Tuesday, October 9, 2007

Richardson City Council slugs it out over city manager decisions

By Nathan Morgan of Richardson City News

RICHARDSON — STARTech, the gift that keeps on giving.

During the Fall of 2004, John Sweeden, said to be an official representative of the City assigned as a liaison between the City and the for-profit corporation, STARTech, and also a member of the STARTech Board of Directors, attended an executive session of the Richardson City Council to discuss the re-negotiation of the STARTech lease agreement for the City-owned, tax-exempt building. At the time, STARTech was in significant arrears on the original lease, and was apparently seeking relief from the pressure of their delinquent standing with the City. On the eleventh hour of the year and during the holiday season, the resulting STARTech lease agreement was quietly signed by Bill Keffler, City Manager and Matt Blanton, Officer of STARTech.

There are many interesting aspects of the re-negotiated lease agreement, starting with the fact that the public was never made aware of the STARTech default on its lease of the City-owned facility, which was bought and renovated with two of the $3 million of 1997 general obligation bond debt incurred by the public for the technology incubator project. (Nobody seems to know where the last million is.) Another curiosity is relative to what authority did John Sweeden attend that meeting. There doesn't appear to be any official action by the City Council that confirms a formation of any such official position.

When questioned about the propriety of Sweeden's attendance at the executive session, presumed to be in violation of the State Law, the City replied that such official position did in fact exist, in spite of the Dual Office Holding laws regarding conflicting interests and competing loyalties. Questions posed to candidate Sweeden regarding the truth behind these assertions during the City Council campaign of 2005 were not answered, but he was elected to office anyway.

When questioned about whether the Council decision to accept the re-negotiated lease had been made behind closed doors and obscured from public view in violation of the Open Meetings Act, the City responded that the Council had, at the inception of STARTech, conveyed all powers to the City Manager, including the privilege of leasing it to a for-profit enterprise at an absurd rate of less than 10% of its true value, then deducting operating expenses to make it virtually free of charge for the next 10 years. So, Keffler made the decision to give away the farm.

Who Can Lease Space?

Target companies of the STARTech venture funding incubation process may lease space directly from STARTech, the management company. So-called non-target companies, upon approval by City Management, may lease space in the facility. The time limit is three years for a target company to leave the nest; non-target companies may stay as long as the City Manager approves. CapitalSoft, Gary Slagel's company overstayed the three-year limit, presumably upon approval of Keffler. The public would conclude that their technology development center would be full of technology startups being incubated by STARTech. But for a long time one of the only occupants was the Mayor. Questions arose regarding the propriety of then Mayor Gary Slagel's companies residing in the building, and conflicting circumstances that appeared between his private business and pubic service occupations. After much public pressure, Slagel curiously resigned from an apparently conflicting situation and moved from the public building. When questioned later, Slagel admitted he had a similar relationship with DART.

By and large unknown to the public, alongside Gary Slagel's company, the Metroplex Technology Business Center (MTBC), a faction of the Richardson Chamber of Commerce, has, and continues to occupy space in the STARTech facility. The lease agreement between STARTech and the non-profit MTBC would be considered a non-target arrangement, requiring the approval of City Management. It is not known if the non-profit MTBC is paying rent or simply giving back city money that was given to the Chamber of Commerce as it occupies the tax-free piece of city-owned real estate.

But wait. There's more.

If you believe the Council, in all its wisdom, conveyed upon the City Manager all the right to do as he wished with the $1.4M building that cost the $3M in 1997 bonds, and that City Council has no input in any subsequent decision, you would apparently be right.

On September 25th, the Governor quietly came to town to welcome the Texas-Israel Chamber of Commerce into the STARTech facility. Members of the public were stunned because there had been no public notice of anything having to do with the "free-of-charge" provision of the facility by the Richardson Chamber of Commerce. Not only was the public surprised about the deal, but so was the Richardson City Council.

There were two curious events that occurred during the Governor's visit. One, an emphatic denunciation by the Governor against any entity bent on the destruction of Israel, coupled with announcement of intent to order divestiture of any business doing business in Iran from Texas state investments. And a donation of $1M from Alon USA, an Israeli oil production company, to the Trinity River Project, a controversial toll-road project in Dallas currently under dispute.

Interesting points of interest:

* Slagel/CapitalSoft/STARTech => toll road contracts

* Murphy/NCTCOG => toll road endorsement

* Perry/Trans-Texas Corridor/Central => foreign construction and toll collection on major new toll road

* Texas-Israel Chamber/STARTech => free rent of public facility started by Slagel

* Keffler => City Manager authorization to give away

* Alon USA => $1M donation to Trinity River Project

Late in this past Monday's City Council Work Session, after all members of the public had had enough and left, the question was posed asking how did the Texas-Israel Chamber of Commerce get the free rent. Keffler responded, "We did it." Confused, because the matter had never come before the Council, when pressed to reveal who is "we", Keffler responded, "We is me". The meltdown that followed resulted in members of the City Council finally beginning to accept how utterly despicable the behavior has been.

It is said that character can be determined not by how people handle things that go their way, but what they do when they don’t. It looks like our City Manager might be on the hot seat of insubordination.

Pegasus News content partner: Richardson City News.

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