DID MITTE CULTURAL DISTRICT SELL COB A BILL OF GOODS?

By Juan Montoya

Just a few months after the City of Brownsville Commission voted to support the application of the Mitte Cultural District to the Texas commission for the Arts, some members and the public are having second thoughts about the vote.

And the major question asked is: "Did the proponents of the cultural district who asked the city to approve expanding its boundaries that will more than double or triple the original size to include some of the city's best downtown residential and commercial real estate falsely state that the expansion was required by the Texas Commission for the Arts?

And will the the city-funded facilities inside the boundaries – and the income streams and state grants –  come under the Mitte District's board's control instead of the city's own cultural and art entities?

In hindsight, some city advocates say that give the Mitte Foundation's checkered past in real estate speculation (and litigation) foreshadow the same happening in Brownsville as the cultural district attempts to increase its footprint in the city's arts and cultural events. 

The Mitte Cultural District applied for designation from the Texas Commission of the Arts in 2016 and were turned down. They then initiated changes in operations and met face-to-face with TCA deputy director Bob McMillan – since retired – who allegedly told them they were on "the right track" with the planned expansion.

After they were turned down, they said the MCD partnered with the Mitte Foundation to develop a list for a future application for designation based on written and in-person feedback from the Texas Commission on the Arts. They told the commission that it was determined that the main areas of reevaluation were expanded district boundaries, economic self-sufficiency, and increased focus on Art & Music programming.

Later, the Mitte Foundation acquired several parcels of land they say are committed to the construction of facilities which will provide a regular revenue stream for the MCD, offer more venues and entities for collaboration on programming, and a greater draw for locals and tourists with a more robust cultural programming.

In their presentation to the city commissioners on August 18, 2020, the directors told them that the TCA had specifically recommended that the boundaries be expanded to make their application for cultural district designation more competitive. The recommendation to approve was made by Ramiro Gonzalez, director of Government and Community Affairs.

But a letter sent to City Manager Noel Bernal and circulated to the commission the day before the item came to a vote,  the MCD's claims that they needed to expand the boundaries to receive TCA approval – and grants – as a cultural district has been challenged.

The writers point out that Dr. Gary Gibbs, Executive Director of the Texas Commission on the Arts, was aware of the information put out in the Brownsville Herald by the MCD advocates and to the citizens of Brownsville, on Monday, August 17, as the reason for the huge expansion of the Mitte Cultural District was incorrect.   

Gibbs said he had a copy of that article and said that if anyone had just asked, TCA would have told them that the information was incorrect. Gibbs wet on to say that said that applying for a cultural district without a vibrant Arts and Culture infrastructure would be like “putting the horse before the cart.”

He also said that the expansion that was just done would make the size of the district too large and would likely cause application denial because the TCA focuses its efforts ijn funding district which are "walkable." 

Brownsville already had appointed a Arts and Culture Task Force which has been seeking the "cultural district" designation by the TCA and are focusing their efforts on also applying for and receiving one or  more authentic cultural district designations for Brownsville sometime in the future.  According to the TCA, arts and culture tourist dollars are the largest amounts of tourist revenue for a community.

Meanwhile, the involvement of the Mitte Foundation with the Brownsville MCD has also raised concerns. 

In Austin, two plaintiff partnerships – 1st and Trinity Super Majority and 3rd and Congress Super Majority – say attorney Gregory Milligan, individually and as receiver for the partnerships, along with the Roy F. & JoAnn Cole Mitte Foundation engaged in a  complex civil conspiracy to essentially swindle assets from the two real estate partnerships  in Travis County.

A major part of the lawsuit filed July 13 alleges that although the Mitte Foundation holds only a 15.84 percent minority limited partnership interest in Trinity and therefore has no authority to control the affairs of the partnership, the Mitte Foundation is a “repeat offender having breached these obligations with abandon, in collusion with the other named defendants and with their knowledge, approval, and active assistance,” the suit states. 

The partnerships allege that lawyer Milligan was allowed to engineer a fire sale of the properties his compensation could … result in a nearly $4 million pay day, which notably is greater than the fair market value of Mitte’s entire interest in both Partnerships.” 
The super majority is asking that the court declare the receiverships null and void.

In 2008, The Chronicle of Higher Education reported that Roy F. and Joann Cole Mitte Foundation was worth around $26-million as late as 2006 had suddenly announced it would stop providing hundreds of thousands of dollars’ worth of scholarships, leaving six universities to scramble to support the dozens of students who were to receive foundation aid.

The article reported that it was unclear why the foundation ran out of money. The foundation’s lawyer says a downturn in the stock market sank its finances, but news reports indicated that the former president, Scott Mitte, son of the founders, spent foundation money lavishly on things like travel and a custom tuxedo. Scott Mitte was also arrested that year after he was caught with a large amount of cocaine.

All the college officials – including University of Texas and Texas State University – quoted in the Chronicle article say they will not leave students in the lurch and will support them with emergency funds. Some of the universities had known about the foundation’s financial woes, but to others the collapse came as a surprise.

If there were no red flags going up then, there were some when it was learned that a new LLC had been registered July 27, 2020 with the Texas Secretary of State named Hernandez and Mitte LLC and listed the principals as attorney Luis and Rita Hernandez, from Brownsville, and Mike Hernandez, from Grand Prairie.

Luis Hernandez is the former legal counsel for the Greater Brownsville Incentives Corporation who was let go by the board. Dr. Rita Hernandez is his wife, a former Assistant Area Superintendent for the Brownsville Independent School District and Education Director for Mike Hernandez's Cameron County Education Initiative, the founder of OP 10-33.

When asked about his involvement in the LLC, Mike Hernandez said he had told his cousin and wife Rita that he was not interested in being involved in the cultural district and had asked that his name be removed from the SOS registration, which he said they did.

What the Hernandez-Mitte LLC is for, is anyone's guess.