Officials at odds over BHSI report

By Robin Fornoff
rfornoff@cnjonline.com

A 12-year-old law creating the Clovis Economic Development Tax Advisory Board (EDTAB) gave it sole responsibility for vetting and performing due diligence on applicants for projects such as the failed $2 million Beauty Health and Science Innovations plant.

But EDTAB may have turned over those responsibilities to the Clovis Industrial Development Corp. (CIDC) at least six years ago, according to board minutes and its policy and procedures manual — at least that’s the viewpoint of Gayla Brumfield, Clovis’ mayor when the BHSI deal went down in 2011.

CIDC Executive Director Chase Gentry doesn’t agree.

Investigators hired by the city to get to the bottom of the failed BHSI project reported in documents released Thursday:

“Upon review of the records and interviews with numerous individuals, it appears undisputed that EDTAB failed to perform its required duties. Instead, these obligations were performed by certain individuals employed by or related to CIDC (a private company).”

Investigators said improper vetting was a factor in the collapse of the BHSI deal. They noted however, that during interviews with Gentry and CIDC board members, none acknowledged the responsibility, though Gentry did perform some vetting of BHSI CEO Brian Sperber.

Gentry said Friday that he hasn’t read the full report and is reserving comment. He did, however, say he doesn’t believe an EDTAB policy and procedures manual approved in 2007 gives due diligence responsibilities to CIDC.

The manual reads, in part: “Clovis Industrial Development Corporation is responsible for working with applicants … processing the application and presenting the application findings to the EDTAB Board for review.” It was approved by both EDTAB and the City Commission in 2007 with changes recommended by Gentry, according to the minutes of both bodies.

Gentry said as he remembers, the changes in the policy manual only gave CIDC the ability to make offers to prospective clients such as BHSI. It was never intended to shift the responsibility for due diligence to CIDC, he said.

CIDC is a private corporation not subject to public inspection, though a portion of its funding is provided by a designated chunk of the city’s gross receipts taxes.

Gentry said before the BHSI investigation the CIDC’s function is to promote economic development for Clovis and Curry County. He was also a main player in the negotiations that prompted the city to cut checks totaling almost $2 million to Sperber to create a cosmetics plant that never opened its doors, according to investigators.

A credit application submitted by Sperber and his credit report both contained damaging information, including past due accounts, according to investigators. Though Gentry, some EDTAB board members, City Manager Joe Thomas and Brumfield were aware of the credit problems, investigators said, none provided the information to the City Commission.

An angry Brumfield, responding to the report, said CIDC has always conducted due diligence on such projects, beginning with the successful Southwest Cheese project in 2004. Brumfield also said conclusions by investigators are rife with errors and criticized them blaming her and Thomas as being “a producing cause of the City’s loss.”

Brumfield said the report accused her of withholding information “and I never withheld any information.

“The EDTAB board is not the responsibility of the mayor,” she said. “It never has been.”

Slater Elza, lead attorney in the investigation conducted by Underwood Law of Amarillo, didn’t immediately return phone calls for comment.

Current Clovis Mayor David Lansford also could not be reached for comment.

Brumfield said she believes the policy manual change in 2007 was an endorsement of CIDC to perform due diligence.

Investigators, however, said the law gives due diligence to EDTAB.

The 2001 ordinance creating EDTAB reads, in part: “…the board shall … obtain information, analyze financial data, and report to the Clovis City Commission concerning any industrial, economic, commercial or business project requesting or applying for financial assistance from the City…”

Brumfield said if that is accurate, then the policy manual adopted by EDTAB and the city six years ago is a “flawed document.”

Brumfield also said, “I think people are going to read out of that report what they read out of it. I will take my responsibility for what happened. I think we all worked hard to create jobs. Looking back on it, we could say I would change this or change that.

“I do believe that a good civic leader finds solutions instead of placing blame. To pick a scapegoat is not the way to do it. I think we can find ways as a community to solve our problems better than to point fingers.”

Thomas said the investigation offered some valuable recommendations for ensuring there isn’t another BHSI. He said he looks forward to putting those recommendations in place as well as other safeguards “to ensure all future projects are thoroughly investigated and vetted.”