A Performance Audit
An Audit Report on Selected Major Agreements Under the Texas Economic Development Act
Under the Texas Economic Development Act (Texas Tax Code, Chapter 313), independent school districts (ISDs) have entered into agreements with businesses for limitations on the appraised values for property (agreements), and those agreements have enabled capital investments and job creation benefiting the local and state economies.
The State Auditor’s Office selected and audited agreements at three ISDs. For those three selected agreements, auditors reviewed the corresponding applications and the agreements to ensure that they complied with applicable Texas Tax Code, Chapter 313, requirements and requirements of the Office of the Comptroller of Public Accounts (Comptroller’s Office).
All three ISDs processed applications and formed and executed agreements as required. In addition, all three ISDs’ conflict of interest policies complied with statutory requirements, and the ISDs had processes in place for disclosing conflicts of interest.
All three ISDs ensured that the payments under the agreements were calculated correctly. In addition, Canyon and Iraan-Sheffield ISDs received their payments in accordance with statutory and agreement requirements. However, Brazosport ISD did not receive its payments for tax year 2019 by the January 31, 2020, due date identified in the agreement. After auditors brought this to Brazosport ISD’s attention, the ISD followed up with the applicant. The ISD received the payments on May 6, 2020.
All three ISDs submitted all required monitoring reports to the Comptroller’s Office.
The three agreements with businesses for limitations on appraised values of property (agreements) audited included:
- Brazosport Independent School District’s (ISD) agreement with MEGlobal Americas Inc. (Application No. 1112).
- Canyon ISD’s agreement with Astra Wind LLC (Application No. 1040).
- Iraan-Sheffield ISD’s agreement with Midway Solar LLC (Application No. 1170).
The ISDs processed the applications and developed agreements appropriately.
The audited ISDs’ conflict of interest policies included all requirements in Texas Local Government Code, Chapters 171 and 176.
Canyon and Iraan-Sheffield ISDs asserted that they did not identify any conflicts of interest associated with their agreements.
For Brazosport ISD, two board members with conflicts of interest associated with the ISD’s agreement appropriately submitted conflict of interest statements prior to the board voting on the agreement, and those board members did not participate in voting related to the agreement. However, the ISD did not ensure that an additional board member with a conflict submitted a conflict of interest statement prior to the board voting on amendments related to the final executed agreement, as required by its policy. According to the ISD’s board meeting minutes, that board member did not vote on the amendments to the agreement.
All three ISDs ensured that the payments under the agreements audited were calculated correctly. Canyon and Iraan-Sheffield ISDs received their payments in accordance with statutory and agreement requirements.
However, Brazosport ISD did not receive a revenue protection payment of $512,254 and a supplemental payment of $395,571 for tax year 2019 from the applicant (business) by the due date of January 31, 2020. After auditors inquired about the missing payments, the ISD contacted the applicant. The ISD received the payments on May 6, 2020.
All three ISDs submitted all required monitoring reports to the Comptroller's Office.
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