Standing firm as a testament to the ability of local economic development experts to judge actual demand for something (as oppose to, say, expressed interest or significant support), Midland Development Corporation brain child project Entrada Business Park Building 'A' stands as empty now as when it first became available....four years ago today.....without a single occupant or buyer having been found to-date.

Someone refresh my memory here. Didn't they almost build a second one also?

It seems like I have heard something recently involving Chrysler and taxpayer assistance...although I am sure I don't what it was.

Now, while the author of this letter apparently has no problem with even serial government bailouts, the fact of the matter is that most Midland voters probably do. And anyway, these are not bailouts, right? Or even subsidies. They are forgivable loans. Forgivable loans with hard-wired, iron-clad, taxpayer-protecting, "Clawback Provisions" that sometimes make the more traditional loan agreements with professional private lenders look tame by comparison. In fact, in many of these agreements the Shilocks at the MDC/City are even harder on the "Lendee" than would be any private sector lender. I know this because I read it in the paper:

Ten years later, reality has asserted itself. Currently, several of the MDC's "clients" are attempting to renegotiate their agreements; presumably to make them less stringent, not more. We shall soon see what the actual level of enforcement on these agreements is going to be. It is a tough one. On the one hand, these companies are probably hurting. On the other, we certainly don't want to be written down as patsies to future "incentees". Well, as much as one can have an economic development fund at all and not be seen as a patsy, anyway.

We have asked these questions (and others) before, but the opportunity presents itself again:

• Philosophically, what is the difference between the MDC taking money from the taxpayers and giving it to [Insert MDC Client Name Here] and the Obama administration taking money from the taxpayers and giving it to Chrysler or GM?
• Should the MDC/City Council decide not to actually enforce these contracts (or should they renegotiate them down) isn't that the exact same thing as a taxpayer bailout?

An interesting paragraph from above:

"The economic development agreement is sometimes more stringent than normal business agreements because public funds are involved, and the city has an interest in seeing that these dollars are protected and not wasted."

Really? Then given an actual choice, why would any company choose the more stringent agreement? They wouldn't ever.....unless they were betting that the provisions in the agreement, however stringently written, won't be enforced.

The dice are rolling on that as we speak.

And, yes, everything that is happening nationally applies here. Directly. Every reason there is on why the Obama Administration and the U.S. Congress shouldn't try to direct an economy at the national level applies in every way to the Midland Development Corporation and the City Council at the local level.

• Part I: If we don't pass this tax, then the Terrorists will have won!


• Part II: This economic development stuff is easy!


• Part III: We will use this money to diversify the economy. Except when we don't.


• Part IV: Government bailouts? No problem!


• Part V: Naysayers! They have no vision!"


• Part VI: That Free Market thing? That's like sooooo Reagan. We're smarter than that now.

In the archives are many, many letters just like this one. Too many to count. All with the same drumbeat: Midland is too tied to an oil-based economy and we need this money from the taxpayer so that we can go out and recruit businesses for Midland who are not part of the oil-based economy. That way we are protected from the downside of business cycles that inevitably come and go.

Actually, it goes a much further than that. The business cycles are usually a result of the market demand (and therefore price) of oil. When the price of oil is high, Midland thrives. When the price of oil is low, Midland suffers a bit. But these cycles are just that. Cycles.

There were also many letters like this one:

One of the biggest arguments offered by the campaign for an Economic Development Sales Tax and its supporters was not simply that we needed to protect ourselves from these business cycles but that the oil reserves on which our economy was based were simply going away. The author of one letter compared Midland to a mining town and stated that he was not aware of a town based solely on mining that survived.

But over the life of the MDC, it has given a lot of money away to companies that 1) are already here, 2) are already coming here without any MDC-driven public subsidies, 3) operate in the oil-based economy, 4) are currently in default (or about to be) on the terms of their agreement with the MDC, or 5) are all of the above. (In fact, here is a challenge: List the companies that the MDC has "incented" that don't fit into one of the above categories.)

Every dollar that the Midland Development Corporation extracts from the economy and turns over to these companies in the oil business like Basic Energy and now the global multi-billion dollar Apache Corporation reveals fully half of the reasoning behind the need for an ED sales tax to be an outright falsehood. I'd call it an outright lie but for the fact that it is a Sunday morning so I feel the need to be more civil. And also because, at the time, the authors of these letters probably really believed what they wrote about what the purpose of this tax money was and how it was to be used.

We have said before that the local economic development establishment behaves and operates as though economic development is whatever the hell they say it is on any given day. Ten years ago the oil patch was going away. Apache Corporation quite apparently disagrees and has decided (with zero artificial incentives needed) to set up a regional office here to handle the acquisitions they have made in the area over the past several years. Still, the local development corporation finds it necessary to hand over a quarter of a million dollars of public money to Apache Corporation to....to do what, exactly? Just spend it locally somewhere?

That kind of sounds like...um..."Stimulus Money"...if you know what I mean.

Go back and read the campaign literature...or wait for it to show up here. It doesn't take much reading to realize that the Midland Development Corporation, along with the City Council, has essentially re-purposed the money that they asked the public for back on November 6, 2001. Yes, I know that "The Law" allows the MDC to spend the money on these things, just as the law allows a panhandler on the street to buy a bottle of vodka with the money he asked you for just so he could get a hot meal.

I would like to think that there is at least one member of the City Council...or even more than one member who would take an honest look at the money that has been taken out of the economy in the last ten years and, taking into consideration the original claims of what the money was for and to whom it would go, and then compare that to what is obviously now a manifest change in philosophy (not to mention the spectacular lack of any success) and then wonder if, just perhaps, the voters should be consulted again.

But then, that's just crazy talk. Because what has happened to this money is what happens to almost all government-run "Investment in our Future!" programs. At the beginning, it was money that was to be used for a specific purpose from which specific results would be achieved.

Ten years on, the money has been re-purposed; there are no discernable results, and what was once asked for from the public is now seen as an entitlement by local public officials both elected and unelected. Among the incenteratti, immediately upon the failure of Plan A there will always be a Plan B (or C or D...), or the need for "improved communications", or the hiring of more consultants to point out Airpark on a map and call it an "Opportunity Zone" or some damned thing to justify the money they take and to help explain away their lack of (positive) impact.

The idea that this money is better left in the hands of the taxpayers never survives. Because, you see, in the eyes of Official Midland, it's their money now. Not yours.

• Part I: If we don't pass this tax, then the Terrorists will have won!
• Part II: This economic development stuff is easy!
• Part III: We will use this money to diversify the economy. Except when we don't.
• Part IV: Government bailouts? No problem!
• Part V: Naysayers! They have no vision!"
• Part VI: That Free Market thing? That's like sooooo Reagan. We're smarter than that now.

Actually, they were against it before they were for it before they were against it again.

A quote from today's MyWestTexas.com article reporting on the City Council's discussion about "sunsetting" various boards and organizations...including the non-performing Midland Development Corporation:

Referring to the elections since 1999 in which the 4A and 4B boards were established, Councilman John James said, "The citizens have already made that decision."

There are two things that Councilman James knows for certain that make this statement really stand out. The first is that the ED Sales tax was voted down at least once (twice?) before it passed in 1999. I guess in those elections the voters didn't decide anything. They just got it wrong. Only when the voters agreed with Mr. James was the issue considered decided.

The second, in all fairness, Mr. James doesn't know for sure...but most everyone else does: If an election were held today to renew the ED Sales Tax it would go down. Big.

That is why all of the talk you will hear about trying to discern the will of the people is just that. Talk. The City Council will never in a million years unilaterally place a "sunset" proposal for the ED Sales Tax/MDC on the ballot. They know what would happen.

Them darn voters would get it wrong again.

From the comments here, a good question regarding those "publicly available" parking spaces at Permian Place that were paid for with taxpayer money (paraphrasing):

When the City Council members voted to approve the $2,000,000 public subsidy towards the development of Permian Place did they know that those 75 parking spaces that were to be "made available to the public" would actually only be available to the public after 5PM and on weekends?

(Yeah, I know it is a reach, but I just felt like typing out "Third Party Non-Tenantgate" just to see how clumsy it actually was.)

From Newsroom Stew:

The point here is to say that at some point the MDC needs to tell us in their words why those who write for Jessica's Well are wrong (if they are wrong). For a while now, Jessica's Well has been the most prominent voice talking about economic development, specifically the MDC. And while the development corporation has spent hundreds of thousands of dollars on marketing, it is hard to hear their responses. They might say why do we need to respond to these people?

One reason that they could respond is because while we may be bloggers we are also actual taxpayers.

A point of clarification: Walsingham actually does live in his Mom's basement.

Question: What is an "incentive" for a company other than an opportunity to reduce its risk in any given venture?

And if there is any sort of meaningful "clawback" provision contained in an agreement with the MDC, how can there then be reduced risk for the "incentee" company?

And doesn't it then follow that the only way a company can look at any agreement with the MDC that contains a "clawback" clause as an actual reduction of their risk is if that company believes that the clawback provision won't actually be enforced if push comes to shove?

I guess we are about to see how seriously the MDC and the City Council take these Clawback provisions that have been trumpeted as having been set in place to protect the taxpayer's interest.

Or if these companies have guessed correctly on how willing the MDC and the City Council are to actually enforce the contracts.

If we are to believe MDC Board member Robert Rendall (and we very much should, I fear), the Midland Development Corporation has provided a low cost (zero interest, actually) loan to a company (several companies maybe) who either wouldn't warrant traditional bank lending (or at least didn't pursue it) and now said company would probably fail should it be required to make good on the terms of it's "loan" leaving the taxpayers to foot the loss.

Gee, that's sound kind of familiar.......

Save in terms of size and scope, is there a whit of difference between the operational philosophy of the MDC in this case and that of Fannie Mae?

Earlier/Related: "So...those so-called "Clawback" provisions are really pretty worthless then, huh?".

From MyWesttexas.com's article on yesterday's Council meeting:

[Midland Development Corporation Board member Robert] Rendall came to the podium and said the company might fail if the council required it to pay back the money. "We are really encouraging them to try to make it," he said.

So the money that Trace was to pay back to the taxpayers of Midland should this venture not work out as was planned can't be paid back because...well..um...this venture hasn't worked out as was planned.

Yes, I know that in some cases that money has in fact been "clawed back" from some companies who did not make good on their employment numbers. But judging from the published council agenda regarding several ongoing MDC agreements the only clawing back of anything is being done by these rent-seeking companies trying to reduce their commitment to "create" jobs.

But the question still remains of these "claw-back" provisions: If these companies have the wherewithal to return these taxpayer funded subsidies after the projects that were funded turn out to be non-performing then why do they need the subsidy in the first place? In short, if they have the money to be "clawed-back" on the back end of a failure, why don't they use that money to self-finance up front? Answer: Because it isn't about financing, it is about free money for the favored.

And although we have asked these questions many times before, back when economic mistakes in one area can be papered over by economic growth in others, I shall ask them again in the hope that our finding ourselves in the midst of a real recession and ham-fisted Obamaian attempts at "re-forming" this country's economy will provide a bit more focus and clarity.

1. Does the Federal, State, or local government have any business provding these kinds of subsidies to privately held firms?
2. Philosophically, what is the difference between the MDC taking money from the taxpayers and giving it to Trace Engines and the Obama administration taking money from the taxpayers and giving it to General Motors?
3. Should the MDC/City Council decide not to actually enforce these contracts (or should they renegotiate them down) isn't that the exact same thing as a taxpayer bailout?
4. Can six political appointees actually ever at once:
   • Be knowledgeable enough about each specfic company's operations and product line as to ascertain the viability of it's business model, and
   • Possess adequate knowledge of the sometimes world-wide industries that these subsidy-seeking companies compete in in order to make any sort of educated guess as to their long-term viability in the marketplace?
   • At least use Google every now and again?
5. Given that the whole philosophy of development corporations is to force the flow of capital into areas that the free market has already decided against funding, how is the Midland Development Corporation's/City Council's arbitrary decisions on which companies are to be subsized and which companies are not anything but a corruption of the marketplace? Even if they get one right?
6. How soon will it be before the MDC moves from referring to "jobs created" to "jobs saved"?

The article mentions that one of the members of the City Council is an investor in one of the companies in the MDC troughdom. He will probably recuse himself from any vote on the proposed renegotiations.

Although, he could always vote against a renegotiation and to actually enforce the current agreement. Such a move would have the twin virtues of being a blow struck on behalf of true free enterprise and one that would also match up with his campaign literature.

But serial claims of fiscal conservativism and a faith in the free market notwithstanding, the "dead hand" of government intervention in the marketplace always seems to mean other people in some other governmental body somewhere else.

They spend. We invest!

(Hat tip to Ospurt for doing yeoman's work on this stuff.)

Here's the link you won't find on the Midland Development Corporation Website!

The entire Midland and Odessa Business Focus from the February 2010 Spirit Magazine.

Here's the link to the Spirit Mag Advertising Rate Card. The card rate for a full page 4-color process ad for one month is $37,600. I'm sure there is a "Business Focus" discount since there are multiple advertisers, but you have to add back the cost of preparing the copy.

Feel free to speculate about the total price in the comments.

Tax Abatements and other Economic Development "tools" used by states, cities and counties have been a favorite topic here at Jessica's Well. We have been told over and over and over again that these "tools" are necessary to create or retain jobs.

Basically, we are led to believe that "incentive" payments offset some of the risk of locating in a community, or that the "incentive" is the "final push to get over the hump." Then deals are struck, everybody smiles, money changes hands, people are hired, and those incentives go straight to the bottom line of the recipient company. Nobody has really worried about the clawbacks, that was until the nation entered into this pitiful economy of the last year and local budgets started shrinking.

According to this AP Story on MSN, things are changing:

As the economy sputters along, municipalities struggling to fix roads, fund schools and pay bills increasingly are rescinding tax abatements to companies that don't hire enough workers, that lay them off or that close up shop. At the same time, they're sharpening new incentive deals, leaving no doubt what is expected of companies and what will happen if they don't deliver.

Even in Texas, where the economic climate is better than many other parts of the Country, the State is getting tough:

In Texas, where companies can get money from the Texas Enterprise Fund if they promise to create a specific number of jobs, the number of clawbacks rose to nine in 2008, compared to a total of seven for the previous three years combined, the governor's office said.

You know the City of Midland is looking at a shortfall this year (look at the sales tax numbers), I wonder if they are having the MDC do the due diligence on all their employment deals, or if they have looked into to the status of their own deal with Cingular? Looking at the parking lot I'm not so sure there are 562.5 full time employees out there.

UPDATE: The MSN Story borrows heavily from a blog posting on December 15 over at clawback.org. In looking at their link regarding the Texas Clawbacks, as of October 31, 2009, TRACE Engines has received $250,000 of a $465,000 grant, and has repaid the State of Texas $17,930 in clawbacks. The MDC just amended the financing agreement.

Last Month I asked the simple question, how's the Cingular deal working out?

In that article I cited the Midland Development Corporation listing of major employers and the City of Midland 2008 Comprehensive Annual Financial Report as my source for the 600 employee level at the Cingular (AT&T) call center.

600 is an interesting number of employees, because according to Paragraph XXXIV of the Tax Abatement Contract (1.3MB PDF), Cingular (now AT&T) agreed to employ 750 full time employees in the Midland Call Center starting on April 1, 2003 through the end of the contract in 2011.

Based on the "Spirit" of the contract, if Cingular only has 600 employees working at the facility, they have essentially violated the "deal" sold to the City and the Taxpayers of Midland. However, according to Paragraph X, "Default: Recapture of Tax Revenue", Cingular actually isn't in default unless their employment drops to below 75% of the contracted amount, or 562.5 employees. (Lucky them)

Under Section XXI of the Abatement Contract, Cingular (AT&T) is required to make an annual written reports which certifies their compliance with the terms of the abatement agreement each June 1.

I wonder what the employment level was in that report last month?

Exit Question: Given Cingular has laid off workers to a level below their promise to the City (but above breach of contract), do you think Cingular is going to be around once the abatement expires, or the value of the abatement is worth less than closing the facility?

First off, I want to thank the Midland Development Corporation for finally posting their approved meeting minutes on their website. Progress is progress, and it deserves to be acknowledged.

Now to the title of this entry, which comes from the Approved April 24, 2009 Minutes of the MDC:

Mr. Hatley stated that Lockheed Martin has contacted Mr. Easterly to bring a C5 Galaxy, the largest airplane in the fleet, to Midland International Airport where it will conduct a three-year retrofit on the plane. Lockheed selected MIA due to the fact that the runway and ramp can handle a plane of its size and weight.

All the quotes in the media about the AMI hangar, going to the MRO conference, and ambiguous references to the size of planes our runways and ramps can handle don't quite measure up to the specifics reported in the MDC minutes. The way the minutes read, it seems like a done deal.

If the C5 retrofit is a reality, I'm glad to see all that FAA grant money, local airport bonds and PFC charges are contributing to the marketability of our local airport. For me the jury is still out on how effective the MDC was in this deal, seems Lockheed Martin called up and said, we need a place to park a plane and work on it and your site meets our requirements.

I wonder if they even asked for ED money?

For Walsingham:

No need to send out a seach party. Lost LiveMidlandTexas.com blogger, Ben, showed up in the MRT today.

No word if he plans to return to blogging after a 7 month hiatus.

1) There apparently exists a proposed budget for the entirely tax supported MDC that will be submitted to the City Council for approval.

2) There is almost certainly a budget for MOTRAN also.

3) The last three "Annual Reports" available for download from the MDC's web site contain no formal information (income statements and balance sheets) concerning the finances of the MDC.

The MDC has spent a lot of money on it's web site and even more on consultants recommending transparency and improved communications. City Council members promised over a year ago that communication and transparency needed to be and would be improved.

A good start would be for the MDC to make available on their web site for viewing by their investors a complete set of financial statements dating back to its creation. Not summaries, but true and complete statements. The kind that investors would expect in any other "investment".

This is not asking a lot of the MDC staff. This is not information that needs to be gathered or tabulated. These detailed financial statements already exist and can be converted into a downloadable format and posted on the MDC's website within an hour or less.

Certainly in less time than it takes to cross post a comment on every blog in town.

Is there any reason that this cannot or should not be done? If there are, I would like to hear them.

I wish that people would take advantage of our open meetings to participate and take their information from. During this recent meeting, there was not even press present. We had a presentation to show that would have addressed so much of the questions that are floating around, and yet there was no one outside the City representatives, MDC board, and MDC employess there to see it. In the same way that you want your questions answered, I have to ask, why is it my responsibility to com[e] to questioning blogs when no one comes to our meetings?

The quote which titles this post comes from §552.001 of the Texas Government Code, AKA the Texas Public Information Act, and is presented in a prominent box on the Comptroller's Texas Transparency Check-Up Website.

On February 26, 2009, Comptroller Susan Combs, published an article on the importance of "Transparency." In this article is the answer to "...why is it my responsibility to come to the questioning blogs..." posed by LRoman:

We in Texas must do better about shedding light on finances, and our government entities must work proactively. While there are no angry shareholders or investors to complain, we are accountable to the taxpayers who fill state coffers with their hard-earned dollars. I would argue that while lack of transparency can lead to serious financial losses, the opposite effect holds when shedding light on expenditures.
...
Beyond the state level, Texans have the right to inspect the books of the various government entities, such as schools, cities, counties or any other quasi-governmental entities, such as electric co-ops. Some would argue that it is too expensive to make the information available, but I believe it is too expensive not to do so.
...
We stand ready to help local governments post information, since we believe so strongly in its vital importance.

The problem with the MDC leadeship, is that history shows they have been reactive (or non-responsive) to the public critism of the MDC's operation and not proactive.

From what little we can cobble together from published reports and the occasional budget we have obtained through other citizens who have filed TPIA requests (and sent us the files), the MDC has spent at least $250,000 on web assets and on web/communicaiton consultants. Yet, the leadership of MDC only sees these assets as "marketing for the community" and not a platform for accountability. Why can't it be both?

It isn't like the data we seek to have available online doesn't already exist. LRoman said there was a presentation to show. Why not post it instead of letting the community speculate on incomplete/inacurate media reports? Why aren't all MDC agendas archived and linked on the website? Why aren't MDC minutes (the ones regarding the public portions) posted on the MDC Website? Why isn't the MDC budget posted, or the annual audits? Why aren't these monthly reports on the various opprotunity zones posted? (You seem to be able to post the Economic Report).

Items of this nature are already on the City of Midland Website, should we expect any less from a City Controlled Entity?

Maybe, at the least, we could expect the MDC to take the advice of their consultants in November 2007?

The State of Texas and the Comptroller have thrown down the Transparency gauntlet to local and quasi-governmental entities. The MDC has the web assets to pick up the challenge, but are they proactive enough to implement it?

UPDATE by Site Admin: Case in point: The latest "Monthly Report" from the Midland Development Corporation contains in its entirety two pages of republished information from the Texas Workforce Commission. Essentially then, The MDC...a quasi-governmental agency that takes $4,000,000 out of the local economy each and every year issues as it's monthly report to the public what may as well be a link to the Texas Workforce Commission's website.

Councilman Dufford is correct when he says that the $2,000,000 public subsidy that (in all probability) is going to be made to Basic Energy Services' Permian Place real estate play is better than paying companies "a couple of million dollars to locate here" in that at least we get a parking garage out of the deal.

But then creating infrastructure is not the hard part. Creating demand is the hard part and totally out of the control of our local (and any other, to be fair) development corporation.

The Midland Development Corporation has created infrastructure before. And they even did it in one of the Genuine Out-Of-Town Consultant Recommended Opportunity Zones. The result is a shell of a building that sits empty after almost three years having never even found a single occupant.

This subsidy will be approved and the taxpayers of Midland will become "partners" in the construction of a parking garage in the exact same sense that taxpayers have become "partners" with GM, Chrysler, Bank of America, etc.

But enough about the garage itself. As has been pointed out before, it does not matter if the subsidy was for a parking structure or if it was for updated air handlers and electrical.

What needs to be focused on is what the money is actually for: Currying favor with Basic Energy Services in the hope that they will keep their corporate headquarters in Midland.

For the sake of argument let us stipulate that a $2,000,000 subsidy is what keeps Basic Energy Services' (a company that as late as last October was able to scrounge up $61 million dollars in cash to buy up another company) corporate HQ in Midland. (I realize that 7 months makes a lot of difference, but there is something about a company that can swallow up whole other companies using cash while simultaneously pleading poverty to the taxpayers of Midland for help in finishing out their parking garage that is an eye-roller of the first order.)

Question: What keeps them here? For the "incentive" to actually have worked inherently means that it caused a company to forego a previous decision about the most economically advantageous location in favor of a less optimal location. In effect, the subsidy theoretically makes up the difference between the most optimal location and the less optimal location, in this case Midland.

Obviously, it can only do this for a limited period of time and that amount of time is determined by the size of the subsidy. So how meaningful is this $2,000,000 subsidy to an oilfield behemoth like Basic Energy Services in terms of having them forego for a time moving their corporate HQ to Houston?

Besides additional subsidies, what keeps Basic Energy Services here? Do any supporters of this subsidy have an answer to this question?

Ostensibly, the $2,000,000 subsidy by the taxpayers is to be given over to Basic Energy Services for use on the Permian Place real estate venture's parking garage. We know this because the MDC's press release regarding the subsidy waxed eloquent about said parking garage and how it addresses a long term need for the central business district. That up to 75 of these supposedly highly sought after parking spaces would be available to non-Permian Place residents was treated as some sort of coup. Better yet, almost all of the parking facility would be made available "by arrangement" (whatever that means) after business hours.

Well, below is what the top three floors of the ginormous parking garage directly across the street looks like during business hours so I am unconvinced that the 75 daytime parking spaces provide any real utility to anyone other than the owners of Permian Plaza. And what would ever (ever!) be the cause for after hours demand over and above the those 75 spaces?

So was the Midland Development Corporation just uncomfortable with the idea of selling this subsidy to the taxpayers based only on the idea that Basic is a great corporate citizen of Midland (they are) and that if they threw $2,000,000 at them it might help keep the remaining 50 jobs here in town?

In other words, what if Basic/Permian Plaza had come to the MDC asking for the $2,000,000 so that they could update the air handlers, re-wire the electrical systems, and re-configure the floors to make them more attractive to renters? Is there any doubt that the subsidy would have still been forthcoming?

Today's MRT story has a lot of comments from the MDC Board that brings the reasons for incenting a parking garage downtown into sharper focus. Maybe it is a case of "mis-rembering", or "mis-quoting," but several things in the story don't add up with previous reports, statements and timeline. If it isn't mis-remembering, then there was a lot of dis-information going on last year:

Let's start with this one:

MDC Directors Laura Roman and David Mims said Wednesday that Basic President-CEO Ken Huseman and other leaders came to the economic development arm of the Midland Chamber of Commerce in February 2008 after their board had declined a merger offer and faced key decisions about the company's future.

A Couple of timeline things. BASIC didn't announce their merger with Grey Wolf until April 2008, and the deal didn't fall through until July 2008. It is kind of hard to say the incentive came in the wake of a declined merger that hasn't been announced yet. Now there was a meeting in January 2008, but all indications from Mr. Henson with the MDC in published reports was that BASIC wasn't seeking money at that time from the MDC, they were just generating publicity for their project (like any other real estate developer):

"I bet (Basic Energy) didn't intend to be in the real estate business," MDC Director Doug Henson said. "It shows confidence that it is good to invest in downtown Midland.

"Basic Energy has stepped up to the plate and I think this will be a catalyst for the downtown area."

This is the first privately driven project in the city's move to revitalize downtown, Henson said. He said Basic's presentation was for informational purposes.

So what is the true sequence of events?

The sequencing in the MRT Story seems to imply the Permian Plaza project wasn't going to go forward back in February 2008, but things seemed to change from this quote:

With the forgiveable loan in hand, they decided to spend another $13 million to modernize their current 511 W. Ohio Ave. headquarters, to be called "Permian Two," upgrade the Hightower Building on Illinois and build a 440-space parking garage where the Pecos, or "Belt Buckle," Building had been razed at 300 N. Pecos St., Roman and Mims said.

So there was a forgivable loan deal in hand when? February 2008? What about this quote from September 2008 which seems to indicate the MDC had the City Attorney scower the 4A law to see how to incent stuff like this, and by September they had just figured out how to do it.

MDC officials currently in the process of developing a criteria that projects must fit to qualify for the incentive.

City Attorney Keith Stretcher said that the 4A corporation can provide a parking lot incentive under the purview of its ordinance.

"Parking is not a project under the 4A corporation," Stretcher said. "But just like infrastructure, the MDC is allowed under a provision to spend for site development needed for a new or expanding business enterprise."

So was an agreement in principle done in February 2008? Is this why this incentive has has taken 15 months to draw up?

And about retaining job at Basic's HQ. I have already linked the July 2008 story after Basic and Grey Wolf called off the merger. In that story Basic's HQ in Midland was quoted as having 100 employees.

How is making Basic retain 50 jobs (a 50% reduction from previous levels) a real retention goal?

Besides the timeframe of the Grey Wolf merger, when else has Basic considered moving to Houston?

What about all those quotes that even if Basic moved to Houston, this was still a great real estate play and they were moving forward regardless? This story implies the project *might not have happened* without the MDC.

They said they did not know if Basic would have proceeded without the MDC money. "I can't put words into Basic's mouth, but they were getting close to the end of their contract and (with MDC's incentive) they could do this without having to go back to their board about continuing the plaza project," Roman said.

We will continue to build out the property. We expect at some point to sell the property to a firm that specializes in developing and managing such properties.

(I still think this aspect of the deal is wrapped up in the nationwide credit crisis on real estate lending, because last year this was a $10M project, now it is $15M and lending is frozen.)

As for this push back from MDC members:

When asked if downtown already had enough parking, Roman conceded the nearby Fasken Center and other buildings have garages but said another is needed. "Sometimes I think people who make comments like that don't work downtown," she said.

It should be said, this blogs critisim of the project has never dealt with need for downtown parking, it has always centered on Why is MDC investing in Parking that is essientially for a lone office complex, regardless of the other goals this garage is supposed to meet. I mean we are spending about $2M in public funds on Centennial Plaza, so one would assume that is the center of the Downtown Revitialization so why say a project is so great for all of downtown when it is isolated from the advertised heart?

The MDC is trying to dress this pig all up, but the clothes aren't fitting too well.

At this point, all I really want is for the complete and concise *facts* about the timeline and decision making regarding this deal to come out so the City Council can make an informed decision on the MDC's actions. We don't need our Council making decisions on what amounts to Chamber Spin.

The Law of Unintended Consequences and just why the government should leave real estate development to the private sector....all wrapped up in one cavernous shell of a building.

But since this all happens in an area where there are no penalties for failure and good ideas remain undifferentiated from bad ones and, anyway, it's other peoples' money...there is no feedback loop to keep it from happening over and over again.

Which is why the first big idea of the New! And! Improved! Midland Development Corporation that was promised is to spend $2,000,000 to help build a parking garage directly across the street from the largest parking garage in Midland (and a block away from another large one) in the name of "economic development".

It's failure to produce any tangible benefit to anyone other than the rent-seeking "clients" of the MDC will produce only what other failures have: A shrug of the shoulders, a promise to work smarter, not harder (or some similar manner of word salad that the consulting and developing classes always seems to emit) and then a total repeat of the process.

If you are a fan of State of the Art Word Salad you can download the MDC's 2007/2008 Annual Report here. Normally, annual reports include details on the finances of an organization, but not here.

There is such as thing as too much communication and transparency, I guess.

UPDATE: A question for the Great Os: In the MDC's Annual Report there is a table showing "Other Projects Funded" on page 28 that shows that MOTRAN has been given $351,000 in "incentives" by the MDC. To me this looks like one Chamber entity just flat out funding another Chamber entity, if not technically, then essentially. How do you see this?