The Odessa City Council on Tuesday approved an economic development agreement that will allow Nacero, Inc. to proceed with construction of a proposed $6.5-$7 billion natural gas processing and production facility, a project that will create at least 3,500 construction jobs and then 350 permanent jobs in Ector County.
The agreement allows the Odessa Development Corporation to provide a $20 million grant incentive to help Nacero, a Houston-based gas manufacturing company construct the new Penwell facility.
“Thank you, we’ve been waiting for this for a long time,” Odessa Development Corporation President Tim Edgmon told council during their work session.
Work session meetings are usually an opportunity for council to discuss issues, but they were asked to vote Tuesday to expediate the process, city administrators explained. Council, which has previously discussed the ODC grant, quickly approved the grant without comment.
Nacero officials have previously said they hope to begin construction of the new facility this year.
According to the agreement with the city, Nacero will only receive the $20 million if the company maintains compliance with all terms and conditions included in the negotiated contract. Those funds will be paid out over 10 years.
In order to receive the grant, Nacero must meet several benchmarks, which include having in place no less than 310 Full-Time Equivalent Jobs in year 6, increasing to 330 in year 7 and maintained at 330 through year 10.
Council also received good news from an independent audit conducted of the city’s 2019-2020 fiscal year which concluded Sept. 30, 2020.
Even though COVID-19 played havoc with Odessa’s economy, the city still managed to generate a $3 million sales tax surplus, Assistant City Manager of Administrative Services Cindy Muncy told council.
“We weren’t sure we were going to make it at first,” Muncy said. “I think the first three months of (2020) saved us.”
Muncy said the annual city sales tax revenue is usually much higher, but she did not disclose what that figure normally is.
The independent audit was conducted by Midland-based Weaver and Tidwell, LLP.
The auditors did cite one “significant discrepancy” discovered during the city’s audit – they initially couldn’t find about $200,000 in the city’s record books.
Muncy explained that the money was there, but due to a technical glitch the auditors did not see it.
The auditors noted they also discovered several minor financial record-keeping discrepancies, but agreed with Muncy that the errors were due to a new accounting system that the city installed in October 2019.
The city was not penalized for any of the errors, but auditors encouraged city officials to work with the company they purchased the system from to make sure the errors don’t occur during next year’s audit.
A poor, or mediocre audit can affect a city’s credit rating and result in higher interest rates if officials borrow money or pursue a bond, Muncy said.
The city received “clean” or high marks in their audit, which revealed that the city is financially “very healthy,” auditors said.
The city ended the 2019-20 fiscal year with a $105.9 million balance in its general fund and boasted $24 million in its fund equity, which is also referred to as its contingency savings account.
“The city traditionally is very conservative financially,” Muncy said. “But due to COVID and the drop in oil and gas, we knew that we had to be even more conservative.”
Council is expected to vote to adopt the audit during their June 22 meeting.
