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06/03/2014MINUTES OF THE CITY COUNCIL AND PARIS ECONOMIC DEVELOPMENT CORPORATION JOINT SPECIAL MEETING OF THE CITY OF PARIS, TEXAS June 3, 2014 The City Council of the City of Paris met for a special meeting at 5:30 p.m. on Tuesday, June 3, 2014, at the City Council Chamber, 107 E. Kaufman, Paris, Texas. Present: Mayor: Matt Frierson Council Members: Aaron Jenkins; Billie Lancaster; Benny Plata; Richard Grossnickle; Edwin Pickle; and A.J. Hashmi City Staff. John Godwin, City Manager; Kent McIlyar, City Attorney; Janice Ellis, City Clerk; Shawn Napier, City Engineer; and Larry Wright, Fire Chief Call meeting to order. Mayor Frierson called the meeting to order at 5:30 p.m. He asked that item 3 be moved forward on the agenda. PEDC Board Chair Rebecca Clifford opened the PEDC meeting. Board Members present from the PEDC were Rebecca Clifford, Dave Turner, and Stephen Grubbs. Also, present was Interim PEDC Director Shannon Barrentine. 3. Consider and act on the revised Final Plat of Lots 1, 2, & 3, Block A, Walnut Creek Business Park 266 Addition, located in the 1900 Block of N.E. Loop 286. City Engineer Shawn Napier said this item was previously considered by Council, but was not approved due to flooding issues. He said those issues were readdressed by Planning and Zoning on Monday and this item was unanimously approved by the board. Mr. Napier explained that the final plat was not the place to review drainage, but that should be addressed when considering the preliminary or site plat. Council Member Hashmi said he was not business unfriendly, but they should follow rules and regulations. He said it was not made clear that the property owner wanted to divide his property. He said there should have been no reason to create so much confusion when this item was first presented to City Council. Council Member Hashmi said he had no problem with this item as long as the City Engineer made sure that rules and regulations were being followed and that in the future the developer was responsible for all costs of drainage issues when the work gets done. Council Member Hashmi said he would make a motion and asked that the City Clerk include in the minutes his motion as stated. Subject to the City Engineer taking responsibility to ensure all rules and regulations are followed and subject to the developer being responsible for all costs associated with drainage issues and completion of work, a Motion to approve this item was made by Council Member Hashmi and seconded by Council Member Pickle. Motion carried, 7 ayes — 0 nays. Special Council Meeting June 3, 2014 Page 2 2. Receive, discuss and possibly act on an update of the PEDC forensic investigation. Mayor Frierson said this item was about clarity and objectivity and how as a community to adjust and move forward. He also said one of the reasons he brought this forward was there were two new Council Members. Mayor Frierson said on March 10th the City Council voted 4 -3 to approve a forensic audit of the PEDC, centering on an anonymous letter regarding the PEDC loan agreement with Harris, Walker and Harper Rogers Wade facility. He asked that Mrs. Clifford present the City Council with an update from start to finish. PEDC Board Chair Rebecca Clifford said that PEDC was directed to engage a firm located outside of Lamar County to conduct an investigation into inappropriate practices by the PEDC resulting in fraud, waste, or abuse. She also said the purpose of the audit investigation was to identify weaknesses in PEDC procedures to ensure that the PEDC was operating in the best interest of all citizens of Paris. Based on experience, Mrs. Clifford said she selected Defenbaugh & Associates to conduct the investigation and on April 2, 2014, the PEDC Board authorized her to engage the firm to conduct the investigation for the period of October 1, 2009 to the present. She stated that on April 3, 2014, a contract was executed and to date the firm had been provided with hundreds of pages of documents. Mrs. Clifford said that Mr. Defenbaugh informed her that the investigation was progressing, but that she had not received a written report from him. She asked if City Council had any questions. Council Member Pickle said he was under the impression that Defenbaugh was to have already provided a written report, but they had not and they had been paid for a report. Mrs. Clifford said Defenbaugh had been doing the work and confirmed a written report had not been received. She reiterated hundreds of pages of documents had been sent to the firm relating to operations of PEDC from October 1, 2009 to the present, so that Defenbaugh would have a complete and unbiased picture. Mayor Frierson inquired if Defenbaugh had been providing weekly oral status report as required in the contract. Mrs. Clifford said she had been receiving weekly oral reports. Mayor Frierson confirmed with Mrs. Clifford that a written status report was not given to PEDC for May or June. He inquired how much money had been paid to Defenbaugh and Mrs. Clifford told him the invoice in their packets had been paid. Council Member Pickle asked if she had received a second invoice and Mrs. Clifford said she received one yesterday for $20,850. Council Member Pickle asked about the written report and Mrs. Clifford reiterated that she had not received one. Mayor Frierson wanted to know if Defenbaugh had come to Paris and Mrs. Clifford told him they came to Paris when she interviewed them. Mayor Frierson inquired if anyone else was present at the interview and Mrs. Clifford said Dr. Hashmi was present. Council Member Hashmi said the meeting took place at his office, because it was a work day and they wanted to ask him about his presentation. Council Member Hashmi said he saw them only for a few minutes and explained they could see a copy of the council meeting at which he gave his presentation. Mayor Frierson questioned the charge of $400 for Defenbaugh's trip to Paris prior to the contract being executed. Mrs. Clifford said that she did not question it, because they had already discounted their billing rate. Mayor Frierson confirmed with Mrs. Clifford that the PEDC Board directed her individually to select the firm. Special Council Meeting June 3, 2014 Page 3 Following a brief discussion about the anonymous letter, Mrs. Clifford verified with Council Member Pickle that he was at the PEDC meeting in which the HWH incentive loan guarantee was discussed and approved. He said he did not have concerns about the loan guarantee, but did have some issues. Council Member Pickle wanted to know the difference between a forensic audit and forensic investigation. Mrs. Clifford said it was semantics and that an audit usually involves a C.P.A. firm while an investigator does not have to be a C.PA. She told the Council the background of the Defenbaugh firm was they were former FBI agents involved in investigating different types of white collar crime. Council Member Pickle inquired if Mrs. Clifford thought there were illegal activities or that things were not disclosed to members of the PEDC during that time. Mrs. Clifford said she did not have an opinion and that she was not conducting an investigation. Citizen Joan Moore said she had called Mayor Frierson and Council Member Pickle to ask if the citizens were going to be allowed to speak and she could not believe that the public were not allowed to give input. Mayor Frierson said there was no public forum at this meeting, but there would be one at the next meeting. Council Member Grossnickle said this investigation was the result of an unsigned letter, which casted dispersions on Harris, Walker, Harper, Rogers Wade, former mayor and now District Will Biard, and Steve Gilbert and apparently Pike Burkhart. He also questioned the invoice, in that it reflected three reports had been submitted, but neither Mrs. Clifford nor the PEDC had received a report. He went on to question why the investigation was ongoing and an invoice paid, but there was no report. He said they should not spend another $20,000 if they were not doing their job. Mrs. Clifford said she had not authorized payment of the second invoice. Council Member Grossnickle said apparently the firm had stayed busy looking at credit card receipts, which had nothing to do with what was alleged in the unsigned letter. He said he did not understand how they went from investigating Rogers Wade's ability to borrow $5,000,000,000 with a $40,000 lot as collateral and how Judge Biard was alleged to have done double duty as working for Harris and Walker while he was mayor and questioned what this had to do with the credit card receipts. Mrs. Clifford said the PEDC Board was instructed to get someone to investigate the operations of PEDC and it was not strictly focused on one deal. Mrs. Clifford said she was not at the meeting to investigate, but to present facts. Council Member Pickle said he would like to see a report that was promised thirty days ago. Council Member Grossnickle said she should demand a report and tell Defenbaugh they are in default of their contract. Council Member Plata also said he would like to see a report, because he hated to spend tax payers' money on something they did not have and recommended that the second invoice not be paid until the report was received. Mayor Fierson asked Vice Chair Stephen Grubbs if the investigation was flowing the way he thought it should with regard to the timeliness or lack of reporting. Mr. Grubbs said the big question was what were they really doing and it was presented to the PEDC as a forensic investigation and not a forensic audit. He said he was a little disappointed in how things turned out because he did not think what had transpired was what was the PEDC charged with as it pertained to the audit. Mr. Grubbs said the most important thing was that they learn the truth, Special Council Meeting June 3, 2014 Page 4 that it be reported and they move forward., He said he personally did not believe there had been any wrongdoings. Council Member Hashmi asked Mrs. Clifford if there had been any communication, to which she responded that she did not want to go into the verbal reports, but that it was not going to end until she did so. Mrs. Clifford said as the current date, she had not received a written report but had received verbal updates. She said since there was an ongoing investigation she felt that she should wait until the investigation was complete before publicly discussing the investigation findings. Mrs. Clifford said in case she needed to make a public presentation about the findings, she got approval from Mr. Deffenbaugh to release information verbally. Mayor Frierson and Council Member Pickle said they wanted a written report and Mrs. Clifford said she was going to give the City Council a verbal report approved by Mr. Deffenbaugh. She said the firm had completed four reports and because of allegations of criminality, all four reports had been turned over to the FBI. She also said the reports had been accepted by the FBI for further investigation and /or prosecution and that additional reports would be submitted to the FBI. Mrs. Clifford said due to the involvement of the FBI, Deffenbaugh would not be conducting any interviews but that interviews would be conducted by the FBI, if the FBI deemed appropriate. Mrs. Clifford told the City Council that Defenbaugh may not be able to provide the PEDC a full written report as the report might interfere with criminal investigations by the FBI, but that a summary report would be provided instead. She stated that Defenbaugh anticipates to be completed within approximately two weeks. Mrs. Clifford said she found it very disturbing that the media did not report on the presentations made by herself, Mr. Strathern and Dr. Hashmi but was rather more focused on attacking the messengers. Mayor Frierson told Mrs. Clifford she was off the agenda, and at the advice of the City Attorney asked that she stay on point. City Attorney Kent McIlyar said he wanted to make sure they stay in compliance with the Texas Open Meetings Act and media coverage was not posted on the agenda. Mrs. Clifford told the City Council they knew what the investigation was about and that whether or appointed or elected, everyone should be more diligent. Mayor Frierson said transparency was best and everyone wanted to do the right thing to make Paris a better place. 3. Adjournment. Board Chair Rebecca Clifford adjourned the PEDC meeting at 6:24 p.m. There being no further business, a Motion to adjourn was made by Council Member Pickle and was seconded by Council Member Plata. Motion carried, 7 ayes — 0 nays. The meeting was adjourned at 6:24 p.m. MATT FRIERSON, MAYOR Qa't"�/ 0 � 00-Al-n J ICE ELLIS, CITY ERK