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Plans for chemical plant raised questions about KEDC power

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Chemical plant

A sandbox used during the groundbreaking ceremony for the MGC Pure Chemicals America plant sits at the plant’s site location in the 4500 block of Roy J. Smith Drive in Killeen, located in the Killeen Business Park, Thursday, Sept. 21, 2017.

A chemical plant’s planned entry in Killeen was a surprise to those who weren’t within the Killeen Economic Development Corporation’s tight information loop.

That was on purpose; the deal with MGC Pure Chemicals America was competitive, business leaders said.

Business negotiations aside, residents and some Killeen City Council members have said there should have been a hint it was a chemical plant. “We should have known,” said Killeen Councilwoman Shirley Fleming in a Herald interview Sept. 27.

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Shirley Fleming

Shirley Fleming

More than 100 residents attended a public forum Sept. 28 at the Killeen Community Center. Some were in disbelief; others appeared annoyed. Most of those who spoke wanted to know how the process to bring the plant began and why it wasn’t communicated. They were worried about safety.

Councilman Steve Harris, a forum organizer along with Fleming, made it a point in the Herald interview to call out the KEDC’s failure to inform the whole council of its business.

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Steve Harris

Steve Harris

“We don’t know what’s going on with that, and that’s the thing,” Harris said. “That’s not good.”

Fleming said the KEDC has too much power.

Although some EDCs use sales tax, the Killeen EDC is a type of nonprofit corporation that uses property tax, specifically, up to 2 cents of the city’s net property tax collections, for economic development. This amounts to 2 cents for every 74.98 cents per $100 of taxable value.

The economic development corporation lures interest with incentives and funds for projects. For example, MGC’s decision to come to Killeen was based on access to a quality workforce, proximity to an interstate and incentives provided by the EDC, including payment for job creation, reimbursement for infrastructure costs, payment of closing and subdividing costs, and reimbursement of 50 percent of real property tax payments, according to an August news release.

KEDC today continues a practice that began 27 years ago, when voters approved a board of nine. Three members of the City Council, three of the Greater Killeen Chamber of Commerce and three of the Killeen Industrial Foundation direct KEDC business. Mayor Jose Segarra, Councilwoman Debbie Nash-King and Councilman Juan Rivera represent the city on the Killeen EDC board.

Should the KEDC ever be dissolved, money and property would be returned to the city after claims and debts are paid, according to the articles of incorporation.

EDC funding is established yearly during the city budget process; the contract is evaluated every two years.

Tax documents from the Oct. 1, 2015, to Sept. 30, 2016, reporting period show the KEDC owns land and buildings with a combined total value of more than $5 million, has a total revenue of $1.7 million and net assets worth $10.7 million. The KEDC counts among revenue, rental income from tenants within the Killeen Business Park, which is on land the EDC owns.

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MGC Pure Chemicals America - MAP

The Killeen Business Park is in east Killeen, and will soon be the home of a new chemical plant, creating nearly 30 jobs with an average salary of about $66,000 per year.

That’s also where Japan-based MGC will build the chemical plant. The plant will produce super-pure hydrogen peroxide, a cleaning chemical used in the semiconductor industry.

“We have an industrial park that’s zoned for manufacturing,” said John Crutchfield, KEDC executive director.

“It is adjacent to the rail. It is one of the only pieces of property in Killeen, from Harker Heights west, adjacent to rail.”

Crutchfield told the crowd at the forum Sept. 28 there weren’t other places in the city that met that requirement, which he said is a common need for companies interested in relocating here.

“We get requests all the time. ... The reality is we don’t have any outside the industrial park. That’s why it’s there. We control that, KEDC owns it, and so that’s the viable site,” he said.

The chemical plant will initially occupy 12.4 acres at the business park, will bring 28 jobs over the next five years, and is expected to begin production in 2019, according to a news release.

The Killeen EDC made that possible.

Total KEDC expenses during the 2015-2016 reporting period were $1.43 million, bringing what was essentially profit to about $285,000. That’s a positive swing of more than three-quarters of a million dollars over the previous year when revenue less expenses were in the red by $549,216.

The City Council in September 2016 voted 5-2 to cut EDC and chamber funding by half. In fiscal years 2017 and 2018, $386,354 goes to the EDC and $338,700 to the chamber, according to city spokeswoman Hilary Shine. Funding is pulled from the water-sewer fund, which is paid into by ratepayers, and the general fund.

Councilman Harris on Sept. 27 hinted he’d like to change the KEDC arrangement to make transparency a priority. Its contract with the city will be up for discussion sometime next year.

“If we give you this amount of money to help fund you, but then you turn around and say we don’t have to tell you anything, ... that’s like the marketing department saying, ‘just leave it to us, don’t worry about it, whatever happens, happens and we’ll just tell you when it’s done,’” he said.

Neither Fleming nor Harris is on the Killeen EDC board, and certain state protections exist to shield business dealings from public view to protect transactions deemed competitive.

In addition to Crutchfield’s position at the EDC, he is the chamber president/CEO and executive director of the Killeen Industrial Foundation.

asierra@kdhnews.com | 254-501-7463

(1) comment

Alvin

This is the personal opinion of this writer.

Copy: 'Although some EDCs use sales tax, the Killeen EDC is a type of nonprofit corporation that uses property tax, specifically, up to 2 cents of the city’s net property tax collections, for economic development. This amounts to 2 cents for every 74.98 cents per $100 of taxable value.'

Continuation of copy: 'Tax documents from the Oct. 1, 2015, to Sept. 30, 2016, reporting period show the KEDC owns land and buildings with a combined total value of more than $5 million, has a total revenue of $1.7 million and net assets worth $10.7 million. The KEDC counts among revenue, rental income from tenants within the Killeen Business Park, which is on land the EDC owns.' End of copy.

I guess, in my personal opinion, the question of: 'How does a non profit organization which collects from the city annually, monies from the city itself, collects rents on land buildings and any other apertures with it's property holdings, has a value of more than $5 million dollars, owns land and buildings, has a total revenue of $1.7 million with net assets worth $10.7 million even exist???? First: How does a non profit organization even qualify if they have land values, have rental property, that collects hundreds of thousands each and every year from the citizens of this city, and operates in such a monopolistic attitude even exist???? Where is the 'non profit' aspect if they own 'assets worth $10.7 million which they collect rent on, and are provided funding each and every year by this city???? This, in essence, does not sit well with this writer and so should it grate on the shoulders of each and every citizen of Killeen.

Copy: 'More than 100 residents attended a public forum Sept. 28 at the Killeen Community Center. Some were in disbelief; others appeared annoyed. Most of those who spoke wanted to know how the process to bring the plant began and why it wasn’t communicated. They were worried about safety.'

Continuation of copy: 'Councilman Steve Harris, a forum organizer along with Fleming, made it a point in the Herald interview to call out the KEDC’s failure to inform the whole council of its business.
“We don’t know what’s going on with that, and that’s the thing,” Harris said. “That’s not good.” End of copy.

No I agree, this is, in my personal opinion, this is not good to have a business venture that is supported by the city, but not open and above board and that is ran by a select few to whom they are not obligated to the city from whence they derive their power. They should not have the position that 'this is a secret organization from whence they are immune'.

This city is supposed to be ran by the city council and the city manager. But is it???? When you have an organization that derives it's power from a city council/city manager, but is controlled by a 'select few' who have that power from within, well I go back to say 'that this is a city whose power revolves around the select few, monopolistic in nature', and goes around the charter concept of being a city council/city manager concept and this should not be.

In essence, there should not be an organization that is formed by the intrusion of city council members, City Chamber members, Killeen Industrial Foundation members, and Killeen Chamber of Commerce. It is my opinion that the city council should not have any membership in such a discombobulated as this one is. It not only says it is a non profit organization, collects monies from this city, is and has shown itself to be an organization that has sat itself up as being independent from the city council itself as demonstrated by the non productive nature of operating independently from the city council, and has the 'power to operate as a single entity that can operate within the confines of this city', all through the good offices of the mayor and select city council members. This should not be.

Copy: 'Should the KEDC ever be dissolved, money and property would be returned to the city after claims and debts are paid, according to the articles of incorporation.' End of copy.

First, I am of the personal opinion that they should invoke the 'articles of dis-incorporation', It should be completely and thoroughly found to be 'not in the best interest of this city'. All of the 'property's' should be returned to this city. This alone would save this city all of the proceeds that are derived from the rental structure plus save this city, annually, the monies that it pays out for the operation of the KEDC itself, the sum of 2 cents for every 74.98 cents per $100 of taxable value.

This operation should be just what it states, 'a non profit organization' which is operated by a staff that is wholly transparent to this city, and not one in which the operation is by any member of the city council. With this arrangement, the city should be profiting from the lands it controls and should be controlled within the confines of the cit council itself that has no interest in ownership whatsoever, and it should totally controlled within the city council. And again, the proceeds of this organization should be 'totally transparent' with open books that are open to the public. As this is a city entity the nature of this operation should be completely and totally 'open to the general public at all times'.

As this is a very contested operation, this should be voted on in a general ballot. Let the citizens be allowed to vote on this matter and until the vote, everything should be 'placed on hold' with all present and future matters pertaining to the 'on-going operations'. Put a stop to the proceedings, such as the placement of 'stop work' on the future of the chemical plant as 'in the best interest of this city'.


This has been the personal opinion of this writer and nothing shall be used, in context or without or changed in any way without first notifying, and receiving explicit approval from this writer.
One of the 4.58 % who voted.

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