IS THE BCIC NEXT IN LINE FOR A COMPLIANCE AUDIT?

Special to El Rrun-Rrun

After the City of Brownsville Auditor and her assistants got done examining the performance of the Greater Brownsville Incentives Corporation (GBIC) and found that the administration under then-CEO and Executive Director (and now city manager) Helen Ramirez lacked sorely in the formal due diligence in vetting two companies owned by the same person that ended up costing the city some $750,000 without nothing to show for it, the GBIC implemented procedures to prevent a future recurrence. 

Under the agreement with 9Point8 Capital, an advisory company, it was supposed to create local employment (20 full time equivalent jobs – 15 back office and 5 hatchery jobs), create a business “hatchery” to help startups find funding, fund space program scholarships at University of Texas at Rio Grande Valley (UTRGV), and bring capital investment for space startups within the city limits of Brownsville.

The original terms for payment were to be $1,000,000 in incentives, paid $250,000 every 6 months for two years per the original term sheet. Per information given to the GBIC board, the entity was also supposed to bring in taxable business personal property valued at $10 million to within the city limits of Brownsville.

On January 6, 2023, the city auditor informed the city's  Audit and Oversight Committee that the company failed to deliver the services it had promised and had been paid two payment of $250,000 each, and recommended that a compliance  audit be performed on the agreement. The committee agreed.

Although the auditors reviewed the hundreds of pages of documentation retrieved by GBIC, they reported that it was not clearly documented what the application and screening process looked like or how it should have looked at the time of occurrence Ramirez signed the 9Point8 Capital agreement.

In the compliance audit report, they state that: "We did find a note indicating accepting self-reporting from the grant recipient would be acceptable in determining compliance. We deem the internal controls were inadequate because of the lack of policies and procedures and reliance on grantee self-reporting."

The cavalier way in which the GBIC and its CXEO Ramirez glossed over the company's bona fides also caused the compliance auditors to implement a process to determine future applicants' track record, net worth, and establish other safeguards to protect the public's money.

Just last week, the Oversight and Audit committee agreed with the auditor that the Brownsville Community Improvement Corporation  (BCIC) might benefit from an internal audit as its administration and its board hand out $100,000s to grants without a clear procurement system and seemingly capricious rules that change to favor its recipients that smack of conflict of interest. 

The BCIC board will hold a regular meeting open to the public today at 5 p.m. at the eBridge Center for Business & Commercialization, 1304 E. Adams St., Brownsville.

One area of concern to auditors and the general public is that when Elon Musk gave the city $2 million to improve the downtown economy and create jobs for local residents, they approved grants to some board members and their families. 

The awarding of grants to family members was the modus operandi at the BCIC with then-chairman Michael Limas 's brother Fabian, who co-owns Las Ramblas with his brother, getting in on the action the next month on June 27, 2019. This despite the GBIC's own express prohibition against the practice in its policy manual. A motion to make them eligible was voted down two meetings ago.

On July 30, 2020, BCIC board member Arturo "Turi" Treviño's brother Alejandro got $10,000 for a his business as did Pedro Cardenas for his Mi Pueblito Restaurant, before he was elected as a city commissioner. Then-Chairman Limas also cashed in on the action, as did his brother Fabian who double dipped for his law firm and Las Ramblas.

At the last meeting of the Audit and Oversight Committee Mayor John Cowen and local attorney Francisco Orozco agreed that similar compliance audits be performed on other boards, including the BCIC. Commissioner Rose Gowen didn't seem to happy, but the auditor let it be known that growing concerns from citizens and some local officials about the board's process and transparency could move them up from down in the list to the very top.

This apparent self-dealing in the awarding of $100,000s of grant money in such a seemingly haphazard manner without any clear guidelines, or guidelines that seem to change from day to day, fly in the face of the city's Code of Ethics that prohibits grant money to go to board members, city officials and employees and their relatives and will be one of the main issues of the audit, committee members were told.

Will such audit reveal that no uniform Standard Operational Procedures (SOP) or a process for a "claw back" provision to force non-compliant award grantees to return the money exist at the BCIC? 

And will it also examine the instances where obvious conflict of interest issues exist in the awarding of public money to city officials, former city officials, city employees, and board members and their families? The most recent revelations indicate that former mayor Trey Mendez was awarded $85,000 even though the city's code of ethics prohibits former city officials from doing business with the city or its boards until after a year of leaving office.

The chickens, apparently, have finally come home to roost at the BCIC and it was high time they did.