Changes to bylaws governing operations of the Buda Economic Development Corporation (EDC) will give city leaders additional control, even as officials maintain the two entities are independent.
But worries continue to mount over the motives behind the changes, which former EDC board of director members allege gives the city access to $4 million in EDC reserves that could be used to pay for city projects not directly related to economic development matters.
However, Buda City Council members, who passed the bylaw changes by a 5-0 vote July 2, maintain changes were meant to make rules concurrent with state laws, while also allowing the EDC the option to provide money for infrastructure projects that could provide an economic benefit. Mayor George Haehn and council member Paul Daugereau were absent July 2 and didn’t vote.
One major change dealt with how the EDC handles its reserves. City leaders approved adding language giving the EDC board of directors the option to transfer reserves in excess of a required three months of operating expenses to “fund capital projects.” Roughly $4 million in reserves has been saved to date by the EDC.
In addition, the city council must give approval before the EDC board moves money from its capital fund to its operating fund if the latter falls below the three-month threshold.
Buda’s City Council is the authorizing unit for the EDC and approves its annual budget, as well as any possible budget amendments. The EDC is an independent Type-B corporation separate from the city.
Prior to July 2, the EDC internally handled transfers of funds within its coffers and informed city leaders if there was any changes. No language existed regarding the transfer of reserves to fund capital projects.
Other changes include amending language regarding city council member participation on the EDC board. Up to three city council members “shall” make up the seven-person EDC board, where previously city council members “may” have participated. Changes also require the EDC to provide unrestricted access to the city of its financial books and records. Prior to July 2, the city council was listed as entitled to access the EDC’s books and records at all times.
Buda Mayor Pro-Tem Wiley Hopkins said amending EDC bylaws was made to make those rules concurrent with state law. Hopkins added the EDC and the city have in the past funded Capital Improvement Projects (CIP), but not always the same ones.
However, Hopkins said the city is not attempting to take control of the EDC and that the two entities are separate. Hopkins refuted claims the city is going after EDC money and said the city is “well-funded” and is in control if its finances.
“There is no truth to it because the city has no need for their (EDC) money,” Hopkins said.
City council member Evan Ture said his initial concern with the bylaw changes was people would see it could be an avenue for the city to spend money to fill city budget gaps.
Instead, Ture said the new rules obtain approval from both the EDC and the city and would only be expended on approved capital projects. Ture also cited what he believed were previous capital projects the city and EDC teamed up on, including expansion of water infrastructure on south Loop 4.
Previous EDC board members April 15 originally denied bylaw changes proposed by city officials. In an April 16 letter to the city, former EDC board president Jose Montoya said the proposed updates could possibly change the scope and purpose of the EDC, which was approved by Buda residents in 2001.
But on April 30, Buda City Council members approved a resolution by 6-1 vote that removed Montoya and the previous board, a part of an ongoing battle between the city and the EDC.
Buda city leaders appointed a new EDC board in May, which included appointing council members Ray Bryant and Lee Urbanovsky. The new EDC board approved the bylaw changes June 25.
Montoya said approval of the bylaws “confirms it was about the money.” Montoya added the city is seeking EDC funds to mitigate an alleged budget shortfall, which city officials are reluctant to identify.
Buda city leaders have begun work on the Fiscal Year 2019-20 budget but have not formally identified any budget overruns at this time.
“The language doesn’t give the EDC board any autonomy. It’s now in the direction of the city manager, under the guise of the city council,” Montoya said.
