HB 4640 Summary and Commentary by John Kelley

Watch the hearing on YouTube By clicking here.

***This is an annotated coverage and commentary of the hearing in Austin on HB-4630 on Tuesday, April 20th in front of the House Transportation Committee. Go to the time listed by the name to listen to the actual video.

0:00 Rep. Abel Herrero (D) District 34 Introduces the bill somewhat pleading for compromise while explain the bill. Herrero filed it on Friday April 16th. Chairman Terry Canales suspended the rules on Monday and fast tracked the hearing for the next day.

Commentary: Terry Canales (D) District 40 (Hidalgo County) Rep. and Chairman of the Transportation Committee is the stepson of former Nueces County Judge and historical Robstown promoter Richard Borchard. He is said to be looking at running for Juan “Chuy” Hinojosa’s Senate seat if the Senator retires as is expected. He would need Barbara Canales’ political support here to carry him through the primary and Robstown has long been the center of Democratic power in the county.

He arguably tried to assist proponents while contradicting opponents. That may clarify why someone from Edinburg is so interested in seeing this passed. Maybe it explains why he gave opponents two minutes apiece to state their case and allowed Charlie Zahn, Port Commission Chairman and Barbara Canales unlimited time. It would also explain his strange comment when he introduced Canales, “We aren’t related, but I wish I was.” When witnesses referred to the Port as bad neighbors, not transparent, unresponsive he stated his mother lives in Corpus Christi and only hears good things about the Port, a somewhat ridiculous statement, knowing the relationships.

3:05 Todd Staples, President of Texas Oil & Gas – Opposed – Diversion of Port funds for nonport  projects

5:00 Hector Rivero, President Texas Chemical Council –Opposed – Diversion of Port funds for nonport  projects

6:23 Tony Bennett, President Texas Association of Manufacturers – Opposed, Diversion of Port funds for non-proprietary projects.

Home Builders Association representing seven Coastal Bend Counties sent a letter of opposition stating unfair advantage in development competition.

7:25 Charles Bujan, Mayor Port Aransas – Opposed

Complained of unfettered development, disregard of zoning laws, the Port suing them, potential loss of taxes.

11:27 Gilbert Gomez representing Robstown – stated Robstown has a 30% poverty rate and an average household income of $35,000 presents. Yes them to pass the legislation but presented no plan for development.

13:00 Ronnie Parker Mayor of Ingleside – Opposes – Not been a trusted partner, hasn’t respected zoning laws.

15:03 Kathy Skurow Mayor of Portland – Opposes – “Dangerous precedent regardless of location” “would place in the hands of unelected port commissioners the right to use public funds to develop commerce, manufacturing, housing…”

18:20 Beatrice Charon Robstown EDC – supports – “We are an economically disadvantaged community”- presented no plan for development.

19:12 Roland Barrera Representing City of Corpus Christi-Opposes – Conflicts over water sales, potential removal of land from the tax rolls, and appointed body spending other than their designated mission. Chairman Canales asked “Who appoints Commissioners?” Implying the City somehow approved of this bill. Barrera responded that their own commissioners ha brought d been unresponsive to City Council requests.

25:19 Cathy Fulton, Port Aransas speaking for residents presented 35-37,000 signatures on petitions against various port projects, there are also nonresponsive to issues directly due to port operations. There is a great distrust of Port and NuecesCounty leadership. Have went to public comment for last three years and met with an attitude of indifference.

30:00 Wes Hoskins President 1st Community and San Patricio County Port Commissioner representing himself as a Port Commissioner and San Patricia County – Opposed – The port has a healthy balance sheet but needs to spend hundreds of millions of dollars to pay down their debt (which is also in the hundreds of millions of dollars). The bill would allow diversion of funds to unspecified, nonport projects. Only port in Texas with this power

33:12 Charlie Zahn Chairman POCCA – arguing that the bill originally designed to dispose of naval station Ingleside property in 2009 allowed them to develop commercial, housing etc “on the property” they were selling. (This is a misleading statement as naval station Ingleside was a complete town with barracks, individual homes, office buildings, commercial areas, canteen, recreational health facilities, a gas station and firefighting school already.) 

“We have property not suited for port uses and should be able to create jobs, foster economic growth.”

Commentary: They wouldn’t use tariffs for development they would issue revenue bonds to fund. This begs the question of whether port ground lease funds would back the bonds and what if the development failed?

If the Port holds land that is suitable for development and sells it to the private party the taxing entities would get to tax the full value of the property and the improvements. The value of the land would grow exponentially once something is built on. If the Port leases the land, there would be no taxes on the land itself or the appreciation of the land because of the development. Tax entities would only gain tax revenue on the improvements. 

Port representatives said in a recent City Council meeting when asked why they don’t just sell surplus land to the highest bidder and let them develop it, that it was their policy never to sell land. That begs the question if the land isn’t desirable for private developers to buy it and develop it putting the full value back on the tax rolls, what makes the Port think that they can develop it profitably?

This also produces an uneven playing field with cities in attracting development.

Representative J. M. Lozano (R) District 43 (Jim Wells, Kleberg and San Patricio Counties) asked Zahn if he had consulted with any other schools about what the loss of revenue would do to them. He dodged the answer to the question.

Lozano asked would you exclude the port as a developer sense you’re saying third parties would do development. Zahn said that would be up to the commission. 

Lozano also asked about the removal of language for competitive bidding. Zahn responded by stating the port always complied with the competitive bidding rules. But he did state leases are not subject to competitive bidding and are negotiated on a one to one basis. He referred to the sale Ingleside naval base as an example. The Ingleside naval base sale was negotiated in private and announced within several months of the Port driving off a company that would’ve brought approximately 200 jobs and made use of the whole naval base. Instead the deal the Port made yielded almost no jobs but did result in an increase in tariffs for the Port. The common of one of the principles of the rejected company stated, “This place is worse in Nigeria.”

In an obvious set of question Chairman Canales asked how much land the port owned and how much was in San Pat versus Nueces County. The answer from Zahn was that the port owned 28,000 acres 23 to 24,000 and Nueces County. What he failed to mention that most of it was underwater. 

Zahn failed to present a plan for development.

49:28 Barbara Canales Nueces County Judge 6 yrs on Port Commission

Canales tried to paint opponents as against good. She brought up and unrelated grant applied for by the county to build breakwaters in Port Aransas, Ingleside by the Bay and North Beach. The irony is that the Port could do those things now out of their own budget as mitigation for damage from shipping. 

She also stated that there was “No implication to the tax code or those school children.” While technically correct, the tax code doesn’t need to be changed for there to be substantial loss of future tax income.

She then made an emotional appeal stay in the area had three disasters as last year a hurricane, coded in the freeze. She stated the unemployment rate in Robstown was 9% that the Raeford Texas in the United States was only 6%. She failed to mention that the unemployment rate for all Nueces County is 9%. She implied these funds would only be used to help Robstown in an area colonias.

She lauded that the Port Development fund can give up to 5% to nonprofits. She failed to mention that they only are donating 3%.

Melding the county and port into one entity she stated, “We’re not an economic engine we’re the economic engine, we’re not important to just the state of Texas, we’re important to the world, we’re not a container port. There are no goods.”

She made the case that development could earn more than the .5% return on their money in the bank but ignore the fact that rewards of investing in speculative development increase the risk of loss as well.

She then went on to imply that Robstown was being treated unfairly and “we just ask to be treated the same.” Canales lives in what could easily be described as a mansion on Ocean Drive and has lived a privileged life.

She closed with another emotional appeal that she was “Not that happy when I woke up this morning knowing that  I’d face this type of controversy for something that could do so good for so many….But then my very first presentation (that morning) was to the Robstown wrestling team.” who won the state championship. “I felt that was a sign,” she said reverently.

She pledged to meet with the opposition and take out housing(which wouldn’t stop them from building hotels). 

Lozano asked her too if she had consulted the schools about the impact. Her response was they have open meetings and Robstown ISD knew about it. Then she made reference to the Port of New York owning the World Trade Center.

Lozano also asked would it not be possible for them to buy undeveloped land in the future which should be taken off the tax rolls if this bill were passed?

She didn’t answer except to say that they had multiple projects none of which she named.

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