The Odessa Development Corporation said goodbye to ousted board member Jeff Russell earlier this month, presenting him with a plaque. Russell thanked them and then offered harsh words of criticism for the city.
Russell, who spent a year on the ODC, said the board is in need of “serious reform.”
“The ODC is tasked with managing over $60 million in taxpayer money, yet the current structure of the ODC almost ensures that it can’t do the work that it was entrusted to do. Voters were sold on the idea of devoting tax dollars to diversify our economy and yet 20 years later, our economy is more dependent on oil than ever before,” Russell said. “Instead of diversifying the economy the ODC has often acted as a kind of philanthropic organization, pumping public dollars into projects way outside the ODC’s main charter.”
Others involved with the ODC for a longer period of time such as Odessan Betsy Triplett-Hurt, who sat on the ODC for six years and is a current ODC compliance committee member, said many of the questions being asked are due to inexperience.
“The questions are valid and they should be asked, but what is important is that they should listen to the answers,” she said.
Russell also said he has serious questions about the ODC’s finances and how they are monitored.
“I learned that hundreds of thousands of taxpayer dollars were funneled into a variety of consultants and there was little understanding or accountability as to what these dollars are accomplishing. I learned that the ODC spends over $700,000 a year on advertising with no provable return on investment,” Russell said. “I learned the simple re-posting of news on the ODC Facebook page results in $150 charge… I learned that the ODC’s compliance audit contractor really doesn’t evaluate or audit much of anything.”
Russell also touched upon his ouster from the board by the city council last month.
“The last thing I learned is that attempting to be honest and aboveboard can get you voted off just like that by hypocritical city council that has one set of rules for their detractors, and a totally different set of rules for themselves, as Mr. (Steve) Thompson could attest. Yes, I learned a lot and I’m glad I had the opportunity to serve,” Russell said.
On Jan. 11, the Odessa City Council voted 4-3 to remove Russell from the ODC after Thompson and fellow council member Mari Willis alleged he spoke on a matter during a Dec. 8 ODC meeting despite having a conflict of interest. They said that although he did abstain from the vote, he should not have even spoken on the matter. They also said he failed to file a form notifying the city of the conflict in a timely matter.
Russell later explained he abstained from voting on a Rhodes USA matter because he mistakenly believed Neo Construction and Rhodes USA were affiliated and he has done business with the former. Russell said he has also since discovered that his business with Neo would not be considered a conflict of interest under the law.
In an interview following the meeting, Russell said he believes he was “voted off the island” because he had become a “squeaky wheel” who routinely questioned how things were being done by the ODC and the compliance committee, a 12-member volunteer board responsible for vetting companies seeking grant funding from the ODC.
FINANCES
In his opinion, the ODC should have its own staff. Currently, City of Odessa staff, contracted companies and the Odessa Chamber of Commerce share responsibilities. He further believes the ODC compliance committee should be disbanded.
Russell questions whether there are enough checks and balances in place when it comes to the ODC’s finances. He further believes a lack of oversight may allow grant recipients to fall short of their contractual obligations.
In one instance, Russell said he and fellow member Kris Crow discovered one contract recipient inflated their employee hour figures with sick days, bereavement days and vacation days. They also included ineligible expenses on their expense sheets, including relocation and auto expenses.
“We found one guy that had worked one day but had a $16,000 payroll amount listed,” Russell said.
“I’m not saying it’s intentional, but it was there and (the auditor) should’ve picked up on it,” he said.
During the ODC meeting Feb. 10, board members had a lengthy discussion about ODC not having its own bank accounts and the city’s auditing practices.
Crow told his fellow members that “co-mingling” ODC’s assets with the city’s seemed dangerous to him. Although he stressed he wasn’t alleging any wrongdoing, he said he’s only getting the financial information the city and the city’s auditing firm, Weaver and Tidwell, want him to have.
Assistant City Manager of Administrative Services Cindy Muncy assured the board there are plenty of checks and balances in place and there are benefits to having the same firm conduct city and ODC audits, including familiarity with the books.
ODC members Melanie Hollman, Chris Cole and David Boutin expressed confidence in the status quo, with Hollman saying the way things are done comports with industry standards. They agreed they thought forcing the city to separate the books and audits would be onerous.
Having said that though, the board agreed it would be a good idea to investigate what it would take to separate the two entities’ finances.
In the interview after the meeting, Russell said he also has issues with the way the city is investing the ODC’s funds. The ODC is seeing very little return on their funds, he said.
“We know when our obligations are coming due, why are we buying three month CDs that will pay nothing when we know we’re not gonna need this chunk of money for five years for the last payment for Nacero? If we invested for five years, then we’d have a lot better return,” Russell said.
Hiring a separate attorney for the ODC makes sense because the city attorney often finds herself caught between the city and the ODC, Russell said. A separate economic development director also makes sense for accountability, he said.
TOO MUCH SPENDING?
Russell also said he and Crow had begun asking questions as to the ODC’s marketing budget. The ODC is spending thousands on a social media campaign and seeing little in return, he said.
In his opinion, the ODC compliance committee needs to be disbanded for several reasons, Russell said. They find ways to justify giving organizations grant funding even when they don’t fall within the ODC’s mission, they limit the information provided to ODC members and they operate in secret, he said.
Frequently, Russell said the compliance committee will recommend giving a company millions of dollars in grant money and hand the ODC members a board packet lacking information. He used a fictional trash company as an example.
“We didn’t have any information on the company beyond their name, address and these guys are going to make trash trucks and they say they’re going to create 10 jobs, and they’re gonna invest $3 million and that was about what we got. They would say ‘It’s been through compliance, and we think that they’re eligible for a million dollar grant,’” Russell said. “We’re going ‘OK, how is that calculated?’ Because we do have what they call a matrix of how that’s supposed to be calculated. ‘Well, compliance did it.’ I said, ‘OK. That’s great. I want to see it.’”
Other communities don’t have compliance committees, Russell said.
“The reason why they’re called the compliance committee is to make sure that the applications are in compliance with the law, with the rules of the ODC. But really, what I quickly began to understand was that the Compliance Committee had more authority and more ability to look at deals than the ODC board,” Russell said. “They knew much more about a potential grant applicant than the ODC board did. And again, they were doing it all in secret. Meetings weren’t posted. There were no minutes published to the meetings. I’m a big open meetings guy.”
While there are some things that would have to be done in executive session, most of what takes place during the compliance committee meetings could take place in public, Russell said.
THE MISSION
Odessa City Councilman Steve Thompson said there is nothing wrong with the way the ODC and its compliance committee operate.
“They think there’s monkey business going on at the ODC and there’s not. It’s heavily scrutinized, and they want to change it, OK? They want to change it in my opinion, because they want control of that money, they want to control the whole process, make it a separate entity and that’s not the way it is set up,” Thompson said. “That would require a change by the voters. So all they’re doing, just like that meeting the other day, all they’re doing is a waste of time.”
Setting up the ODC with its own attorneys, auditors and the like would be a huge unnecessary expense, Thompson said. Crow and any others who agree with him need to focus on the actual mission of the ODC, he said.
“They sit on that board to evaluate projects for economic development for the City of Odessa. That’s the key thing here,” Thompson said. “They weren’t asked to get on there and look at financials for the entities. They weren’t asked to get on there to see how the ODC operates. Their only responsibility is to evaluate projects, see if they meet the criteria and see if they can help negotiate contracts and bring them to the city for approval. That’s their job. They’ve gotten totally outside of their work scope, or however you want to say it, job description.”
Triplett-Hurt, who sat on the ODC for six years and is a current ODC compliance committee member, said the city considered taking on economic development in 2018 and quickly determined the city could never afford the staffing it would require.
“I thought it would be a great idea, too, but then I realized ‘Oh, there may be more to it than meets the eye,” Triplett-Hurt said.
Thompson agreed.
“These guys talk about wasting money. ‘Oh, look at this, look at that, what that’s gonna cost you?’ What do you think attorneys are gonna cost you for that group? 150 or $200,000 a year, plus your own secretary, your own auditor,” Thompson said.
TRANSPARENCY
Triplett-Hurt, who was the first woman chair of the ODC, said she understood people’s concerns about the secrecy surrounding the compliance committee’s work and it’s why she allowed members of the Hispanic, Black and Odessa chambers of commerce to become ex-officio members of the committee. It’s also why there are now three ex-officio members of the ODC on the committee, she said.
The fact is companies and organizations would stop pursuing opportunities in Odessa if they were required to divulge their financial information in an open forum, Triplett-Hurt said. In addition, they also wouldn’t want to run the risk of their trade secrets getting out, especially if there was no guarantee they’d get the grant funding they sought.
Boutin said he understands people’s concerns and he and Manskey “have agreed and are working on a template that would provide more information to the board members, but stop short of those trade secrets and detailed financial information.”
The compliance committee is made up of bankers, attorneys, realtors and developers, people well-suited for the job they’ve been given, Triplett-Hurt said.
“If you don’t have an organized committee that is comprised of members with certain skill sets then you’d have people sitting around a coffee table discussing what they want and that’s when there’d be a lack of transparency,” she said.
The questions being asked are due to inexperience, Triplett-Hurt said.
“The questions are valid and they should be asked, but what is important is that they should listen to the answers,” she said.
Boutin concurred with Triplett-Hurt.
“It’s kind of human nature for people who are new to a board or committee to have some kind of a preconceived notion of how that board committee functions, what kind of decisions they might be making, how they make those decisions, what the mission is, what the vision is,” Boutin said. “Usually what happens is, once they start participating, I think, more often than not, they conclude that what their preconceived notions were, for the most part, are not accurate.”
Odessa is one of the biggest oil fields in the world, but the city is only giving grants to oil field companies that are bringing new, innovative technology to the area along with jobs, Triplett-Hurt said.
RESULTS
“In my humble opinion, we’re doing an excellent job based on the quality of people who are reviewing the information,” she said. “They have the expertise and the skill sets needed.”
Boutin said he is “leaning slightly toward” hiring an attorney for the ODC, but he doesn’t believe the ODC needs its own economic director.
“First and foremost, I think that the chamber, as our contractor, has done a tremendous job. Just look at the performance. Since inception, we’ve created a tremendous number of jobs, and a huge dollar investment of capital investment with regard to these grant recipients,” Boutin said. “The other thing is, it makes it extremely easy, in fact, it it lends itself perfectly to tapping the volunteers in the chamber.”
Odessa City Councilwoman Denise Swanner said she can see the arguments from both sides and appreciated Russell’s service.
”I think he asked hard questions and sometimes people don’t like to answer hard questions, you know, good, bad or indifferent,” Swanner said. “Sometimes people ask questions, just for a lack of education, and they want answers, because they are sitting on something new and people get offended by that. I think it’s always good to ask questions, right? Nothing is a stupid question in my opinion.”
