By Juan Montoya
Questions raised by board members of the Greater Brownsville Incentives Corporation regarding the propriety - and potential illegality - of guaranteeing $500,000 to fund a modified payday loan program with sales-tax funds meant for manufacturing and industrial development, derailed the plan pushed by chairman Graham Sevier-Schultz and Nick Mitchell-Bennett of the Community Loan Center for the Rio Grande Valley Multi-Bank.
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The question came up during last Friday's teleconferenced GBIC meeting which was shown through Zoom due to precautions against COVID-19. At one point - when he saw the item would not pass - Sevier-Schultz made a motion to table the item for later consideration but could not muster the votes.
Instead, a board majority voted to deny funding the plan pushed by Sevier and Mitchell-Bennett.
At that point, when Sevier-Schultz saw that the proposal would fail, he chided the board members and said: "The motion dies, and so does this organization. This is totally ridiculous."
Board member Pedro Cardenas then responded to Sevier's comment saying that members were in the dark because they had received no backup to the item on the agenda as he had asked for three days before the meeting.
In the meeting backup there was no documentation included and Sevier said it was not necessary because Mitchell-Bennett was participating in the Zoom teleconference to explain the proposal.
"That's interesting, Pedro," Sevier answered, derisively calling Cardenas by his first name, and said that he had not read Cardenas' emails and wasn't responsible for putting together the back-up packets. In the future, he said Cardenas could get the information if he was specific about the item and alerted him before hand.
"Read my emails," Cardenas said.
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During the meeting (the Zoom transmission messes up several times), Mitchell-Bennett said that the GBIC lending the Loan Center $500,000 over 10 years would be the "easiest way to go about it" of three options he had outlined before.
"You would lend us the money and we would put it into the loan pool. We would pay interest in the first seven years and interest and principal starting in the eighth to 10th year."
Although the loan plan was characterized as a way to prevent employees from falling prey to "payday" loan companies, Mitchell-Bennett said that under several of the three options he offered, his loan center would make arrangements with either GBIC or the employees to collect the loan payments through payroll deductions.
Under such a plan, the only defaults so far had been when an employee was terminated, but if GBIC's loan of $500,000 over 20 years at 2 percent interest, the Loan Center could still pay GBIC.
However, board member Esteban Guerra questioned whether getting into the "lending business" was a proper use for a Type A corporation funds like the GBIC and to board member Sandra Duran it seemed to deviate from the corporation's focus on its strategic plan.
Sevier-Schultz and Mitchell-Bennett said that the loans to GBIC's industrial employees - at 18 percent interest - could help in "employee retention" and as a way to attract employers and reduce "employee stress."
That, according to Mitchell-Bennett, was a "huge selling point" in the loan center's approach with employers in other part of the country where they operate.
But GBIC records of the February 20 meeting seem to indicate that their assertions go counter to against the presentation made by Russel Gallahan from the Texas Comptroller’s Office who addressed the board - including Sevier - when he explained the parameters of the Type A Tax Code.
The intent, Gallahan explained then, was to bring Industrial Primary Jobs that would then bring “new” money into the Economy. The focus on small business, loans, etc., only creates a circulation of local money, he said, and no new money is introduced into the economy.
The Type A Tax Code is clear in that a Type A is supposed to only fund projects that create primary jobs in specific industries that represent certain North America Industrial Classification System (NAICS) codes.
The NAICS, he explained, assigns a code or a number to all industries. The Texas Type A Tax Code lists those NAICS codes. Restaurants, service industry, loans, etc., are not on the NAICS list for Texas Type A primary jobs.
Questions raised by board members of the Greater Brownsville Incentives Corporation regarding the propriety - and potential illegality - of guaranteeing $500,000 to fund a modified payday loan program with sales-tax funds meant for manufacturing and industrial development, derailed the plan pushed by chairman Graham Sevier-Schultz and Nick Mitchell-Bennett of the Community Loan Center for the Rio Grande Valley Multi-Bank.
The question came up during last Friday's teleconferenced GBIC meeting which was shown through Zoom due to precautions against COVID-19. At one point - when he saw the item would not pass - Sevier-Schultz made a motion to table the item for later consideration but could not muster the votes.
Instead, a board majority voted to deny funding the plan pushed by Sevier and Mitchell-Bennett.
At that point, when Sevier-Schultz saw that the proposal would fail, he chided the board members and said: "The motion dies, and so does this organization. This is totally ridiculous."
Board member Pedro Cardenas then responded to Sevier's comment saying that members were in the dark because they had received no backup to the item on the agenda as he had asked for three days before the meeting.
In the meeting backup there was no documentation included and Sevier said it was not necessary because Mitchell-Bennett was participating in the Zoom teleconference to explain the proposal.
"That's interesting, Pedro," Sevier answered, derisively calling Cardenas by his first name, and said that he had not read Cardenas' emails and wasn't responsible for putting together the back-up packets. In the future, he said Cardenas could get the information if he was specific about the item and alerted him before hand.
"Read my emails," Cardenas said.
During the meeting (the Zoom transmission messes up several times), Mitchell-Bennett said that the GBIC lending the Loan Center $500,000 over 10 years would be the "easiest way to go about it" of three options he had outlined before.
"You would lend us the money and we would put it into the loan pool. We would pay interest in the first seven years and interest and principal starting in the eighth to 10th year."
Although the loan plan was characterized as a way to prevent employees from falling prey to "payday" loan companies, Mitchell-Bennett said that under several of the three options he offered, his loan center would make arrangements with either GBIC or the employees to collect the loan payments through payroll deductions.
Under such a plan, the only defaults so far had been when an employee was terminated, but if GBIC's loan of $500,000 over 20 years at 2 percent interest, the Loan Center could still pay GBIC.
However, board member Esteban Guerra questioned whether getting into the "lending business" was a proper use for a Type A corporation funds like the GBIC and to board member Sandra Duran it seemed to deviate from the corporation's focus on its strategic plan.
Sevier-Schultz and Mitchell-Bennett said that the loans to GBIC's industrial employees - at 18 percent interest - could help in "employee retention" and as a way to attract employers and reduce "employee stress."
That, according to Mitchell-Bennett, was a "huge selling point" in the loan center's approach with employers in other part of the country where they operate.
But GBIC records of the February 20 meeting seem to indicate that their assertions go counter to against the presentation made by Russel Gallahan from the Texas Comptroller’s Office who addressed the board - including Sevier - when he explained the parameters of the Type A Tax Code.
The intent, Gallahan explained then, was to bring Industrial Primary Jobs that would then bring “new” money into the Economy. The focus on small business, loans, etc., only creates a circulation of local money, he said, and no new money is introduced into the economy.
The NAICS, he explained, assigns a code or a number to all industries. The Texas Type A Tax Code lists those NAICS codes. Restaurants, service industry, loans, etc., are not on the NAICS list for Texas Type A primary jobs.
As the meeting dragged on, and after Sevier's petulant answers to the board members, the item was denied on a motion by Steve Guerra and seconded by Cardenas. There was no votes in favor of the loan center proposal.
In the Zoom broadcast, Sevier begs to close the meeting citing previous obligations. But since there were five members participating in the meeting, one more than the four required to have a quorum, the meeting could well have continued without him.
After the item was denied, Sevier thanked Mitchell-Bennett and apologized for his having had to wait telling him that "we'll see if we can develop anything in the future."