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July 2, 2005
Kelo & Western Seafood in Freeport, Texas

On this Fourth of July weekend, I think that it is appropriate to revisit the Kelo Case that I wrote about here, here and here.
This time, I want to discuss it in terms of its very real and present impact on people—rather than its theoretical implications.

Last Tuesday, I had the honor of filling in for Mychal Massie on his radio show Straight Talk on Right Talk Radio. One of
my guests was Wright Gore. I wrote about the show here. After the show, I had the opportunity to interview Wright and I
am posting that interview in this piece.

Wright is the member of a family that owns Western Seafood in Freeport, Texas. The company receives delivery of shrimp
from fisherman near the Old Brazos River as it empties into the Gulf of Mexico. A part of the property, three hundred and
thirty feet, is located on the waterfront. Though small, this part of the property is the most important because it provides the
only access to the company for the unloading of catch. Without this piece of property, Western Seafood will go out of

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business.

Wright’s company faces the real possibility that this property will be taken by the City of Freeport to give to a company
owned by Hiram Walker Royal, who lives in Dallas, Texas . He intends to develop this property—along with the property
of others into a marina.

Here is the story from Wright:

The History of Western Seafood

Jerri: I am talking with Wright Gore. Wright is part of the family that owns a seafood company down in Freeport Texas and
Wright will you tell the folks what the name of your company is and the history behind it.

Wright Gore: The name of the company is Western Seafood. It was a business that was managed and then purchased by my
grandfather during the war. It has been in my family for over 50 years and the business is primarily wholesale of shrimp and
that is buying from independent boat owners and reselling it wholesale all across the country. A lot of it ends up in four-star
restaurants in New York and Chicago actually.

Jerri: So your granddad actually worked for the company and worked his way up to a manager position and then was
successful enough to actually buy the company out.

Wright Gore: Well he made himself that way. He was managing this business for a couple of businessmen during the war
and they tired of the business and they gave him an ultimatum one day. Either you purchase this business from us or you
lose your job and he chose the former and he literally sacrificed everything he had in order to do that. He sold his house,
moved my family to Biloxi and kept them there for over a year in order to work and pay off his debts to the people that
owned the business and is the American success story.

Jerri: So yes, that truly is the American success story and why don’t you explain to the folks what your company does?

Wright Gore: We sell shrimp wholesale. Again, we take it in from independent boat owners. It is the wholesale of shrimp
that is taken from the Gulf of Mexico. The independent boat owners go out 100 miles out into the water and come in and we
resell that all over the country.

Jerri: And is the location of your business an important factor to your business?

Wright Gore: Yes, it is.

Jerri: Why is that?

Wright Gore: Well, our docks along the Old Brazos River in Freeport are in very close proximity to the opening of the
waterways there. So, the boats have very quick access to the Gulf of Mexico and that has a lot to do with why the boat
owners come to our ports in Freeport Texas along with a handful of others along the Texas Gulf Coast. Another reason is
because the waters are protected by a guillotine gate which if a hurricane comes all of the boats that are upstream from this
huge dam or guillotine gate when lowered are completely protected from any storms or natural weather situations,
hurricanes and the like and it is one reason why the water ways inside of that guillotine gate are valuable for commercial
purposes.

Jerri: Your business is located right on the water there?

Wright Gore: That is correct.

The City of Freeport Uses Eminent Domain Powers

Jerri: OK and since we are talking here about the Kelo versus New London case and in fact that case is going to have a real
life impact on you because the City of Freeport has been trying to take your property for some time. Is that right?

Wright Gore: Yes, that is correct.

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Jerri: Will you explain to the folks out there how that began and what has happened since then?

Wright Gore: Sure thing. Well, as I stated earlier the Old Brazos River is a Federally protected waterway, not only regulated
but it is protected by the huge guillotine gate and the fellow who owns the property adjacent to our loading docks decided
that his property was valuable and he would like to have it too but unfortunately this next door neighbor of ours never
bothered to let us know that. He never came to us and said I would like to make you an offer for your property. Instead what
he did was, he took full advantage of the powers that have now been reaffirmed by the Kelo case and that is that private
developers can gang up with a local municipal government and rent out their powers of eminent domain all in the name of
economic development. So, what happened was, our next door neighbor a fellow by the name of Walker Royall went to the
City and said I would like that property and I would like for you to condemn it for me and they agreed to do so and the case
has been taken all the way to the Fifth Circuit.

Jerri: OK. I want to be real clear about this next-door neighbor. This is not someone who lives and works or has a business
next door to yours is it?

Wright Gore: No it is not, Jerri.

Jerri: Is it a developer from Dallas names Hiram Walker Royall?

Wright Gore: That is correct. There is a developer that lives in Dallas and he is our neighbor in the sense that he owns the
property next door but in fact he does not have any reason or business himself in Freeport Texas. He simply inherited a lot
of money and a lot of property that is in Freeport and he has a lot of political influence. He actually donated the building
that the City Hall is contained in to the City of Freeport.

Jerri: When did he do that?

Wright Gore: He did that a couple of years ago. I understand he got a nice tax break from that but it certainly seems to have
won him some political favors as well.

Jerri: When did he inherit this property down in Freeport?

Wright Gore: He inherited it just after 2001, I believe.

Jerri: OK. So, let me get this straight. He has no connection to the community. He then inherits some property. He comes
down. He makes a contribution to the City in the form of a building for the City Counsel. He decides that he wants your
land but he never comes and talks to you and negotiates to try to buy your property. Is that right?

Wright Gore: All of that is correct. He never once made an offer to purchase this property but instead he simply went to the
City and said that I would like that property.

Jerri: So, he lowered his transaction costs and just goes to the City and asks them to take your property under their powers
of eminent domain and give to him.

Wright Gore: That is correct. That is exactly right.

The Terms of the Deal to the Developer

Jerri: And what is he planning to do with that property once he gets it.

Wright Gore: The plans are to build a marina but this is not a marina that would actually be built otherwise with his
property and money. As a matter of fact the development agreement between himself and the City of Freeport and the City
of Freeport Economic Development Corporation, this tripod agreement not only spells out the obligation of the City of
Freeport to take our property along with many other property owners parcels from them and convey title to Walker Royall.
It also states that of the projected $7,000,000 development costs of this marina that $6,000,000 comes directly from the
taxpayers and further more that he would receive a tax abatement for as long as the law allows from all City taxes. What is
kind of ironic about that Jerri is that this is being done under the idea of expanding the tax base and creating jobs. But
unfortunately if this entire 330 feet parcel in question were taken from us it would jeopardize our livelihood and the 56 jobs
that we provide along the waterfront in order to generate according to the City manager’s deposition somewhere between

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10-15 jobs.

Jerri: Lets go over that. Because I went to the web site StoptheEDC.com and got some of these figures that you are talking
about. Let’s just try to lay the stage first for this. First the City created an Economic Development is it Corporation?

Wright Gore: That is correct.

Jerri: And is it this Corporation that has been charged with economic development in the City? Or was it formed
specifically for this particular deal? Or do you know?

Wright Gore: It was formed in 1999 after the City called for a vote to establish this Economic Development Corporation as
many other municipalities have in Texas. It is given the power by a statute call the TDCA or Texas Development
Corporation Act. And what this does, is that it creates a nonprofit corporation with the power to add an extra half cent sales
tax to the local economy and then to use that tax money in order for purposes of “economic development” but the reality is
Jerri, that the best majority of money is spent on luring other businesses by granting them tax abatements and properties and
other things.

Jerri: So, this development corporation has the power to tax it’s citizens but rather than trying to encourage businesses that
already exist there or people who already live there to create their own businesses, it is going outside of Freeport and
finding businesses to relocate in Freeport. Is that right?

Wright Gore: Well, that is right and it also conveys the power of eminent domain on the Economic Development
Corporation, which normally, historically has been used for purely public purposes such as roads and businesses and what
not. But yes, this is primarily to lure business from out of town.

Jerri: So, they are taking your tax dollars, they are using it to take the taxpayers land under eminent domain to give to other
parties who may not even be citizens of Freeport.

Wright Gore: That is exactly right.

Jerri: OK and lets go over some of these figures. It was represented that this marina would somehow increase the tax base
of Freeport. Is that right?

Wright Gore: Yes.

Jerri: But the fact is that they are not even going to have to pay property tax for some unspecified period of time. Correct?

Wright Gore: Yes, that is right. For as long as the law allows as a matter of fact. So, it actually is a decrease in property
taxes.

Jerri: Because you guys pay property tax, right?

Wright Gore: And we have for over 50 years and never been late.

Jerri: And, it is going to take $6,000,000 of taxpayer money and transfer that to Hiram Walter Royall to use on this marina.
Is that right?

Wright Gore: Yes, that is exactly right. Along with the tax abatements and conveying title to other peoples properties. So, it
is clearly a raw deal for the people within Freeport.

Jerri: One thing about the facts and figures that you have come up with. First of all if they take this property it is essentially
going to shut your operations down because you will not be able to operate because the shrimpers will not be able to get to
you and so you will have to lay off your people. Right?

Wright Gore: Well that is correct.

Jerri: And you have some 54 or 56 people employed.

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Wright Gore: Yes that is right.

Jerri: And there is a business that is next to you that is in the same boat that has maybe 20 something employees.

Wright Gore: Yes, that is right and during the summer months, during the shrimp season there are literally hundreds of
workers in the shrimp trade along these docks and all of these jobs and all of the contribution to the local economy would
go away because there would be no reason for these boats to come to town anymore and all of the ancillary businesses
would dry up.

Jerri: And you estimate that just among the shrimpers that you are talking about 200+ jobs being lost because of this marina.

Wright Gore: Well that is true. There would either be lost or they certainly would not be coming to Freeport anymore. They
would have to go elsewhere along the Texas Gulf Coast. It would clearly be a blow to the Freeport economy.

Shifting Risk from the Developer to the Taxpayer

Jerri: Now one thing that is really bad about this is the fact that Hiram Walker Royall actually went to a bank to try to get
this financed and discovered that he could not get it financed. Didn’t you tell me that?

Wright Gore: That is what he claimed. Hiram Walker Royall did manage to make one single appearance to the people of
Freeport in a “town hall meeting” which was staged by City officials. It was really more of a town proclamation than a town
hall meeting because it was simply a stating of what the City was going to do and when he was questioned by one Freeport
citizen about why their tax money should be spent, should go to him, he stated that well, he took this to a bank and they
considered the idea simply too risky to bank on and so the people of Freeport were going to have to make up the difference.
So, it begs the question, if a bank would not take on these risks why should the people of Freeport?

Jerri: So, he is expecting you guys, not only to give up your land, not only to give up your tax dollars but also to bear the
risk of this thing not being successful and the taxpayers never seeing a return of their $6,000,000. Is that right?

Wright Gore: That is true Jerri. Because this loan not only is a loan directly from the taxpayers it is also a non-guaranteed
loan. Walker Royall did not personally sign on this and he does not have to pay the principal back if this project does not
become profitable according to whatever his definition of profitable is.

Jerri: It is an unsecured loan?

Wright Gore: Well it is. It really is in the sense that the only collateral for this loan would be his own property, which he
values at $750,000. Other than that plus, a contribution by him of some $1,000,000, you have a total of $1,750,000 in assets
or at least they valued it at that backing up $6,000,000 in cash from the taxpayers.

Jerri: So, basically the corporation is the one signing the note with the City and if it is a failure and Walker Royall takes it
into bankruptcy then there is no guarantee that a bankruptcy trustee is going to see that the City gets its money back.

Wright Gore: No, in fact it probably would not have much power to do so. Unfortunately, Jerri all of the reward would
come to Walker Royall and all of the risks are on the shoulders of the Freeport taxpayer.

Comment by Jerri: Upon review of the Development Agreement, I found this paragraph:

“Developer Loan” means the loan from the EDC to the Project Developer funded by the City Loan from the City to the EDC, as provided for in
Section 2.2(a) hereof, which shall provide for: (a) an initial term during which payments of interest only shall be due on a quarterly basis, such
initial term to conclude upon the earlier to occur of (i) 5 years following the date of the Developer Loan note or (ii) the date upon which the
Project has reached a breakeven point of profitability followed by an additional term of 20 years during which payments of principal and interest
shall be due on a monthly, fully-amortizing basis, (b) an interest rate equal to the rate that the City is able to obtain on issuance of its 15-year
tax-exempt certificates of obligation, (c) a non-recourse basis (except as to the Project and the Revenues), (d) no pre-payment penalty, (e) no
guaranty, and (f) other terms mutually agreed upon by the parties and as provided for in Section 2.2 hereof and otherwise consistent with the
provisions to this Agreement. For purposes of this Agreement, the term “breakeven” shall mean that Revenues have exceeded gross operating
expenses of the Project (including all debt-service payments and expenses related to the Developer Loan, but excluding any developer fees paid
to the Project Developer or any Affiliate of the Project Developer) on a trailing 12-month basis. (emphasis added)

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Thus, it appears that the developer is not personally guaranteeing the loan and the only security is the marina and land and
whatever revenues might exist upon default. According to Wright, “The City Manager’s favorite line is that the loan is
“secured by the 1/2 cent sales tax.” Technically, I would imagine that this is in fact what would secure the bonds to be
floated.”

The Property Owners Fight Back

Jerri: Now you have been fighting against this ever since they came to you threatening to take your property. Is that correct?

Wright Gore: That is right. When they initially approached us in October 2002, they said rather nocuously, say, you would
like to do something that would help the Freeport economy, wouldn’t you? And we said, well sure. We would love to. They
said, we want to bring a marina to the town and we want to know if you have a problem with that. Well of course not, we
would love to see a marina come to town. In fact we would love to see anything that would promote economic development
in Freeport. They did not reveal at the time what their plans were; however, and their plans were to either take this property
at a price that they set, that they felt was reasonable or to take it by eminent domain. There is a law that says you must make
an offer for the property. So, the City of Freeport did just that.

Jerri: What kind of offer did they make?

Wright Gore: It was for approximately $167,000 for this 330 feet parcel. To put that in perspective. Losing this entire parcel
would literally mean losing our entire business. Our entire livelihood for 50 years. So, no $167,000 in light of that is really
not a fair price and we let them know that. They said, well that is the offer, take it or leave it.

Jerri: So, basically they want to take the most crucial part of the property that your business is on and they want to claim
that because it is limited footage that it is only worth $100,000 something dollars where as to you what it means is the loss
of your entire business.

Wright Gore: Yea, that is exactly right Jerri. Whatever appraiser they hired to have performed simply did not take into
account the fact that a business would be lost. It is really not the property in and of itself. It is the fact that livelihoods would
be lost.

Jerri: And so they did not even make an offer for the entire property. Since, your business would essentially have no value if
you lose this piece.

Wright Gore: Well that is right Jerri. Because without this piece, this piece truly is essential to everything because it is the
center of all operation. This is where the boats dock and load their catch into our unloading facility and partial taking access
to that facility will be blocked and that is what we have been trying to stop.

Jerri: So, you turned them down then. And did they file papers to exercise eminent domain after that?

Wright Gore: Yes, almost immediately they filed law suite to condemn the property.
Jerri: And what happened? What was it heard before a trial court?

Wright Gore: There was an administrative hearing about it. We challenged the right to take and we just happened to have
federal jurisdiction because the waterways were federally regulated so this was heard initially by Federal District Court in
Galveston Texas and that Judge, Samuel Kent ruled that rights to condemn this property because of the Texas Development
Corporation Act statute and his interpretation of it.

Jerri: Was that merely on motions or was there a full-blown trial with a jury or did just the judge hear this?

Wright Gore: There was no trial. It was not heard by a jury and..

Jerri: Was it some sort of motion brought by the City that the Judge ruled on, like a motion for summary judgment or
something like that?

Wright Gore: Yes.

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Jerri: They won that summary judgment?

Wright Gore: They did.

Jerri: And then it went to the Fifth Circuit and at that point in time what happened?

Wright Gore: Well, at that point, first of all the Federal District Court denied our motion for reconsideration. And then we
asked for a stay pending the appeal and it was also denied. It was not until writ of certiorari was granted by the Supreme
Court in the Kelo case that the Fifth Circuit decided to stay the…

Jerri: So the Fifth Circuit knew that this case was iminent so they issued a stay to stop proceedings.

Wright Gore: That is correct.

Jerri: And now once the Kelo decision came out what is happening?

Wright Gore: Well, the Kelo decision came out last Wednesday. By last Friday the City had already filed to lift the
injunction in the Fifth Circuit and now our response is due by July 8.

Jerri: So the injunction is going to be lifted and then just a proceeding before the Fifth Circuit is going to proceed.

Wright Gore: Yes, that is correct.

Jerri: So, basically now it is going to be up to the Fifth Circuit to decide whether or not you get to keep your property.
Besides going to court are there any other measures that you are taking right now that you would like to share with us.

Wright Gore: The first is that there is a provision within the Texas Development Corporation Act at TDCA, which allows
for the citizens who voted the Economic Development Corporation into existence to also vote it back out. And the way that
they do that is by gathering the signatures on a petition of more than 10% of the registered voters within that municipality to
bring it to a vote and we have done just that.

Jerri: How many registered voters are there in Freeport?

Wright Gore: Approximately 5500 and we have collected in excess of 760 votes at this point.

Jerri: And have you submitted that?

Wright Gore: We will be submitting it this week.

Jerri: To the City council or to whom?

Wright Gore: It is presented to the City, certified within a week and presented to the City counsel for a vote.

The City Fights Back and Stomps on the First Amendment

Jerri: And have you gotten any feed back about what the City intends to do about that?

Wright Gore: Well I can tell you that they are fighting it tooth and nail as we speak. They have already stopped us multiple
times. Just going out door to door for petitions they have told us that we needed a permit to do this when in fact we clearly
do not. Finding a case that the Supreme Court heard years ago regarding Jehovah’s Witnesses that says that you absolutely
have the right to go door to door to speak to people about all sorts of things.

Jerri: How did they try to stop you? Did they arrest someone? Or did they send you a letter? Or exactly what did they do?

Wright Gore: They simply stopped us and we had to comply or face arrest.

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Jerri: They sent the police out to stop you on the street?

Wright Gore: That is correct?

Jerri: And so how did you overcome that?

Wright Gore: Well we really have not so far. We continued to. We know that they want to stop this by using police powers
and we just hope that we are successful.

Jerri: Yea. Well do you think that there will be a lot of citizens that show up at that meeting of the City Counsel next week?

Wright Gore: Oh, I certainly do. I believe when a public hearing is called for this. I believe that people will turn out in
standing room only as they have many, many times in this eminent domain case.

Jerri: The Institute for Justice is helping you or the Castle Coalition is involved in this. Aren’t they?

Wright Gore: Yes we have received considerable help from both organizations both in our legal strategy and in a grass roots
level. We have learned by example from the Institute for Justice and the Castle Coalition that these efforts can be fought
and won. Certainly it is much more difficult now in light of the Kelo decision but we certainly feel that this issue is far, far
from over in the City of Freeport.

What About This Developer?

Jerri: OK. Well let’s talk a little bit about this developer who is taking your land. He is an heir to the liquor company.

Wright Gore: Yes, that is right. His full name is actually Hiram Walker Royall as is in the whiskey distillery. His family
sold that for hundreds of millions of dollars back in the 80s.
Jerri: And do they also own a large part of the Humble, now Exon or Mobil Company.

Wright Gore: Yes, his family was also the founders of the Humble Oil Company, which eventually became Exxon Mobil
family with a lot of influence.

Jerri: What is the name of his company that is coming in here and trying to do that?

Wright Gore: It has been labeled Freeport Waterfront Properties.

Jerri: And I think that you told me that he has refused to meet with any of you people.

Wright Gore: Unfortunately he has not found the need to meet with us. He says that this is an issue for the City to work out.
He has never felt obligated to make us any offer for this property because he knows that he does not have to. In the one
scheduled meeting that I had with him he said this is the hammer that we have and we are going to use it.

Jerri: So, there was no remorse. No acknowledgment of the fact that this is your property. This has been in your family for
50 years.

Wright Gore: Well, unfortunately that is the case. When they had this town hall meeting they used a Baptist Church to do it.
One of the people got up and said isn’t there a Commandment about that shall not covet thy neighbor’s property and really
there was no answer to that question.

Jerri: He would not answer the question?

Wright Gore: No.

What Can We Do To Help?

Jerri: So, where do you plan to go from here? Just pursuing trying to get this Corporation to be dissolved and continuing

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with your court? Any other plans that you would like to share with us?

Wright Gore: Sure. There is actually a bill introduced yesterday by representative Frank Corte, Jr. of San Antonio,
nullifying the State of Texas this Kelo decision by outlawing the use of eminent domain by local municipalities in the name
of economic development. And this is something that everybody in Texas should contact their house and senate
representatives about and tell them that they support the bill by representative Frank Court.

Jerri: And you guys have a web site where you are trying to keep everyone informed about what is going on with this and
there is some other stuff on here. Will you explain to everyone about that site?

Wright Gore: We have a couple of web sites. The first one we established last year is scaldalinfreecourt.com. And it is
basically in hopes of shedding some light on the situation that a lot of the City governments fathers have kept Freeport
residents in the dark about. And we established another more specific site stoptheedc.com and on it provides information
about a corporation that can run rough shod over the rights granted to it by its own citizens.

Jerri: And do you give information on that web site about how people in other Texas communities can emulate you and try
to get these economic development corporations stopped.

Wright Gore: Sure, they can certainly follow our model. We have a petition that has been generated by an election law
attorney here in Texas that they can take and use to start their own movement and circulate that petition to have their own
economic development corporation dissolved.

I also learned from Wright, that the developer, Hiram Walker Royal, has taken off the gloves. He has sued Wright for
fighting this land grab, claiming defamation based on the information posted at the above websites. Apparently, one of his
claims is that Wright misrepresented that Walker Royal drove a Porsche when he actually drove a BMW.

Texans, call your State Senators and Representatives and register your support for Representative Corte’s bill. Everyone,
call your U.S. Representative and Senators to register your support for Sen. Cornyn’s bill.

After all, your home or business might be next.

By: Sue Bob @ 12:23 pm in: Uncategorized |

1 Comment »

1. [...] Update: One other issue that I must note. Terry Dill supports a constitutional amendment to prevent State and
Local governments from taking property to give to private developers. As those who read my blog know, I wrote
quite a bit about this after the Kelo decision here, here here, here, and here. [...]

Pingback by Sue Bob’s Diary » I’m Volunteering for Terry Dill — January 7, 2006 @ 5:04 pm

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