Sulphur Springs City Council approved all items proposed on Tuesday night’s agenda, except one. The council considered, but opted not to take action Tuesday night, regarding a tax abatement, the terms of which have not been fully met.
The Economic Development Corporation notified the city by letter that, during a review of tax abatement certifications, Ocean Spray Cranberries was found to not be in compliance with the terms of the agreement, with fewer than the required jobs on the payroll for 2018,. The abatement, for 2018-22, was contingent on the company maintaining its labor force of 143 employees. The company had a labor reduction of 13 employees, City Manager Marc Maxwell told council members at their regular May meeting Tuesday night.
City Finance Director Lesa Smith reported the company also had an earlier abatement, for 2016-2020.
“They both have the same requirements of 143 jobs and a payroll of $8.1 million each year,” Smith said.
“The decision before you is: do you wish to cancel the abatement due to noncompliance, do you wish to modify the requirements or do you want to do some type of pro rata percentage?” Maxwell said.
The council could opt to hold the company to 130 employees, opt to reduce the abatement by the percent of job loss, or say there is no agreement because the terms were not met, Maxwell said.
Place 1 Councilwoman Erica Armstrong pointed out that Ocean Spray Cranberries representatives, in a response letter to the EDC regarding the matter, indicated they are trying to find a place for the employees whose jobs were lost
“In their request, they did ask us to consider reducing the percent of the abatement. I think that would be a fair option in that they are trying to fulfill,” Armstrong said.
Mayor John Sellers asked if there were any other precedents in the city regarding action taken when requirements of a tax abatement have not been met.
City Attorney Jim McLeroy said he can recall only one other time in the past when the city rescinded an abatement. In that instance, the company did not ask for modifications or other terms paid, but paid all of the taxes owed.
Place 6 Councilman Doug Moore said based on the amount the city would receive if a pro rata option were granted, “I’m not sure that’s the way to go.” He asked if the abatement could be suspended for a year, to be evaluated at the end of the year, with the abatement granted then only if all the terms were met.
“I haven’t looked at that, but I’m assuming we could modify it, yes,” McLeroy said.
Armstrong asked if the payroll requirement was met.
Smith said she wasn’t sure what their current payroll is.
McLeroy suggested tabling the item until EDC staff, who work directly with industries, can be consulted for a recommendation regarding the abatement.
Armstrong made a motion, seconded by Place 2 Councilman Jimmy Lucas, to table the matter pending a recommendation by the EDC. The motion passed.
In other business Tuesday night, Inceptive was approved to design and produce construction drawings for the H.W. Grays Building in Pacific Park, based on the recommendations of the selection committee, after the architecture firm’s qualifications were reviewed and rated.
The city council approved Ordinance 2744, and selling of a limited tax note for $445,000, with $9,000 going toward note costs and $436,000 toward equipment purchase costs. It will be financed through City National Bank at a 1.88 percent interest rate. The equipment was purchased out of the city’s fund balance, the bonds are now sold to reimburse the expenditure, Maxwell explained.
The city also is refinancing two existing bond notes. The previous average rate on the old bonds was 5.42 percent. The new rate is 2.78 percent, which will save the city approximately $50,000 a year in bond payments, city officials reported.
The city also approved Resolution 1167, which denies the distribution cost recovery factor to increase distribution rates for Oncor Electric Delivery. That’s a $29 million increase across the state, according to Maxwell. The resolution authorizes the city to join with the Steering Committee of Cities Served by Oncor to evaluate the filing, determine whether the filing complies with law, and if lawful, to determine further strategy, including a possible settlement, to pursue.
Smith reported “almost everything on the revenue side is tracking to budget” as of the end of the seventh month in the fiscal year.
“We are still up on sales tax. We are up 9.71 percent over this time last year. So, that around $217,000 up,” Smith said.
She included projects for the end of the year in her budget report to the council.
“There are a couple of budgets that look to be over, two of them significantly,” Smith reported.
She estimated the fire department will be $91,000 over budget this year and the police department will be $46,000 over budget. If that’s the case, the council will be asked at a later time to amend the budget to reflect the additional expenses.
“There are a couple of reasons I pinpointed my overages accounting for those two departments mainly. The main issue with fire department is they changed the minimum staff from five to six per 24-hour shift. It’s good news for the fire department, but it does have an impact on our budget. So, that’s one of the main reasons there,” Smith said.
The anticipated increase in spending in the police department could be due to the change from an 8-hour shift to a 12-hour shift, and having to pay the public safety director a salary while he was on leave and having to paying “a little bit extra for the increase in duties for the interim chief,” Smith said.
Public Safety Director James “Jay” Sanders was on administrative leave with pay from March 22 to May 3, while being investigated by Texas Commission on Law Enforcement for allegedly providing “false information to pay for a couple of people to go to academy.” The TCOLE investigation concluded on May 2, with Sanders surrendering his peace officer license, TCOLE spokeswoman Gretchen Grigsby said Tuesday. Sanders handed in his resignation to the city on May 3.
Sulphur Springs Police Capt. Jason Ricketson stepped up to serve as acting police chief when Sanders was placed on leave and continues to serve in that capacity. No timeline has been announced by city officials regarding when a permanent police chief and fire chief or public safety director will be appointed or selected. Tim Vaughn is serving as acting chief of Sulphur Springs Fire Department.
