The Amarillo Economic Development Corporation (AEDC) held its regular board meeting on Monday, tackling key financial, legal, and operational matters that could shape the organization's future. Among the topics discussed were the approval of the fiscal year 2024 audit, the resolution of a legal dispute, a reimbursement to the City of Amarillo, and updates to internal policies.
Audit Report Highlights Financial Shifts and Risks
The meeting began with a presentation from Janie Arnold, a partner at CMMS CPAs & Advisors PLLC, who outlined the findings of the AEDC’s fiscal year 2024 audit. While Arnold noted some "significant risks" such as management override of controls and improper revenue recognition, she emphasized that these are common concerns in any audit and were not unique to the AEDC.
One of the major revelations in the audit was the substantial increase in the AEDC’s direct grants and business retention services contracts, which rose from $3.4 million in 2023 to $27.2 million in 2024. Arnold clarified that this jump was due to funds designated for the Texas Tech University System’s veterinary school project being moved from "Commitments" (reserved for future payments) to "Payables" (due for payment over the next four years).
Board Chairman Alex Fairly requested additional time to review the audit before approving it. However, City of Amarillo Assistant City Manager and AEDC Treasurer Laura Storrs urged the board to accept the report before the March 31 deadline, as required by the Municipal Securities Rulemaking Board (MSRB) for financial transparency.
After discussion, the board unanimously approved the audit report, ensuring it would be posted in compliance with regulatory requirements.
Settlement Reached in 314 Easy Math, LLC Case
The AEDC board also addressed a legal dispute with 314 Easy Math, LLC, owned by Alejandro Magallanes, a past winner of the Amarillo EnterPrize Challenge. This local initiative provides financial support to small businesses, but Magallanes found himself in a legal battle after he relocated away from Amarillo, triggering a repayment clause in his $100,000 grant.
In November 2022, the AEDC filed a lawsuit to recover the funds, claiming the money functioned as a loan that required repayment under certain conditions. Magallanes countersued, arguing that the AEDC had misrepresented the terms.
After negotiations, both parties reached a settlement and forbearance agreement. Under the terms, 314 Easy Math and Magallanes will repay a total of $30,000 in installments, and all legal claims will be dropped.
Interim AEDC President and CEO Doug Nelson described the agreement as a practical resolution.
“This settlement allows both parties to move forward without prolonged litigation. We’ve always aimed for a fair resolution while protecting taxpayer dollars.”
Fairly added:
“This guy won the EnterPrize Challenge but didn’t fulfill his obligations. He didn’t stay in Amarillo, which was part of the deal. We figured it was best to negotiate and start recovering some of the funds rather than drag this out further.”
The board approved the settlement, closing the case and ensuring partial repayment of the disputed funds.
AEDC to Reimburse City of Amarillo for Audit Costs
The board also debated whether the AEDC should reimburse the City of Amarillo $40,757.78 for expenses related to an internal audit and an independent financial review by Hyde Kelley LLP covering the past three years.
City Manager Grayson Path cited Texas Local Government Code Section 501.007, which prohibits municipalities from lending or granting public funds to a corporation. This legal interpretation prompted the AEDC to consider reimbursing the city for these expenses.
While Interim CEO Doug Nelson noted that the city had requested the audits, not the AEDC, Chairman Fairly supported the reimbursement.
“I have no issue reimbursing this because, frankly, it stems from past financial mismanagement at the AEDC board level.”
The board approved the reimbursement, which will require a budget amendment and subsequent approval from the Amarillo City Council.
Policy Changes Target Financial Oversight
The AEDC board also approved updates to its internal policies and procedures, particularly regarding business-related expenditures.
One major change requires AEDC employees to use city-issued purchase cards instead of personal credit cards for business expenses, except in emergencies. The update stemmed from past challenges with the city's purchase card system, which frequently declined transactions.
“At one point, 20 out of 100 transactions were getting declined,” Nelson said.
However, the city has since switched to a new purchase card system, and AEDC staff reported no recent issues.
Nelson emphasized that these policy updates are part of a broader effort to increase accountability and streamline financial management.
“We’ve made substantial improvements in how we handle finances. These policy changes reinforce our commitment to transparency and responsible economic development.”
Board Appointments Remain in Limbo
The AEDC board currently consists of one regularly appointed member, Dipak Patel (who was absent from the meeting), while the other four members were appointed on a temporary basis in November 2024.
With upcoming city council elections on May 3, the timing of permanent board appointments remains uncertain.
Councilmember and AEDC board member Don Tipps outlined two possible approaches:
Wait for the new city council to make board appointments after the election.
Make appointments immediately, as AEDC is in the process of hiring a permanent President and CEO and may need leadership stability.
Fairly, who has committed to serving through 2025, stressed the importance of continuity.
“I realized we need a new leader and direction. I’m committed to staying through the year to ensure stability and a proper transition.”
Nelson added that the AEDC board will follow the city council’s guidance on future appointments.
Looking Ahead
The AEDC’s next board meeting is scheduled for April 21 at 9 a.m., where discussions on economic development projects, leadership transitions, and financial planning are expected to continue.
