On March 19, 2003, the Five Points Development Association hosted a mayoral candidate’s forum at Cappetto’s. In attendance that day were then-mayoral-incumbent Ray Caballero, who arrived late, and contenders Joe Wardy, Ray Graham and Carl Starr. Caballero, in his closing statement said, “just leave me alone and I would make them more money than they ever would have on their own.” Caballero was responding to the criticism by the business community about the water emergency and the TIF districts. But in the background, there was an ongoing rumor about a large pharmaceutical company looking to establish themselves in El Paso. During this time, the BHI was trying to build a medical mecca to stimulate El Paso’s economic development. That a large pharmaceutical was considering El Paso was big news for the BHI and the community. Here is the story of Merck.
The Merck Controversy
On March 4, 2003 several El Paso business owners received an email from the “office of Raymond C. Caballero, Mayor of El Paso”. The email asked that Caballero’s administration be judged by its record and “not by rumors”. The email was in response to an online post on February 11, 2003 on the El Paso Forum, (disclaimer: the online bulletin board was owned by the author) an online discussion bulletin board. The posting by an unknown individual said,
“Last summer, a huge multi-national corporation, Merck (mainly focused on pharmaceutical products) came to town to meet with our mayor to look at investing millions of dollars into our community. They were looking at setting up a 500,000 square foot facility (or possibly 2) and providing between 2,000 to 4,000 jobs in our community.”
The posting went on to state that Caballero told the company representatives “our community will no longer be the low-wage capital of the U.S., our city will no longer be exploited by greedy businesses, and that our goal was to become a high-tech employment center – a new silicon valley.” The posting also included the statement that the company representatives told a local real estate broker, RECON, that they had never been so insulted by a mayor in all their years of scouting potential sites.
Although that posting was not as popular as the other posts, Caballero’s office felt compelled to address it on March 4, 2003. In the email, Caballero stated that there was never a meeting with Merck, rather there was a meeting with “Telerex-a wholly owned subsidiary of Merck.” The e-mail misspelled the name of the company; the company’s correct spelling is Telerx and it is a subsidiary of Merck. Caballero stated, that contrary to the online rumor, Telerx had located a facility to El Paso, “an inbound call center with an initial investment of 175 jobs and that they have plans for future expansion.” The email added that the initial proposal from Telerx did not allow it to “qualify for a tax abatement under the old policy or the new one, but that it did qualify for and was designated a State Enterprise Zone.”
The email continued, “I (Caballero) am proud to have a company like Telerx in El Paso and to have been a part [of] the team that recruited them.” Matt Blaugrund of RECON was mentioned in the email because Blaugrund had allegedly stated that there was an additional meeting in which Caballero was alleged to have walked out of. Caballero’s email included copies of the online posting.
An analysis of the email headers from the original email showed that a city server was used to send the unsolicited email. At the time, we asked city officials to confirm the authenticity of the email but did not receive a reply to our multiple requests in 2003.
There were several rumors about Telerx, including that a second facility had been put on hold because of Caballero. Matt Blaugrund denied the characterization of the events in Caballero’s email and in the rumors.
In another version of the rumor, groups of pharmaceutical representatives allegedly stated that a new pharmaceutical company saw videotape in which Caballero was heard saying something to the effect that El Paso has no more resources to support industry moving into the city. This version of the rumor alleged that the company in question was Merck/Plowshare, which wanted to build a prescription processing center and an incinerator to dispose of expired drugs. Seemingly supporting this version of the rumor was a January 27, 2003, KTSM news report that had the mayor stating that the city must be careful with growth because the city does not have enough resources. Allegedly, this is the source of the tape that is mentioned by these representatives.
Susie Byrd Becomes Part of the Controversy
Another version of the rumor came from sources who were allegedly at the first meeting with representatives from Telerx and Caballero. According to this version of events, the meeting which happened sometime in the Summer of 2001, had then director of Economic Development, Bobby Franco and another analyst from the department meeting with a group of three to four representatives from Telerx including Mark Blaugrund and possibly Matt Blaugrund. The meeting had been set because Telerx was looking to relocate to El Paso and was inquiring about city incentives. There was uncertainty regarding the new administration’s policy on tax abatements.
This uncertainty was brought on shortly after Caballero assumed office because there apparently had been no clear direction from him regarding his economic development policy. At the beginning of his administration, Caballero had directed his then-executive assistant, Susannah M. Byrd to be his liaison with the Economic Development Department. It was generally accepted within the economic department that Byrd was there to “micro-manage” the department.
At the meeting between Caballero and Telerx, as described by those who were allegedly present, the representatives from Telerx were somewhat unsettled because they were under the impression that they were there to discuss “business”. Instead, Caballero had rambled on about a project that he described as the BHI. In his presentation, Caballero described his vision about the BHI and talked about a book that everyone should have on their desks. It turns out that the book Caballero was talking about was the Merck Medical Book that is produced by a completely different subsidiary of Merck. In discussing the BHI, the Mayor is alleged to have stated that maybe Merck might be interested in participating in a bigger capacity regarding the BHI project.
As the events were relayed, it seems that Caballero did not comprehend the purpose of the meeting, whose purpose had been to see what incentives the city could offer the company to get them to relocate to El Paso. Caballero’s presentation seemed to forget that those present had no authority and would not likely be involved in any future BHI plans or projects because Telerx had nothing to do with the Merck pharmaceutical or research divisions. The representatives present seemed to feel that Caballero did not understand how business is conducted between major conglomerates. Confused by Caballero’s presentation, but not deterred, the Telerx representatives asked pointed questions regarding what incentives the city was prepared to offer. According to those present, Caballero told them that Telerx was “too small to offer them any Tax Abatements.”
At this point, Bobby Franco stepped in and suggested that the city may offer a State Enterprise Zone option to them. According to those present, Caballero’s reaction to Franco’s proposal seemed to indicate that he had no understanding of what this option entailed and did not immediately respond. Caballero only said they could investigate it in response to Franco’s suggestion. The next day, the sources stated that the Economic Development Department received a telephone call that allegedly was made by Matt Blaugrund indicating that the team from Telerx was unhappy with the meeting. This phone call could not be confirmed but Matt Keats, of Keats Southwest, Ltd., publicly stated that he did in fact hear Matt Blaugrund tell a similar story. Blaugrund has subsequently denied making such a statement.
Fortunately for El Paso, the story does not end there. Telerx did eventually relocate to El Paso but not after a new controversy emerged. Shortly after the meeting related above, Telerx representatives contacted the Economic Development Department to begin the process of qualifying for the State Enterprise Zone designation. This call resulted in the assignment of the application to the city specialist that specifically handled these types of requests, as had always been the custom. Susie Byrd prepared the Telerx formal notice for Caballero’s signature. Caballero signed the letter committing El Paso to the incentives for Telerx. On February 19, 2002, the resolution approving the state enterprise zone  was approved by city council. Later that afternoon, Debbie Hamlyn, then-Director of Community Development allegedly received a telephone call from Caballero demanding why he had not been informed that this was going to presented to city council.
On the day that city council approved the enterprise zone designation for Telerx, Caballero was quoted in the El Paso Times saying that he “was hoping one door will lead to another.” Caballero was suggesting that “Merck might put an operation in El Paso” to benefit the BHI.  What is important to note is that according to this version of the story, Caballero had signed the letter that obligated the city, a letter created by his executive assistant Susie Byrd, and yet Caballero seemed to be unaware of it.
It should also be noted that except for Caballero’s version of the events, all the other recollections have the common theme that the Telerx representatives were not happy with the outcome of their meeting with him. Economic development staff felt that this first major interaction between the Economic Development Department and Caballero’s office set the tone for the rest of his administration’s handling of the city’s economic development. The real events that transpired on that first crucial meeting may never be known because time has skewed the recollection of those present. What is known is that Economic Development Director Bobby Franco resigned in January 2002,  shortly after Caballero assumed office. Franco told the El Paso Times that his resignation had nothing to do with “Caballero’s aim of changing the way economic development is done in El Paso.”  However, Franco’s resignation was followed by drastic budget cuts of the department’s budget. One of Caballero’s first actions was to assign his executive assistant, Susie Byrd to work in the department in a capacity that was never fully explained.
But Caballero also assigned another one of his executive assistants to create the El Paso Regional Development Alliance, a public-private partnership focused on creating a cohesive economic development plan for El Paso. Caballero’s executive assistant tasked with setting up the new economic development entity was Joyce Feinberg.  Eliot Shapleigh married Joyce Feinberg in September 2009, a year after Shapleigh divorced former-El Paso County Assistant Lee Aune Shapleigh. 
We also know that Telerx Marketing, Inc. opened a call center with an initial plan to contract 175 people. It further planned to hire 300 to 500 more people in its first three to five years in operation.  By 2007, Telerx employed 680 employees in its El Paso center. El Paso’s 24 call centers employed over 10,000 in 2007. 
Normally this would not have merited a full-length article but Caballero’s need to send an email to El Paso business leaders in response to an online post with little activity forced us to ask the question; if Caballero’s true intention was to set the record straight, or was it something else? Many of today’s public policy controversies can be traced directly back to the city’s handling of economic development under the Caballero administration, specifically how it focused on projects linked to gentrifying the Latino neighborhood around the University Medical Center of El Paso, which continues to be threatened today.
Martín Paredes extensively covered city politics from 2001 through mid-2005 for the online publications: El Paso Metro and the El Paso Tribune. Unless specifically noted, the information presented in this article comes from contemporaneous notes taken by the author at the time of the events depicted here.
- Vic Kolenc, “Call center plans May opening,” El Paso Times, February 19, 2002.
- David Peregrino, “Chamber, city link to boost economy,” El Paso Times, September 20, 2002.
- Brandi Grissom, “Going’ to the chapel,” The Texas Tribune, September 30, 2009.
- Vic Kolenc, “City economic guru accepts job in Phoenix,” El Paso Times, January 9, 2002.
- Vic Kolenc, “Telerx to fill 100 new jobs,” El Paso Times, September 25, 2007.
Categories: El Paso