The Galveston City Council on Thursday needs to reject a twice-amended agreement that made sure a developer of a luxury beach subdivision was able to get an immediate $4 million gift of taxpayer money with even more in the pipeline.

In 2014, the Redevelopment Authority, or RDA, and Tax Increment Redevelopment Zone 13, or TIRZ 13, violated the Open Meetings Act while negotiating a new contract with developer Tofigh Shirazi. The board members even signed secrecy agreements that made sure there was no public input into the new contract that shed Shirazi of all responsibility and increased his take of tax dollars.

That agreement was cooked up after a then-Mayor Lewis Rosen and city council fired RDA board members who were trying to make Shirazi do what he said he would do under the Beachtown project plan he signed. The board had found that Shirazi was in violation of his agreement by not building the commercial and residential housing contracted in 2002. The city council then appointed new board members who crafted the new agreement in secrecy over six meetings.

Elizabeth Beeton, Jos Wristers and I filed a lawsuit against the RDA for the egregious open meetings violations hoping that the judge would void the new development agreement allowing a fresh start to negotiations with the developer that would be more friendly to taxpayers. However, the RDA decided to keep this bad deal. This time around the RDA learned its lesson by posting the vote on the second agreement properly, which will make our lawsuit moot.

If the city council rubber stamps this agreement then taxpayers will continue to subsidize a luxury housing development on the beach with no return on investment for an additional 25 years.

State law requires that although amounts in the project plan are estimates, those estimates “may not vary materially” from the plan. The agreement changed from the usual floating interest rate of about 3.25 percent to a fixed interest rate of 7.3 percent, and requires total payment of interest before principal. This over $4 million dollar change varies materially from the original estimate.

The new agreement also absolves the developer of responsibility for building the master planned community needed to generate the taxes that pay for the infrastructure. Even though Beachtown is a public-private partnership, the developer has said it is his right to build anything or not, and this new agreement concurs.

Not only is this a bad deal, it is an abdication of responsibility for oversight of taxpayer money and may leave the city or RDA open for future litigation.

The city general fund will not see any of the taxes from improvements until the TIRZ expiration in 2042. As it stands now, the taxpayers end up paying over $2,000 a day for interest to him for the next 14 years.

On Thursday, the council needs to reject this amended agreement or defer the vote on this agreement until they have time to review this properly.

Jackie Cole lives in Galveston.

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(9) comments

Jarvis Buckley

While I am no fan of Jackie Coles veterinary skills I believe is is 100 percent correct regarding beach town . Just my opinion.......

Ron Binkley

Buckley.....that was a cheap shot!

Jarvis Buckley

Sorry--she is 👍

Bill Cochrane

Veterinary skills? Jarvis, you just lost my respect for you.

Pete Nanos

Cole wants more TIRZ money so she can light and landscape the "million dollar" sidewalk to nowhere that she demanded be built. Maybe even some billboard ads to advertise it in hopes that just one or two people might actually use it. Please drive down Stewart Rd and admire this work of art and example of wasted money. It's a real joke.

Jarvis Buckley

Yes & I lost my 12,Yr old loyal friend.

Jarvis Buckley

I appreciate all the good things Jackie Cole does for Galveston Island. I just had a bad experience with her vet. business. My heart still hearts. It was just my opinion.

Bill Broussard

Jarvis: I am so sorry to hear that. My wife has been very ill for a couple of months and I can swear our Min-pin misses her a lot when she is in the hospital. Of course, Pat misses our min-pin also. It is really amazing how much a part of our life they become.

For the purists out there: If you thought poorly of the Obama effort to underwrite the automotive industry and the banking industry during the 2008 depression, you need to look at this move becasue its actually three times worse than Jackie lets on as to public subsides and I frankly cannot figure out why anyone should do this especially us. The developer chose to build houses at or above 1.5 MM dollars so its starts with a very limited market. As far as I know, only council member Tarlton-Shannon is a resident who can afford to live in Beachtown. All the rest of the owners are from places like New Jersey etc and rent the homes out for small fortunes.

In choosing such a small market segment, the developer also left himself very open to lower price competition like the kind now being built next to Stewart Beach. While quite expensive, they do not approach Beachtown prices so undercut the Beachtown market on price.
I can see no reason to underwrite this development any more than we have already with the possible exception that the debt money is probably linked Moody National, Frost or one of the other institutions networked to our current council and City Staff.

Its tax theft pure and simple and I have to wonder what Jim Ware, the head of the RDA, was thinking when he cut this backroom deal. Jim is usually a decent man.

Jarvis Buckley

Thank you Bill.

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