial Airport "Proof of Concept"

 At its January meeting, the McKinney Community Development Corporation (MCDC) heard from organizations and groups wanting grants. The long-controversial city airport came asking for $30M in financing. Grant requests will awarded at the February meeting. Earlier in January, the city asked the McKinney Economic Development Corporation (MEDC) for $22.4M.

                          City Presentation 

The city cannot use property tax money for three years after two failed commercial airport bonds (one in 2015 for the land and another one in 2023 for a terminal). While the city waits out the clock, its only recourse seems to be the MCDC and MEDC.

The city of McKinney asked the MCDC for a $30M bridge loan, either from the fund balance or by taking out sales tax bonds, until a federal Rural TIFIA loan can be secured. This would require at least two years of yearly $1M interest only payments. The city is prepared to have the MCDC carry the entire loan if the TIFIA loan does not work out.

The combined $52M ask is for a budget, “proof of concept” commercial airport they will use to woo a budget airline. There is still no firm commitment from an airliner. Here is the specific wording from the grant application:

“The proposed infrastructure will enable development of various aviation uses on the east side of the airport. The plan is to maximize flexibility to allow for growth in the future as the market and economy dictate. The proposed terminal is a small phase one terminal that is expandable but is intended as an inexpensive terminal to prove that commercial service is viable at TKI. If commercial service is successful, future expansion would include the construction of an entirely new terminal north of the first phase. The first phase terminal would continue to offer gates for the terminal or could be repurposed as a maintenance facility and/or rental car facility.” 

Both the MEDC and MCDC collect a half-cent each of sales tax revenue. That allotment translates into roughly $25M a year. The MCDC alone has saved over $47M in a fund balance for future unnamed projects—like the airport.

The MCDC left the public hearing open for the $30M commercial grant.
Please email the MCDC board at Info@mckinneycdc.org on agenda item # 25-2377.

There will also be a joint City Council, MEDC, and MCDC meeting on 2/18/25 at 4pm. The airport will likely be discussed.

For more background on the changing role of the MCDC, please see the following past articles:

McKinney’s Community Development Corporation Changes Focus

McKinney Leadership’s Heard Problem

The $200M Airport Bond

190 Acre Airport Land Purchase

Demystifying McKinney's Airport

Special Interests Finance McKinney’s Pro-Prop A PAC

PAC finance reports for and against the city council-driven term extension charter amendment on the ballot this November are posted on the city of McKinney’s website. 

So far, the pro-Prop A PAC, Citizens for McKinney, has brought in about $47,000 in individual, corporate, and in-kind donations to finance the campaign to pass city council term extensions. The corporate and business interest owners resemble those who donated to the recently failed $200M airport bond.

The top individual donors of $3,500 each were David Craig (of Craig Ranch, etc.), David Brooks (of Independent Bank and an earlier investor in TUPPS), David Johnson (?), and William Darling (Darling Homes and ManeGate). The PAC also received $500 each from Roeder & Hullett, two law firm members in town representing many apartment builders and companies with special planning needs. Two real estate company owners/brokers donated $2,000 each: McKissick and Franklin.

The top corporation donors totaled about $18,000:

Ashton Commercial Construction gave $3,000.
Tradition Homes gave $3,500 (a Bill Darling company).
South Beach Interests, LTD gave $1,000.
Burress Law gave $1,000.
DFW Law Office in Dallas gave $5,000.
SKRS Investments based in Addision gave $2,500.
Presidium Group based in Dallas gave $2,500 (multifamily real estate investment firm).

The anti-Prop A PAC, Keep McKinney Unique, was financed by mostly smaller donations from individuals, including a collaboration with a GoFundMe.com sign drive. In total, the majority of the donations ranged from $14 for one sign to $200 to help buy signs or pay for an education campaign. As of the 10/28 filing, about $6,000 was donated to the anti-term extension PAC.

There will most likely be one more filing for each PAC after the election is over on Tuesday. 

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.

 

 

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.

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

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.