While all three bills by State Rep. Joe Deshotel, D-Beaumont, aimed at expanding allowable projects funded through Port Arthur’s EDC have passed the House, the Lamar State College-Port Arthur students’ housing measure faced the most opposition.

House Bill 2473, which survived a 70-69 House vote May 4, would allow the Port Arthur EDC to use tax money for the development or construction of housing facilities on or adjacent to the LSC-PA campus.

Three lawmakers, including Speaker of the House Joe Straus, were listed as present but not voting according to the House Journal report for that day. Also, the journal included statements from two lawmakers who said afterward that their votes were recorded opposite of how they intended to vote.

Debate on HB 2473 is scheduled for Wednesday before the Senate Committee on Economic Development.

Two other measures, HB 1966 and HB 1967, are also written almost exclusively for the city of Port Arthur’s EDC.

EDCs in Texas are allowed to spend sales and use tax monies to fund certain economic development related projects although the specific type of projects allowed is a point of contention between supporters and opponents.

Speaking on the House floor, Deshotel said HB 2473 is intended to allow the PAEDC to work with LSC-PA and a private developer to build housing for students in the downtown area as part of revitalization efforts.

When questioned by Rep. Rob Orr, R-Burleson, Deshotel said the bill would carve out the PAEDC from restrictions that other EDCs across the state face.

Orr said he was concerned because the Legislature has been protective on how EDCs can spend sales and use tax revenue. Deshotel said the bill is necessary because LSC-PA is prohibited from issuing revenue bonds to pay for housing.

When asked who would own the proposed development, Deshotel said it was his understanding that the college would own the housing development and that the project would operate under a 50-year or 100-year lease arrangement.

Lawmakers’ shouts of “oh” filled the chamber after the close vote was announced.

HB 1966, would expand the definition of an EDC “project” to include infrastructure and telecommunication improvements and facilities to fight coastal erosion.

The bill, which passed 140-1 in the House Thursday, would allow projects deemed “suitable to develop and revitalize areas” but only in cities of more than 10,000, which are located in municipalities in a county bordering the Gulf of Mexico, or the Intracoastal Waterway and in an area that exceeds the state average unemployment rate.

HB 1967, which passed the House 103-19 also on May 4, seeks to qualify funding for projects in that same geographical description but which are geared to job training and life-skills training for the unemployed. That bill will also be heard Wednesday before the Senate Committee on Economic Development.

Supporters of the three measures argue that current state law does not allow these projects to be funded with EDC monies while opponents say that current state law does allow the projects proposed in both HB 1966 and HB 1967.

But as for HB 2437, opponents are wary of opening up economic development corporation statutes by “carving out” allowances that give some areas an unfair advantage.           

“Historically, the Legislature has been reluctant to change the economic development corporation act going back to 1989 in allowing for the expenditures by EDCs to go into areas that have their own fees or tax base structures,” said Carlton Schwab, president and CEO of the Texas Economic Development Council. “The Legislature has never been interested in funding hospitals with EDC funding or college programs or general infrastructure.”

The state has not passed any carve outs allowing specific expanded EDC authority for cities in the last 10 years, Schwab said.

Schwab met in March with Deshotel, EDC Executive Director Floyd Batiste, Councilman Raymond Scott, Jr. and then Councilman Harold Doucet, Sr. where he pointed out how Local Government Code provisions governing EDCs would allow projects proposed in both HB 1966 and HB 1967.

In a March 27 letter to the group after the meeting, Schwab said Section 501.103 outlines a number of allowable expenditures “suitable to promote or develop new or expanded business enterprises” regarding possible redevelopment of “a certain area along Proctor Street in downtown Port Arthur.”

The letter goes on to state that “there are certain incentives that the City of Port Arthur could use to help make the redevelopment of that area more attractive to the private developer considering the project.”

Life skills training and job training is also covered by existing state law, he said.

“The training that you described for local citizens in support of the petrochemical industry in your area would certainly meet the provisions of 501.102, and, if you did this training with the written support of your local refineries, would meet the criteria outlined in Sections 501.162,” the letter states.

In an April 1 letter responding to Schwab, Kaprina Frank, interim EDC chairman, calls Schwab’s interpretation of state law “misplaced.”

“Under current law the PAEDC cannot fund the redevelopment of downtown Port Arthur because the project does not qualify as an ‘authorized project’ as defined within Subchapter C, Chapter 501, Local Government Code,” Franks’ letter reads. “Therefore, your suggestion that Section 501.103 would allow the PAEDC to fund this development project is misplaced.

“First, Section 501.103 only allows 4A funds for improving infrastructure when the improvements are tied to a specific business enterprise. Here, the proposed infrastructure improvements are not related to a specific business enterprise.”

HB 1966 would remedy the current challenge the EDC faces by providing “flexibility for PAEDC to expend funds on infrastructure improvements which would foster and develop new economic advancement opportunities without the improvements being tied to a specific end user,” Franks’ letter states.

HB 1967 is necessary, Franks argues, because current state law would not allow the PAEDC to fund “pre-training” programs not offered by a business enterprise.

“Specifically, Section 501.162 limits funding for job training programs offered through business enterprises that will agree in writing to certain conditions,” the letter states. “Port Arthur has a high unemployment rate and a high percentage of citizens with limited skills.

“As a result, businesses with ‘on-the-job’ training programs are reluctant to spend funds to train individuals lacking basic skills.”

Schwab said that opening up current law to allow projects specifically for one area in the state would create a “slippery slope.”

“We support EDC efforts in Port Arthur but it’s never been done before and unprecedented,” he said. “We’re not against what Port Arthur and the Port Arthur EDC is trying to do. We’re not even against the dorm if Lamar State College-Port Arthur wants to build it but we’re opposed to building it with money out of the EDC fund.”

Schwab said his organization will continue to oppose all three bills during Senate debate.