JACKSONVILLE — Economic development officials continued to issue grants to businesses without city council approval for nearly a year after the city and Texas Attorney General's office told them they were not following state law.

JEDCO's lawyer Eldridge Moak said when the city notified JEDCO of the new procedure, he questioned the city's interpretation of the law and contacted the attorney general's office for an opinion.

An attorney from the office backed the city's view of the law, he said.

However, confusion lingered because an Attorney General's opinion is not legally binding, Moak said.

He said the confusion went on for a number of weeks, but in the end, the city has the authority to set JEDCO's rules, and they have tried to “come up with a procedure to comply with what the city wanted us to do,” Moak said.

City Manager Mo Raissi said JEDCO is now bringing projects before the council.

However, current and former city officials said the process of getting JEDCO to comply with the law has been a lengthy struggle.

Since the city notified JEDCO of the policy in May 2010, approximately $1 million in taxpayer money has been awarded to local businesses.  

“I believe they've made two presentations to the city council within the last few months,” City Attorney Joe Angle said. But a comparison of records shows that a number of expenditures exceeding $10,000 were not brought to the council.

The issue started in the spring of 2010 when City Manager Mo Raissi attended a conference and learned that all development projects exceeding $10,000 were supposed to be approved by the city council.

Until that time, JEDCO officials brought their yearly budget before the council for approval and used discretion to make decisions as to which clients received how much money.

“We didn't understand that there was a procedure that needed to be followed that was not being followed,” Angle said.

When the city officials learned otherwise, they met with JEDCO and sent a letter to Moak explaining the new policy.

In a May 19, 2010 letter to Moak, Angle related the city council's request for JEDCO to bring projects before the city council for final approval.

Eldridge responded in June 2010, “The procedure that has been used for many years is for JEDCO to annually submit a proposed budget to the City Council and have the Council approve that budget.  We believe that this procedure complies with the (law)...” he writes. “We have not interpreted this section of the Local Government Code to require specific approval of each project or of specific expenditures.”

In March 2011, Angle wrote a letter to Eldridge, stating, “It has been brought to our attention that JEDCO has continued to fund projects without the approval of the Jacksonville City Council... We believed that this issue was settled after our meeting last year.”

The letter states:

• all projects must be approved by the Jacksonville City Council,

• projects over $10,000 should be brought before the council twice,

• a notice must be published in the local newspaper about the expenditure.

Angle said the city is not trying to micromanage JEDCO's business, but trying to follow the legal processes established by the Legislature.

“In my opinion, these procedures are set up this way because what we're dealing with here is public money.  Tax money,” Angle said.

JEDCO officials receive roughly $1 million annually from the half-cent sales tax to use to spur economic growth and development.  The seven-member board is appointed by the city council and is not directly answerable to the public.

“The people who are elected representatives of the people are the ones that are accountable to the tax payers to the expenditure of that money.  The people that are accountable to the taxpayers are the ones that need to find the final say-so,” Angle said.