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October 22nd, 2008
San Marcos City Council meeting dominated by $4 million development incentive increase and Wonder World Drive extension contract

San Marcos City Council approved a $4 million increase in its economic development agreement with Stone Creek Crossing, by amending the original request, by a 4-3 vote. Council members Gaylord Bose, Chris Jones, and John Thomaides voted no. With the amendment, the Council approved an ad valorem tax abatement for five years whereby the City will retain 20% of the increased taxes from the development and rebate 80% to Stone Creek. The City will retain the first $500,000 of sales tax collected and rebate 80% to Stone Creek up to a maximum of $1 million annually. The City and Stone Creek will split any amount in excess of $1 million. The total tax abatement shall not exceed $6 million over the five (5) year period of the abatement.

During the Council discussion on the issue, a representative for the project said public improvements required by the city including drainage and the interstate ramp reversal cost more than $8 million. He claimed that future financing of the project could be threatened if the city didn’t grant the increased development incentives.

Council member Thomaides asked that since all businesses’ costs have increased significantly, should all San Marcos businesses be given the same consideration? Thomaides said that he had supported 20 out of 21 development incentives but could not support this proposal. For Council member Bose the issue was simple. He said Stone Creek had agreed to the original development proposal just last year and now wanted it changed. Bose suggested to the developer, “Keep your word.”

Council member Jones suggested a change to the proposed amendment that would allow the total tax abatement to reach $4 million. He said he recognized the value of the developer’s investment but thought the proposed abatement before the council was too large. The amendment failed by a 6 no, 1 yes vote.

Mayor Susan Narvaiz supported the proposed increase because of the “special circumstances” of the project which included the land the project was on, which had been earlier purchased by the State of Texas and taken off the city tax rolls, and the drainage issues connected to the land. “We need to stay focused on economic development even during times of economic uncertainty,” said Narvaiz.

Council member Daniel Guerrero supported the increased development incentive because the affected project is in a “growth corridor” that includes the Outlet Malls and the Hotel/Conference Center. For Guererro, “this is going to bring a different level of business” to the area.

Council member Pam Couch supported the proposed incentive noting that the company had invested $100 million in the project, the tax abatement was performance based, the city would still receive $500,000 in tax revenue, and that the development would compliment the city’s hotel/conference center. “This is a great project for San Marcos,” said Couch.

The second major issue for the Council concerned the contract for the Wonder World Drive extension. The resolution before the Council would rescind the City’s award to Rodman LLC for the extension project from RM 12 to Stagecoach Drive and award the project to J.C. Evans Construction, the second lowest bidder. Lee Taylor, on behalf of Hunter Industries of San Marcos, asked the Council not to award the contract to the second lowest bidder but to re-let the project.
In an email dated October 21, 2008, John A. Barton, Assistant executive Director for Engineering Operations for the Texas Department of Transportation, (TxDOT), said, “It is correct that TxDOT’s normal practice in this situation we would reject all bids and re-let.”

In a letter to the City of San Marcos on October 20, 2008, Tracy Schieffer, President of The Associated General Contractors of America (AGC) of Texas, asked the city to re-advertize and re-let the project. Schieffer said the city is defending its proposed award of the contract to J.C. Evans because Rodman was nonresponsive. Michael Sexton, KBR Project Manager, in a letter dated August 1, 2008, said KBR recommended the City award the construction contract to Rodman. “The recommended contractor has met all the requirements in the Bid Proposal package,” said Sexton. Referencing Sexton’s letter, Schieffer argued that the issue is not non-responsiveness. It “is a failure to execute problem”, and thus, according to Schieffer, “TxDOT guidelines would have prescribed that the city reject all bids and re-let the project.”

City Council moved to executive session for over thirty minutes to discuss the issue. After returning to public session, the Council unanimously approved a resolution declaring Rodman’s bid for the project “non-responsive” and awarding the bid to J.C. Evans Construction subject to TxDOT’s written concurrence and the “timely delivery of proof of insurance and payment and performance bonds by the next lowest responsive and responsible bidder approved by TxDOT.”

In other business, The Council approved on third and final reading amending the Wrecker ordinance and the Downtown Master Plan and established a Planned Development District (PDD) with a base zoning of Multi -Family at 401 Fredericksburg, 210 and 212 Pat Garrison, and 408 and 418 Comanche.

Finally, the Council unanimously approved a resolution in support of the Hays County Bond Election at $207.1 million for construction and improvements of county roads including FM 110 from McCarty Lane to SH 123. Precinct Two Hays County Commissioner Jeff Barton thanked city council and city staff for their cooperation and noted that the Commissioner’s Court had approved the bond election ordinance unanimously.

by Ed Milhalkanin

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0 thoughts on “San Marcos City Council meeting dominated by $4 million development incentive increase and Wonder World Drive extension contract

  1. I am surprised by the largesse bestowed upon the developer by our Mayor and City Council. Just like the bailout on Wall Street, the developer told San Marcos that if we do not cough up another $4 million dollars, then the future of the project is in jeopardy. As a point of comparison, I read elsewhere that “the Austin City Council is giving HelioVolt incentives worth more than $600,000, equal to 60 percent in property tax abatements for 10 years, provided the company met investment and employment targets.” HelioVolt had to fight hard to get the $600,000 deal from the City of Austin, and that was for a high-tech venture that will spend $80 million on their brand-new facility and create a multitude of high-quality jobs directly (and indirectly even more economic benefit through the companies that will now locate near their facility). Yet, here in San Marcos we think it is “smart” to provide $6 million in tax abatement for a retail project?

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  3. It was a $4 mil tax ABATEMENT. None of it is taxpayer money. If the project folded and sat as a half finished project, there would be NO real tax revenue generated by the property. If the project was never started, it would still be an empty field owned by a government agency that is completely tax exempt, paying no property tax. Also, I believe the tax abatement was for ad valorem tax. Isn’t that property tax? If so, then we still get the sales tax revenue. In case you missed it, San Marcos dwarfed the rest of the cities in Hays County in sales tax rebates for the month of August. It was up from the same period last year and this with a tax free weekend and a slow economy. Do you really think the cows in the field pay sales tax? 🙂 This deal completely makes sense and folks that say it is wasting taxpayer money don’t have a clue as to how things work.

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