Texas Attorney General Paxton puts to rest dispute about Montgomery County’s Coronavirus Relief Fund distribution, as more Woodlands Township Board deceit comes to light

Image: This shark, representing the Woodlands Township, fed upon a dead whale, representing the free spending faction in control of the Township’s Board.

The Golden Hammer Staff Reports

The Woodlands and Austin, April 18 – Last Wednesday, April 13, 2022, Texas Attorney General Ken Paxton put to rest the dispute over whether the Montgomery County Commissioners Court properly distributed the 2020 Coronavirus Relief Funds (CRF) when the Commissioners Court chose not to pay The Woodlands $55 per person, a measure many other local governments in Texas used to distribute the CRF. Rather than distributing approximately $6.1 million to The Woodlands Township, the Commissioners Court distributed only approximately $280,000 in “reimbursable expenses” the Township actually incurred during the pandemic.

In response to a request by State Senator Brandon Creighton of Conroe, Paxton ruled that the Commissioners Court distribution was proper in the following summary:

“In the 2020 Coronavirus Relief Fund (“CRF”), the U.S. Congress appropriated $150 billion to assist states, territories and tribal governments, and certain local governments to fund necessary but unbudgeted expenditures the governments incurred because of the COVID-19 public health emergency. Texas cities and counties with populations exceeding 500,000 were eligible for a direct payment of CRF funds from the U.S. Treasury. The CRF did not expressly require a direct recipient to redistribute its CRF funds to local governments within its jurisdiction and did not establish a methodology by which to redistribute its CRF funds. Accordingly, we cannot conclude a particular direct recipient’s redistribution methodology is contrary to law.”

In referring to Creighton’s July 21, 2021, letter to the Attorney General, Paxton further explained:

“You tell us the State of Texas established a state funding methodology of $55 per capita for the jurisdictions below the 500,000 population threshold. You also tell us that ‘[o]f the twelve counties that received direct CRF funding . . ., all except for one followed the state’s $55 per capita methodology for distributing funds to the local governments within their jurisdiction.’ You explain that Montgomery County distributed funding to local governments within its jurisdiction under its own parameters and ‘not the methodology established by the Treasury or the State.’ As a result, those local governments ‘did not receive their equitable share of CRF funding and were also ineligible from receiving the state’s allocation directed for jurisdictions with under a 500,000 population.’ You ask about the correct distribution requirement as between the Treasury, state, or county, and about how a jurisdiction with a population under 500,000, but within a county with a population over 500,000 should receive their allotted equitable share of CRF funds.”

This issue become a very hot one during the desperate attempt by the majority of the Woodlands Township’s Board to consolidate power and increase their taxing authority by incorporating The Woodlands as a city government in a November 2, 2022, referendum. That referendum failed in an enormous landslide by a 69% to 31% margin of the votes.

Both Township Chairman Gordy Bunch and Township Director Shelley Sekula-Gibbs claimed during the incorporation referendum campaign – which they financed in part using Township tax dollars – that an argument for incorporation of The Woodlands as a city government is that the Township wants more federal stimulus funds and would have received them, if the Township were a city.

It turns out, however, that Bunch, Sekula-Gibbs, and the entire Township Board knew well before they even called the incorporation referendum that the Montgomery County government had distributed the CRF correctly, because the Township’s outside law and lobbying firm had advised them of that fact, as one current high level manager, one former high level manager, and one outsider to the Township have confirmed, on the condition of anonymity for fear of reprisal. The former manager told The Golden Hammer, Montgomery County’s leading daily newspaper, “Bunch and Sekula knew they were speaking falsely, or at least without any factual or legal basis, when they made those remarks during the incorporation referendum.”

In response to a request for comment, Bunch provided a very detailed and thorough response as follows:

“The Woodlands Township was advised by Treasury and Texas that The Woodland Township was included in CARES Act funding. Montgomery County was given the same guidance as every other county in Texas for $55 per capita for communities like The Woodlands Township, Conroe, etc. Every county over 500k in Population, except Montgomery County, provided the funding as advised by Texas. The Woodlands Township did receive our $55 per capita allocation from the Harris County portion of The Woodlands. The CRF language Montgomery County is hiding behind us the distribution to other government entities language wasn’t strong enough to force them to pass through the funding intended for The Woodlands Township or Conroe or any of the other CARES Act eligible governments in Montgomery County. Montgomery County claimed Texas had our funds and Texas claims Montgomery County has our funding. The Woodlands Township is caught in the middle being told by Treasury we are qualified for CARES Act funds without clearing up which entity we are to receive them from. The Attorney General Opinion opines MoCo didn’t break the law because the CRF language didn’t force them to pass though the CARES Act funding Congress intended to reach The Woodlands Township. CARES Act funding has nothing to do with incorporation, so I’m not sure why you phrase your question around this topic. The Woodlands Township still had $5.8m in unreimbursed CARES Act eligible expenses we have yet to receive. This is entirely for our first responding The Woodlands Fire Department quarantine, overtime, PPE and related COVID-19 expenses. Perhaps you can get Texas or federally elected officials to opine on how our community can collect on the CARES Act funds Congress and TX allocated to The Woodlands that no one wants to do the right thing and pass on to our community.

“ARPA funding was incorporation related and had nothing to do with our argument with Montgomery County or Texas on CARES Act funds. The Woodlands Township was specifically excluded from ARPA, because we are not an incorporated municipality. I have the letter from Treasury denying our ARPA appeal for funding as a Township and the response specifically points to lack of Incorporation. We did receive that notice prior to putting Incorporation on the Ballot.

“Check with Congressman Brady on the CARES Act legislative intent and whom voted to appropriate the funds as the then Chairman of House Way and Means Committee. Ask him who did he intend for his hometown to receive the funds from? Empirical evidence points to the actions of Texas redistributing to all entities in the counties less than 500k in population their $55 per capita and all other counties over 500k pn population passing through the $55 per capita as well. Only Montgomery County hoarded the CARES Act funds.

“MoCo has received $105 million in CARES Act and $118 million in ARPA funds. Both funds can be shared with The Woodlands Township for eligible expenses. The Woodlands Township was told our CARES Act allocation was $6.1 million in Montgomery County and we have only received $244,000 of the $223 million the County has received.

“Montgomery County was told by Texas it should pass through $55 per capita and CRF language didn’t say ‘shall pass on’ instead said ‘could.’ This is a question of do you have to be forced to do the right thing or can you do it without being forced. We can see what our commissioners court chose. If we were in any other county in Texas, this would have been a non issue.”

Outright name-calling and pointing fiscally-bloodied fingers at each other has broken out between the Montgomery County Commissioners Court, Precinct 3 Commissioner James Noack, Precinct 2 Commissioner Charlie Riley, and County Judge Mark Keough, on the one hand, and the Woodlands Township, Township Chairman Gordy Bunch, and Township Director Shelley Sekula-Gibbs, on the other hand. At the March 9, 2021, Commissioners Court meeting the ugly besmirchments and allegations broke into downright nastiness, as Keough attempted to explain why the County government did all he and County employees believe the Coronavirus Aid, Relief, and Economic Security Act required of them, while Sekula-Gibbs claimed that the County government shorted the Woodlands Township by more than $7.5 million.

President Donald Trump signed the $2.2 trillion CARES Act “stimulus” legislation into law on March 27, 2020. Local and state governments have engaged in a feeding frenzy for the funds every since that date. The childish display, on all counts, put on perfect display, like an aquarium with piranhas eating a fish dropped from above, the utter reality of the principle that: whatever government does (outside of law enforcement and national defense), government does badly.

Pirahnas devouring a dead fish carcass at the Sentosa Island Aquarium in Singapore.

Keough began the feeding frenzy for an agenda item he placed on the Commissioners Court agenda seemingly for the sole purpose of allowing up to tear his teeth into the Woodlands Township and its Chairman Gordy Bunch.

Keough said, “I wanted to discuss this item because of some misnomers…and misinformation regarding the distribution of CARES Act funds by the County…It has been said that, as we move forward in the CARES Act, that Montgomery County has not operated within the spirit of the CARES Act and, in some sense, that we have withheld from political subdivisions monies that come from the CARES Act and have done so arbitrarily…Section 5001 of the Act…has to do with the use of the funds…here’s what it says…these funds were monies that were not accounted for in the budget…in other words they’re not for the purpose of reimbursing items already in the budget.”

An indignant Precinct 3 Montgomery County Commissioner James Noack, March 9, 2021.

Keough made that point – that CARES Act funds may only reimburse extraordinary expenditures arising from the China Virus panic rather than for routine budget items – because Bunch has contended that the Woodlands Township should have received from the County’s CARES Act funds the sum of $7.7 million, instead of the $280,000 for which the Township actually provided receipts for reimbursement of extraordinary expenditures.

Without mentioning them by name, Keough charged Bunch and the Township with seeking funds far beyond what Section 5001 and Treasury regulations would permit. The County Judge said, “It’s incumbent on us to make sure we use them [the funds] properly…It has been said that we have intentionally not funded certain entities…Are we as a county responsible to make sure that smaller entities contained within receive funds? The Treasury guidance says no…There’s no question that we have not withheld any funds that are to be reimbursed if they turn in legitimate receipts.”

Sekula-Gibbs told the Commissioners Court on March 9, 2021, “Last June of 2020, the Woodlands requested reimbursement for some legitimate CARES Act expenses that totaled $6.1 million for The Woodlands…We were reimbursed somewhere in the $280,000 range, not the $6.1 million, a far cry from it. We are interesting in receiving the rest of that $6.1 million for our residents. We think it is due to them…Texas received $11.2 billion in CARES Act money, and the jurisdictions which are over 500,000 in population received $3.2 billion. Jurisdictions of less than 500,000 population got $1.85 billion. The jurisdictions like Montgomery County, which are over 500,000 in population got that money directly. Then they were supposed to hand it down to qualified municipalities and jurisdictions, which would include The Woodlands. Those 500,000-plus jurisdictions are 6 cities and 12 counties.”

Sekula-Gibbs then explained an interesting comparison between Montgomery County and the others of those cities and counties of 500,000 or more in population, which received CARES Act funds. She explained, “When the Township didn’t receive what we were supposed to, we asked our Vice President of Finance to look at other counties to see how they did it. She reported at one of our meetings that she received responses from most of the counties that she requested information from. Out of the those…all of them allocated money to the smaller jurisdictions at the rate of $55 per capita. Williamson County gave in excess of $55 per capita…”

Montgomery County received $104 million in CARES Act funds as one of the twelves counties and six municipalities in Texas with over 500,000 population. “We are not required to give any of the money to political subdivisions,” County Judge Mark Keough said. “There have been some strong accusations against the County.”

Noack, who was in a dispute with Bunch and the Township Board over issues related to incorporation of the Woodlands as a municipality, then showed a video clip of Bunch speaking during a February 24 Township Board meeting.

Woodlands Township Chairman Gordy Bunch didn’t mince words at the Board meeting on February 24, 2021.
Bunch said during the February 24 Township Board meeting, “Because if we do find out, if they bring the $10 million that they paid, that’s just theft…They’re supposed to reimburse for the actual expense they got on our behalf. They got reimbursed…That’s not right.”

Noack responded to Bunch’s statement, ” These unfortunate comments were made at the recent Township Board meeting where there is a mistaken impression that Montgomery County would have even considered taking a contract payment and reimbursing ourselves for it. So Rakesh [Pandey, County Auditor] is going to come up here and explain how we went through the process of reimbursing ourselves for law enforcement dollars, public safety dollars, we spent.”

Pandey briefly explained, “For any outside funding we have, we never double dip.”

Keough then asked for emphasis, “You mean there was no double dipping that has taken place, even though that was brought up.”

Noack then enunciated, “Rakesh, there was also a statement made that Montgomery County, that we didn’t do anything with regards to mortgage assistance…and rental support. Can you remind the Court how much we committed to that cause?”

Pandey told the Commissioners Court, in his nicely rehearsed line, that the County government has paid $10 million for local nonprofits to distribute for mortgage assistance and rental support.

Keough once again chimed in, “There was a statement made that we didn’t do those things, but we’ve actually done that. Commissioner [pointing to Noack], we’ve actually done that.”

Noack uttered, “We went to great lengths to work with our nonprofits to make certain that we’ve gotten money into people’s hands as efficiently as possible…You don’t need a narrative out there that the County didn’t do something, when, in fact, we did.”

Noack then issued his demand to Bunch and the Woodlands Township Board for an apology: “For someone to claim that theft could have taken place, that’s a pretty egregious statement. I think that an apology should be issued from the Woodlands Township to Montgomery County. ”

Riley added, “I have to agree with that.”

Precinct 1 Commissioner Robert Walker also mused, “I would too. You can call me a lot of things, but that’s not one of them.”

Riley retorted, “Wait til you’ve been here long enough. You’ll be called everything.”

 

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