Below is an email exchange between “Anonymous” and Brownsville2020 that hopefully provides useful information for our readers. Anonymous’s email is posted first, with the 2020 responses after each point, each beginning with [BOLD BRACKETS]
[ANONYMOUS: I just wanted to point out that your comparison of GBIC/BEDC (4A) and MEDC (4B) is completely erroneous and misleading. Please educate yourselves before you confuse more people. Allow me to point out why this analysis is wrong:
[2020 RESPONSE: First, thank you for taking the time to respond with a very informative and thoughtful response to the 2020 site. You are obviously well-informed and already civically engaged. Our goal is certainly not to misinform or mislead. We started the research by comparing the missions of the GBIC/BEDC and MEDC (which are remarkably similar) and then read relevant portions of the Texas Attorney General's Handbook of Economic Development for Local Government http://www.oag.state.tx.us to understand what the differences were between 4A and 4B.
Here are the missions of the MEDC (4B) and GBIC/BEDC (4A):
MEDC stands for the McAllen Economic Development Corporation. It is a not-for-profit corporation under contract with the City of McAllen to create jobs for McAllen by attracting new industry and helping existing companies to expand. The MEDC team works with prospective industrial clients, handles marketing and public affairs, and provides corporate support to existing manufacturing and supplier companies. Industrial clients are individuals who represent companies or industries looking for a site to expand or relocate their plant or service operation. They include the full realm from suppliers to manufacturers.
The Brownsville Economic Development Council (BEDC) is a publicly-funded organization created in 1992 to help companies establish or expand operations in the Brownsville area. The 6-person BEDC staff offers companies the financial, job training and site location assistance they need to be successful here. BEDC guides a prospective firm through the process of acquiring permits and zoning, identifying potential suppliers, making contacts with other businesses and meeting community leaders.
And here are summaries of the 4A and 4B taxes from the Attorney General's Economic Development handbook:
The Section 4A tax is generally considered the more restrictive of the two taxes in terms of authorized types of expenditures. The types of projects permitted under Section 4A include the more traditional types of economic development initiatives that facilitate manufacturing and industrial activity. For example, the Section 4A tax can be used to fund the provision of land, buildings, equipment, facilities, expenditures, targeted infrastructure and improvements that are for the creation or retention of primary jobs for projects such as manufacturing and industrial facilities, research and development facilities, military facilities, including closed or realigned military bases, recycling facilities, distribution centers, small warehouse facilities, primary job training facilities for use by institutions of higher education, and regional or national corporate headquarters facilities. The Section 4A sales tax may also fund business-related airports, port-related facilities, and certain airport-related facilities 25 miles from an international border, as well as eligible job training classes, certain career centers and certain infrastructural improvements which promote or develop new or expanded business enterprises.
The Section 4B tax also can be used to fund the provision of land, buildings, equipment, facilities, expenditures, targeted infrastructure and improvements that are for the creation or retention of primary jobs for projects such as manufacturing and industrial facilities, research and development facilities, military facilities, including closed or realigned military bases, transportation facilities, sewage or solid waste disposal facilities, recycling facilities, air or water pollution control facilities, distribution centers, small warehouse facilities, primary job training facilities for use by institutions of higher education, regional or national corporate headquarters facilities, eligible job training classes, certain career centers and certain infrastructural improvements that promote or develop new or expanded business enterprises. However, the Section 4B tax can additionally fund projects that are typically considered to be community development initiatives. For example, authorized categories under Section 4B include, among other items, land, buildings, equipment, facilities, expenditures, and improvements for professional and amateur sports facilities, park facilities and events, entertainment and tourist facilities, and affordable housing. Also, the Section 4B tax may be expended for the development of water supply facilities or water conservation programs. However, in order to undertake a water supply facility or water conservation program, the facility or program has to be approved by a majority of the qualified voters of the city voting in an election called and held for that purpose.12 As of September 1, 2005, certain Section 4B development corporations are allowed to do projects that promote new and expanded business development, which could include retail projects.13
As you can see there is much overlap in both the missions of MEDC and BEDC/GBIC and the statutory purposes of the 4A and 4B. Responses to your specific points in your email below are found with the blue brackets.]
[ANONYMOUS: Point #1. You cannot compare 4A and 4B programs. Rules on how sales tax proceeds can be utilized are different between 4A and 4B programs. A brief explanation can be found in the following link from the State Comptroller’s Office that explains the difference between 4A and 4B programs: http://www.window.state.tx.us/taxinfo/taxpubs/tx96_302.html. If you want to compare McAllen’s 4B economic development program, then you would have to compare it with Brownsville’s 4B program. These funds are administered by the Brownsville Community Improvement Corporation (BCIC) headed by Dr. Delina Barrera at the city. McAllen does not have a 4A economic development program, and the BEDC or GBIC have nothing to do with 4B funds.
[2020 RESPONSE: We disagree. You can compare a 4A (GBIC/BEDC) with a 4B (MEDC) when their missions are virtually identical, and when Texas law allows both 4A's and 4B's to engage in economic development, including retail, by recruiting companies that create jobs and provide job training. The legislature has blurred the lines between 4A's and 4B's, so that 4B's like the MEDC can engage in economic development activity just like Brownsville's 4A GBIC/BEDC. Regretfully, even though BEDC's mission includes job training, State Comptroller's records show BEDC has spent $0.00 during the past six years on that program. To address your concern, McAllen's 4B and Brownsville's 4B are not alike because our 4B--unlike McAllen's--is limited to "quality of life" projects such as parks (although it can and should do much more real economic development). However, both our 4B's are similar in the sense that both are housed under their respective City Managers at City Hall, which some have opined elsewhere should happen with our 4A as well.]
[ANONYMOUS: Point #2. The BEDC derives its operating funds from an annual contract with GBIC. The BEDC does not have access to the entire funds collected by GBIC. BEDC’s annual budget is actually around $500,000. The city, and more specifically, the Planning Department, actually administer GBIC funds. The city also takes a portion of GBIC funds for administrative purposes. Your study does not mention this.
[2020 RESPONSE: We compared line by line with official records submitted by GBIC and MEDC to the State Comptroller. No politics involved. Apples to apples. Of course we haven't fully researched the reasons for the differences in debt, incentives, marketing, capital, costs, etc. Where is the “portion” of 4A funds found in the new City 08 budget?]
[ANONYMOUS Point#3. I am sure you tried to get a copy of MEDC’s budget. And I am also sure you got nowhere. MEDC is actually funded directly from a grant from the City of McAllen; however, the larger majority of their budget, which surpasses BEDC’s budget by far, is derived from its revenues from the McAllen Foreign Trade Zone. Grants and membership probably round off their budget.
[2020 RESPONSE: We did not inquire about the MEDC budget. As mentioned previously, we researched the Texas State Comptroller's official records and the Attorney General’s Economic Development handbook. Query: why DON'T we have a Brownsville Foreign Trade Zone to start deriving more revenues from all the trucks and cargo moving across our streets everyday? That sounds like a great project for the 4A and 4B to work on together - work with DHS to create a safe, secure, international, multi-model facility that could handle and coordinate cross-border cargo by rail, air, trucks, and ships that could provide many new jobs and training.]
[ANONYMOUS Point# 4. An apples to apples comparison would mean that you would have to compare the Brownsville Community Improvement Corporation (4B) and the Development Corporation of McAllen.
[2020 RESPONSE. We disagree, for reasons mentioned above. The apples are on the table and being compared, year by year. The results of the efforts of MEDC and BEDC speak for themselves. Does anyone know how many jobs are STILL in existence in Brownsville since GBIC started operating in 1992? In other words, what sustainable economic development have our millions in tax dollars brought to us? There is some benefit, but it seems McAllen is doing economic development a lot better than we are. We wonder why, especially when we have more natural assets and a more strategic location than McAllen. In our view the future of Brownsville is not call centers and maquiladoras which are always in the process of being outsourced. If we don't begin to move in new directions, we will loose our best computer, engineering, and business students to other cities with high-wage, high tech jobs.]
