For A Price, You Can Get Behind the Closed Doors of Fort Bend Business
Fort Bend’s rapid population growth means construction is fairly constant.
At just after 7 a.m. on a mid-September day, a visitor made it no farther than just inside the glass doors of the development council. About 30 or so directors, mostly white, male, in their fifties, wearing dark suit coats and with the tops of their Men’s Wearhouse dress shirts open, wandered about inside a meeting room off the main office, sipping coffee from paper cups. On each high-backed leather chair, both around large tables and around the sides of the room, sat meeting agendas emblazoned with the Greater Fort Bend Economic Development Council’s logo.
“May I help you?” a woman asked in the tone of someone addressing a homeless person seeking a seat at Fleming’s. She summoned council CEO Jeff Wiley, a cool-headed, well-coiffed gentleman with a brunette shock of hair. “This is a private meeting,” Wiley advised, not unpleasantly. He is friendly but serious.
Why? Aren’t these people doing the work for the public? Some of the people in there are employed by the cities and the school districts and the county. “Yes, but they are business leaders,” Wiley said. Okay, but can’t we just hear what they’re talking about? After all, isn’t this to benefit the whole county? What is so secret? “There is nothing secret. It’s a private meeting,” Wiley said.
Millions of dollars are spent and generated by the Fort Bend economic development group, which draws up a legislative agenda and advises local municipalities and school districts on political stances and strategies. It is often the first group to greet prospective corporate leaders who may be looking to come to the county.
The development council mobilizes task forces devoted to pending projects that will affect nearly all local residents. It produces aerial maps of the region, and municipalities can then buy a sponsorship with their names attached for $5,000. In May, the city of Missouri City paid the development council $12,000 for a “branding and marketing program video.” And for the season that just wrapped up in mid-September, Missouri City paid $2,500 for a piece of skybox No. 16 for the minor-league Sugar Land Skeeters baseball team, according to invoices obtained for this story.
The county’s cities, special districts and schools pay between $20,000 and $250,000 a year to have a designated number of spots on the board of directors. The more you pay, the more you get of these powerful slots that help develop the roads, the type of growth and the tax breaks given to companies in Fort Bend County.
Businesses also pay for a spot at the table, with membership fees running between $1,500 and $6,000 a year. Those that pony up rub elbows with the dealmakers and purse-string holders from the government. “It’s very important for us to have a presence in Fort Bend County,” said Helen Bow, a representative of Wells Fargo, a longtime member of the council. “It’s like joining any other civic group, like the Rotary.”
Except that it isn’t. In some cases, a company coming to Fort Bend county is required to belong to the council if it wants to be privy to tax abatements the county hands out. And board members also provide input on bond measures, then see their own companies receive contracts to provide services on projects paid for by those bonds.
Several calls and emails to other companies belonging to the council were placed for this article. No one else responded.
For decades the Greater Fort Bend Economic Development Council has carved out public policy while its members enjoy the lucrative economic fruits of booming Fort Bend County. Most of the work has been done behind closed doors.
“If people could see everything we do, why would these businesses want to become members of our organization?” Wiley asked in an interview after the meeting. That’s why many of the members join — to gain access to the business decisions being made. His members, he said, are part of the growth in the area, from engineering firms to developers and the public sector.
In some cases, pending land development is discussed. “You don’t want that out there in public because people start to speculate and raise the land value,” Wiley said. Of course, someone who has paid the price of admission to sit on the council could do the same.
The refusal of access to meetings doesn’t surprise Missouri City resident Yvonne Larsen. She has spent hours and hundreds of dollars in the past two years chasing the economic development corporation and its records. She has sent open records requests and consulted lawyers and First Amendment advocates. By day the New York native works for a Fortune 500 company that on her Facebook page she jokingly calls a “big evil corporation.”
But the real evil, she says, is that a group hides from public disclosure while using public money to advocate for projects that benefit the powerful and wealthy.
“I have pursued this because this is where my husband and I live,” explains Larsen. “We’re voters who pay taxes in Fort Bend County.” Her husband, Ron, is retired from the Air Force and an air traffic controller. He shares her frustration with the power structure and the secrecy, even fetching records for her when he can. But it is clearly her passion.
“This whole idea of the elite sitting around a table for favors, and commingling the money they get from the public and from private individuals, is quite simply money laundering,” she insists.
Twice in early 2015, after public information requests, the Texas attorney general determined the development council was a public entity.
The development council battled Larsen in appeals to the attorney general, using council board member Steve Robinson, a partner in the white-shoe law firm Allen Boone Humphries Robinson. The AG determined that the council operated largely through membership fees and donations from local governments and even had specific agreements with one city to provide services.
As a result, the development council reluctantly coughed up ten months of a check register for one of the council accounts, as well as an economic statement from 2014. Larsen pressed for more.
But in June 2015, the Texas Supreme Court ruled that the Greater Houston Partnership, which has a structure similar to that of the Fort Bend County economic development group, is not subject to open records requests even though it receives funding from government groups.
The Fort Bend council cited the ruling in denying all pending public records requests. It then quickly set up password protection on its website to ensure that its affairs and expenditures would be kept quiet. New language was added to contracts asserting that the council was not a public body subject to public information statutes.
Which is where it sits today, with hundreds of thousands of dollars in public money being spent on secretive expeditions by the council, including an agreement between the county and the council that when someone comes knocking on the door for a tax break, that person had better be ready to join the council for the favor.
Fort Bend Independent School District continues to add new campuses.
When it began, in 1987, the Greater Fort Bend Economic Development Council had a much different charge than it has today. With only about 175,000 people in the whole area, the idea was simply to recruit “quality” business to the county.
Jeff Wiley grew up in Michigan and Ohio and came to Texas via Florida in the private sector, working for Alltel Wireless. He saw the Rust Belt’s demise inflict poverty on the Midwest, and learned that the economic development council had formed during the oil bust because something similar, although less crippling, had happened in Fort Bend County.
“This community was in absolute retreat in 1986,” Wiley said. “They looked around and said, ‘We just float with Houston; when it goes up, we go up, and when it goes down, we go down.’”
The council was formed, Wiley said, to recruit business, create a commerce-friendly community, provide the best roads to drive business and “to keep the community together, both private and public.”
He became CEO of the development council in 2004. One of the first things that went up in his office was a plaque bearing one of the many quotable lines from the movie The Shawshank Redemption, in which protagonist/jailbreaker Andy Dufresne says, in part, “Get busy living or get busy dying.”
“That,” Wiley said, “is the motivation for the economic development council. You have to keep growing, and if you aren’t, you are dying.”
The development council leans exclusively on big business and municipalities for its support. What was once a group devoted to bringing in suitable employers risks becoming a monolith catering to big money, as huge checks from disparate sources both public and private create a hefty but murky bank account.
The Texas Energy Center, that ill-fated nonprofit established in 2001 to bring high-paying jobs to the region, was managed by the economic development council. It received $3.6 million in state money under former governor Rick Perry from his fabled economic development slush fund.
After it launched, in 2003, not a single penny was spent on payroll at the TEC, which made it hard to create anything. And when the center disbanded, in late 2014, the $991,000 of public money sitting in its bank account was quietly transferred to the economic development council. The money, Wiley said, is “in ultra-safe investments. It will be used for the purpose for which it was raised — that is, for energy and education.” That one-time blast of nearly $1 million in public funds is augmented by annual infusions from local governments.
Every year, Fort Bend County commissioners approve a $250,000 payment to the council for services that include site selection and “analysis services” for new businesses coming into the county, or any municipality in the county. In exchange for the outlay, the county gets to appoint five members to the council’s board of directors.
Members can join willingly, but sometimes it takes a little coercion. Borrowing from the forced-membership tactics used by unions, the council sometimes requests a little quid pro quo when it comes to securing a constituent.
For instance, a new company coming into Fort Bend County can get a coveted tax break when it agrees to be part of the power structure. Among the 19 factors considered by the county commissioners in granting that tax abatement — under which a group would pay a lesser amount of taxes on a project or property in exchange for providing a benefit to the county in the form of commerce or service — is membership in the economic development council.
In addition, an applicant is required to respond to a questionnaire from the development council, which also asks if the company will become a member. Doing so appears to be optional. Until you learn that of the companies receiving tax abatements in Fort Bend County in 2015, just two — Seatex Ltd. and Nynee Ventures — did not have the implied obligation in their contract with the county or checked “yes” on the questionnaire administered by the development council.
The agreement reads, in part, “that owner will participate in the continuing economic development process in Fort Bend County by becoming a regular member of the Greater Fort Bend Economic Development Council.”
The tax abatement granted to QuVa Pharma was approved by Fort Bend County commissioners with nary a raised eyebrow. Ditto for Sunoco Logistics, Aldi, Cardinal Health and any number of property developers. The commissioners have granted 32 active tax abatements, and for all the blustery talk about how the county is a coveted destination for anyone with an MBA and a plank to peddle, abatements are needed even in such an alluring place as Sugar Land.
QuVa’s predecessor, SPIRRA, received the favor in 2009 when it opened a facility in Sugar Land. Now Bain Capital Private Equity, one of the nation’s wealthiest equity funding groups, was financing an expansion of the compounding plant.
But as part of the original agreement between QuVa predecessor SPIRRA and the county — as well as virtually all abatements reviewed over the past ten years — the blessing of the economic council had to be given via a six-page questionnaire that included such points as number of jobs, average salary, a vow to police against the hiring of illegal immigrants and, last but not least, a promise that the business will become a regular member of the council at a rate of $2,000 a year “for a minimum period coinciding with the term of any County abatement agreement.” QuVa agreed to the membership without question.
There have been companies that refused to join, Wiley said, as recently as last year. Initially, Wiley said he would get the name of one such group. He then backed off. “The [council] does not make a habit of naming companies publicly who do not join our organization under any circumstance or for any reason,” he wrote in an email.
Besides, all the abatement contract says is that the entity will support economic development activities, insisted Fort Bend County Judge Robert Hebert. Despite the contract language — “will” join the economic development council — doing so is not an obligation. “I have not had one member call me and complain about the fact that they were joining [the development council],” Hebert said. “We don’t require them to join, but membership is just a requirement under the contract. And it’s never been a deal killer. It’s a relatively insignificant amount.”
State statute prohibits the payment of more than $1,000 to a county for consideration of a tax abatement. But what about an entity conducting itself as an arm of the county, but not quite?
The state comptroller’s office referred the question to the AG’s office. A spokeswoman for the attorney general called it “an interesting situation…but unfortunately, OAG policy prevents us from giving any legal interpretation…” She then referred the issue to the county.
Fort Bend County Attorney Roy Cordes asserted in an email that joining the economic development council “is not mandatory” and therefore any rule regarding such payments is not applicable. Hebert said no one is complaining.
For abatements, development council members are not covered by conflict of interest policy or prohibitions. So members of the council are free to apply for and receive abatements. Executive committee vice chairman Les Newton, the president of Planned Community Developers, has received tax abatements on various buildings for projects by Town Center Lakeside, Ltd., a subsidiary firm he manages, since 2000. The group was formed to create a 43-acre mixed-use development in the center of Sugar Land.
“We present all abatement applications submitted by a prospective commercial candidate that meet the jurisdictional tax abatement guidelines irrespective of whether the applicant is a current member of the council,” CEO Wiley said in an email.
Tax break or not, membership is certainly conducive to doing some business connected to the council.
When the 12-story office building in which the council meets, One Fluor Daniel, needed new cooling towers, the lucrative contract went to board member Jim Rice and his company, Rice & Gardner Consultants. Rice also serves on the Fort Bend ISD school board.
Every year, the books for the economic development council are handled by John Null at accounting giant Whitley Penn’s Houston office. Null was a member of the council when he was a partner in Null Lairson, which in 2012 merged with Whitley.
And finally, much of the assets of the development council are housed with member banks.
It’s hard to decipher more detail because of the secrecy. The policies of cities in the county are opaque with regard to conditional payouts to the economic development council; the city of Sugar Land, for example, contested an open records request for the paperwork regarding a recent tax abatement, insisting the information isn’t public.
But it is clear that without the public, the economic development council would not run. In the most recent records available, for tax year 2013, the council generated operating revenue of $1.059 million; 96 percent of that came from membership fees. Nearly a quarter of that, $250,000, came from Fort Bend County. And yet when it comes to spending money to support bond measures that will affect a large portion of county taxpayers, the council won’t let the public sit in on a meeting or see the books. Even the once-public membership list is now cloaked behind password protection.
Fort Bend resident Yvonne Larsen has fought to get the economic development council to open up.
The dirt, a burnt orange, moist and chunky like old Play-Doh, began to pile up in early August on the southern edge of a 47-acre site in Fort Bend County. Today the mounds are starting to take shape, tucked into a corner of undeveloped field and forest.
After ground was broken in August, it started becoming clear where a main school building would go, and the spaces that flank it will hold still more structures, sports fields and parking. All are being built to accommodate the ever-growing families of Houston’s expanding suburbia in developments teeming with streets bearing starry-eyed names like Harbor Light, Silver Moon and Deer Valley. These streets land in master-planned developments like Sienna Plantation and Willow Creek Ranch.
The turning of ground for new schools for the Fort Bend Independent School District sounds like money to some of those who paid to have a seat at the table of the Greater Fort Bend Economic Development Council.
The schools are being built out of a $484 million bond measure approved by voters in November 2014. Two months before that vote, the directors of the economic council voted to support the Fort Bend school district bond measure “and to dedicate staff time and resources to advocate for passage of the bond,” according to a resolution approved by the directors.
Soon ads appeared in local newspapers, and billboards popped up. A robo call went out. According to the requisite disclosure, all this was paid for by the “Excellence in Education for Everyone PAC,” whose treasurer was development council member Claude Leatherwood. Leatherwood, who did not return calls for this story, is a local banker and has been a member of the development council since 2000. The address on the ad — One Fluor Daniel Drive — is for the same building in which the development council meets. It’s also the same address used by several PACs advocating big public spending in previous bond measures, all of which benefited the members of the economic development council.
The PAC’s financial disclosure was not filed with the school district or the Texas Ethics Commission, as required by state statute. If the public went looking for expenditures in the appropriate place, they would find nothing.
Instead of the proper filing, the forms, notarized by development council office manager Carolyn Martin, were filed with the county. “This is not where those forms are to be filed,” a lawyer with the Texas Ethics Commission says. “And it never has been.”
After the election, the PAC switched treasurers to Bob Brown, chairman of the development council’s executive committee. It is simply awaiting the next bond measure in the county with a $19,000 balance.
Other PACs have also resided at One Fluor Daniel over the years, most of them heavily bankrolled by council membership. The Fort Bend ISD PAC paid the development council for work, including election signage and consulting. The development council also made an interest-free loan to Citizens for Sugar Land Parks in 2013.
The unwillingness of the development council to share its finances, which include taxpayer money and the backing of efforts that will affect the public, “does not surprise me at all,” said Bob Dunn, former publisher of local news group Fort Bend Now. He reported on the council — “or at least I tried to with the information that was available” — and found that lips were tight when it came to the comings and goings of the group. “They are all in this together; they all know each other and do business with each other,” he said.
With the Fort Bend ISD bonds approved, a number of development council members are getting jobs from the issuance. The project architect for seven of the schools that will be renovated with 2014 bond cash is AUTOARCH, whose CEO, Lina Sabouni, is a longtime board member.
Also on the council at the time support for the measure was approved was Tom Wilcox, retired from Johnson Development, which oversees all of Sienna Plantation, where the new schools are located. On its webpage, Johnson boasts that the community features “five on-site Fort Bend ISD schools.”
The financial adviser on the bonds for the school district was First Southwest. Multinational law firm Bracewell & Giuliani served as bond counsel. Both paid between $1,500 and $6,000 to have someone on the economic development council board as the measure was being supported. Trucks bearing the name of Harris Construction in Houston, a council member for years, are on site.
Also represented is one of the local municipal utility districts, which cites the wonderful new schools in the recent bond issuance as an assurance to bondholders that any debt issued will be in good stead thanks to the solid community that’s springing up.
The former CEO of the development council, Herb Appel, acknowledges that the group has “had quite a bit to do with passing some bond measures. We’re involved in many things that benefit the development of the economy in this area,” he said. “That’s the purpose of the group.”
As the purse strings for the Fort Bend ISD bond expenditures loosened, the development council began to fret about a series of open records requests that were being filed seeking check registers, meeting minutes, agendas and board packets. For five consecutive meetings in early 2015, the development council board was given updates on the status of these requests, which came as the Texas Supreme Court was deciding on the case of the Greater Houston Partnership.
On July 8, 2015, the board of directors was briefed by member Steve Robinson on the court’s decision in favor of keeping the records of economic development groups private. While there are no publicly available minutes of the meeting, it is clear the board was advised to lock it down.
“This really illustrates the danger you see in this opinion in action,” said Joe Larsen (no relation to Yvonne Larsen), an open records lawyer in Houston and a member of the board of directors of the Freedom of Information Foundation of Texas. “It can now be used to shut off these kinds of inquiries.”
Most significant, the state Supreme Court ruling ignores the Kneeland test, a benchmark for open records advocates seeking records from outside groups doing business for the government.
The test, named after a 1988 federal case in which a Texas broadcaster, Carole Kneeland, successfully challenged the NCAA to obtain records from a college football program, established a precedent for determining if a private entity receiving public funds is subject to open records laws. It has been the crux of dozens of decisions in the state under which economic development groups funded wholly or in part by government groups without a vendor relationship must turn over the records of work funded by taxpayer money.
After Robinson’s briefing, the website of the council was locked down to limit public access to financial information. And council office manager Martin’s usual email to directors in advance of their monthly meeting changed its tone in her August 10, 2015, communication, in light of the court ruling. That email included the board’s meeting packet, with a detailed account of each agenda item. But unlike before the GHP ruling, the material was no longer accessible to the public.
“The meeting packet is password protected…This is a restricted file,” the note accompanying the material read.
“We have always taken a position that we are not a public entity,” Wiley said. “[The] fact is, based on the Supreme Court ruling, we were never a public entity.”
Transparency advocates are putting together legislation for the coming session in Austin to address the lack of openness of quasi-public groups like the Fort Bend development council in the wake of the GHP ruling. “The Freedom of Information Foundation of Texas is pushing several bills, and one is to fix the GHP case,” Joe Larsen said. The Fort Bend situation is the kind of case the advocates will use as a discussion point.
The foundation is working with state Representative Giovanni Capriglione (R-Keller), who is expected to champion at least some of the measures being drafted. He says he’s already alarmed by how economic development groups are keeping secrets.
“When there is some acting as a gatekeeping, how is that not a government agent?” Capriglione said. “There’s a huge difference between a private company that provides specific services or something like a GHP, where they are working in tandem to achieve the city’s goal. And the public needs access to that information.”
In November, more work will begin on some schools in the Fort Bend ISD. AUTOARCH is part of the team working with the quarter-million-dollar budget for architectural enhancements and engineering to implement improvements to Ridgemont Elementary School and the $39,000 and change for the same at Progressive High School.
But the answer to the question of how much more work is being handled by members of the economic development council who paid to have a seat at the table will, for now, have to be deduced.
“If there is someone here acting as a gatekeeper of a large amount of public money that is not a government agency, this needs to be addressed,” Yvonne Larsen said. “There’s a huge difference between a private company that provides specific services or a group working in tandem to achieve a public goal. The public needs access to that information.”