Sweet Deal

August 5 was just another day at Harris County Commissioners Court. After awarding millions of dollars in contracts and quickly dispatching other routine business without a second look, the commissioners moved on to the part of each week's agenda devoted to matters affecting each of the county's four precincts. Checking his short list, Commissioner El Franco Lee informed his colleagues that the first item for his Precinct 1 might warrant some discussion.

And a discussion of sorts did ensue.
What Lee was proposing that the county do was legal, declared Richard Huff, a lawyer with Fulbright & Jaworski.

It would be good for the county, said Lee.
Harris County would not be responsible if the project failed, Huff emphasized.

After about 15 minutes of more informal banter, the discussion petered out and Lee asked his colleagues to approve the item. County Judge Robert Eckels seconded Lee's motion, then recited the familiar litany that might as well be a single word, "Allinfavor?Opposed?Motioncarries."

The deal was done. The Court had approved Lee's item with about the same degree of nonchalance it displays in okaying requests to install buried telephone cable.

As is sometimes the case with Harris County government, however, the brevity and casualness of the public discourse belied the significance of the vote. But the talk was incidental, anyway, since the deal that the commissioners unanimously approved on August 5 had been wired far out of public view, long before the public's representatives gave it their perfunctory stamp of approval. What the commissioners had done was vote to create a local government corporation to help subsidize a private, for-profit developer. The corporation would enable an outfit calling itself Professional Players Club to finance a $50 million golf course and hotel complex in northeast Harris County with tax-exempt bonds -- instruments that are traditionally issued to fund projects that serve a public good, such as roads, jails and hospitals. Not golf resorts.

The golf course and hotel deal had been in the works for three years by the time it was set before Commissioners Court, but few people who live and work in the area of the proposed site had known anything about it until it surfaced on the Court's agenda. And the project still might not have raised many eyebrows were it not for its magnitude -- the complex will occupy 400 acres and include two 18-hole golf courses and an upscale 200-room hotel and conference center.

Commissioner Lee, in whose precinct the complex will be built, called it "about the biggest thing that's happened in the last 50 years, and probably the biggest thing that will happen in the next 50 in that region in terms of development."

That sentiment carried the day, although some reservations were expressed at the meeting. Rose Garcia, an assistant county attorney, told the Court she didn't think the use of the particular provision in the Transportation Code under which the corporation was formed allowed for golf courses or hotels. County Auditor Tommy Tompkins noted that the county was indirectly competing with the private sector and suggested that commissioners might consider setting guidelines for creating such nonprofits.

Even the commissioners showed some reluctance to move ahead. Eckels asked whether the developers shouldn't just borrow money from the bank like everyone else. Steve Radack raised the possibility of holding the item for a week, and Lee said he was "tempted to honor that request, simply to give the Court more time to look at [the issue]." After all, despite the assurances that the deal was going to spur development in the area and return handsomely on the investment, none of the commissioners had seen any actual numbers to back those claims.

The county's involvement also brought another gift for the developers. Because the bonds sold through the corporation would be tax-exempt, the golf courses and hotel financed by them would also be exempt from paying property taxes to the county and the Sheldon Independent School District -- a fact of which Lee and others familiar with the deal claimed to be unaware until after the commissioners' vote

Lee and other supporters of the project have since argued that the jobs and revenues from sales and hotel taxes the development will bring, as well as additional development it supposedly catalyzes, will more than offset the uncaptured property tax revenue. And they point out that though the government corporation will own the facility, there's no risk to the county if the project fails, because the deal is structured so that bondholders will take the hit instead.

"It's a no-brainer," Lee insists.
In truth, the numbers are inconclusive. Jim Robinson, the chief appraiser for the Harris County Appraisal District, estimates that the property taxes on the golf courses and hotel would come to roughly $1 million annually. The developers, meanwhile, project revenue of $450,000 from hotel taxes and the creation of 280300 jobs, so whether the county would come out ahead or behind would depend on a variety of variables.

Conjecture about the project's financial impact, however, is almost beside the point. More pressing are the questions that the commissioners flatly ignored in agreeing to help underwrite the project: What's to prevent anyone who wants a tax-exempt golf course, housing development or other private venture from requesting a similar deal from the Court in the name of economic progress? Will the county begin forming government corporations with the frequency it now awards tax abatements, and what will the cumulative effect be? And where is the line between promoting ventures that have a legitimate public purpose and subsidizing private enterprises that should be left to the market?