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July 17th, 2009
EDSM gives Springtown proposal details

STAFF REPORT

Following is the working proposal for San Marcos city incentives to Lamy-Springfield Mall, Ltd., which is attempting to redevelop Springtown Center. The proposal was presented by Economic Development San Marcos (EDSM), the city’s economic development board, during its open session Thursday afternoon.

In executive session, EDSM decided on a recommendation as to how the San Marcos City Council should proceed. That recommendation has not been made public.

The city council will take up the matter at its July 21 meeting.

(Editor’s Note: Very slight changes are made to the text for consistency with this publication’s punctuation and style.)    

Purpose

To provide funds to redevelop the Springtown Shopping Center (the “center”) into an entertainment-based destination that will attract a mix of users not currently located in San Marcos, including an Alamo Drafthouse style movie theatre. The redevelopment of the center will include the following improvements: updated exterior facades, lighting, signage, pedestrian oriented areas, a pavilion and other design features and/or improvements intended to modernize the center, which serves as a gateway into the City of San Marcos. All terms originate from the effective date of the agreement.

Loan

o $3,900,000
o six-year loan term
o Interest – city’s cost of funds plus 1 percent, with ceiling of 6 percent
o Years one and two, interest accrues and will be payable when loan matures.
o Beginning in year three through loan maturity, developer will make quarterly payments of interest only.
o City takes a first lien position on the Target parcel as security for the loan (“collateral”).
o Any violation of the covenants described below will be a default under the loan.

Chapter 380 Agreement

o Beginning in 2011 and continuing through 2016, 50 percent of any increase in city sales taxes generated by the center that exceeds actual 2009 sales taxes collected by the city from the center in any given year will be paid to developer to reimburse:

+ (i) Interest payments made by the developer, and
+ (ii) Architectural upgrade costs –  not to exceed $600,000

o If there is a default under the loan, any funds advanced under the Chapter 380 Agreement will be added to the outstanding balance of the loan and secured by the collateral.

Covenants

o Developer agrees to provide an outdoor pavilion/gathering area within the center within three years. Such area will be privately owned, but will be made available for periodic, public use.

o Within three years, developer will enter into initial leases of a minimum 50,000 square feet for entertainment uses. “Entertainment uses” shall mean places of business that people gather for entertainment and recreation, including but not limited to, movie theatres, bowling alleys, sports bars, restaurants, night clubs, family entertainment venues, fitness centers and similar type uses.

o Developer agrees to use good faith efforts to hire local businesses to assist in the renovation of the center.

o City council has final approval on any leases for bars of more than 10,000 square feet during the term of the loan.

 Other considerations for City Council:

o A portion of the city’s increase in sales tax revenue be used to fund the downtown master plan.

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0 thoughts on “EDSM gives Springtown proposal details

  1. What an insult. This is just a creative way to repackage the same thing that brought the “pitchforks and torches” out at the last city council meeting: taxpayer funded handouts to the developer. Many different constituencies in the community oppose these handouts, but certain leaders press on with their own agenda.

    Passing this would be bad policy and bad government because (1) we would be using taxpayer money to incentivize minimum wage, waitstaff and bartender jobs, (2) Springtown should redevelop based on private initiative and not with government handouts, and (3) it would be unfaithful to the approved downtown master plan.

    It sure feels like some of our leaders kowtow to developers and ignore us pesky citizens.

  2. Wow. Terrible terms.

    Move to wonderful San Marcos. We have several great new strip malls, plenty of low-paying retail jobs, a river thats turning into a seasonal creek (plus a brand new $800,000 bridge to cross it), trashy, overcrowded parks, plenty of cheap tract homes on tiny lots, and sub-par schools.

  3. I think it sounds wonderful. San Marcos desperately needs better entertainment venues and better restaurants. We don’t have to have small town mentality. I see this as an opportunity to have a little bit of Austin down south.

  4. My wife and I purposely chose San Marcos to move to, start a new business, buy a house, and establish new roots in the community. Being against taxpayer funded handouts to developers does not equal “hate San Marcos” at all. We live here, work here, go to church here, pay taxes here, and contribute to the community. I believe it is healthy and important for citizens to be involved in local governance.

  5. I went to graduate school here, moved away, and then moved back and settled down here. At the time I believed that San Marcos offered the best quality of life at the lowest cost of living. I’d like to maintain the quality of life here. The council needs to offer incentives to save our river, not the strip mall. If they are concerned about our tax base, they need to consider the loss in revenue if the river dries up. I’m sure its greater than what would be gained from the mall, especially when we consider how much tax revenue we’re giving up to the developer under this proposal.

  6. I noticed that there is an Academy Sporting Goods going in over at Stone Creek. I never heard of any incentives for that. Is it possible that retail would come here without incentives??

  7. The incentives given to StoneCreek are part of what allowed them to pull in Academy, who was looking at another site in San Marcos. So the short answer is yes, Academy was willing to come without incentives. The incentives are what made the difference in what center it located in once it arrived. StoneCreek was desperate to land a third anchor and sold the site to them at the lowest price their investors/bank would allow.

  8. If they were coming here either way, then it sounds like the incentives only served to un-level the playing field with any other potential sites.

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