San Marcos Mercury | Local News from San Marcos and Hays County, Texas

July 20th, 2009
Editorial: Springtown, here we go again

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.

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0 thoughts on “Editorial: Springtown, here we go again

  1. I hope our city leaders will let this developer find another funding source for his entertainment complex idea. In my opinion, there are plenty of entertainment options. Not many places the size of San Marcos can say that. They have to catergorize us in with Austin and San Antonio. If the city has $5 million burning their pockets, that money should go to something more worthwhile, like possibly putting a down payment on another train overpass into downtown.

  2. If enough of us show up and speak during the citizen comment period, then perhaps the council will not try to ramrod this “new deal” through in one meeting. Shoving these (latest in a series of) handouts down our throats is not endearing. Citizens / taxpayers need enough time for awareness, review and comment. Our leaders need to bring greater transparency and integrity to their decision making process and community participation.

  3. Or Rene if that same $5 mil is burning, maybe they can actually start the Rio Vista street(s) project that has been idle for far too long now? Or would that make too much sense?

  4. why in the world does San Marcos NEED more stores and entertainment…

    why is “growth” thought of as SO GOOD they will sell there souls>???

  5. Eddie, I think the City Council would look for a federal grant for a project like that. These guys that we have governing this city have a snobby outlook on everything related to economic development. Ever since the Embassey Suites and City Convention Center was conceived, they’ve been adding people with the mentality that the city has an open checkbook. Look at the failed opportunity to bring those 500 jobs The Scooter Store was offering. They don’t have a clue on how to lure companies to San Marcos other than granting valuable city tax revenue to every developer.

  6. What about the fact that Alamo Draft House will not even be able to show first run movies. It is my understanding that Starplex has those rights. So the city is going to partner up with a business that won’t even be able to provide the one thing that is needed for its success. WOW. Maybe that’s why we should let private business and banking handle this project. Because unlike politicians, we know to look below the surface of deals. I’m with Mr. Bose on this one. Just another horse trader. Send em on down the road.

  7. Instead of more of the same (taking our taxpayer money and giving it to wealthy developers), how about something different. Instead of our current insulated approach where the same few people in power decide amongst themselves on behalf of San Marcos, how about we open the process up and involve the community in brainstorming new different ideas. We would all benefit from fresh new thinking that engages more and a greater variety of people and perspectives.

    For example, will the existence of a massive multi-faceted entertainment complex convince young families or retirees to move here and live in San Marcos? Will it attract the kinds of businesses and industries we have targeted for our long-term growth? Do we have a vision beyond simply growing retail and low-paying jobs?

    Where are the new ideas like converting Springtown into a mixed-use walkable development where younger retirees can live? They’d be able to walk to the grocery store, and other shops and service providers can spring up in the complex to serve their needs. The younger retirees (as a demographic) want to be active and contribute to their community, they have a wealth of knowledge and experience that can further improve our town.

    Or, how about a new business incubator or two; there are numerous examples of such initiatives working elsewhere in our great country. Plenty of intellectual property is developed at Texas State University each year, should we keep putting it on the shelf, why not help commercialize it into new businesses located right here in San Marcos, instead of letting it slip away each year as the graduating students go elsewhere for a real career.

    And, what about the plans we as a community have already invested a lot of time, money, and participation in developing? Why are we letting them languish on the shelf, let’s get going with what we’ve already decided we need to do in order to improve our long-term vibrancy.

  8. The terms of the loan are crap, there’s no way of getting around that. As for what to do with Springtown… that’s purely political and opinion-based.

    Steve, a retiree community in the middle of some of the busiest streets in a college town doesn’t sound like the greatest idea. Kids tend to drive fast, and let’s face it, older folks tend to move slower. As for the “younger retiree” idea, who defines “young”, and who kicks them out when they get too “old”? That’s probably a can of worms best left unopened.

    All things considered, New Braunfels is probably a far better (and safer) place to retire.

    I agree that an entertainment complex probably isn’t the best route but it seems the best of bad choices, at this point.

    Also, there may be some merit to working with IP generated by Texas State, but that’s entirely up to Texas State to pursue. As a business decision, licensing the patents on IP to already established large business (of which we have few) is an obvious one, so bringing those opportunities to a relatively small town may be problematic.

  9. Debating what kind of business will go on the Springtown Center, although good, really is not up to us, it’s up to the developers. However, what we do have a say in is where our tax money is going. We must not allow our city council to begin engaging in the banking business, our city is not a bank, we should not subsidize this business venture. The developers come from money, they can find a loan at any bank, but as stated in this editorial, a bank will not provide such sweet loan terms as the city is willing to fork up. It’s almost as if our city officials are paying them the developers to develop here, when I have no doubt they would do so regardless of the city’s loan. Our council has set a disgusting precedent, of which Lamy wants to get a piece of.
    Narvaiz is a joke!

  10. I own a small private business, tech related, in San Marcos who pays employees living wages with benefits.

    I could do a lot with an interest free loan in terms of providing work for skilled people.

  11. Our city leaders keep subsidizing retail and low-paying jobs to come to town. How can we stop this? First, keep telling our leaders we don’t want them to give away our hard-earned taxpayer dollars to these wealthy developers. Second, demand our leaders open up the dialog to more in the community. Generating participation can yield a lot of ideas which is necessary to eventually decide on the ones that make the most sense. I keep complaining about how our taxpayer dollars are being frittered away, and I feel like I need to do more in terms of suggestions and solutions. The different ideas I’ve listed here are just a few, there are plenty more and smarter people here in town than myself, we can do so much better if and when we get more citizen participation. Our leaders, if they so choose, can play a proactive role in fostering nurturing a new sense of community.

  12. Getting really tired of idiots bashing retail jobs on here! First, many of the retail jobs here pay just as much as other non-retail jobs for beginners. Second, they offer numerous management opportunities {and mid-management} that persons can move into far faster than trying to move up in non-retail sector. Third, they provide an entry way for those who are unable to afford higher education {and there are many here like that}. Fourth, retail is what brings in sales tax!! And that keeps those of you that are bitching so much from paying higher property taxes on your homes! And without retail here, just where the hell would you buy stuff? Another city who would benefit from the sale?
    And FINALLY< if you have such a great alternative Steve, or if “ku” wants an interest free loan from city…then you two need to get off your complaining rear ends and write up your own proposals and take to the city! {Then we can all rip you down too, right?}…
    NO, I do NOT work in retail nor own a retail business… but I DO see a reality in that the “politically correct” idiots seem to ignore too often!!

  13. The median household income in San Marcos is about $31,000 per year.

    The per capita income is 16,000. That’s $7.70 per hour. For Texas, it is $24,000 per year. For Austin, it is $29,000. That’s right, the average person in Austin makes nearly the same as the average household in San Marcos.

    In New Braunfels, the per capita income is $24,000, right in line with the state.

    In Buda, it is closer to $27,000.

    29% of our population lives below the poverty level. That’s nearly twice the state average. We have as high a percentage of citizens living at 50% of the poverty level as the state has below the poverty level at all.

    The average pay at the proposed National Foods facility in Buda is $60,000. The typical salary for a retail manager is $40,000 to $60,000. You tell me which jobs would lift the standard of living in San Marcos.

    The entry-level jobs at my company pay about $35,000 to $45,000 and most of our employees make significantly more than that.

    I haven’t been called an idiot all week, thanks.

    As for people not being able to afford college, I wonder where those people work. Of course, with $4.5 million in unawarded scholarships at Texas State for a given year, the reason more of our students don’t go on to college goes well beyond financial means.

    I wonder where the people in Austin shop and how they manage their property taxes, without a retail-driven economy.

  14. Ted, really? please share with us all THE NAME OF YOUR COMPANY that has “ENTRY-level jobs” paying “about $35,000-$45,000 and most of our employees make significantly more than that”. I know of SEVERAL people who live here that have college degrees and would welcome the opportunity!!!! Many have been searching for jobs the past couple of years that would pay a livable range like that! So, let us all know where to apply… that is, if this is for real and not one of those “commission only” jobs in sales with the huge turnover ’cause the money isn’t really there!

  15. We’re hiring and we’re not in San Marcos. If you want to come talk to me privately, I’ll be at the City Council meeting tonight. I’m not putting company information on here.

    The jobs are real and we have very little turnover.

    Starting pay for teachers in San Marcos is in that range. Entry level computer programming positions pay a good bit more.

  16. Here is an extract of what I presented to the Mayor and City Council during the citizen comment period:

    If and when you decide to spend our taxpayer money on economic development, please consider these five questions:

    1) Will it raise or lower the average household income?
    2) Does it expand the diversity and vibrancy of our local economy?
    3) Will it attract the kinds of businesses and industries we have identified for our long-term economic sustainability?
    4) How does it stack rank to the plans and projects we already have developed?
    5) Is it a good deal for everybody involved?

    Affirmative answers to these five questions will help confirm you are making the best possible decision at the time it is in play.

    * Raise or lower average income?
    * Expand economic diversity?
    * Long-term sustainability?
    * Resonance with existing plans?
    * Good for everybody?

    Our taxpayer money should be treated with great care. Please spend it wisely, with careful consideration.

  17. I’m with you Ted. If people would get out of their little box and apply themselves, maybe, just maybe they could find their true worth. However, why bother. The government will just take from those who do and give to those who don’t.

  18. Ted, for someone who just admitted to not employing people in San Marcos yourself, you sure seem to have some strong ideas about how other people should do it….how about put your money where your mouth is then maybe we can take you seriously.

  19. I work outside of San Marcos and I have employees, yes. I don’t have the authority to relocate the company to San Marcos and it is unlikely that it would make sense for us to do so, if I did.

    When I have the money to put where my mouth is, I will. I guess since I don’t have the means to start a business in town right now and have to work for a living, 50 miles away, my opinions don’t count. Certainly not as much as the opinions of an anonymous poster who has yet to claim any ties to San Marcos.

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