06-06-11 Meeting of the La Porte Development Corporation Board of Directors minutes

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Osborne, Stacey From: ctaskins @swbell.net Sent: Monday, June 20, 2011 10:59 AM To: Osborne, Stacey; Bottoms, Ron Subject: EDC funding for radio station Stacey: The LP Economic Development Corporation has requested that the City Attorney's office render an opinion on the legality of using EDC funds to help contribute towards the cost of developing a non - profit radio station, which would also stream broadcasts on the internet. Broadcasts would potentially promote local city and business interests. In working with EDC member Randy Woodward, we have identified two possible statutory grounds for making this type of expenditure: 1) Local Government Code Sec. 501.103(2) allows EDC funds to be used in connection with a project for "infrastructure necessary to promote or develop new or expanded business enterprises, limited to .... telecommunications and Internet improvements ". 2) Local Government Code Sec. 505.103 authorizes an EDC to "spend not more than 10 percent of the corporate revenues for promotional purposes ". In my opinion, we probably can not justify making an expenditure for the radio station under LGC 501.103(2) for "telecommunications and Internet improvements ". The purpose behind this statute is to allow EDC funds to pay costs directly related to installation and upkeep of telecommunication /internet infrastructure. A good example of a proper application of the statute would be the use of EDC funds to pay for the placement of telecommunication cables in and from a street right -of -way to a new or expanding office building or business park complex. As presented, the proposal is not to directly fund the cost of telecommunication infrastructure, but instead is cash grants to start up a radio station, which presumably would cover all associated costs for the operation. Also, even if we can overcome this hurdle by perhaps limiting the funding to equipment for internet broadcasts there is the concern that the other requirement of the statute — that there must be a nexus between the telecommunication infrastructure and promotion of new or expanded enterprises- is weak. It is unclear how internet streaming of broadcasts by a non - profit radio station which may air pieces about the city or local businesses "promotes or develops new or expanded business enterprises ". I contacted Bill Longley, counsel with the Texas Municipal League who specializes in EDC law about this question, and he voiced the same concerns. He didn't think an EDC grant to a radio station constituted development of telecommunication infrastructure, even if it streamed broadcasts on the internet. He also emphasized that there has to be a direct relationship to promotion of business development. There is a better chance of justifying an EDC expenditure on a non - profit radio station under LGC 505.103, for general promotion of the city. This type of expenditure does not require a project (and thus no public hearing, notices in the newspaper), but together with other EDC promotional expenditures (i.e. directional signage) can not exceed 10% of yearly EDC revenues. Also, there does not have to be a link to "new or expanded business enterprises ". However, to move forward, it would be absolutely necessary that the radio station proposal be further developed to show how the City of La Porte (and the development of business within La Porte) in the city would be promoted by the day -to -day operations of the radio station. 1