Ingleside Council to Port: Include us or no rezoning.

Former Congressman Curt Weldon accuses A&M’s Dennis Beal of “…nothing shy of malpractice, and possibly libelous.” in alleged sabotage of APEX deal. Thousands of jobs at stake.

At an emergency Ingleside City Council meeting on Friday, March 5th, both Mayor Stella Herrmann and Council woman and former Mayor Elaine Kemp told Port Commissioners who were present they would refuse to make any zoning change required by the port to develop the property until they were included in the decision making process. The property reverts to R-1 residential when the Port takes possession. For the Port to develop the NSI property, the City of Ingleside must rezone the property to business and industrial categories. Ingleside called the meeting over concerns that some Port Commissioners were willing to kill their best chance for redevelopment in order to give Texas A&M University an undeserved multimillion dollar gift.

Port Commissioners Mike Carrell, Judy Hawley, Ken Berry and Francis Gandy attended the meeting. Berry was invited by the council and Gandy attended to discuss the opportunity for APEX Group’s offer to move a shipbuilding company to the base and question Carrell’s actions. Hawley and Carrell were there to defend their decision to halt negotiations with the company. Berry had sent a letter to public officials last week expressing his concern that Carrell’s action could lose its biggest opportunity to redevelop the base.

The council voted in rare unanimity (7-0) to send a letter to the Port of Corpus Christi demanding two things; 1) that the port include them in executive sessions when discussing proposals for Naval Station Ingleside (NSI) development and that, 2) that Ingleside be allowed to present to the Port Commission an overview of Ingleside’s concerns and needs in the development of the base. Council members expressed alarm that they would be on the hook for infrastructure costs based on decisions by the Port which they were excluded from. Previous situations had brought extra costs to Ingleside which has around 9,000 residents and a budget of $10 million.

Councilman and former mayor Willie Vaden pointed out that while Nueces County likes to tout the fact that Nueces County taxpayers paid $250 per capita to buy the property, Ingleside residents paid $1250 per capita to install infrastructure for the base. Much of it ended up unused after the base wasn’t expanded to its original plan leaving the City of Ingleside with extra costs to flush unneeded water towers and lift stations that were built by the city. The city also faces extensive loss of revenues from water sales to the base, sales and property taxes.

The issue was brought to a head by Port Commissioner Ken Berry’s letter to local officials stating that Port Commissioners Carrell, Hawley and Richard Borchard were refusing to allow staff to negotiate with APEX Group who wants to buy or lease the base long term. APEX would immediately start development of the location for one of its companies Swiftships. Swiftships has hundreds of millions of dollars in federal and foreign government contracts to build small harbor and riverine patrol boats.

Their facility in Louisiana is not large enough to accommodate the work and they are also negotiating with communities that have closed bases in Virginia and Puerto Rico as alternatives. APEX has said it needs to sign and occupy a base by April 1 to comply with some of the requirements of its government contracts and if the port cannot meet its timetable it will be forced to abandon the NSI option for one of the other alternatives. Carrell, Hawley, and Borchard halted staff negotiations with APEX until the A&M contract is concluded March 19th.

APEX wants to lease and develop the base around ship manufacturing, marine research and development, maritime risk management and fire, rescue and security training. Its subsidiary and the first proposed tenant Swiftships builds ships from 35 to 215 feet for everything from fire fighting to patrol, dive and offshore service boats. A&M is seeking to be the master developer on a long term basis and control base development. Company officials said they have no desire to have to work through A&M’s bureaucracy to make decisions and move on projects.

Weldon interests APEX in NSI last year.
Former Congressman (R-Pa) and House Armed Services Committee Vice Chairman Curt Weldon was contracted last year by APEX to find a base for expanding Swiftships. Weldon, who identified NSI as one potential site, contacted Congressman Solomon Ortiz and visited the site last year. Weldon then contacted Port Director John LaRue and Dr. Kem Bennett A&M Vice Chancellor to discuss the potential for an International Riverine Maritime Center at NSI.

Earlier this year Weldon, LaRue and the APEX CEO visited with Chancellor Mike McKinney and Dennis Beal Col. USMC (ret.) to further discuss the development of NSI. Beal has been appointed by A&M to lead the NSI redevelopment effort. Weldon says in a letter responding to a memo by Beal that since that meeting no attempt to reach out to APEX has been made by A&M. That lack of response may have led APEX to start negotiating directly with Port staff.

APEX had made a bid directly to Port staff around the first of February after a visit to the facility in mid-January. Beal had sent an email memo to LaRue and Tom Moore who is in charge of NSI development for the Port on Feb. 4th stating he “…had some conversations with several people about the APEX proposal.” Beal states, “This is a very risky proposal. It is quite simply – bad. It does not create new jobs, is subject to them destroying the property and just leaving in the event their govt. contracts do not come to fruition. The type of jobs it creates will compete with Gulf Marine and other operators in the area. Hence it does not create net jobs but pulls from the existing labor force in south Texas.”

The staff evidently did not agree with Beal’s proposal and prepared a counter proposal that was presented for review by Carrell, Hawley and Borchard who are the Port Commissioners NSI subcommittee at a February 16th meeting. At that time the three directed the Port staff to cease all formal negotiations with APEX. When another special meeting commissioners meeting was held on Friday, February 26th, Commissioners Berry and Bobby Gonzales asked to put the APEX proposal on the table for discussion in executive session. Carrell, Hawley, Borchard and contested Commissioner Robert Kostelnik voted to adjourn without allowing any discussion of APEX’s offer. The Caller Times reported the next day that the talks were “stalled.”

Beal’s vetting questioned by Weldon.
Beal’s “vetting” of the APEX offer evidently consisted “conversations with several people” and one call to a anonymous source in the pentagon who told him that there was only funding for nine more boats from the Department of Defense (DOD). That appears to be the source of Beal’s judgment of the Swiftships deal as a “risky proposal.” As Weldon pointed out in a response dated March 8, only part of the contracts are with the US Government DOD, the rest of the contracts include ships for the government of Iraq, Kuwait and Egypt. Swiftships is also in discussions with ten other nations to supply the more of riverine patrol vessels they want to build at their new facility.

Weldon who was obviously incensed by Beal’s email and lack of A&M response stated in his “Response to your memo of February 4” “So let me be very clear – your memo to Tom Moore and John LaRue dated February 4, 2010 was and is, an embarrassment to Texas A&M, nothing shy of malpractice, and possible libelous. I am not an attorney, but in my opinion your actions border on ‘tortious interference’.” Weldon also pointed out that he wrote the legislation in 1998 that designated Texas A&M as the Nation’s Emergency Response and Training Center, fought in 2001 to keep open the Corpus Christi Army Depot open and helped to get the Navy to waive the $200 million price to the Port for NSI to $1.00.

Weldon said during his 6th visit last week to visit with local officials he found he, “… could not believe the level of dis-information that had been given to these outstanding public servants, much of it identical to what I read I your memo to Port Staff.” According to the Caller Times Jaime Powell, Nueces County Judge Loyd Neal and San Patricio County Judge Terry Simpson, both Carrell supporters, think A&M should get the deal first.

Weldon goes on to dispute Beal’s assertion that somehow APEX would hurt labor in south Texas by increasing the demand for skilled workers. He rightfully points out that Gulf Marine which off shored local operations laid off the last of its 2,000+ workers in January just weeks before Beal wrote his memo. 7,015 workers have lost their jobs with the closing of NSI and over 18,000 people are unemployed in Nueces County alone which posted an 8.4% unemployment rate in January. That doesn’t include an estimated equal number who are under employed in jobs below their skill level.

The pre capita income in the Corpus Christi MSA (metropolitan statistical area which includes Nueces and surrounding counties) has dropped $5,831 a year from $33,171 to $27,340 in the last four years. The 2008 average per capita income for the United States was $40,208 or over 32% higher than our current per capita income.

A&M Money for Nothing?
A&M has been the master developer under a memorandum of understanding (MOU) for 11 months for a fee of almost $30,000/month. So far they have been unable to produce any potential tenants or buyers. The port has known about the closure since 2007 and has been unable on its own to interest any other potential tenants or buyers. As Commissioner Ken Berry pointed out at the Ingleside City Council meeting, “APEX is not the only deal on the table; it might be the best deal available.” Carrell insisted the Port wanted to get several deals to choose from but didn’t know of any prospects that A&M might have or whether A&M was actually interested in buying the facility itself.

Stalling the APEX negotiations until a contract is concluded with A&M would allow A&M to collect at least a 5% commission even though they had nothing to do with the deal. If the low figure of $3 million a year is used for a 99 year lease A&M would collect $15 million. If they “vetted” the deal for the port, they could possibly claim 10% of any pier or wharf leases for ten years and 25% any other lease for ten years. A huge windfall for years to come, that would add significantly to the price of the facility. According to the Caller Times Jaime Powell, Nueces County Judge Loyd Neal and San Patricio County Judge Terry Simpson, both Carrell supporters, think A&M should “vet” the deal.

Even more significant to APEX is the ability to develop the rest of the NSI facility. A&M has so far come up with no firm plan, tenant or buyer, yet Carrell and his supporters want to give A&M total control for years to come. A&M would not assume any of the $500,000/month maintenance and operation costs for NSI, the port would continue to bear that cost. In addition, as a University no property taxes would be levied on NSI. For Ingleside that means no tax revenue and huge infrastructure costs.

Chancellor Mike McKinney’s Chamber of Commerce address on Thursday, February 25, 2010 to tell us the A&M vision for NSI was widely panned in the community. McKinney revealed no plans except some “long term research facility development” telling residents to be patient and that A&M would take care of the base while the community should focus on beefing up their symphony and school system. It was so bad it was completely unreported by the Caller Times.

In addition, under questioning regarding Carrell admitted that while A&M had produced no proposals, they now would like to be a bidder as well as broker. After Ingleside officials stated that would be inappropriate, Carrell stated it bothered him as well. He said “no one will be allowed to wear two hats.” He and Hawley were both asked by the Ingleside City Council to make the same commitment, that during the March 9th meeting a decision would be made as to be whether A&M would be a broker or a bidder but not both. Carrell gave a weak acknowledgement that he would resolve it by that date.

Did Carrell and company already kill any chance of getting the APEX deal?
Weldon also went on in his response to accuse Beal of selectively sharing his memo with officials to poison opinion against the deal before it was negotiated by staff and possibly pushing APEX to another site. He states, “Your cavalier misrepresentations and half-truths have caused APEX/Swiftships to look away from Ingleside and Corpus Christi, and that is an absolute tragedy. They have already aggressively arranged site visits with other locations where their presence would be welcomed with open arms.”

One thing for sure, if A&M loses the APEX deal and has nothing of equal value to replace it, Solomon Ortiz Jr.s’ proposal to elect port commissioners might gain real public support.