Something is bothering you, dear, what is it?

No big deal. Well, yes, I guess it is. I got invited to a fund raiser today for Councilman Smith’s reelection?

Why does that bother you, although you were never invited before this election season?

It’s a dilemma for me. Remember when he was on the Community Development Corporation Board? He was very nice to me when I approached the Board for $20,000 in funds for my non-profit organization. It was Smith who encouraged me to apply when we were at the same table at a Chamber luncheon a month earlier. He was very enthusiastic and actuall rallied the cause on my behalf with the other Board members. The vote was unanimous. I later thanked him for taking the lead, championing my request.

So, what is wrong with that? Your non-profit serves the community well.

There’s a couple of problems that bother my conscious. The first is that if I had a $1,000 to give, I should be contributing to my non-profit. They could use the funds.

What is the second problem?

Well, I feel obligated to make a contribution. In a way, I owe him. There is no obligation for the amount to be $1,000. I could contribute less. But then I would feel ungrateful and probably be viewed by him as unappreciative. It was a large amount of taxpayer money I received.

And weren’t you thinking of approaching the CDC Board again this year for a comparable amount?

Yes, that adds to my dilemma.

I can see why. But he is not on the CDC Board any longer. Doesn’t that let you off the hook?

Not really. The CDC Board members are appointed by the City Council. In fact, Councilman Smith is one of the two Council Liaisons to the CDC Board. He would be there in the meeting if I asked for more money.

Gee. This IS a dilemma you have been put in. It just eases its way into the equation, doesn’t it? Is there no solution?

I see one solution, but it would take an action on the City Council’s part. And that is not likely to happen. Four of the seven council members were formerly on the CDC Board.

Tell me how this dilemma could be solved.

There are several ways, but the most effective way would be for the Council to require a recipient of any city funds to be disallowed from ever contributing money to a council candidate or council member.

My goodness. That would be a profound step of integrity on the City Council’s part. And that would remove the dilemma of dozens or maybe even hundreds of recipients from feeling an obligation to contribute, right?

Almost. Any time money is being doled out, it is impossible for Board or Council members to prevent building a potential political constituency. That is why all boards especially Money Boards are a natural springboard to running for City Council.

But doesn’t that happen all the time, like when the Council responds to youth athletic teams build or improve ball fields?

Yes, to some degree. It is natural to try to help an incumbent garner votes if they have done something for you. That is generally why it is so hard for an outsider to beat an incumbent. Nobody is doing anything wrong, it is just hard not to return a favor or to say thanks when you get public money or projects built from public money.

Wow! This is a big issue. Unfortunately, that’s the way it is. And is probably the reason former council and board members say they went from being highly popular to a nobody the day they left office. But what are you going to do about your invitation to Councilman Smith’s fund raiser.

I’m going. And I will make a contribution. I feel obligated to do so. However, I will be changing my mind on a related issue.

What’s that?

I am not going to be going to the CDC this year for a continuation of the funding for my non-profit.

I fully understand. A clear conscious is not worth it.

Exactly!

 

Introduction.

An interesting phenomenon exists when a school board or city council member gets elected. There is a good chance that a large percentage of the things on their agenda being dealt with were put in motion by past councils and boards. Similarly, many of the decisions while they are in the capacity of an elected official will not come to fruition for years after they have completed their terms. Nor will the financial impact.

For example, it is possible that a bond election could occur under one city council, the issuance of bonds and groundbreaking occur under a subsequent council and the full cost have to be assumed by yet a third generation of council members. The first two periods of time often come in a celebrative atmosphere. Photo ops and brass plaques. The last period, raising funds to cover the costs, may not be such a happy time.

If I were on the third generation of council members or school board, I would have two questions for my colleagues: 1) why are we acting surprised? And 2) why should we apologize for stepping up to our responsibility to take care of what was put in motion before we came on board?

This is where the “just say no” mindset of the current generation of elected officials across the country and across the state is simply wrong-headed. And this is where the deferral option of balancing local budgets is so popular. Especially when it comes to employee compensation, pension funding and infrastructure maintenance & repair.

A Report Card.

This is why communities should prepare a report card on council and school board decisions. And that includes the sitting council today as well as the councils of years past – often for a decade or two. A budget is not truly balanced unless it is spending sufficient funds to keep up with the expenses occurring right now that might not have checks written until the future.

But let’s face it, that is not happening and is not likely to happen by the governing body itself. Often the race isn’t the election battle to get seated. With the clock ticking, how many things can a current elected body initiate knowing it will be a future council who has to figure out how to pay? Every professional manager knows that the single most effective way to balance a budget is to not start any program or project you can’t afford to fund now and in the future. Perhaps that is why so many things are approved with only a partial year’s costs shown.

A Multi-Year Financial Plan.

An honest MYFP produces some interesting revelations. A one-year budget can be and is often structurally imbalanced even through it appears to be balanced. Police cars with 100,000 miles on them can be pushed out at least one more year, perhaps. However, in a MYFP, you are faced with balancing the subsequent years, too. In the end, you can easily spot the gaps on the horizon. That is why the Tax Rate Equivalent (TRE) I wrote about is so important. You can’t raise taxes in advance – and may not even have to.

However, it is extremely valuable to know that a gap with a TRE of, say 3 to 5 cents can’t be ignored. A MYFP can give you a heads up on the challenge. The logical order of budget balancing steps are:

Improve Productivity.
Trim Expenditures.
Use Reserves.
Reduce Program Service Levels.
Eliminate Programs & Services.
Raise User Fees.
Raise Taxes.

There are a few other ways, but they are generally gimmicks and short-term fixes. Only five of those on the list really make a difference when balancing a budget. Trimming expenditures, like cutting travel expenses by 30%, really does not translate into sufficient moneys to balance a budget. Using reserves is a temporary solution.

If the last four are used, these can create huge negative reactions if discussed in the heat of the budget workshops. They require much discussion and planning steps to execute.

You will notice that the Deferral option is not shown on the balancing list even though it is the Number One annual budget choice, a bad choice. Even a deceitful choice. If you Defer to the following year, the impact starts to show up in a MYFP. You can replace 5 police cars a year, as needed, or 25-30 in a single year if you wait long enough and let your maintenance costs eat you alive.

The Look Back.

It is even possible to do this in reverse. I would not be an elected official for a million bucks, but the first thing I would do if I were is to go back at least five years to determine how the budget was balanced in those years. I would do this using my seven options above plus Deferrals and Non-Recurring Revenues like a big bump in sales taxes due to a positive audit adjustment that created a windfall.

What would I do with this historical information? I would put out a report card on the decisions of the past councils and boards that might be responsible for laying in my lap the obligation to balance the current year plus the past gaps pushed forward.

But there could be a good report card here. If I had been in office for a term or two and was leaving, I would want to do my own report card showing how my colleagues and I had taken care of business. Perhaps even established some reserves to recognize Depreciation.

The Political Report Card.

I believe in McKinney this is much more important report card than the budget since the resources have been rich for a number of years.

I’m interested in where the money went for the MEDC/MCDC $millions since inception. Who were the board members and their relationships to the recipients of those moneys? Who received money and then later became city council candidate contributors? Which council members built their political constituency by playing Santa Claus?

What were the bigger land deals and how were those decisions made? Why are there so many lawsuits involved? What are those about? Why were some council members so involved in some staff issues and terminations that their actions led to the FBI being called in?

There’s no political historian in McKinney. There needs to be one. Actually, there needs to be an independent team preparing report cards without a statute of limitations. LFM

 

From most accounts, Robbie Clark is a nice guy. In a 2007 local newspaper story, Mr. Clark is referred as “Mr. McKinney.” He was the star quarterback of the McKinney High School football team in the 1960s. A search of Mr. Clark’s service on the City of McKinney Boards and other community boards shows he is highly involved. I would say he qualifies as being part of the McKinney Good Ole Boy Network – or the Underground Government, as I call it.

You might recall my Rumors vs Fact blog a few days ago. I had heard rumors from more than one person that Robbie Clark goes a little overboard in representing his bank while he sits on the McKinney Economic Development Corporation. The rumor included pushing for the MEDC to give Mr. Clark’s friend or customer some extra consideration on a piece of property the MEDC was selling. So I did an Open Records Request. After three attempts I finally got the email MEDC Executive Director about which I was hearing. It is dated November 27,2013. I suggest you read carefully.

“I have been aware for over a year that Larry Crosby has put a group of investors together to purchase land in East McKinney. The Group started with the purchase of the Cotton Compress property. I understand they are trying to put property together to make significant investments in new construction projects in East McKinney. If at all possible, I would like to see us give them every consideration that we can for the purchase of the old Emerson Building. I know nothing of the other offers, when they came in, if the purchasers have the capacity to buy or what the intended uses are. I understand that it is difficult to run to board members for approval. I understand your intentions to talk to the Executive Committee, but this seems like an odd way of selling City owned property valued at over $3MM. Why would we not bring all three proposals along with the back up information on each proposal to the board for approval of one. I don’t think you want to take the risk yourself if there is political fall out over the selection process.

I apologize for being new to the process and don’t want to be a trouble maker or second guesser, but I think you can use your board to see that you are negotiating the swamp. I have always thought that reasonable business thinkers, given all the information, will tend to come to the same conclusions except when politics are involved.

Mr. Crosby has gone to considerable expense for a while to assemble property. I understand that he may be interested in buying some property in East McKinney along the railroad track that would significantly clean up a blighted area. I think this is someone we want to work with and will help us. Please let me know if you would like to discuss further. I am in Friday and will be available most of the day.

 Thanks,

Robbie”

The MEDC Executive Director responded that he was trying to keep politics completely out of the process and that all three prospects were “clients” of MEDC.

The Brush Off.

I contacted the Mayor and Interim City Manager (ICM) as was told they would check into this incident. A week or so later I was invited back to talk to the ICM. The response was exactly what a few people told me would happen, as if some of my colleagues had seen the script. Mr. Clark shouldn’t have done that, but he meant well as a representative of the City. His choice was not awarded the contract, so no harm was done. He probably just wasn’t thinking and wasn’t likely to do it again. I assumed somebody at the City had talked to him. In fact, the City Council at that point had already made the move to place the Money Boards (MEDC/MCDC) administrative oversight under the City Manager. I expressed my great disappointment with the response and left fairly quickly. I sensed a circling of the wagons going on.

The McKinney Way.

I sincerely believe Mr. Clark is a good man. I also believe he may have behaved not realizing he was doing something wrong. But then why would someone have that perspective? I feel fairly confident in saying Mr. Clark is a product of what he has seen being done over the years by others. That is exactly the way we humans rationalize and lower the bar on behavior. “Nothing I did or am doing is much worse than others have done before me.”  That is how a culture gets established. Left unchecked, the inevitable laxness settles in. The bar is lowered. McKinney has a ton of examples I will be writing about in the future.

So, What Should Happen?

I believe Mr. Clark should be removed from the MEDC Board by the City Council. They have removed another MEDC Board member at least once to my knowledge not due to a conflict, real or  perceived but for a potential conflict of interest. This is the real thing, concrete,  with Robbie Clark. If Mr. Clark was anything but a hometown football hero, this might have already been done.

Actually, I am calling on Robbie Clark himself to resign. It is the honorable thing to do. I am quite sure that this is not the first time he has used his influence, although it is hopefully the most flagrant. In my ORR emails I received from the City, I found it interesting that he lobbied the MEDC to look favorably toward his good bank client: Servergy. It may have been before he joined the MEDC Board, but there was another time when he recommended his good friend, the ex-CFO of Servergy, to be the Compliance Auditor for the MEDC to monitor contracts. All you have to do is Google “Servergy” to be reminded it is the company Ken Paxton is connected to and part of Mr. Paxton’s current indictment. And if you were to go to the offices of Servergy, you walk past the adjoining neighboring offices of the MEDC/MCDC.

The City Council should raise the standard and live by the highest standards of all. The two Money Boards (MEDC/MCDC) receive $10,000,000 each in sales taxes every single year.

Reversing The Culture.

In just one generation of elected City Council members, The McKinney Way could be reversed. They could do that by living within a high code of ethics, written or unwritten. They could convey a message that conflicts of interest, real or perceived, will not be tolerated. They would make it known to a board violator that they stepped over a line. The standards would be fully understood if the example exuded from every Council member themselves.

If there is one single achievement that would match the best of just about everything I’ve seen from recent City Councils, it would be this: Change the culture. This monumental act would survive them and mold the most honest future possible for the City of McKinney. I have many more examples to write about this week. LFM

 

 

Introduction.

“We don’t legally have to do that.” Gee, I hate that response. There are reasons we have laws that make us do something. Usually these reasons include an abuse of power, a lack of transparency or flat out deceitfulness. Oh, and worse of all, when we take choices away from the taxpayer or voter. There are many examples. A daily blog for each one would fill most of my calendar year. But let’s talk about one.

For many years, cities and counties were allowed to choose how the ballot was fashioned for a bond election. Let’s think this through. If I were a city council or staff member and had some controversial items I wanted to see passed, what could I do? The logical and most honest way to be fair with the taxpayers is to separate the choices on the ballot. Almost never are bond ballot items given the same weight. Streets and Drainage are often top priorities. And for a good reason. They are used by everybody daily and create a hardship when they fall into disrepair.

But how about a library? I would give it a high priority, but would you? A new city hall? We might be split more evenly on that one, although I personally would push hard for the important image of the building that houses the seat of government and the public forum. Many would disagree and be perfectly happy in an ugly two story bank building that you can stand in front of and possibly miss. If we went down the list, there would be certain items that we might really bicker over. Something big and expensive used infrequently might be tough to get passed.

So, would a city place 4-8 separate items on the ballot and let the voter choose? Or would the city council lump the controversial items with sure-thing items and put the voters in an All-or-None situation?

Ballot Bundling used to be legally possible for cities to do in Texas. But then laws got changed to force a city to allow the voters to see the choices, make the choices and for the city to live with the outcome. So, Streets & Drainage are separated from Parks & Recreation. And even Parks & Recreation might be split so the voter can decide. A Natatorium would surely be separated.

When you think about it, while now a law, most citizens and city officials they elect would think of it as the insult of the grandest order if they were placed in an All-or-None situation. In other words, abuse came first, then a law, and now it would be considered an egregious act to force a voter into a corner and demand a ransom.

Now Comes McKinney ISD.

MISD is days away from calling a $200+ million bond election. It contains an expensive $50+ million football stadium. The remainder has to do with classrooms and other facilities that, on the surface, sound logical and needed. If anyone has been preaching to take care of aging infrastructure longer than I have, please step forward.

Silly ole me made the assumption the football stadium would be a separate ballot item.

Then a colleague told me that MISD was going to bundle the stadium with the core infrastructure items. I quickly corrected them that it would be illegal for a ballot to be designed that way. I was then told school districts could get away Ballot Bundling. As I am prone to do, I checked with some professionals and got put in my place. ISDs can do this – legally – and MISD plans to do so in just a couple of days.

Intellectual Dishonesty.

I am stunned! While anticipating that the bastions in search of truth, our educational institutions, are going to pop the “it’s legal” over the net, I’m ready for slam it back. This is the egregious abuse of power and deceitfulness and voter extortion that got the cities in trouble years back. How is it that ISDs can get away with this nonsense? Better lobbyist?

Whoa, Baby! Now you have my full attention. But as I get into this deal, I get more alarmed. Most of the people in McKinney ISD had not heard of these plans for a football stadium until June 2015 when a huge sign appeared in a field at a prominent location just off the Sam Rayburn Tollway. It’s prime commercial property to me, but that’s another issue. In McKinney we have two zoning designations: 1) Residential and 2) Commercial About To Be Rezoned to Residential.

There were several news stories at the time, most of them quoting school officials saying the football stadium conversation was just getting started.

So I go to the property rolls and learn that there are three large parcels of land that make up the stadium site. Two were bought in September 2011 and one in 2015. Sounds to me that the conversation started some time ago. Then I find a high-level sketch of the site and a rough cost estimate by an architectural firm working for the ISD. They may be working on other things, but they have been paid $2.3 million with the first payments on August 22, 2014. By the time the sign had been planted in the field, MISD had spent $1.277 million on them. Okay, this is getting a little more irritating to me.

No Tax Rate Increase???

But there is a bigger issue here. I am hearing that the stadium can be built without raising the property taxes. Now this is both heartbreaking and maddening at the same time. I was part of the group who voted for a 13-cent tax rate increase in 2013. The proposition passed but my little circle of friends thought I was crazy. However, I did my own number crunching back then (of course I did!).

Fortunately, I wrote an email to a colleague back at that time explaining my logic. In the email I also indicated that, according to my analysis, the MISD was asking for 3-4 cents more than they needed. I was actually okay with that. In my mind, a huge increase means you better not come back to the taxpayer for quite some time.

I also gave weight to my decision when I watched the video of the school superintendent at that time talking about how the MISD had taken so many steps to cut here and there before having to ask for the voters to fill the gap left by the mean ole state legislators.

Fool me once, shame on you. Fool me twice, shame on me. Dang! We have made a quick recovery. Three years after needing 13-cents, MISD can miraculously build a $50+ football stadium without raising taxes. Somehow I don’t hear the ISD explaining the converse: if we don’t build a new football stadium, we can cut the taxes by …

So what do we have now? Apparently a $50+ million stadium that to my knowledge was presented at the outset as a Cadillac model. Did the MISD board get a chance to see Chevy alternative? And not only do we get sold the Cadillac, but it may be bundled with the HVAC to keep our “keeds” warm or cool or to keep the roof from leaking on their heads. Take it or leave it!

Is The MISD Board on Planet Earth?

I tried to go online to see what I could learn about the MISD Board meetings. I can find agendas, but no minutes although the button says there are minutes. I tried to watch a video of a meeting. I can only find two video and neither of them had the audio working. I tried to look at check registers, and they are in PDF format and listed in an order that must have come from a random number generator.

Does the Board ask questions or rubber stamp everything? Do any of them have any kind of business sense? I would like to know if any of them have even looked at the budget and audited financial statements? Or the check registers?

As an aside, nobody seems to have taught the MISD B0ard and Administration about timing and perception. Allen ISD’s football stadium has nothing to do with this MISD decision. Or does it? The entire world gasped at the cost of the Allen ISD stadium ($60 million for 18,000 seats) as well as the problems they had. The construction company fixed the problem, we read, and the AISD was not out more money.

However, the construction company is McKinney-based and has built almost every school building in McKinney over the years. Their school buildings seem to enjoy a great reputation. MISD has paid them $138,938,096 since FY 2008, the largest cash outflow other than personnel costs and wire transfers for bond payments. And that doesn’t mean they are even going to bid on this proposed stadium nor does it mean MISD would select them. However, add a perception issue to everything else, and you just have to ask yourself what is the MISD Board thinking?

Oh my, I get the sense that the MISD is another entity that labels themselves as transparent. If you are smart enough to dig through their information and ask a lot of questions. And I mean a ton of questions! LFM

Introduction

I get a lot of people telling me things here in McKinney. A few would not earn a high credibility award. But most would. However, even the most credible tip has to be treated as a rumor until I can get the facts. Most facts should be discoverable if accurate and complete minutes are taken in meetings of the City Council, Planning & Zoning and the two primary Money Boards – McKinney Economic Development Corporation (MEDC) and McKinney Community Development Corporation (MCDC).

If the meetings are videotaped, those recordings help considerably. Even a complete transcript of a meeting is missing something if you can’t see the body language and hear the tone of voice. I once wrote my city council that a particular item they were discussing the night before was revealing. The words coming out of their mouths did not match the expressions on their faces. They were tiptoeing around a subject matter and were trying too hard to say one thing without meaning another. Plus, they were being recorded, which has its good and bad aspects.

Once in an email I called out a particular council member known for his support of a particular developer. He was lazily sitting there assuming a vote for the developer was going his way. Then there were some deep questions and some tones that indicated uncertainty of the merit of the rezoning request by one, then two, then three council members. All of a sudden he sat up straight, scooted closer to the microphone and tried to formulate his thoughts to steer the discussion back for the developer. An exact transcript would have missed the comical body language.

The Weight Given To Rumors

There are times when different weights should be given to rumors. I often hear a “rumor” (my initial classification) from two or more credible sources, often over a period of a few months. Their comments seem independent, and I don’t suspect they are repeating each other’s or a third party’s rumor. I am likely to give a lot of weight to this kind of information even though I need more verification before calling it a fact.

An example is a “rumor” I heard from at least three credible people that the City’s responses to Open Records Requests (ORR) were being filtered by someone. That’s pretty serious and even gets into the realm of tampering with official government documents to my way of thinking. The weight I was giving to that “rumor” jumped 10x when I made one ORR asking for a document I heard existed. It was about an inappropriate urging from an MEDC Board Member to consider selling a piece of property to one of his bank clients. My ORR included a date range. I received about 300 pages of email copies, but the ORR response did not have what I was looking to find. So I asked again if the City was sure about their search. Then I got another 90 pages of emails. Still not there. Finally, I asked my source for the specific date and subject line and amended my ORR. Surprise! I got it. So then I asked the City for the query code for all three searches. I could not see where the first search query did not find the document.

To this day, I want to think the City was honest in its efforts even though they fell on their sword saying they could not explain the missed search. But do you see how one can start giving weight to “rumors” from multiple, credible people when you place a rumor in the context of an actual personal experience?

Perception.

I will be talking a lot about the importance of perception in my blogs. In many professions, we learn as students and then into practice that perception is given the same weight as fact. In public service, perception may even be greater than reality. I will be so bold as to say it doesn’t matter if you are fair and independent if you are not perceived as being so. What do we do about this dilemma? Mainly, we go out of your way to be both fair and independent AND to be perceived as fair and independent.

I mention this now even though my topic is about rumors and facts. These topics are intertwined with related subjects such as perception, ethics, transparency, intellectual honesty and a host of other words that define us as individual and organizations.

Tolerance & Passive Approval

You might be asking yourself why I haven’t taken my concerns to city officials. I have. I have met with the Mayor and Interim City Manager on numerous occasions to discuss many of these topics about which I am writing. I did not like the responses. Many of the responses were excuses for the bad behavior of others. Some were that procedures are now in place to prevent something from happening again. Those are appreciated. Some responses were agreements that things need changed or that they were being addressed privately. I hope so.

But I wonder. The McKinney culture is to be tolerant. At least until faced with a complaint. Some tolerance is expected and necessary. Yet tolerance often ends up setting a low standard. It is always easy to reach a low bar. Tolerance and even non-confrontational demeanor often translate into passive approval. Over time, nobody even knows they are doing something questionable.

The Need for Standard Setters

We are a few short months away from getting a new city manager in McKinney. We are about a year away from getting a new mayor and more new council members. We need some new standard setters. We need leaders who will call out bad behavior and communicate a lack of tolerance for anything less than the highest ethical standards. If leaders lead and set standards, then a code of conduct or a code of ethics in written form is unnecessary. It should exude from the leaders. It should be in their DNA.

It starts with the Mayor. We need a mayor who will not place being friends with everybody ahead of being a leader. I have told both the Mayor and Interim City Manager that I am offended that I’ve got to be the one to spend my time digging into rumors to prove they are facts already known – or should already be known by them. We have some smart people here in McKinney, citizens and those on the Council, Boards and Commissions. I simply don’t understand why they aren’t motivated to change the culture, to raise the standards AND to confront the issues that allow true transparency to thrive? LFM