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Council/PEDC Meeting
<br />September 15, 2014
<br />Page 2
<br />Baird to have participated in the negotiation of the incentive agreement with HWH. Mr. Grubbs
<br />said on April 2, 2014 the PEDC elected to use Defenbaugh and Associates to complete the
<br />forensic investigation, the estimated cost to be $50,000, a ninety day agreement was signed and it
<br />began on April 3, 2014, and continued through July 3, 2014. Under the agreement, Mr.
<br />Defenbaugh was to provide weekly oral status reports and a monthly written report to the PEDC
<br />and that never occurred. He said PEDC Board Chair, Rebecca Clifford, denied having received
<br />any reports from Mr. Defenbaugh at the PEDC Board meeting on May 6, 2014 and again denied
<br />having received any written reports at the June 3, 2014, joint meeting of the City Council and the
<br />PEDC. Mr. Grubbs said that he received a preliminary report from Mr. Defenbaugh on July 25,
<br />2014, and on August 5, 2014, the PEDC Board met in Executive Session to discuss personnel
<br />issues that were noted in the Defenbaugh report. Mr. Grubbs also said that Mr. Defenbaugh was
<br />in attendance and it was then that they were told that the report that they had received was in fact
<br />not his final report. On August 11, 2014 the final report was delivered to the PEDC office by
<br />Mr. Defenbaugh and on August 15, 2014 the final report was made available to the public. Mr.
<br />Grubbs said he asked PEDC attorney, Jeff Moore, to walk them through the more relevant
<br />aspects of the report as it pertained to Texas Law. He informed City Council that Jeff Moore
<br />was a partner with Brown and Hoffineister, who had a practice emphasizing on local
<br />governmental law, economic development, zoning and land use. He also said Mr. Moore
<br />possessed 20 years of municipal law experience, was a frequent speaker around the State of
<br />Texas on Municipal topics such as Economic Development for Texas cities, including Type A
<br />and Type B Sales Tax, Chapter 380 agreements, tax abatement agreements, tax incentive
<br />financing, the Texas Open Meetings Act and the Texas Public Information Act. Mr. Grubbs
<br />stated Mr. Moore had spent four years with the Texas Attorney General's office as the head of
<br />the Municipal Affairs Section and currently assists the Texas Economic Development Council,
<br />the Texas Attorney General's Office and the State Comptroller office with Type A and Type B
<br />sales tax training, and conducts training seminars required by the Texas Legislature.
<br />Jeff Moore gave a presentation to the City Council and the PEDC Board, which covered Type A
<br />Sales Tax Issues, State oversight, permissible Type A projects, promotional expenditures, job
<br />training, sales tax proceeds for promotional purposes, business recruitment and development,
<br />gifting proceeds, approval of PEDC expenditures, and State conflicts of interest statute. Mr.
<br />Moore noted the report had a lot of discussion about the lack of policies and procedures, and then
<br />pointed out that State Law had already addressed all of that.
<br />Mr. Moore stressed the sales tax was a local issue. He said voters vote it in and voters can vote it
<br />out, and it was not for the Comptroller's Office to investigate, and it was not for the Attorney
<br />General's Office to investigate. Mr. Moore said the District Attorney's Office is to investigate if
<br />there is some criminal wrong doing, and that they could ask the prosecutors assistant division
<br />within the Attorney General's Office for help. He noted that in the report there was some quest
<br />for the Attorney Generals' Office or the Comptroller's Office to review, and then stated if the
<br />EDC hired a third party to do business recruitment and they did not have a written contract for
<br />that business recruitment effort, that the Attorney General's Office could go after the EDC for
<br />failure to have a contract. Mr. Moore said that was a civil penalty and the fine could be as much
<br />as $10,000. Mr. Moore said there was no criminal penalty and added that the Attorney General's
<br />office has never had to pursue any violations under that section. Mr. Moore said the
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