By the Newstreamz editorial board
None of what follows is a criticism of Lamy-Springfield Mall, Ltd., the company wishing to redevelop Springtown Center into an entertainment colossus to include an “Alamo Drafhouse style” venue, along with such possible uses as bowling alleys, sports bars and fitness centers, among others. Lamy-Springfield is a business, which endeavors to build profitable enterprises and finance them in the most favorable possible terms so as to maximize returns for its investors. We’re for that.
The company’s principal, Peter Lamy, is a big player in Central Texas. He wouldn’t own a $1.1 million home across the street from Michael Dell if he weren’t. He wants badly to make a deal with the City of San Marcos at terms that are most favorable to his company. He’s just doing business.
It’s not Lamy-Springfield’s job to make the best possible deal for San Marcos and its citizens. It is not the developer’s job to hold the best interests of San Marcians sufficiently at heart. That job falls to the San Marcos City Council.
We ask the city council to discharge that responsibility seriously and with the clearest possible conscience as it decides Tuesday night whether to grant a new incentive package to Lamy-Springfield for the redevelopment of Springtown Center. We believe the most serious, responsible, conscientious and, indeed, intelligent decision would issue another denial of the incentives.
The city council unanimously turned back a $5 million interest-free loan for Lamy-Springfield two weeks ago after the public rightly spotted a rip-off and said so. Very quickly, the developer and its supporters at City Hall have come back with another proposal, basically the same wolf in sheep’s clothing.
The new proposal calls for the city to extend a $3.9 million loan, with interest, payable in six years. The interest rate is the “city’s cost of funds” plus one percent, not to exceed six percent total. However, from 2011 through 2016, the developer also would receive back 50 percent of the city’s share of sales tax that the project generates beyond Springtown’s 2009 levels, which are pretty close to nothing right now. That money would defray the developer’s interest payments, plus up to $600,000 in “architectural enhancements.” If all goes well for the development, then, it will wind up with, in essence, a $3.9 million loan at no interest, plus a $600,000 handout just for playing. Thus, instead of issuing a $5 million loan at no interest under the failed proposal, now the city would issue a $3.9 million loan, effectively at no interest, plus a $600,000 sales tax rebate.
In exchange for the $3.9 million loan with defrayed interest and the $600,000 prize, the city would take the first lien on the Target parcel at Springtown Center. Just two weeks ago, the developer wanted $3.2 million of its $5 million loan to buy that parcel. So, are we to understand that the city might be willing to issue a $3.9 million loan, plus a $600,000 premium, while securing it with a building that was worth $3.2 million two weeks ago?
We object to the incentive proposals, for the same litany of reasons that we outlined when we objected to the $5 million loan two weeks ago. To wit, it is unwise for the city to incentivize minimum wage jobs when it really needs to incentivize breadwinner employment, we find it unfair for the city to incentivize direct competition for downtown businesses after private money has invested in the downtown square on the promise of the downtown master plan, and we just really wish this city had enough self respect to refrain from groveling for movie theaters, bowling alleys, retail stores, bars or restaurants. Those are just a few objections.
To those, we might add another. Why is the city so interested all of a sudden in becoming a commercial banker? We already lack confidence in City Hall’s ability to pull off complex real estate transactions after it gave away an extra $4 million for Stone Creek Crossing last fall without even negotiating for Target to waive an operating easement that prohibits competition at the Springtown location that Target abandoned for Stone Creek. Now, the city appears willing to take on another layer of complexity outside of its competence. We object to the city entering the commercial banking business unless there is a compelling public interest for such activity, which, in this case, there is not.
Early this week, San Marcos Mayor Susan Narvaiz and City Manager Rick Menchaca made their pitch for Springtown incentives to a local newspaper that ran their assertions without question. In the article, Menchaca noted that the developer needs “cash up front.” Which makes the Springtown development no different than any other. But why does the developer need cash up front from the city, rather than from a commercial banker?
The answer, obviously, is that no commercial banker would offer such obsequious terms. Which business would be insensible enough to consider jumping through all the hoops in today’s world for a commercial loan, with interest rates running about seven percent on the low end right now, when city officials in San Marcos are practically begging to lend the money at a maximum of six percent (probably even lower) and willing to give back the interest plus $600,000? On top of all that, the city is willing to take, as collateral, a building that probably isn’t worth the loan amount.
Lamy is no fool. It is to be hoped that the city can at least match his wits. Walking away would come close enough.
Not for nothing, we will point out that the mayor and the city manager are attempting to promote the incentives after a fashion that is unavailing. For example, the aforementioned article indirectly quotes Narvaiz and Menchaca saying that economic development isn’t just about creating jobs. We agree. Economic development plays the additional role of enhancing the quality of life in a city, thus enhancing the city’s attractiveness for serious employers looking for a location. The two city officials then gave the outlet malls, the Wonder World Drive extension and the reconstruction of Rio Vista Falls as such examples. The reader, apparently, is supposed to infer that because those worthy projects don’t create real jobs, then the Springtown project that doesn’t create real jobs is equally meritorious.
But that simply doesn’t follow. Different projects come to a city at different times in a city’s life, and those projects rise and fall on their own merits within the context of time and place. This city would have lost part of its soul without rebuilding Rio Vista Falls. The Wonder World Drive extension stands to be an extremely beneficial traffic conduit. The outlet malls came at a time when the city needed that particular sales tax boost. But the city now is too reliant on sales taxes, we could never hold a movie theater or bowling alley as dear as Rio Vista Falls, and we simply don’t believe the kinds of venues conjectured for Springtown would generate a net cultural gain for the city.
Later in that same piece, Narvaiz notes about downtown interests that “They don’t provide high paying jobs either,” as if to suggest that downtown bar owners are hypocrites for opposing city subsidies to their direct competition. Again, Narvaiz ignores the point. The downtown bars and restaurants aren’t subsidized by the city, nor should bars and restaurants in any part of town be subsidized by the city. Beyond that, though, it simply isn’t true that downtown interests don’t include living wage employment. Look around the square and, alongside bars and restaurants, one sees professions – insurance, real estate, legal and others. That’s the mix by which the square stays lively day and night. The Springtown proposal does not promise professions.
We do not oppose the proposed redevelopment of Springtown Center. We merely oppose the city’s financial involvement, particularly under such complaisant terms. We believe the fate of Springtown would be better enough left to private investors and private bankers. We understand that the Springtown location is a gateway to San Marcos, which is precisely why private interests will save it from blight before too long. Poise, should the city possess it, will lead to the best outcome for Springtown.
Meanwhile, we have more pressing needs in the public sphere, not the least of which is the creation of real jobs. This Springtown matter has been enough of a distraction for long enough. The city would serve itself well to leave the issue behind and move on to matters within its true competence. It is to be hoped that the process can begin Tuesday night, with the city council’s emphatic rejection of the new Springtown incentive proposal, which walks and talks way too much like the old one.Email | Print