Breaking Story:

Will LOYD NEAL Allow Nueces County To Soon Be Run By An Elite Group Of Contractors?

Nueces County, Texas --

s the general elections approach, many voters are examining the past tenure of candidates running for office – especially when it comes to the Nueces County Judge race. Former Sheriff Larry Olivarez will be challenging former Corpus Christi Mayor Lloyd Neal.

While the jail scandal (and some of the things that need fixing) has received much attention and many a politico tried to smudge Olivarez’ campaign, it is becoming blanketed by now by a more serious apprehension.

A few reoccurring themes are: “Is Lloyd Neal going to do to the County if he wins as County Judge what he did to the City of Corpus Christi?” and “Are these elite contractors going to demolish financial health of the budget of the county?”

One of the reoccurring themes being looked at seriously by voters is the issue of what this publication has coined as CONTRACTRACY – that is, a regional government run and/or influenced by the voracious agendas of contractors. One only needs to review the municipal contraction projects under Loyd Neal’s administration as Mayor of Corpus Christi and an alarming, disquieting pattern –charged with vested interest – which come into view.

El Defenzor newspaper has been working on a story for a few weeks now. In reviewing several annual budgets of the city of Corpus Christi…. A power group or vested interest group was identified known for a few years now (especially among those that are “In The Know”) as the “Holy Trinity.” Three parties/three persons that have worked together to accomplish various projects (e.g., Packery Channel, American Bank Center and a few others) involving millions upon millions of dollars. The powercratic virus of CONTRACTRACY is apparent such as in the Packery Channel project: Al Jones – the president of American Bank – FINANCES (the bonds – which passed in 2001); Joe Fulton (or his construction company) CONSTRUCTS (the project) and Loyd Neal (Politician/Insurance/business broker) PASSES IT (Neal has a history of doing the politicking/lobbying to pass the bonds and or muster political support for the projects).

CONTRACTRACY:

The definition of a CONTRACTRACY is a regional government that is influenced by a small, very potent “ autocracy which attempts to wipe out the competition. Under a CONTRACTRACY the phenomenon of POLITICIANS FOR HIRE is implicated (despite the unique recruitment means that might apply). Either Politicians run and/or are recruited to run office. The “ruling” contractors (who find ways to finance their candidates’ campaigns) have been described by some businessmen as “leeches who suck the blood of (metaphorically implying) “budgets” of entities such as cities, counties and community colleges to aggrandize their operations.

To clarify, the voters supported the bond election in 2001. The message was send by voters that Packery Channel and the American Bank Center projects and a few others were considered good for the area. The arguments in this analysis suggests that some form of CONTRACTRACY exists -- and it does not logically follow that this publication or anyone affiliated with this on-going investigation is in anyway against economic development.

LOAN-SHARK RATES:

What is being rigorously assessed by this publication is the manner in which the projects were financed. For instance, the budget for the City of Corpus Christi 2005/2006 shows on page 287 that the city borrowed – the principal -- $9,1000,000 for Packery (North Padre Island TIF) but will be paying $18,606,925 to the American Bank; the city will be paying $9,006,925 in interest. Are these “Loan-Shark” rates at 98 percent interest or do the ratepayers prefer a more sloppy and slipshod criteria?

Clearly, many feel fiscal negligence exists. “Fiscal negligence exists sometimes when the average voter is kept in the dark by an institutional arrangement,” one specialist told this publication. The City could have negotiated better rates. Additionally this report is an attempt to answer a question asked by many a tax-payer, “Why the city’s debt was so high” – in fact, the total debt after Neal left his office as mayor was 1.3 billion dollars.

COST-OVERRUNS:

The fact is that most of the time the implication of CONTRACTRACY suggest that many of the projects undertaken during Neal’s mayoral tenure were not completed on time and thus and so were plagued with huge cost-overruns (simply defined as an excess of cost over budget which necessitates an additional allocation of funds in the budget). As one small contractor put it: “During the mentioned projects not even a toilet was completed on time that I know of. Cost-over runs serve as lax mechanisms in place used to get more money from the city and ratepayers – especially when the elected politicians are part of their social orbit of interest. It also has a lot to do with cronyism.” The reality is that the taxpayers are the ones that end up paying when the contractors go over-budget by millions of dollars. Are politicians such as Neal perceived as merely a cog in a wheel that can be smoothed and coaxed to push an overbearing agenda?

In order to answer the above question one has to understand the technical aspects of the game. For instance, the bond process. This and other matters need to be placed under the microscope. They have to be understood in order to understand the next level of inferences.

THE BOND PROCESS AND AGENDAS:

One critic defined and explained the alleged wile: “Let me explain the Bond process. We as taxpayers voted to pass the Bonds in 2001. Then, what the City did was issue bonds. Bonds are like War bonds for instance; they are notes securing the project will be paid. Typically the bond market is a secure one in that it is low risk. Why? Because the city is not going to go away anytime soon. However, bonds usually pay low returns in that they are not taking a big gamble.”

Many a member of the Taxpayers Association and citizens in general have pointed out in the past few years that the patterns are there in black and white to identify the paradoxes. Neal as mayor issued Bonds – which is debt. and even raises taxes by raising property values (or raised what is referred to as the effective tax rate).

DOUBLE DIPPING?

Other indications of facilitating the agendas of CONTRACTRACY are highlighted during Neal’s administration. Contracts were given to builders that were known friends/close associates of Neal and other city council members. They developed the real estate that is/was owned by them. As one informer put it: “Imagine some barren field near the ocean (that no one would want otherwise) and suddenly it goes up in value. Does it make you suspicious? Then as a taxpayer you start noticing the same bank or banks involved in this project or business venture begin to issue loans not only to the city but the private contractors. Is the band double dipping? Requires a complex answer. A flow begins to occur that is allegedly mutually beneficial to some parties. One does not need to be a rocket scientist to arrive at this preliminary notion.”

The same source extended: “Do you not agree that if in one project a major contractor shows that a contractor will change 20 million for a construction project -- but in the closing stages, ends up spending up to 28 million. Do you not feel that it is the responsibility of city council to support the hike or to attempt to persuade the contractor to live up to his pledge of competing the project for the amount promised or otherwise be penalized or sued for bridge of contract?”

TRUTH IN TAXATION LAW and EFFECTIVE TAX RATE:

To make some initial generalizations from initial findings: Neal has been the leading tax raising mayor in the history of Corpus Christi. He likes to say that his tax increases were voter approved. It is not an accurate statement. The effective Tax Rate shows what the actual tax rate should be when you include increase in property values. The city is required by law to publish these rates – it is known as TRUTH-IN-TAXATION LAW. He raised the Effective Tax Rate every year during his 10 year tenure as mayor – for a total of 33 percent.

Neal’s tenure as mayor obligated the taxpayers and put the city in debt by issuing $88 million in Certificates of Oblication (CO’s). They are by definition debt obligations similar to bonds, except they are done without voter approval.

CORPUS CHRISTI UNITED or BIG BUSINESS FLEXING ITS MUSCLE AGAINST THE ELDERLY AND DISABLED?

Yet there is a poignant note – Ageism? Neal during his administration as mayor voted against tax exemptions for seniors and disabled persons. In fact three local companies closely tied with Neal were the ones that financed the effort to pass the city’s bond proposal and defeat measures that would freeze the tax bills of elderly and disabled homeowners: American Bank, Anderson Group Construction Management and LandLord resources. This group was known as “Corpus Christi United.” These were party of the base that orbited Neal at the time bankrolling a cold and callous and insenstive marketing campaign against tax-freezing ideas for seniors and the sick. The exceptions were eventually passed despite such forces of resistance; but the exceptions still lag $10,000 behind the County, the Hospital District and Corpus Christi ISD.

HOW MUCH DO WE HAVE TO PAY FOR A GLASS OF FRESH WATER?

During Neal’s tenure as mayor led to fresh water rates being increased by 57 percent and waste water rates by 113 percent. The Total Utility Increase by the city under Neal’s mayoral tenure averaged $93.30 every year. Not only are the Utility taxes and fees increasing but the City has gone into debt for Utilities. It is safe to report that 43 percent of the City’s overall debt service is for Utilities. This amounts to $29 million annually.

What has made this investigation more complex is that Neal while as mayor voted against full financial disclosure. A mentality was put in place at the time and more than likely is predicted to infest the county government if Neal is elected.

WHY ARE TAXPAYERS PAYING SO MUCH IN TAXES/UTILITY RATES?

The question becomes – Why are the ratepayers of Corpus Christi paying so much in Taxes and Utility Rates? The answer: Neal as mayor put the city in massive debt and clearly his CONTRACTRACY tendencies had something to do with it. Currently, the City of Corpus Christi has a total debt of $1.3 Billion. The large majority was accumulated under Neal’s administration. One only needs to review the following sources: the City Budgets, the Truth and Taxation Publication in addition to doing a compare and contrast of both the city and county budgets over the last few years.

Corpus Christi is currently one of the most indebted cities for its size in the country. Nueces County has little debt by comparison. To illustrate this point, exactly 16.2 percent of the city’s budget goes to paying off this debt in comparison to the county’s 2 percent (of debt service). In fact during Neal’s last term as mayor, the city was forced to make $74 million in debt payments. The Milken Institute, an economic development think tank ranks Corpus Christi as in the lowest three percent of its sampling base when it comes to fiscal efficiency.