Minutes TC 04/09/2019 TOWN OF TROPHY CLUB
TOWN COUNCIL REGULAR SESSION MINUTES
TUESDAY,APRIL 9,2019,7:00 P.M.
LOCATION:1 TROPHY WOOD DRIVE,TROPHY CLUB,TEXAS
COUNCIL CHAMBERS
The Town Council of the Town of Trophy Club, Texas, met in a Regular Session on Tuesday, April 9, 2019. The
meeting was held within the boundaries of the Town and was open to the public.
TOWN COUNCIL MEMBERS PRESENT:
C. Nick Sanders Mayor
Philip Shoffner Mayor Pro Tem, Place 6
Alicia L.Fleury Council Member, Place 1
Eric Jensen Council Member, Place 2
Greg Lamont Council Member, Place 5
TOWN COUNCIL MEMBERS ABSENT:
Tim Kurtz Council Member, Place 4
STAFF PRESENT:
Tom Class Town Manager Mike Pastor Information Technology Manager
David Dodd Town Attorney Lisa Payne Town Planner
Holly Fimbres Town Secretary/RMO Jonathan Phillips Director of Administrative&Financial Services
Patrick Arata Police Chief Tommy Uzee Director of Community Development
Wade Carroll Fire Chief Steve Woodard Police Captain
Tony Jaramillo Director of Parks and Recreation John Zagurski Finance Manager
Jill Lind Communications&Marketing Manager Steve Zieverink Information Technology Specialist
Mayor Sanders announced the date of Tuesday, April 9, 2019, called the Town Council to order and announced a
quorum at 7:00 p.m. Additionally, he advised that Council Member Kurtz would not be attending the meeting due
to a conflict of interest with one of the agenda items.
The Invocation was offered by Reverend Edlen Cowley with Fellowship United Methodist Church.
The Pledges to the American Flag and Texas Flag were led by Mayor Pro Tem Shoffner.
CITIZEN PRESENTATIONS
This is an opportunity for citizens to address the Council on any matter whether or not it is posted on the agenda.
The Council is not permitted to take action on or discuss any presentations made to the Council at this time
concerning an item not listed on the agenda. The Council will hear presentations on specific agenda items prior to
the Council addressing those items. You may speak up to four (4) minutes or the time limit determined by the
Mayor or presiding officer. To speak during this item you must complete the Speaker's form that includes the
topic(s)of your statement. Topics of presentation should be limited to matters over which the Council has authority.
J.J. Isherwood, 2 Greenbrook Court, stated that he was a combat veteran who retired after 20 years of military
service in 2006. He and his family moved to Trophy Club because it was a wonderful neighborhood, close
community, and was a safe place to live. Several years ago, he has had the opportunity to serve on the newly
created Crime Control and Prevention District(CCPD) Board and it has been on honor to still be serving on it. It has
been his absolute privilege to serve with exceptionally qualified individuals with some of whom have extensive law
enforcement background, Patrick Arata and Tom Class were two such individuals. The Town was fortunate to have
them and should be extremely grateful that they put their hands up for public service. He categorized the special
agent in charge of the Federal Bureau of Investigation (FBI) Dallas field office and the Assistant Chief to Drug
Enforcement Administration (DEA) aviation operations as awesome qualifications to have their hands in the
Town's law enforcement and operations. He has had the privilege of working with both individuals and they had
his complete trust and confidence. Their diligent efforts have made his job easy on the CCPD Board and both have
served as faithful stewards of the Town. The quality of the Town's officers, their confidence, equipment, and
training has been a direct result of Police Chief Arata's hard work and leadership in the community. Town
Manager Class and Police Chief Arata have done the leg work to help make the community the safest and
customer service orientated in the nation. Perhaps their only sin was having a zero tolerance towards corruption.
His job as a triple seven pilot takes him away from home for extended periods of time and he see's things all over
the world. He was grateful for where he lived and rested easy knowing that these two individuals were on the job
when he was away. He tended to stay away from the soap opera on social media but felt it was important to
express his feelings and support towards two persons of great quality and absolute integrity.
Stephanie Fuller, 2604 Morgan Lane, James Jackson, owner of CrossFit Trophy Club, and Jack Tucker, Student
Council President at Carroll Senior High School, invited the Town of Trophy Club and Town Council to attend their
second annual Stronger Than Cancer Fun Run/5k and/or CrossFit Workout on May 11, 2019. This event benefited
Hudson Feldman and honored other children that had been victims of cancer. Hudson was diagnosed at the age of
2 years of age with Stage 4 cancer on November 9, 2018. Steve and Bonnie Feldman moved their family to Trophy
Club in June 2016, just before welcoming Hudson and his twin sister Haylee to their family that September. He
was a twin but he also had older twin siblings, Hannah and Hunter, who were in the second grade at Beck
Elementary. Hudson was currently receiving several different types of chemotherapy at Cook Children's in Fort
Worth and will continue off and on for the next 50 weeks. All proceeds from this event would go to the Feldman
family. Their goal was to be able to fundraise and receive enough sponsorship to cover the costs involved with the
event. The Fun Run/5k would begin at 7:15 a.m.at Byron Nelson High School and the CrossFit Competition would
begin at 9:00 a.m.at CrossFit Trophy Club.
Council Member Fleury thanked Jack for being so involved in the community.
Ross Eldred, 2819 Marrickville Drive, has been a resident since 2013. He came before the Town Council to engage
and recommend the removal of Tom Class as Town Manager. He worked for him at his previous job. He cringed
when Tom was selected as Town Manager. He could provide examples and felt that Mr. Class was the antithesis of
a leader and manager. The following information was based on his personal observation and from discussions
with individuals both inside and outside Trophy Club. Mr. Class only cared about himself, he was narcissistic in
many ways, and insulated himself by often intimating and eliminating those who were not yes men. Mr. Class did
not listen to opposing or critiquing viewpoints and refused to look objectively at any evidence contrary to his
beliefs. Tom thrived off conflict that he has personally witnessed and often the chaos seen was manufactured. He
has seen Mr.Class generate false statements and documents that simply were not true in an attempt to tear down
those individuals who did not share his views. He did not feel that Tom picked people with qualifications but
instead those with whom he could trust. He has seen Tom make decisions that he believed were poor and in the
process built a culture based on fear. On paper Mr. Class looked impressive, presented well, and said the right
things. As a resident, he has kept up with the conflicts that have been raised and he did not feel like the Town
should resemble the federal government, but that was exactly what the Town was becoming. He has seen Tom
replace good people with people he knew would follow him. He was concerned that now Mr. Class' had his eyes
set on the Town Council and once he owned the Town Council there would be no more checks or balances.
Therefore, he implored and warned the Council to make the right decisions before Tom created more damage. A
multitude of others could be brought in that have experienced Mr. Class; however many feared for their
livelihoods if they spoke out about him, but he could no longer sit idly in a place that he called home. He believed
that Mr. Class would have no issue with describing employees as being disgruntled but he was actually the
common thread that causes a wake of destruction everywhere he has gone. Mr. Class no longer lives in Trophy
Club; therefore he questioned the motivation that if Trophy Club was so great, then why did he leave. It would
take a significant amount of time to make Trophy Club government transparent and a high functioning culture,
even after his departure. Culture was the most important foundation in any organization and he has observed Mr.
Class as being the antithesis of a productive culture. Repair could only begin with Mr.Class' removal and he hoped
that the damages were not too great. Trophy Club would not be better than when Tom found it, but instead
would be far worse. He again implored the Town Council to terminate Mr.Class before it was too late.
Danny Mayer, 2201 Prestwick Avenue, disagreed with Mayor Sanders regarding what was and was not a violation
concerning a breach of confidentiality. The Mayor had the ability to submit a question to the Attorney General's
Office for an opinion and he asked that it be submitted regarding the emails. On March 28, 2019, the Town
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Manager sent an email to the Council and Town Attorney in which Mr. Class disclosed information that was in his
opinion confidential, but emails were subject to Open Records. Therefore it appeared that Mr. Class violated his
ethical responsibility. In that email, he made accusatory and demeaning remarks against Town Council Members.
Again, on April 4, 2019, Mr. Class sent another email to the Council and others in which he again disseminated
information that was confidential in his opinion and it appeared that once again Mr. Class violated his ethical
responsibility. Ironically the second email was a request to be shielded because of an apparent zeal attempt to
sever the relationship with Old Town Development(OTD). Mr.Class was in contact with the Texas Rangers and he
did not notify members of the Council of the interaction with them. When asked in Executive Session, Mr. Class
was forced to admit it. It was from his understanding,that the Texas Rangers looked at this and saw nothing. Mr.
Class was now asking to be shielded and protected from the very people that employed him and supervised his
activities. Mr. Class violated his ethical responsibilities, destroyed trust, and now attempted to hide behind the
shield of law. What was equally or might be more troublesome involved the Town Manager and the information
coming to light now regarding a hostile and toxic work environment in Trophy Club,which apparently was created
by the Town Manager. Trophy Club may be a great place to live but apparently it was not a great place to work.
Four employees were now coming forward with shocking stories of forged documents, conspiracy, policy
violations, and the list goes on regarding the Town Manager. He was disappointed when the Mayor, in an attempt
to protect the Town Manager, engaged a former employee on Facebook. The former employee made some
observations on what happened while he was employed and the Mayor responded that it was time for him to
move on. The Mayor went on to say that the former employee never contacted him regarding these allegations.
The former employee listed three separate dates in which he sent emails to all the Council Members concerning
these allegations. An Open Records Request has been submitted to determine whether the Mayor was correct
that he had not been notified. The current atmosphere in Town Hall could not continue and the distrust between
the Town Manager and the Town Council must end. This responsibility fell directly on the shoulders of the elected
officials and to ignore this would simply be a malfeasance of their office. He suggested putting the Town Manager
on administrative paid leave in order to find out what was going on and appoint a temporary Town Manager. It
should be a person not presently or in the past had been a town employee or official. He believed that the actions
of Mr. Class showed very clearly that he harbored a great deal of animosity toward the Town and certain elected
officials. On a side note, he invited the former employee to attend the Council meeting, but he advised him that
the Town Manager had warned him that he would be arrested for trespassing if he ever set foot in Town Hall.
Since there were numerous allegations which now must be investigated, he was asking that the Council have every
current Staff member and former Staff member who worked for Mr.Class be interviewed by a third party to obtain
their opinion of the work environment and if they were aware of any false documents. The Town must show some
leadership and the actions of Mr. Class were now in the public venue. It was no longer behind the closed doors in
Executive Session. Should the Council fail to have an outside independent agency look at these alleged abuses,
then they not only failed Town Staff but the Town as a whole. He felt that if the Town Manager was innocent,then
he should welcome this investigation,but this would be unnecessary if the Town Manager simply resigned.
Steve Flynn, 417 Ramsey Trail, addressed the Council as well as everyone watching. The last six to eight months
have been disheartening, disgraceful, and disappointing. Negative social media posts kept occurring and at what
point in time would it stop. Civility was a formal politeness and courtesy in behavior and speech; polite remarks
used in formal conversation. The Town has lost civility and therefore he proposed to have the Council consider
having a Trophy Club Civility Day. As a community,for 24 hours they would stay off social media and stop the back
stabbing to show that they had the ability to be civil. This would send a positive message to their kids and
neighbors.
ANNOUNCEMENTS AND REPORTS
1. Receive Town Manager Class'update and provide input regarding the following(T.Class):
• Medal of Honor Escort—The 2019 Medal of Honor Motorcade Escort would be coming through Trophy
Club on April 10th as they make their way to the Medal of Honor host city, Gainesville,Texas for a parade
that would take place on April 13th to recognize Veterans from both World War II and the Vietnam Wars.
Members of the community were invited to line bridges over State Highway 114 with American flags,
signs,and posters.
• EGGstravaganza — Would be held on Saturday, April 20th, between 9:00 a.m. and 10:00 a.m. He
recognized Bara Church who has volunteered to help Staff place the 15,000 eggs, assist with crowd
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control, and help with Easter Bunny pictures.
• Early Voting—Would begin on April 22nd and run through April 30th for the upcoming May 4th General
and Special Election. The closest early voting site for Denton County residents will be at Trophy Club
Town Hall and the closest early voting site for Tarrant County residents will be at Southlake Town Hall.
Council Member Fleury highly encouraged residents to attend the Medal of Honor Escort and bring their children
to honor Veterans. Additionally,she encouraged everyone to get out there and vote.
CONSENT AGENDA
All matters listed as Consent Agenda are considered to be routine by the Town Council and will be enacted by one
motion. There will not be a separate discussion of these items. If discussion is desired, that item will be removed
from the consent agenda and will be considered separately.
2. Consider and take appropriate action regarding the Town Council Regular Session Minutes dated March 26,
2019(T.Class). (Town Secretary Note:Approved as presented in the Town Council agenda packet)
3. Consider and take appropriate action regarding a Joint Election Agreement between the Town of Trophy
Club and Tarrant County Elections for administration of the Town's May 4, 2019 General and Special
Election(T.Class).
4. Consider and take appropriate action regarding the financial and variance report dated January 2019 (T.
Class).
Motion:
Motion made by Mayor Pro Tern Shoffner, seconded by Council Member Fleury, to approve the Consent Agenda
Items 2 through 4.
Motion carried unanimously 5-0-0.
REGULAR SESSION
5. Youth Programs Standards of Care
A) Conduct a Public Hearing regarding an Ordinance renewing Section 1.08.001,Youth Programs Standards
of Care,of Division 1,Generally,of Article 1.08, Parks and Recreation,of Chapter 1,General Provisions,
of the Town of Trophy Club Code of Ordinances(T.Class).
Mayor Sanders opened the public hearing at 7:31 p.m.
Director of Parks and Recreation Jaramillo stated that the purpose of this item was to renew the Town of Trophy
Club's 2019 Youth Programs Standards of Care. The strategic link was Nature & Beautification — Maintain Town
assets, services, and codes of ordinances that preserve the natural beauty of the Town. The Youth Programs
Standards of Care were intended to be minimum standards by which the Town Parks and Recreation Department
would operate the Summer Adventure Camp program. The only proposed amendment to the ordinance was
changing the "Recreation Coordinator" job title to "Recreation Specialist." Staff recommended approval of the
ordinance as presented.
Mayor Sanders closed the public hearing at 7:32 p.m.
Town Council Minutes April 9, 2019 Page 4 of 14
B) Consider and take appropriate action regarding an Ordinance renewing Section 1.08.001, Youth
Programs Standards of Care,of Division 1,Generally,of Article 1.08, Parks and Recreation,of Chapter 1,
General Provisions,of the Town of Trophy Club Code of Ordinances;and providing an effective date(T.
Class).
Motion:
Motion made by Mayor Pro Tern Shoffner,seconded by Council Member Lamont,to approve Ordinance No.2019-
11 as presented, renewing Section 1.08.001,Youth Programs Standards of Care, of Division 1, Generally, of Article
1.08, Parks and Recreation, of Chapter 1, General Provisions, of the Town of Trophy Club Code of Ordinances; and
providing an effective date of April 9,2019.
Motion carried unanimously 5-0-0.
6. Discussion of items for Future Agendas to include agenda items for consideration on the April 23, 2019
Council agenda and items from the Town Council Future Agenda Items list(T.Class).
This item allows Council to request the placement of items on upcoming agendas when the topic of discussion
requires research and review that cannot be accomplished in the time frame between regular Council meetings.
However, a Council Member may request that an item be placed on the next regularly scheduled meeting without
first placing that item on the Future Agenda Items list. All requests for agenda items must comply with Charter
requirements.
There were no items added to the April 23,2019 Council agenda or to the Town Council Future Agenda Items list.
Mayor Sanders made the following statement prior to the Council going into Executive Session. With the
agreement of Council, we can choose to conduct our discussions and take action on any section on the agenda
under the Executive Session section,except with personnel matters unless the employee that was being discussed
elected to have that portion in Open Session. It was his recommendation that Council conduct Item 7 (A) in Open
Session.
Motion:
Motion made by Council Member Fleury, seconded by Council Member Lamont,to move to consider item 7 (A) in
Open Session.
Council Member Fleury stated that she wanted to move this item to Open Session for the sake of transparency and
productivity. She wanted a fully open and fair discussion on a hot issue that was at this point negatively impacting
the Town. There was little decorum during Open Session and certainly no decorum behind closed doors. There
has been a Council Member who has resigned and a Mayor who tries his best to maintain control. She felt that
what was happening in the court of social media was bad and has gotten out of control. Instead of having
conspiracy theories and conjecture being posted, she preferred to have the facts presented in Open Session. She
stated that they were going to start recording Executive Session because the narrative appeared to change the
next day.
The vote was taken.
Motion carried unanimously 5-0-0.
Mayor Sanders opened Executive Session item number 7 (A), concerning current matters with OTD regarding
Bread Winners and HG Sply Economic Development Agreements and possible amendments to or adopting new
agreements. The partnership between the Town and OTD began in the 2014 when the Council approved
Resolution 2014-17 in May 2014. This later became what was referred to as a 380 Agreement,the ability for the
Council to direct part of its sales tax dollars to support some kind of development to help promote the Trophy
Wood Business District. This also included the establishment of a Tax Increment Reinvestment Zone (TIRZ),which
helps promote an economically thriving district that enhances and strengthens the Town's tax base, attracts new
investment opportunities, and preserves existing development values through the use of available financial,
marketing, land planning,and capital infrastructure development tools. Part of the agreement with OTD from the
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beginning was to share in the incremental taxes to help continue the Trophy Wood Business District. Over the
period of time, there have been numerous changes made to the agreements. The funds from a portion of the
sales tax dollars and incremental property tax were governed by two separate boards,the Economic Development
Corporation (EDC)4B and TIRZ No. 1. The agreements with OTD allow the Town to make monthly payments for a
period of 20 years, which ultimately helps fund the two high quality restaurants with sales tax dollars and
incremental property tax. Part of the current discussions deal with the aspects of two poorly written agreements
that have certain clauses that may or may not be pertinent. The Council was trying to work through these conflicts
to still have a successful outcome for the residents.
Town Manager Class stated that "During October 2017, I learned from a Staff member that Bread Winners had
been advertised for sale and I told Mayor Sanders. Over the next few months' Staff responded to multiple
inquiries from OTD Principals regarding specific terms of the agreement in the "event of a sale." I brought this to
the attention of Council, and as a result an action was taken to ensure OTD would continue to receive incentive
payments regardless of their future interest in the restaurant. Now let me be clear. The action taken to revise the
Developers Agreement was well within Council's purview and authority. A little over two weeks ago on March
24th, I received an email from Mayor Pro Tern Shoffner who said he had been caught off guard with learning Bread
Winners had been sold, and did not recall having been told so. This was important because of the implications for
future incentive payments, and Mayor Pro Tern Shoffner asked to speak to me about it. Having never been told of
the sale myself, I asked our Administrative and Financial Services Director to reach out to Chris Gordon to confirm
the sale, and additional Staff members to conduct a comprehensive search of all Town records to determine if in
fact the Town, EDC, or TIRZ Board had been notified. Chris Gordon later confirmed the restaurant was sold, and
our search identified no records indicating the Town, EDC, or TIRZ Board had been notified. Our search also
revealed two additional issues of concern which I brought to Council's attention:
1. Section 4.1 (d) of the Agreement specifically mandated OTD's notification of the Town, EDC, and TIRZ
Board in the event of a sale, and because there was no notification, and based upon the legal opinion of
our Town Attorney, the Agreement was in breach and the Town was no longer obligated to pay out the
remaining$700k+incentives.
2. An email between a current Council Member and OTD Principal was inadvertently discovered which gave
rise to a potential conflict of interest.
Again, I want to be perfectly clear. All of my communications with Council, many of which have become public
record and the basis for a very public lynching on social media, were discussed with our Town Attorney who
opined they were not privileged communications under the Open Records Act. Additionally, it was the opinion of
our Town Attorney that in every instance I acted within the scope of my authority as Town Manager, and have
fulfilled all my duties and responsibilities."
Council Member Jensen inquired when the conflict of interest was discovered. Town Manager Class responded
that the conflict of interest issue had been discovered either on the evening of March 25th or the morning of
March 26th.
Council Member Jensen asked if this was a new conflict of interest because the trampoline park had already been
known about. Town Manager Class confirmed that it was a new conflict.
Council Member Jensen inquired who else knew about the conflict when it was discovered. Town Manager Class
responded that he asked about seven Staff members to meet in the morning and afternoon after receiving Mayor
Pro Tem Shoffner's email that initiated a search of records.
Council Member Jensen questioned if he gave authority to Staff to tell anyone outside of other Staff members
because it should have been kept between Staff until Council was advised of the information. Town Manager Class
responded that he did not give anyone the authority to do so.
Council Member Jensen asked the Town Attorney his opinion if the Council should have been apprised of a
discovered conflict of interest before it was released to the public. Town Attorney Dodd confirmed and stated that
it was planned to be disclosed to Council during Executive Session on March 26,2019.
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Council Member Jensen pointed out that there was a post on Facebook on March 24th at 5:35 p.m., which was
prior to when it was stated of the discovery, by Brian Brennan who made the comment that "Kurtz has more of a
conflict than just a vote and he knows what I am talking about and so does Chris Gordon."
Town Manager Class stated that he could have been speaking about several conflicts of interests that have been
discussed for several months.
Mayor Sanders called for a Point of Order and stated that he did not believe that examining the conflict dealt with
the agreement was at hand.
Council Member Jensen commented that it was ironic that Mr. Brennan made the post on Sunday. He asked the
Town Attorney if an investigation had been done in regards to the discovered conflict of interest as far as reaching
out to Council Member Kurtz. Town Attorney Dodd responded that he spoke to Council Member Kurtz the night of
March 26th during the break between the Workshop and Regular Session. The email was self-explanatory that
Council Member Kurtz' wife was invested in Turnbury Capital, which was invested in the HG Sply project. He
previously did an investigation and discovered the trampoline business that Council Member Kurtz and Mr.Gordon
were involved with.
Council Member Jensen questioned if the timeframe had been investigated on when Council Member Kurtz had
money in Turnbury Capital and when it was taken out. Town Attorney Dodd responded that Council Member Kurtz
mentioned that it was his wife investing for their son and that he did not have anything to do with Turnbury, but
he showed Council Member Kurtz a document from the Secretary of State's Office showing him as the
incorporator.
Council Member Jensen asked the Town Attorney if he had reached out to Council Member Kurtz's attorney to get
any further background. Town Attorney Dodd responded that he had a meeting with the other attorney, but as
the Town Attorney he was looking for conflict of interests and how they affected votes. One conflict of interest
was already established with the business relationship with the trampoline park. He did not have jurisdiction to
look any further if there were any complaints or criminal charges. His investigation stopped when Council Member
Kurtz was no longer available to participate in OTD discussions.
Council Member Jensen inquired if there were any votes on record during the time of Council Member Kurtz's
investment in Turnbury Capital. Town Attorney Dodd responded that there were votes around June 2018 and
January 2018, but he did not cross examine Council Member Kurtz about the dates.
Council Member Jensen questioned if Council Member Kurtz was in attendance for the Joint Session meeting that
occurred on January 18, 2018 when there was a vote to amend the OTD agreements to extend the deadline of the
Certificate of Occupancy to November 22, 2018. Town Secretary Fimbres responded that the minutes reflected
that Council Member Kurtz was absent from that meeting.
Council Member Jensen inquired when there would have been another instance where Council Member Kurtz
could have placed a vote during his time of ownership. Town Attorney Dodd responded that he did not establish
his time of ownership.
Town Manager Class stated that the votes that were in question occurred on June 12,2018 and July 24,2018.
Council Member Jensen inquired when Council Member Kurtz was out of Turnbury Capital. Town Attorney Dodd
responded that Council Member Kurtz advised that he was out in January 2018, but the Secretary of State's Office
showed that it was changed in January 2019.
Council Member Jensen asked if there was a legal representative for Council Member Kurtz and if they had any
documentation proving the time of investment in Turnbury Capital. Ashkan Mehryari, 212 W. Spring Valley Road
in Richardson, Attorney representing Council Member Kurtz, responded that he did not have any documentation
with him but he clarified that Council Member Kurtz had an oral agreement that he would divest his shares. This
transaction through attorneys and accountants and had been forgotten about. He divested the shares back to the
Town Council Minutes April 9,2019 Page 7 of 14
original price that he paid for them to avoid any conflicts. It was not for Council Member Kurtz but was his child's
trust that would benefit from this. This occurred before Town Manager Class brought it up this year and it was
back dated to the original date that they had agreed upon, which he believed was January 2018. He would not
have had any investment at the June and July 2018 Council meetings. Council Member Kurtz would only have a
liability, meaning when the$100,000 worth of shares were sold, he would have only received$100,000 back and if
the investment did not pan out,then he only stood to lose funds.
Town Manager Class advised that the third vote that was in question occurred on January 8, 2019,with a 5-2 vote
for the Design Cost Proposal with Muckleroy & Falls for the engineering and design of the Trophy Club Parking
Garage project.
Council Member Jensen remarked that Town Manager Class had sent an email advising that there was no written
agreement with OTD for Phase III.
Mayor Pro Tem Shoffner asked if the Town moved forward with the Design Cost Proposal with Muckleroy& Falls.
Town Manager Class responded that no the Town did not.
Council Member Lamont commented that the reality was that on March 15, 2018, Council Member Kurtz said he
would recuse himself from any business that emerged with the partnership between operations and realty
business. Unless Council Member Kurtz was saying that was not OTD, he did not recuse himself from the June 12,
2018 meeting, which was a critical meeting because the agreement was amended. He questioned the agreement
that was signed by OTD when they no longer owned the property because it had been sold two weeks before.
Council Member Fleury asked who created Turnbury Capital,who owned it,and who were the managing partners.
Mr. Mehryari responded that he did not represent Turnbury Capital therefore he could not answer those
questions.
Town Attorney Dodd advised that the Secretary of State's Office has public documents of when it was formed in
August 2016 that showed Council Member Kurtz and another gentleman in Town as directors and the address was
here in Trophy Club, but he had no information regarding investments.
Council Member Fleury remarked that it had been mentioned that there was a connection between Turnbury
Capital and OTD. Town Manager Class responded that was in the email from Council Member Kurtz to Mr.Gordon
indicating that his wife was invested in Turnbury Capital,which was investing in HG Sply.
Council Member Fleury commented that she was asking these questions to get the truth heard. She asked how
this would affect the conflict issue if the intent was to divest the investment but yet he wasn't removed from being
the managing partner. Town Attorney Dodd responded that being a managing partner and director was different
than investment. On a day of a vote,the status would be looked at that time.
Council Member Jensen advised that on January 20, 2019, Mayor Sanders sent an email to Town Manager Class,
Director of Administrative and Financial Services Phillips, and Mayor Pro Tem Shoffner asking if there were any
written agreement on OTD involvement in Phase III. The Mayor thought there was an RFP process where the
Town rejected all responses and reissued an RFP and inquired if an RFP was awarded to OTD, and if OTD signed
anything related to the RFP for Phase III. On January 28,2019,Town Manager Class sent an email in response that
there was no written agreement with OTD, nor had OTD signed anything related to the Phase Ill RFP. He had also
confirmed that the Mayor was correct that there was an RFP process with two submittals; one of which was
rejected which prompted the EDC 4B and Council to begin discussions with OTD.
Council Member Lamont stated that he had mentioned during the June 12, 2018 Executive Session that he had
heard that the loan was paid off. He felt that if the loan was paid off then the Town was out of the deal because
the agreement continued until the lender was paid off. He had been ensured that the loan was not paid off by
several Council Members who said that OTD had just switched lenders. He asked again how OTD was authorized
to sign an agreement when they did not own the property. He stated that Council Member Jensen had previously
remarked that all Council knew that OTD sold the land. He commented that he did not know that OTD sold the
land. The Council voted on something when they did not know that the land was sold.
Town Council Minutes April 9,2019 Page 8 of 14
Council Member Fleury stated that she did not know either that the land had been sold.
Council Member Jensen highlighted that per Section 4.1(d)of the agreement it stated "Discretionary sale by OTD.
The Town and/or EDC shall have the Right of First Refusal to purchase the property." He stopped there to read the
following whereas clause on page 1,"Developer is the owner of an approximate 2.0517 acre tract of land generally
located in the Trophy Wood Plaza project comprised of Tract 2, Lot 2R-2 and zoned as part of Planned
Development No 25." Within the Definitions section on page 3,"Property"shall mean 2.0517 acres,which was the
land that Bread Winners sat on. The definition for HG Sply has a different definition for property within a separate
agreement. He went back to Section 4.1 (d), "The Town and/or EDC shall have the Right of First Refusal to
purchase the property if Developer desires to sell the property with or without public improvements or property
improvements at any time during the Right of First Refusal Term (defined below). The right of Town and/or EDC
under this section shall remain in effect until such time as two (2) separate restaurants on the "property" have
each received a Certificate of Occupancy and Developer complies with all of its obligations under Section 3.2 and
Section 4.1(a)of this agreement(above), at which time the Town's and EDC's right of First Refusal shall terminate
and be of no further force and effect ("Right of First Refusal Term")." He pointed out that the agreement was
written incorrectly because they were not doing two separate restaurants for the Bread Winners property and that
Bread Winners already had their Certificate of Occupancy. Additionally, he identified another mistake within
Section 4.1 (a) where it stated "Further, if Developer fails to obtain two (2) Certificates of Occupancy for each of
the two (2) separate restaurant sites." He believed that the agreement should be amended to have the correct
number of one(1)Certificate of Occupancy for each of the two(2)separate restaurants.
Mayor Sanders stated that he did not know either that the land had been sold.
Mayor Pro Tem Shoffner advised that he was present from the very beginning and voted on each agreement
brought to Council regarding OTD. In early 2013 was when the Town and OTD began discussions. During that
timeframe the Town was desperate for restaurants and retail. The reason for the PD 30 development was because
the Town was desperate for anything that would bring in additional revenue to help lessen the pressure of
property taxes. The previous Town Manager Mike Slye and the previous Assistant Town Manager Stephen Seidel
worked hard with OTD to bring high quality restaurants. In a Staff Report, previous Town Manager Slye sent a
project overview that stated that"OTD approached the Town in April 2013 regarding the potential opportunity to
develop high quality restaurants within the Town. Over the course of the past year, the Town has worked with
OTD to develop a performance incentive agreement that would develop three to four restaurants on
approximately 5.4 acre tract generally located between the Baylor Medical Center and Trophy Wood Drive. This
property was within the geographic boundaries of TIRZ No. 1 and was eligible for TIRZ incentives. The
performance incentive being offered was approximately $3.2 million. The Town anticipated that the appraised
value and gross sales for the development to reach $12.8 million within five years of signing a development
agreement, which equates to approximately $250,000 per year. There were three components to the incentive
agreement predicted on performance measures attained by certain dates by OTD." The TIRZ No. 1, EDC 4B, and
Council unanimously approved the Term Sheet. Additionally, he provided a few updates that had been provided
by Staff over the last couple of years:
• September 2, 2014-Previous Assistant Town Manager Seidel advised that payment would not begin until
the development agreement was executed by all parties, thus the $23,000 would not occur this fiscal
year. OTD was beyond frustrated with the property owner. OTD submitted the LOI on July 31st and they
could not get a response or phone call from the property owner. The LOI met the seller's terms regarding
price and acreage but communication from the seller had been difficult and often nonexistent from the
very beginning.
• January 30, 2015-Previous Town Manager Seidel spoke with OTD regarding the development agreement
and setting up bank payments. The executed Term Sheet stated that the EDC makes all payments to the
lender, not to OTD. Staff was currently working on a draft developer's agreement but the Term Sheet
stated that the Town would make no payment until the property closed and there was an executed
developer's agreement. OTD closed on the property the prior week and it could be March at the earliest
before a developers agreement was ready to go forward for approval by all three boards.
• April 2, 2015-Previous Town Manager Seidel advised that he initially thought they would need an EDC 4B
meeting the following week, but a couple items had not come to fruition. OTD had a very serious meeting
with one of the restaurants that focused primarily on the breakfast and lunch crowd. The meeting went
Town Council Minutes April 9,2019 Page 9 of 14
great and OTD felt fairly confident regarding the outcome. In fact, the restaurant group may consider
bringing another concept. Staff should know something soon about when the LOI might get signed.
• November 5, 2015 - Previous Town Manager Seidel provided an update that OTD continued to push
forward with Elias Pope and his concept. Staff was hopeful that a lease could be signed by mid-December
but Mr. Pope was going to be on a mission trip which would slow down the process slightly. The biggest
concern was Mehrdad and his Entrada development, or another city, swooping in at the last minute to
steel the deal; however if the lease could get signed there would be considerable interest in the newly
acquired property based on some initial conversations. Staff and OTD have been working on some
information to further strengthen the position with Mr. Pope.
Mayor Pro Tern Shoffner provided the above information to show that the Town asked OTD to bring high quality
restaurants and if OTD did,the Town would provide an incentive. Going back to early 2014, he would have never
dreamed that the Town would have gotten Bread Winners or HG Sply. OTD brought two high quality restaurants
that far exceeded everyone's expectations. He agreed with Mayor Sanders that the agreements were poorly
written and contained mistakes, but the intent had been met by OTD. There have been numerous unanimous
votes by Council, EDC 4B, and TIRZ No. 1. Lastly, he implored the Council to forget about the conflicts and move
forward with clean agreements and fulfill the obligations that were made to OTD.
Council Member Lamont commented that the Right of First Refusal could be argued and it could be argued that
there were two restaurants on the Bread Winners property with it having Quarter Bar. He read 4.1 (a) of the
agreement, "EDC shall continue making land repayments in the amount of$5,926.48 with a total payment by EDC
not to exceed$71,117.76 annually to the Developer's Lender pursuant to the Developer Agreement for a period of
seven (7) additional years, ending January 22, 2025, or upon the date that EDC's obligation was paid in full,
whichever occurs first." He believed that because OTD sold the land, the Town no longer had an obligation under
the agreement.
Council Member Fleury remarked that OTD did bring some amazing concepts to the Town. She acknowledged that
the agreements were poorly written but the Town Manager was trying to take pause because of allegations of
conflicts and breach of contract. She provided the City of Dallas and City of Richardson as examples with their
conflicts and the need to have these discussions in Open Session.
Main Motion:
Main Motion made by Mayor Sanders, seconded by Council Member Jensen, to direct the Town Manager, Town
Attorney, and Staff to 1) Continue payments with OTD; 2) Direct Town Attorney and Town Manager to work to
create an agreement documenting payments remaining on Bread Winners property and that the agreement
include releases for both parties of all conflicts that may exist in the current agreement;and 3)Work with OTD and
attorneys to modify the existing agreement for the HG property once the C.O.was obtained by HG.
Mayor Sanders wanted to move forward in a positive manner and not have any more slanderous activity. Mistakes
have been made and he did not want to try to rewrite a second developer's agreement for the HG property
because it was already a poorly written agreement. The fulfillment of bringing two restaurants has occurred and a
Certificate of Occupancy would be obtained for HG Sply. He wanted to allow the opportunity for residents to hear
the facts and provide their input. He remembered when the Town was not able to attract restaurants because the
location was not ideal. OTD has leveraged themselves and received bank notes to purchase land to build a building
that attracted restaurants. He wanted to come up with an agreement for the Bread Winners property that was
specific to payments being made to OTD for the remainder of the 20 year note. A statement should be drafted
that would release both parties of any liabilities, risks, and past conflicts. The second portion of the motion dealt
with the HG Sply property because the Certificate of Occupancy would be obtained in the near future and the
Right of First Refusal should be dealt with accordingly because the Town was not allowed to own self generating
businesses. He pointed out that the HG Sply agreement had a 60 day notice clause.
Council Member Jensen advised that the developer's agreement had a 60 day clause but the Subordination
Agreement with Frost Bank had a 180 day notice and it also stated that any other agreement was junior in
agreement to the Subordination Agreement that the Town signed.
Town Council Minutes April 9,2019 Page 10 of 14
Motion to Amend,
Motion to Amend made by Mayor Pro Tern Shoffner, seconded by Council Member Jensen, to add the following
language or similar language agreed to by both parties to state that "All entities and individuals who are party to
this agreement, and any subordinate agreements, certify that all past or current Conflicts of Interest have been
disclosed to all other parties, in accordance with State Law, and documented within the agreement. Further, all
entities and individuals who are party to this agreement shall disclose any past, current, or future Conflicts of
Interest to all other parties, upon receiving knowledge of such,in accordance with State Law."
Mayor Pro Tern Shoffner wanted to make it crystal clear to the residents and all stakeholders that every conflict of
interest would be in the agreement and be disclosed.
Council Member Fleury inquired if this would include appointed officials as well as elected officials. Town Attorney
Dodd responded that the way the motion was worded it would include members of Council, EDC 4B, and TIRZ No.
1.
LuAnne Oldham, 2535 Roseville Drive, provided a presentation based on information she obtained through public
records, Open Records Request, and Tarrant County Real Property online records. She highlighted several items
dealing with the Term Sheet approved on March 24,2014(effective January 22,2015)between the Town,TIRZ No.
1, EDC 4B,and OTD that included:
• OTD purchase property for$1,064,278.25;
• 2 executed leases—10 year minimum term within,24 months(1/22/17);
• 2 Certificate of Occupancy-2 restaurants within 36 months(1/22/18);
• EDC 4B pays developer's lender a total amount of$1,064,278.25(Purchase price, less interest);
• TIRZ No. 1 pays developer up to$1,000,000 total incremental revenue for public improvements;
• If developer fails in obligation at the 24,36 month terms(1/22/17)(1/22/18) EDC 4B or Town may elect to
purchase property;
• Economic Development Agreement("EDA")(8/24/16,signed 10/13/16)term expires 1/22/2035;
• By multiple amendments approved by Council the Certificate of Occupancy term has been pushed to a
total of 50 months from the effective date;
• The requirement to secure 2 restaurant leases with a minimum of ten year terms was evidenced to the
Town by cut and paste, marked-up,one page excerpts of typically lengthy lease agreements;and
• Complete terms of the leases were not provided - questioning the validity of an unconditional 10 year
minimum term.
Ms. Oldham concluded that why all this mattered was that there was a pattern of under disclosure, conditions of
10 year minimum term of the lease(s)were unknown, numerous extensions to the EDA were approved by Council
Member(s) with strong business ties to the beneficiary of the action, and these business ties were not disclosed
prior to the votes. Records failed to reflect notice to the Town of the sale/transfer of the Bread Winners tract to a
third party, the deed recorded was on June 4, 2018. The EDA was amended after the sale of the Bread Winners
tract and diverting the lender reimbursement to the developer directly through action taken on June 12,2018.She
believed that a pattern of amendments were pushed to benefit developer. Strategic appointments to influential
committees recommended by a subcommittee composed of Council Members closely aligned to the developers by
action taken on June 27, 2017. Financial investment and business tie disclosure questions have been answered by
abrupt resignations of Council Members and Ethics Committee Members. The possible misapplication of Town tax
dollars has been hidden from officials. Heated discussions have been heard outside of Executive Sessions. She
concluded that the Town Manager was contacted and questioned by an outside investigator. The current
consequences of an unbalanced EDA should have been apparent to citizens. Committees have been reconstituted,
and financial alliances have deepened between a select few members of the community.
Mayor Sanders inquired if there had been email exchanges regarding the copy of the leases agreement that
appeared not to be a full copy as mentioned by Ms.Oldham. Town Manager Class responded that he brought that
matter to the attention of the attorney for OTD but a better quality had not been provided.
Mayor Sanders spoke about Ms. Oldham's comment regarding diverting funds. He had not been told that the
building and land was sold, but that the bank was requiring OTD to pay off a note in order to receive their
Town Council Minutes April 9, 2019 Page 11 of 14
construction loan.
The vote for the Motion to Amend was taken,to add the following language or similar language agreed to by both
parties to state that "All entities and individuals who are party to this agreement, and any subordinate
agreements, certify that all past or current Conflicts of Interest have been disclosed to all other parties, in
accordance with State Law, and documented within the agreement. Further, all entities and individuals who are
party to this agreement shall disclose any past, current, or future Conflicts of Interest to all other parties, upon
receiving knowledge of such,in accordance with State Law."
Motion to Amend carried unanimously 5-0-0.
Council Member Fleury asked that grace and mercy be extended to the Town Manager who was doing his job in
the midst of potential conflicts and breach of contract. She felt that Town Manager Class has exhibited the utmost
integrity. She did not want individuals to slander or defame the Town Manager and Staff. Additionally, she asked
what the implementation was when OTD signed the agreements as owners when the property had been sold.
Town Attorney Dodd responded that it would be addressed if the Town moved forward with the breach of
contract,which he would rather discuss in Executive Session.
Council Member Jensen commented that the Town received a response from the Attorney for OTD on April 4,
2019,that the developer agreements in place did not specifically require a production of the leases,therefore, an
informal response was made, which was intended in the spirit of the goodwill that this retained throughout its
progress.
Motion to Divide the Question:
Motion made by Council Member Lamont to divide the question dealing with the Main Motion.
Motion to Divide the Question failed for lack of a second.
Mayor Sanders acknowledged that action needed to be dealt with through Agenda Item No.8.
Council Member Jensen noted that the Council had to look at the entire picture as a responsibility to the residents
of Trophy Club. There was a risk to the Town if payments ceased due to the signed Subordination Agreement in
place.
Kristin Regel,8350 N. Central Expressway in Dallas,Attorney representing OTD in its various entities forms,advised
that she was a commercial litigator and has been practicing for 21 years. She met with a couple of Staff members
last week and she sent a response on April 4,2019. It has been discussed at length the historical perspective of the
developer's agreements. In 2014 there was a Term Sheet and in 2015 the initial agreement included the entire
track of land of 3.88 acres to encompass what eventually became the Bread Winners and HG Sply projects. At
some point,it was recognized that there were different entities that owned HG Sply and Bread Winners,which had
different terms and payments; therefore two different agreements were developed. Each amendment had been
voted on by the Town Council each and every time in an effort to continue the business relationship that
eventually has benefited the Town. It was common for town's to offer incentives using tax dollars to increase
revenue in the future. She noted that previous agreements would not be entered into a court of law. There was a
risk to the Town due to the Subordination Agreement, as well as a risk of litigation. She hoped that they could
resolve this issue because that was the best way to go.
Mayor Sanders advised that potential litigation should not be discussed.
Ms. Regel advised that from an attorney's perspective that deals with contractors, the Right of First Refusal that
the Town would have had, expired long before OTD sold Bread Winners. Therefore there was no Right of First
Refusal and no need to provide written notification. She addressed a point made by Ms. Oldham regarding the
document that was emailed to the previous Assistant Town Manager Steven Glickman. She explained that Staff
had reached out to OTD in December 2016, inquiring about the status of the leases. Her client put together a
quick response and cut and pasted the signature from their tenants to indicate that they received the leases.
Commercial leases could be hundreds of pages and could contain confidential information, which they have the
original 15 year commercial leases. There was nothing in the agreements that required OTD to produce the
commercial leases. She believed there was a valid agreement that allowed the responsibilities and obligations of
Town Council Minutes April 9, 2019 Page 12 of 14
the Town, TIRZ No. 1, and EDC to continue payments regardless of whether or not OTD paid off the loan.
Additionally, she addressed Council Member Lamont's inquiry about why did OTD sign an agreement when there
had already been a sale. This was due to the fact that OTD continued to own the incentives under the agreement
and OTD was always allowed to be able to sell the property at some future date.
Mayor Sanders moved to Agenda Item No.8 in order to properly take action.
EXECUTIVE SESSION
7. Pursuant to the following designated sections of the Texas Government Code, Annotated, Chapter 551
(Texas Open Meetings Act),the Council convened into executive session to discuss the following:
A) Section 551.071 Consultation with Attorney under Subsection (2)to consult with the Town Attorney on
a matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules
of Professional Conduct of the State Bar of Texas clearly conflicts with the Texas Open Meetings Act and
Section 551.087 Deliberation regarding Economic Development Negotiations under Subsection (1) to
discuss or deliberate regarding commercial or financial information that the governmental body has
received from a business prospect that the governmental body seeks to have locate, stay,or expand in
or near the territory of the governmental body and with which the governmental body is conducting
economic development negotiations and Subsection (2) to deliberate the offer of a financial or other
incentive to a business prospect that the Town seeks to have locate within the territory of the Town:
Current matters with OTD regarding Bread Winners and HG Sply Economic Development Agreements
and possible amendments to or adopting new agreements(Mayor Sanders)
B) Section 551.072 Deliberation regarding Real Property to discuss or deliberate the purchase, exchange,
lease, or value of real property if deliberation in an open meeting would have a detrimental effect on
the position of the governmental body in negotiations with a third person:
1) North of State Highway 114, east of Trophy Club Drive and west of Town limits (Mayor Pro Tern
Shoffner and Council Member Kurtz)
2) Parcel between Bread Winners and Trophy Club Town Hall (T.Class)
3) Potential transfer of property(T.Class)
C) Section 551.074 Personnel Matters to discuss or deliberate the appointment, employment, evaluation,
reassignment, duties, discipline or dismissal of a public officer or employee and Section 551.071 under
Subsection (2) Consultation with Attorney to consult with its attorney on a matter in which the duty of
the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of
the State Bar of Texas clearly conflicts with the Texas Open Meetings Act.
1) Simon D.Whiting with Burford&Ryburn,L.L.P.(Mayor Sanders)
2) Town Manager Thomas M.Class,Sr.(Mayor Sanders)
CONVENED INTO EXECUTIVE SESSION-START TIME—10:02 P.M.
RECONVENED INTO REGULAR SESSION-START TIME-11:36 P.M.
RECONVENED INTO REGULAR SESSION
8. Consider and take appropriate action regarding the Executive Session(T.Class).
Motion:
Motion made by Mayor Sanders, seconded by Council Member Jensen, to direct the Town Manager, Town
Attorney, and Staff to 1) Continue payments on Bread Winners land; 2) Direct Town Attorney and Town Manager
Town Council Minutes April 9, 2019 Page 13 of 14
to work to create an agreement documenting payments remaining on Bread Winners property and that the
agreement include releases for both parties of all conflicts that may exist in the current agreement; and 3) Work
with OTD and attorneys to modify the existing agreement for the HG property once the C.O.was obtained by HG;
and 4) Add the following language or similar language agreed to by both parties to state that "All entities and
individuals who are party to this agreement, and any subordinate agreements, certify that all past or current
Conflicts of Interest have been disclosed to all other parties,in accordance with State Law, and documented within
the agreement. Further, all entities and individuals who are party to this agreement shall disclose any past,
current, or future Conflicts of Interest to all other parties, upon receiving knowledge of such, in accordance with
State Law."
Susan Edstrom, 269 Oak Hill Drive, thanked the Council for the openness of the meeting. She commented that
intent could not be proved and that conflict that existed should not be forgiven. If payments were made that
should not have been made, then it was the Council's fiduciary responsibility to get the Town's funds back. She
expected the Council to be good stewards of the Town's funds.
Greg Wilson, 2013 Churchill Downs Lane, remarked that he had been the President of EDC 4B when much of this
transpired. He explained that it started out as three restaurants, and then it went to two restaurants, and
ultimately went to one restaurant. He felt that a lot of the changes were made to the agreements and the
paperwork had not been documented how it should have been. It was a travesty to have Town Manager Class
publicly demonized. He asked that everyone treat each other how they wanted to be treated, especially when that
person was simply doing their job. He hoped that everyone could be civil moving forward and that this could be
resolved in an amicable manner. His experience in dealing with Town Manager Class has been a great experience.
Council Member Lamont commented that he felt that he had been misled at the June 12,2018 Council meeting and
that this agreement was null and void.
Council Member Fleury assumed that negotiations for the new agreements would be done in Open Session.
Mayor Sanders remarked that typically negotiations would not occur in Open Session.
The vote was taken.
Motion carried 4-1-0, with Mayor Sanders, Mayor Pro Tern Shoffner, and Council Member Fleury and Jensen
voting for,and with Council Member Lamont voting against.
RECESSED AT 9:30 P.M.FOR A BREAK
RECONVENED AT 10:02 P.M. INTO REGULAR SESSION AND IMMEDIATELY ENTERED INTO EXECUTIVE SESSION
Motion:
Motion made by Council Member Lamont,seconded by Council Member Fleury,to engage for employment matters
the law firm of Burford&Ryburn, L.L.P.
Motion carried unanimously 5-0-0.
ADJOURN
Mayor Sanders adjourned the meeting at 11:37 p.m. /f
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Town Council Minutes April 9,2019 Page 14 of 14