Ignoring the Elephant in COSA-DC’s Board Room

SAN ANGELO, TX — During the most recent meeting of the City Council, the City of San Angelo Economic Development Corporation (COSA-DC) attempted to revise its bylaws. The central focus of the revisions was to remove from city staff purview the act of hiring the director of economic development, the executive leader of COSA-DC.

That position has been vacant since July 2022 and the City has engaged a headhunter to find a new one. Effectively, by reading the bylaw revision, the COSA-DC board of volunteer directors appointed by the City Council wanted to be the hiring party for the new director, not the city manager. In the ensuing discussion, the board denied it was attempting to remove the city manager from the hiring process. Rather, the board wanted to insure it had a say in choosing the director, which is the case now, as currently allowed by the city manager.

Mayor Brenda Gunter panned the bylaw revisions and convinced the majority of the council to send the revisions back to COSA-DC as denied.

The current COSA-DC board has been on a tear for the past nine months to make itself more independent from the City of San Angelo. Led by COSA-DC Vice Chairman John Bariou, some on COSA-DC want to move away from City Hall control and they claim Texas Statutes support this.

Not stressed in the discussions of COSA-DC independence is the current contract the development corporation has with the City called the City Services Agreement. This is the elephant in the room. A thumbnail of that agreement is that the City provides the management and financing of COSA-DC's $414,000 annual payroll for an annual payment of $724,000 from COSA-DC. The previous COSA-DC director alleged that the City was using this agreement to skim money from the half-cent sales tax revenue to pay for higher salaries of top City staffers. The City, through Assistant City Manager and current interim director of COSA-DC Michael Dane, argues that the extra $310,000 that COSA-DC pays the City is for other services such as legal, public relations, and finance. Dane has a spreadsheet to justify the extra money over and above the payroll expenses.

Justified expenses on a spreadsheet or not, some on the COSA-DC board want the option or opportunity to find another entity to provide payroll services and have the person in the executive director position not be a member of City staff as it is today. The bylaws changes also asked that the COSA-DC board have the ability to appoint its own treasurer and secretary, two other positions now filled by city staffers.

COSA-DC so far has been beating around the bush, ignoring the elephant in the room. Such as it was with the request to Council to update its bylaws.

Meanwhile, the search for a new director has been fruitless so far. Dane told the board today that the recruiter was recently in the city and toured the airport and industrial park.

“It’s a question of attracting the right people, and trying to match them (to us).”

COSA-DC Board President Max Puello asked when the board will see applicants. Dane said the recruiter needs about 30 days from today.

The COSA-DC oversees approximately $11 million annually that is collected via the half-cent sales tax. When the current half-cent sales tax carve out was approved, it was sold to the voters that 72 percent of the revenue would be dedicated to water source procurement, such as how half-cent tax revenue is used to finance the Hickory water well fields, pipelines, and water treatment. What remains is about $2.9 million. Of that, $262,500 is paid to the San Angelo Chamber of Commerce for business recruiting efforts. After paying the Chamber, the City Services Agreement, and other expenses, the board has about $1.6 million annually to fund new economic development projects as they arise.

For example, today the board approved spending $90,000 on a study to find out if the City of San Angelo can re-start the small non-potable water plant located on the airport grounds. The CBP aviation and the Angelo State University flying school, both at the airport, need better water pressure to power each's respective fire suppression systems and the city water distribution system may be inadequate to provide adequate water pressure for fire suppression during peak water usage times citywide.

COSA-DC will likely have plenty of money for projects like the above this year. At the board meeting today, City Finance Director Tina Dierschke reported that sales tax revenue collection for the year is up nearly 10 percent over last fiscal year as indicated in the first quarter returns (Oct - Dec 2022).