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

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. 

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 here. Please 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.