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Council /PEDC Meeting September 15, 2014 Page 4 with that AG opinion if they publicized or advertised the city for business development, and that PEDC could pay for the promotional activity. Mr. Moore said whether someone else should pay for it or not is a judgment call, as the Statute leaves that to the Board to make the decision. Subsequently, it is for Council to approve or disapprove. Mr. Moore referenced funds provided to Lamar County Chamber of Commerce and it says potential fraud, waste and/or abuse. He said the Chamber was actually a specific Statute under Section 504.102 of the Local Government Code that says the PEDC can contract with any corporation to carry out the objectives and duties of the EDC. He also said a number of cities have a joint Chamber/EDC office and the Statute says Type A or Type B can fund those sorts of private entities, provided the Chamber does EDC stuff. Mr. Moore emphasized the need to have written contracts and approval, but said if you did not it was not criminal. Mr. Moore said he understood the political ramifications but again that opinion does not say it's a criminal violation not to have a contract. He said the Chamber could advertise for the community and the EDC could pay for the Chamber's advertising activities. Mr. Moore stated although there were no policies and procedures in place regarding expenditures, PEDC staff had a judiciary responsibility to ensure the best use of 4A now called Type A development funds. He said that was not exactly accurate for the staff, it was really for the Board. The diversity initiative program basically noted it was a kind of a good program in that it worked, but there was an $8.00 shortfall, He said there could be better accounting, better bookkeeping, but that was not fraud or waste or abuse. Mr. Moore defined fraud as intent to deceive. With regard to the HWH agreement, Mr. Moore said there was a note that read information revealed there was a lack of fiscal oversight in the EDC. Mr. Moore said State Law had already addressed that oversight, which states it takes Board approval, Council approval, and written agreements. He also said Chapter 171 of the Local Government Code does not apply to all conflicts, but only applies to very specific conflicts. He said if the person had a substantial interest in a business entity or real property, that's further defined as usually 10% or more gross income from that business, that's going to be a substantial interest in a business. He said for real property it is a legal explicable interest of $2,500 or more of real property. Mr. Moore said the Statute provides if you have that sort of conflict, there are three things you have to do and that is file an affidavit, sustain from discussing it, and sustain from voting. He said if there is a violation, it's a Class A Misdemeanor, and that would be reviewed by the District Attorney's Office for determination. Mr. Moore further said they were talking about 2010 and if a violation had occurred, the statute of limitation had run. Mr. Moore said he reviewed the conflicts disclosure statement under Chapter 176 that was submitted to the EDC. He said the report notes that Steve Gilbert participated in the contract negotiations with HWH as this was part of his official duties as the Executive Director of the PEDC, and he may have been fostering a private relationship with the HWH. Mr. Moore said he was not aware of any noncompeting clauses for cities. He said he understood that the $7,500 per occurrence for expenditures without approval had been removed and if it had not, that would have been one of his recommendations. Mr. Moore said all expenditures need to go through the Board and go to Council for approval and that could be done through the budget.