Crockett Council Talks Business
Greg Ritchie
Messenger Reporter
CROCKETT – Crockett’s office of economic development may be shut down, but the business of developing local businesses was very much on the agenda of the city council meeting Monday, June 16.
The council was asked to approve the second and third phases of the buildout at 1505 South Fourth Street, where Provalus has begun operations, including creating jobs for residents. Crockett City Administrator John Angerstein informed the council all engineering work had been completed and they could now consider bids to move forward with the renovations.
Angerstein said the company already employs 42 people, with a goal of reaching 60, but part of the agreement was for the city to help build out more office space at the city-owned facility. The company and city were looking to get the work done in July.
The idea is to complete the second phase, which would expand the space available, to move all current employees into that area, before taking on the third and final phase of the buildout. The plan was formulated in phases since Provalus came ready to begin operations and hiring a local workforce.
Explaining the need to hire architects, Angerstein explained, “We’re required a law to hire an architect if we spend over $100,000 in public funds for a public building.” He said since the project would require changing the building’s structure and removing walls, help with the engineering plans was required. The eventual goal would be to expand to a local staff of 180.
Langston Industrial Group of Lufkin was the only company to submit a complete bid, albeit for $377,000 with a small price for additional add-ons. When council members balked at the price, Angerstein reminded them their original budget for the project had been set at $550,000, meaning there was enough money allotted to both complete the project and save money over their original estimates.
Langston had agreed to begin work by the beginning of July and be complete by the end of September, promising a 100-day build.
This being unanimously approved, Crockett Mayor Dr. Ianthia Fisher said Provalus has been a welcome addition to the city and the jobs it offers to local residents.
“They’re excited about it, and they like their job. I was really excited for them to have that many jobs close to home,” Fisher said.
Council then discussed the situation A&A Texas Capital, who recently came to Crockett from Canada. The company produces treatments for lumber and is building a large complex along the city’s Loop 304. The motion would be to amend certain conditions and agree certain conditions of the original agreement had already been met. The company signed an agreement with the city tying certain achievements to tax abatements and other incentives.
Angerstein explained the company had already met two out of three conditions of their contract, ahead of schedule. The company was obligated to begin construction within the first 12 months, which was done. The second condition was to invest at least $3.6 million within the first three years.
“Obviously, the three years are not up, but to date, they’ve invested over $7 million,” Angerstein noted.
Changing market conditions have led the company to want to expand their Crockett operations — which is good — but might ironically break one of the clauses of the agreement with the city. Angerstein explained the company could face issues with banks if they went for additional funding since the company’s future projects might not be in line with the agreement, which limits them to only certain types of products.
“The recapture clause condition number three says, ‘If such default is the result of failure of developer/owner to use the real property exclusively for a functioning facility to manufacture materials that enhance the durability of wood products,’” Angerstein read. “That clause is what they’ve asked, and what I personally agree, is probably overly restrictive. If the market continues changing and they want to expand their product to something outside of wood preservation — they want to do some steel manufacturing or anything else, even if they want to add and invest more money and hire more people — we say they can’t.
Arguing that relaxing the clause would give the company a better chance at going beyond their original estimates, he argued the city would not want the property back anyway, not wanting to have it empty and not on the city’s property tax rolls. The company will have to perform, Angerstein said, especially given the amount of time and money already invested in the city and their willingness to seek additional funding for expansion.
“How do we hold them accountable to perform?” asked Precinct Three Councilwoman NaTrenia Hicks.
“All of the other performance clauses are still in the agreement,” Angerstein said. “There’s still performance clauses in there that say they have to hire and be functioning for the next 10 years or they have to pay back all tax abatements as well as any other incentives we provided.”
Hicks asked about Lincoln Lumber, a company brought in by the city’s economic development office which recently closed its doors. Angerstein pointed out the company owes the city for any tax rebates it received, since it did not fulfill its agreement to stay in business for five years. In business or not though, Angerstein said it was in the company’s best interest to find someone to take over the business, since they are still paying property tax, as long as they continue to own the building.
Hicks asked if the city could recapture the company’s equipment to help pay their debt, but Angerstein said the city did not purchase the equipment, so it was not part of the agreement. Hicks said Lincoln Lumber got their property for basically nothing, but since the property was never appraised, the city could take it back, perhaps $2 million worth of property.
“That’s 19 acres on the loop,” Hicks pointed out.
“We assessed at it as an empty piece of property and we had a business owner that was wanting to make investments in it and hired jobs — all of which they’ve kept their end of the bargain. When you’re talking about remedies,” Angerstein said, getting back to the case of A%A, “all the remedies are still in here. All we’re saying is, we don’t want to take that property back if they decide to expand it and do something in steel production or plastics, or something else. We’re not going to play a legal game and take that property back when they owe money to the bank, and they’ve already made investments of over $7 million.”
Pointing out the discussion had gotten off track, Precinct One Councilman Dennis Ivey said the discussion was more about whether the city was limiting the company from possible expansion, due to rigid conditions in the agreement. Hicks asked why the city couldn’t amend the agreement to create new recapture clauses.
“Mayor, I move we go back to the previous discussion,” interrupted Precinct Five Councilman Mike Marsh.
“I am still in discussion, sir,” countered Hicks.
Fisher pointed out a motion could be made to limit debate, but Hicks disagreed, saying discussion comes first. Hicks continued, ignoring the motion.
“Excuse me, excuse me,” Fisher interrupted. “They are calling for an end to the discussion.”
“With that being said, I understand,” Hicks tried to continue.
“Did you understand?” Fisher asked.
“I understand,” Hicks attempted. “But you have to understand…”
Fisher said a call had been made to put an end to the discussion.
“Anyone can do that?” Hicks asked.
“If it is moved and seconded,” Fisher began.
“I second,” Ivey added.
Precinct Two Councilman Christopher Price wanted to know what kinds of products the company might want to make, which company executives explained steel and other products were being looked at.
Hicks said her concern was that the company might close, leaving people without jobs and selling the property to a business the city might not want. Angerstein pointed out there are other deed restrictions which limit who can use or later buy the property. He said the idea was just to make sure the city was not limiting the company’s proposed expansion by restricting the type of products they manufacture.
The motion was approved, with Hicks voting no.
Greg Ritchie can be reached at [email protected]
