Unable to continue pursuing the wildly ambitious agenda of its former executive director, Texas Energy Center operations have been reined in and refocused on a contractual responsibility to create new jobs.

Texas Energy Center - Third Part Of A Series

The Series:

Part 1 → Economic Engine Or Empty Promise? Part 2 → Ambitions Outpaced Its Pocketbook → Born Amid A Heap Of Hype Part 3 → Who Really Landed The Jobs? Part 4 → Sugar Land Quits TEC, Comes Back In 2 Weeks

In return for a $3.6 million grant from Gov. Rick Perry’s Texas Enterprise Fund, the TEC negotiated - and then renegotiated - a contract that originally obligated it to invest at least $20 million in a new headquarters by 2007, and be “significantly responsible for creating” 1,500 high-paying jobs by 2009.

Under terms of the amended contract, the TEC no longer has an obligation to invest in a building. It also no longer has to be “significantly responsible,” but rather “directly involved in creating” 1,500 jobs, in increments over time. And those jobs no longer have to be created by 2009. Instead, under the revised contract, the TEC has until 2016 - seven additional years.

Critics say even with the extra time, the TEC still has failed to perform these contractual duties. But the center’s de facto director and economic development officials in Gov. Perry’s office say the TEC already has “certified” more jobs than it’s required to at this point in time.

In the end, whether the TEC has succeeded or failed may depend on what “directly involved in creating” jobs actually means.

In order to attract new employers, some economic development organizations traditionally spend significant percentages of their budgets on activities such as creating national or regional marketing campaigns to tout an area’s image or location, traveling out of state to meet with site selectors, conducting industry research to identify target companies, or paying to bring corporate executives in on site visits.

TEC financial records provided to its board members and the governor’s office reflect no such activity. The center appears not to have a marketing budget. Its web site has been shut down. It spent a total of $141.94 on “publicity” activities during fiscal year 2005-2006. And during the same year, it spent nothing on travel.

Mirrored Efforts
As for the TEC’s involvement in creating jobs, it appears to mirror the efforts of the Greater Fort Bend Economic Development Council. That may be because, since late 2004 when a lack of funding forced the exit of its entire staff, top TEC and economic development council officials have become nearly one and the same.

Former EDC president Herb Appel is the TEC’s treasurer and secretary. EDC Chairman Bob Brown also serves as TEC chairman, and is designated by Fort Bend County to serve as the county’s representative on the TEC board. And EDC President Jeff Wiley also serves in a contractor’s role as the TEC’s director - for which the EDC has been charging the energy center $10,000 a month.

“The original energy center scope had a lot of things attached to it,” Wiley said in a recent interview. “It had fuel cells, it had zero emission power plants, it had RPSEA and leveraging federal funds for Texas, and it had creation of the TEC, largely in a tenant services capacity - and an organizational structure to essentially manage all of those things.”

But that structure had been based on tens of millions of dollars in state funding that never materialized. So the TEC was without enough money for staff, and Wiley needed to alter the structure.

“I think the board prudently looked at the operational functions and decided to minimize that,” Wiley said.

In spite of the obvious challenges of working to create jobs without money for marketing, travel or entertainment, the TEC was able to exceed its “job target” as of March 31, 2006, and certified creation of 365 jobs, according to a May 2006 letter from Wiley to Gov. Perry’s Economic Development and Tourism Division.

The TEC job claims, and the quality of due diligence performed by the governor’s office in certifying those claims, resulted in some highly publicized criticism in the summer of 2006, by state Rep. and House Democratic Caucus Chairman Jim Dunnam, D-Waco.

A Call For Scrutiny
In a July 2006 letter, Dunnam urged state Audtior John Keel “in the strongest possible terms” to conduct an audit of the Texas Enterprise Fund and the Texas Energy Center, where he said there was “evidence of corruption and fiscal mismanagement.”

Keel did not comply. At the time, a spokeswoman for Gov. Perry called Dunnam’s letter “a baseless political attack designed to distract attention” from the Enterprise Fund’s success in creating jobs.

“There is absolutely no credible evidence that TEC met its contractual obligation to create 100 jobs by Aug. 31, 2005,” Dunnam said in the letter. “After lingering in clear violation of this contract for three months, on Dec. 1, 2005, the governor conveniently covered for TEC’s failures by amending the initial contract with TEC.”

“I don’t know what the beef is,” Wiley said at the time, “unless it’s just political grandstanding.”

As for the 365 jobs Wiley submitted for certification in May 2006, they included 163 from Sunoco Logistics Partners LP, 88 from Schlumberger Technology Corp., 77 from Mechanical Equipment Co., 11 from a software company called First Genesis, and 26 others from six TEC tenants.

For each company with jobs being “certified” as qualifying to meet obligations of the state contract, the TEC is required to complete an “opportunity certificate” for the governor’s office. Among other things, those reports require that the TEC name the job creation dates, the number of qualifying jobs, their location, and what the TEC did to create them.

In almost all of the opportunity certificates on file at the governor’s office, the TEC does not say what role it played in job creation, but instead repeats the same three paragraphs of boilerplate language.

Facilitating Meetings
“The Texas Energy Center is comprised of local, public and private institutions engaged in bringing high technology solutions in the advanced energy related fields to Texas,” the boilerplate reads in part. “The Texas Energy Center was established to provide for statewide coordination and support for economic development in the advanced and alternate energy fields, preserve and promote advanced energy research and development and preserve and promote advanced energy manufacturing in Texas through innovative state incentives to the industry, including leveraged local, regional and federal support.”

In three instances, however, EDC officials signing off on the opportunity certificates went beyond the boilerplate and provided more information.

In the case of Schluberger, the EDC’s Brown said in a June 20, 2005, certificate the TEC was “instrumental in facilitating meetings between local government institutions and Schlumberger to facilitate an incentive package and local cooperation to attract expansion to the Sugar Land campus.”

In the case of Mechanical Equipment Co., Brown said in a Dec. 9, 2005, certificate that the TEC “assisted MECO in site selection searches and coordination for relocation of their operations to Texas including a permanent site for future operation and expansion. Brown later wrote a letter to the governor’s office asking to allow children of incoming employees for the Louisiana company to be considered qualified for in-state tuition rates at Texas public universities.

In the case of Sunoco, Brown said the TEC helped in “facilitating meetings,” wrote a letter asking for a waiver of out-of-state tuition requirements for children of Sunoco employees moving into Texas, and paid for a blind classified ad in the Houston Chronicle designed to illustrate the available local work force.

The governor’s office also had documents showing what one former Sugar Land official called a more likely reason - outside of location - that Sunoco Logistics chose to move its operations to Fort Bend County. The city agreed to provide, through the Sugar Land Development Corp., a $500,000 cash incentive and a 10-year tax abatement.

Diligence Due?
Robert Black, a spokesman for Gov. Perry, was asked if state economic development officials believe the information provided in the opportunity certificates meets the due diligence required in the state grant contract.

“The short answer is yes, we believe so,” Black said in a recent telephone interview. “Right now we show the energy center at 365 jobs created.”

Black noted that a manager for each company whose jobs are included in the opportunity certificates was required to sign the form, signifying that the TEC had performed as stated.

Asked if the governor’s office has had any concerns over the energy center’s ability to produce new jobs for the state without the benefit of a staff, Black seemed taken aback. “I don’t think that’s accurate,” he said. Informed the TEC had been without employees for at least a year, Black put a caller on hold for several minutes, then returned to the phone and said, referring to TEC board directors, “the members are the ones that run the center.”

Wiley echoed that assertion. “Outside the energy center, we’ve got a number of jobs that we turned in for certification to the state. And those vary in scope and purpose, but they all have one commonality,” he said. “And that is that one of the energy center directors or multiple energy center directors have worked to get them to locate here or expand here.”

With the exception of Mechanical Equipment Co., which located in Stafford, all the rest of TEC’s certified jobs are located in Sugar Land.

Taking Credit
While Wiley and the governor’s office indicated the TEC can fulfill its obligation of direct involvement in creating 1,500 high-paying jobs simply by certifying new employment created mostly through Sugar Land’s efforts, that belief doesn’t appear to be shared by city officials.

Asked what he believes the TEC’s role was in bringing the Sunoco jobs to Sugar Land, City Manager and TEC board member Allen Bogard said only, “a portion of the salary of Jeff Wiley was paid for by the TEC.”

In a September 2006 email to Wiley from Joe Esch, Sugar Land’s executive director for business and intergovernmental relations, Esch brings up the subject of an upcoming press release announcing the relocation to Sugar Land of Bechtel Equipment Operations.

“At issue was including in the joint release the assertion of the Texas Energy Center as a responsible party for the Bechtel project,” Esch said in the email, which was obtained by FortBendNow in a Texas Public Information Act request. “There is a clear difference between qualifying jobs to meet the TEC’s contractual requirement with the state and actively seeking to create a perception of the TEC as an active, successful, going concern.

“To apply that thought further, while I believe it would be appropriate to make reference in this press release that the jobs relocating from out of state will quailify for credit with the state under the Texas Energy Center’s funding contract, I do not believe it is either appropriate or honest to suggest that the Texas Energy Center was responsible for or played any significant part in the Bechtel project.”

Next: Breaking Up Is Hard To Do

In return for a $3.6 million grant from Gov. Rick Perry’s Texas Enterprise Fund, the TEC negotiated - and then renegotiated - a contract that originally obligated it to invest at least $20 million in a new headquarters by 2007, and be “significantly responsible for creating” 1,500 high-paying jobs by 2009.

Under terms of the amended contract, signed by Gov. Perry in December 2005, the TEC no longer has an obligation to invest in a building. It also no longer has to be “significantly responsible,” but rather “directly involved in creating” 1,500 jobs, in increments over time. And those jobs no longer have to be created by 2009. Instead, under the revised contract, the TEC has until 2016 - seven additional years.

Critics say even with the extra time, the TEC still has failed to perform these contractual duties. But the center’s de facto director and economic development officials in Gov. Perry’s office say the TEC already has “certified” more jobs than it’s required to at this point in time.