Did the City of Glen Rose act properly in moving funds from the Glen Rose Economic Development Corp.’s account to pay for maintenance and operations at Oakdale Park?
That’s the $100,000 question.
The Glen Rose City Council decided Monday night to get a second opinion to resolve the matter once and for all. It plans to ask the state’s highest legal authority, Texas Attorney General Greg Abbott, for his interpretation of the law concerning so-called 4B corporations, boards that oversee the spending of 4B funds. Those monies come from a portion of sales tax revenues returned to cities for economic development projects.
The dispute goes back to 2009 when the GREDC board supposedly authorized the city to move the $100,000 from its pot to the city’s to pay for operations and equipment at Oakdale Park.
But, as an independent audit of the GREDC last September pointed out, board minutes for at least 10 meetings — including the one in question — were not found.
“Without the minutes, we were unable to verify that the Board authorized several material expenditures, including $100,000 to the City of Glen Rose,” the audit firm, Willsher & Associates, PLLC, stated in its report.
The audit also turned up an “inadequate system of internal controls.”
GREDC Chairman Jimmy Gosdin, who inherited the problem when he took the helm of the board earlier this year, told the Glen Rose City Council Monday night that he just wants to get the matter settled and the GREDC’s books in order.
“We just want to do what’s legal,” Gosdin said. “We need to get an opinion from the Attorney General. We don’t want to spend attorney fees on it.”
Mayor Jean King said the city can account for the expenditure of the funds in question.
But Gosdin said his understanding of the purpose of 4B funds is that they are not supposed to be used for maintenance and operations. In the case of the city’s purchase of Oakdale Park, the funds were to be used for debt service, he said.
“The criteria for us set by the government was that we were only to fund the debt” when the city purchased Oakdale Park, Gosdin said.
“So we need to contact the state,” King said.
“We’ve had enough muddling of the funds,” Gosdin replied. “We want it clearly stated from here on out what’s right and wrong.”
Mayor Pro Tem Bob Stricklin said he thought “we had a legal interpretation that that was kosher,” referring to transferring the GREDC funds for maintenance and operations at Oakdale Park.
“The board voted to pay for the purchase of Oakdale only,” Gosdin said. “No equipment or maintenance. That’s the way it’s stated in the state mandate. So the question is what we can do to legally continue it. We just want the books to be cleared up legally.
“It’s city council money,” he added. “It’s city money.”
City Secretary Peggy Busch, who was not present Monday night, has said in the past that the city’s auditor, Cliff May, whose family sold the park to the city, felt that the $100,000 was a “budgeted item.” She said the city’s financial advisor, Jim Sabonis, also said the money could be used for operational expenses.
Sabonis, who was present at the council meeting to speak on another matter, said he understanding was that 4B monies could support operations and that’s the way the 4B funds were approved by voters.
“My remembrance of the situation is there was some flexibility,” he said. “I thought we built in flexibility to fund the assets.”
City Council member Sandra Ramsay moved to have City Attorney Andrew Lucas draft a letter to the AG, signed by all council and 4B members, asking to clear up the question. Councilman Dennis Moore seconded the motion.
The vote was unanimous in favor. Council member Sue Oldenburg abstained since she was serving on the GREDC board when the disbursement occurred.