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

February 15th, 2010
Council to take another crack at Springtown incentives

021410bestbuyThe San Marcos City Council will consider incentives Tuesday night to place an Alamo Drafthouse in the vacant Best Buy building at Springtown Center. Photo by Andy Sevilla.

By ANDY SEVILLA
Associate Editor

Efforts by San Marcos city officials to provide economic development incentives to re-develop Springtown Center are back on the city council docket Tuesday night as Lamy-Springtown Mall, Ltd., faces foreclosure on two parcels of the property. Similar efforts succumbed to public opposition twice last summer.

The Springtown item was added to the council agenda without back-up details last Thursday at 4 p.m., about 24 hours after the agenda originally was posted. The item reads, “Consider possible offer of incentives to Triple Tap Ventures, LLC, for the redevelopment of the old Best Buy Building (Springtown location) for occupancy by Alamo Drafthouse Cinema.”

Details about the incentive proposal were not available.

Last July, the city considered incentives to Lamy-Springtown Mall, including an interest-free loan of $5 million for an entertainment project anchored by an Alamo Drafthouse at the largely vacated Springtown Center. Following much public protest, the city council voted unanimously to reject the proposal.

Later that month, public opposition discouraged a similar proposal for Lamy-Springtown, which pulled the request hours before the council was to vote. Under the second proposal, the city would have loaned Lamy-Springtown $3.9 million to be repaid in six years at a maximum interest rate of six percent. From 2011 through 2016, the city would have rebated 50 percent of the project’s generated city sales tax above the vacant Springtown Center’s current levels. That money would have defrayed the developer’s interest payments and provided up to $600,000 for architectural enhancements.

The two Springtown parcels on the Hays County foreclosure list for the March 2 auction combine for roughly ten acres. Lamy-Springtown took out loans in 2005 and 2006 for a combined $13.75 million for the two parcels. The lender is Thrivent Financial for Lutherans. According to Thrivent’s website, it is a Fortune 500 financial service organization that is faith-based and not-for-profit.

Also on the foreclosure list is Sanctuary Lofts, LP, which operates the Sanctuary Lofts Apartments at 400 North Street. Pete Lamy of Lamy-Springtown Mall was one of the limited partner/equity investors, as were Joe Lamy and Jay Lamy. It could not be determined Sunday if the Lamys still hold interests in Sanctuary Lofts.

Triple Tap has acquired the exclusive development and franchise rights to operate the Alamo Drafthouse concept in six major Texas metropolitan areas. Triple Tap’s first venture was the acquisition of two existing Alamo Drafthouse Theaters in Houston.

The Alamo Drafthouse is a combined movie theater and restaurant concept in which patrons can view movies while being served from a full menu of food and beverages.

A Facebook group has formed in support of bringing an Alamo Drafthouse to San Marcos. The group, called “Give San Marcos, TX an Alamo Drafthouse,” counts 246 members, including San Marcos Councilmember Kim Porterfield.

The desolate Springtown Center was once a thriving shopping center that included national retailers like Target, JC Penny, and Bealls. The box stores moved to newly developed StoneCreek Center on the south edge of San Marcos about a year ago, after the city council upped a $2 million incentive package to $6 million.

With the anchor tenants gone from Springtown Mall, many of the smaller tenants have packed up and left behind them a big box blight in the city’s gateway near Interstate-35 and Hopkins Street.

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51 thoughts on “Council to take another crack at Springtown incentives

  1. It still seems like deals get concocted in “smoke filled back rooms” out of sight from the public. Citizens of San Marcos want and demand more transparency in local government. We desperately need runaway spending reeled in. To have doubled our long-term debt in just three years, and to keep adding more debt to the pile, in this age of economic storms, is not fiscally responsible. Financial incentives do play a role, but they should be much more limited than the largesse we have seen in the past few years. As a community, we need to live within our means. As noted in a recent Denver Post article on Colorado Springs having to cut back on basic services, “There’s a lot of anger, a lot of frustration about how governments spend their money.”

  2. So what I get from this is that Lamy is an idiot when it comes to investing, and set himself up to end up upside-down on Springtown. He grossly overpaid for those two parcels even for the 2006 real estate climate, and there are consequences for that. Let it go to foreclosure. Somebody else will pick it up, but they won’t have near the financial burden and will be able to afford to do quality redevelopment instead of another crappy facelift that becomes obsolete just as the incentives come to an end. In fact, Alamo Drafthouse might stand to benefit from it facing foreclosure and be able to negotiate a sweetheart deal for themselves with the lease (it’s tough to find a negotiating tool that is more effective than knowing the landlord is desperate). Bottom line is that Alamo Drafthouse is a natural fit for San Marcos and is desirable. However, the purpose of tax incentives is not to bail out investors that made stupid decisions. This will be an interesting vote that may reveal exactly how serious Ryan Thomason was about his complaints over economic incentives during his campaign.

  3. So the Council si looking into loaning $5M to a developer already in default. Leason #1 in lender school, don’t loan money to people already in default. Leason #1A, especially if you’re in second lien situation. Absent the SM bailout, look for Lamy to file bankruptcy March 1.

  4. I agree with cws, let it go to foreclosure. Thrivent will sell it for pennies on the dollar just to get it off their books. Heck, maybe the Lamy’s will pull a Gary Bradley and buy it back themselves. Empty for 6 months is not long in the world of commercial real estate, especially in this market. I disagree that this is a good Alamo Drafthouse market though. We just don’t have enough money in this town. Or people who care about interesting movies.

  5. Do we get to bail out Sanctuary Lofts, too? It seems like that project also had an interesting story.

  6. Sanctuary is more “interesting” than Springtown. Sanctuayr appears to be full, or close to it, which means it either doesn’t cashflow enough to pay the bills, or the developer is just pocketing the money.

  7. Sanctuary is kind of surprising. Last I checked, they were over 95% occupied. If you aren’t cashflowing at that rate, then you’ve got serious problems.

    Bob makes a good point about the potential for Lamy to flip this property to himself through foreclosure. Six months of vacancy is nothing, yet some Councilmembers will probably act as though the sky is falling and write a check for a few million. Let it sit longer, and you will see a quality redevelopment, rather than some pathetic facelift that is doomed to result in the property becoming obsolete again just as the economic incentives expire. If ALL of the other tenants move out (Furrs, Blockbuster, etc.), then you can really have a good blank slate to redevelop with fewer constraints.

    bob & I just have to agree to disagree on the Drafthouse market. I know what the demographics looked like the last time I went to the Drafthouse on South Lamar, which is the Drafthouse location most similar to the Springtown location. I think it will work here. Look at the typical college date: dinner and a movie. The dinner alone, without any alcoholic drinks, can run $30 even on a budget. Tack on another $14 for movie tickets. A couple of sodas & popcorn? Another $10 minimum. You’ve got a $50-$60 night… roughly the same amount of my last bill at the Drafthouse. Forget the typical college date though… take a look at what the college students are throwing down on the Square every Thirsty Thursday. Drafthouse is looking at the college student market in San Marcos more than anything–the market where students get student loans but don’t make plans to repay (instead treating all income as disposable); the market with Mommy & Daddy’s credit card; the market with relatively few living expenses; the market of $30,000 millionaires. Drafthouse franchisees took a few missteps in other markets, so I don’t think Alamo Drafthouse corporate will let that happen again. They won’t allow a franchisee to select a location that won’t work with what they know about their clients.

  8. I’m more than happy to have Alamo roll the dice in Springtown – as long as it’s on their own dime. I’ll enjoy them while they last and hope they make it. Here’s some stats though:
    Within a 5 mile radius of Alamo Lamar – 292,030 people, HH Income $61,483, Median Home Value $201,140.
    Within a 5 mile radius of Springtown – 46,025 people, HH Inc $40,519, Median Home Value $97,813.
    In the neighborhood behind Alamo Lamar a very small empty lot sells for $200k and up. There’s a ton of money there. I don’t have stats on education levels but I bet there’s a huge disparity and I bet that’s a major factor in who will go see the types of movies Alamo shows. Don’t forget that a big chunk of these students live outside SM.

    I still hope they come though, and are very succesful.

  9. Alamo Drafthouse will come here on their own. They don’t need taxpayer money. The Triple Tap team is very experienced and knows how to make money from these things. They will negotiate the best deal for them possible from all parties, of course. They know what they are doing and they will make money with their San Marcos location. There is a good reason they obtained the franchise rights for the San Marcos market. Note, most of the profit at the Alamo Drafthouse locations is from the food and drinks. I join many citizens of San Marcos in saying we will be delighted to see Alamo Drafthouse open in San Marcos. But, please, don’t be naive and think we need to throw taxpayer money at them to make it happen. It’s already going to happen, on its own, all by itself.

  10. why did the city give incentives for already successful and established businesses to MOVE out of Springtown and NOW they worry about the empty lot? Once again, bad and/or lack of long term planning on the part of the city leaders. i see now that Applebee’s is closed – who’s next? And since when is 6 months a long time in this town? any one remember that prior to Wally’s and Sean Patricks’ opening, those sites sat vacant for over 18 years.

  11. I love the idea of having an Alamo Drafthouse here. I also understand the desire (need?) for cities to give incentives for major business development. Everywhere you look, the citizenry goes up in arms against such incentives, but the local government has to do it because if they don’t *someone* will.

    For a perfect example, look no further than the state of the economy in Luling after the city fathers declined Wal Mart ‘s proposed incentives to put the distribution center there. It went to New Braunfels instead and now the economy in Luling is virtually nonexistent. Sure, other factors are at play in their economic situation, but I think it’s a good example nonetheless.

    Besides, the latest incentive package seems to be no big deal as far as incentives go….a loan at 6% interest? I’m OK with that. Half of their sales tax revenues back for a period of time? I’m OK there, too. Many businesses get 100% for much longer periods. As far as whether the owner might default…..well, if he does, the City should ensure that they get a priority lien position on the property. I’m sure they could make some cash off of that property if they get to take it over…..

    Overall, it’s a cost-benefit analysis that the City has to do. I understand people that oppose stuff like this on principal alone, but I would caution those people to educate themselves about these costs and benefits. I admit that I’m not privy to any inside information on this deal, but just taking what is in this story at face value makes me think that it might be a good deal for the City.

  12. Let’s give them basic tax incentives to close the deal and nothing more. No extension of credit will improve their outlook here. Now if a company wants to start from the ground up and employ a hundred or more people, then maybe we can cut a deal.

  13. Dano I doubt that Thrivent is going to be eager to subordinate their note, especially now that it is in default. Not to mention that as posted the City’s deal would be with a tenant, not the land owner.

    I will readily admit, my initial response to deals like this is a resounding No. But as you wrote, the cost/benifit analysis must be taken into account. And that analysis needs to include the effects on other entertainment venues. If it’s a good business deal, it’s a good deal.

    And one must assume that a last minute addition to the agenda in executive session does give rise to questions about governmental openness.

  14. Openness and due diligence. Recall that when this last came up, the city did not even fully understand the restrictions placed on the property by Target (in an earlier incentive deal). I’d be curious to hear how our elected officials have used the last few months to prepare themselves to make a more informed decision on this matter.

    Curious is all, though. I can’t see any point in getting all wound up about this again. City council has heard very clearly, twice, what the citizens think of incentives for minimum wage jobs (about the only jobs there are, which can lower our per capita income). Either they got the message then, or they just aren’t going to get it.

  15. On your last point, I agree totally.

    If they knew they would be considering this at tonight’s meeting, it should have been announced via regular channels, not as a last-minute addition to an executive session. I seriously doubt that no one up there had any inkling of this topic until last minute. Multi-million dollar deals like this don’t just happen overnight and it makes me wonder how long they have been sitting on this.

    I think the message that our local leaders are sending to “we the people” is that they don’t want us to have a chance to be heard….or that they don’t care what we think. Either way, it reflects very poorly on local government in San Marcos.

  16. I cannot accept the comparison between a Wal-Mart distribution center and an Alamo Drafthouse. One grows the regional economic pie; another shifts the size of the slices of the regional economic pie. A cost-benefit analysis is a tool for professionals with proper inputs who can input the proper variables and control for bias. In the hands of the City Council, it is more a numeric justification for policy preferences. The investor at the podium can select the numbers and input and justify the decision the Council wants to make — better to just have a rule of no than to trust the discretion of a group who has little.

  17. 1. The barking started to early. Read the line: “Details about the incentive proposal were not available.” We do not know what Triple Tap, not Lamy. Will want as an incentive. Could just be a tax break. Sounds like we’ll find out Tuesday.

    2. Look at the link to the Facebook Group and tell me this place won’t get business. They love the thing.

    3. We only have a dollar theater and Starplex, this is the right time and the right location.

    4. Only a handful cities get the offer of a Drathouse.

    5. This will revive Springtown.

    6. Google all the awards and recognition Drafthouse has received in Austin. They have the power to draw attention (which equals money) because they are unique and popular theaters.
    .

  18. The attitude of the Council is wrong, slipping this into the agenda suddenly
    These jobs won’t raise the per-capital income (they actually will probably lower it)
    The city is not a bank, and it’s not our jobs as taxpayers to fund a bailout of a deflating landowner.

    “Cost-Benefit Analysis” is quickly joining “Pro-active” as one of the political buzzwords I’ve come to hate. They can be tremendously useful tools but everyone comes to the table with their own pair of tinted glasses, colored by their interests, and nigh-impossible to pry off. I think it was Lee Atwater who said “I can make a poll say anything I want it to.” The same applies with CBA’s. Three different people can run the same one and come out with three different conclusions.

    I’ll be at City Hall tomorrow. I hope you’ll join me. The politics of sitting behind a computer screen rarely generates results.

  19. We need to continue to tell the Mayor and City Council how we feel about these deals when they pop up. They already feel this is a totally different deal than last year simply because they are negotiating with Triple Tap (the fanchisee who secured rights to the San Marcos market from Alamo Drafthouse corporate, the franchisor) rather than the mall landlord. Again, why are we contemplating using taxpayer money to bring in jobs that will lower the average wage in our community? We have loaded up so much long-term debt in the past several years, we should not dole out more taxpayer money without compelling reasons.

  20. If anyone wants to ask how this incentive would meet any of our economic development goals to:

    1.) Help regional businesses to be globally competitive
    2.) Diversify the area economy
    3.) Make the Greater San Marcos area’s one of Texas’ most compelling destinations to live, work, and visit

    I’d love to hear that answer.

  21. Dear Mayor and City Council members,

    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. In this challenging economic environment, I believe any “deals” need to satisfy all 5 criteria, before you decide to spend more of our taxpayer money.

  22. Why not the old movie theater on the courthouse square? Former Gordo’s location? Its in the heart of the student – within-walking – distance – date – night scene anyway. I’d love to see that area used as an Alamo Drafthouse. Has that property been sold?

    Sure, the Springtown mall has more parking, but our downtown area needs to work on that issue anyway. Can’t we get both: Alamo downtown and parking garage? If the city financed a parking garage, they could get back revenues off that pretty easily, it seems to me.

    IMHO, a Drafthouse is needed for San Marcos. But doesn’t fit in the neighborhood of Springtown mall, given apartments with a wide age spread nearby (everybody from seniors to families to students). Too much noise, late at night, too much potential mess to clean up.

    And gosh, couldn’t we get some home grown businesses into Springtown, instead of imported businesses?

    Just sayin’

  23. Pam,

    You make an excellent point, if fact Alamo did consider Gordo’s a few years ago.
    Why didn’t they come you ask? Parking. Our Mayor has no intention of ever building
    a parking garage…never.

  24. It is my understanding that when Gordo’s was being considered for an Alamo, the owner refused to sell the space. I also believe the space is now being converted into a music theater, although I haven’t heard of any movement on that for a while.

    Tim and Kerry League still own the three central Austin Alamo’s (originalalamo dot com) which are the South Lamar, Ritz and Village locations, and I think they only have an advertising and name sharing agreement with Triple Tap (drafhouse dot com). The company that owns the name now has a different business model and would likely do a more mainstream theater, like the Lake Creek theater or the ones they have opened in Houston and San Antonio.

    The council has made some very poor and short sighted decisions about Springtown. Giving incentives to move businesses out was stupid. Not having a redevelopment plan for keeping it from becoming a wasteland was also stupid. We need to get businesses back in there, and we will probably have to give some incentives to fill it. Alamo is a great start. Sure maybe it will happen on it’s own, but don’t we want to speed the local recovery up? That’s where incentives should be used and it should be worth some money to us.

  25. I am really getting tired of government by ambush from the City of San Marcos. Forget that this is about a specific business. Just look at the basics of this deal. Why the secrecy from the City and the Mayor. What does the Mayor know and when did she know it? The citizens of San Marcos are not allowed any prior knowledge of the deal. Why? Because it can’t pass the smell test. If this deal was going to be good for us, the Mayor would be shouting the details. Instead we get an item placed on the agenda a day later than normal which just happens to coincide with a City three day holiday. Have any of our Council been advised of the details of this deal? My guess is that only select few of the Council know what is up with this transaction. Those will be the Council members that Susan! can depend on to vote her way regardless of the merits of the incentive package. Do any of you think that Chris Jones or John Thomaides have received any information about this agenda item.

    Why would the very first discussion, and possibly last discussion if the Mayor gets her way, be in executive session. It sure can’t be done is secret so the City can drive a harder bargain. If the City was interested in doing this deal at the least cost to the taxpayers, we would let Springtown go to foreclosure. Instead, as the last time this came up, the Mayor seems hell bent on rescuing Lamy from it’s own folly. Why? The Mayor has become obsessed with this project. What is going on here.

    If this were a deal to put a bar and restaurant into Springtown, would you look at it any different. Of course you would. Some of you are willing to accept this deal simply because you think an Alamo Draft House would be cool. Don’t be blinded to the reality. Who is Triple Tap Ventures? Why would they purchase the franchise rights to an Alamo Draft House in San Marcos, issue a press release that they are putting a Draft House in San Marcos and then claim they will not do the deal unless they get concessions from the City.

    Take a look at who the City is dealing with in the form of Triple Tap Ventures. Unfortunately, I can not put links in the post but you can quickly verify my information on Google. The CEO of Triple Tap is Norman Abdallah. Mr. Abdallah is also the CEO of Restaurants Unlimited. This is a brief profile of the company.

    “Restaurants Unlimited, Inc. operates a chain of restaurants in the United States. It operates restaurants in Anchorage, Alaska; Phoenix, Arizona; Berkeley, Burlingame, Los Angeles, Oakland, Redondo Beach, San Francisco, and San Leandro, California; Denver, Colorado; Honolulu, Hawaii; Carmel and Indianapolis, Indiana; Bloomington, Minneapolis, and St. Paul, Minnesota; Cincinnati… ”

    Apparently Triple Tap is a subsidiary of Restaurants Unlimited. Restaurants Unlimited is a subsidiary of a hedge fund called Sun Capital Partners. Below is the description of Sun Capital from Wikipedia.
    “Sun Capital Partners, Inc. is a private investment firm focused on leveraged buyouts, equity, debt, and other investments in market-leading companies. Sun Capital affiliates have invested in and managed more than 145 companies worldwide with combined sales in excess of $35.0 billion since Sun Capital’s inception in 1995. Sun Capital has offices in Boca Raton, Florida, Los Angeles, California, New York, New York, London, and Shenzhen.

    The firm’s portfolio includes many regionally and nationally recognized companies, such as Bruegger’s, Boston Market, Exopack, Marsh Supermarkets, Fazoli’s Restaurants, Wickes Furniture, Nationwide Furniture, Mervyn’s department stores, Anchor Blue Clothing Company, The Limited clothing stores, ShopKo, Pamida discount store chains, Smokey Bones and Hickory Farms.

    In 2006, Sun Capital announced the purchase of Marsh Supermarkets of Indianapolis, IN, the owner/operator of 128 supermarkets/food stores, and 154 Village Pantry convenience stores, among other divisions. In 2007, Sun Capital acquired majority interest in the plumbing fixture company American Standard Americas. In 2008, Sun Capital acquired majority interest in Gordmans, a department store headquartered in Omaha, Nebraska. Sun Capital funds own a minority share of the following: BlueLinx Holdings, Chrysler, Dale and Thomas Popcorn ,Easy Gardener Products, GMAC Financial Services”

    This poor little company just can’t possibly open an Alamo Draft House in San Marcos, Texas with out help from the taxpayers. BS. This whole deal is just another fat cat Wall Street hedge fund trying to squeeze the last dollar out of us poor rubes in San Marcos.

    Demand some transparency from out Mayor and City Council. Don’t let this happen. If it does, as voters, we must punish every elected official who hides and approves this deal. We must start to expect that our City Council follow the Open Meeting laws of Texas. This secrecy must stop.

    Charles Sims

  26. Once again, I think you all–Mr. Sims in particular, have nailed it. Great analysis and serious commentary. Beware, though, lest you get a trend started of citizens demanding knowledge and competence and diligence around that dais, as well as in conclusions to be shared with the Governing Body. It is indeed quite easy for the “mechanics” and “fixers” BOTH on staff and in the private sector–people whose deepest instinct is to get along and move projects–for their matching resumes, if no more.

    Correct also that mega-holding companies have more people and “confidential” information than an ignorant citizen could ever wade through; they easily can choose to outweigh a Council seeing these deals as “coonskins on the wall” for themselves. In fact, the Economic Development Incentive game has produced no shortage of economic benefit to any sound and solid company. Some merely move jobs out of one area (City, State, whatever) into another that is MORE economical to the company. Some, naturally, fail or go bust. Some are marginal and flailing around for a placed to land, one where hopefully there is cheap labor and a low COL.

    It’s the other half of the transaction–the unwashed–who get left out. When it comes to how some scheme will affect HIM, THE TAXPAYER, he is left only with ribbon-cuttings, congratulations all ’round and the promise of the promissory note–a leaf in the hurricane of greed and bad debt. But isn”t he the City’s “investor,” to be accorded full disclosure at the earliest possible and allowed to lend a considered opinion? What? “Sign” a blank note unseen? No idea of the goods, service, collateral, expenses, scheduling or NET economic return–might guess the impact on the local market, if he could find out how much local money is being pumped into other ventures–or, (God forbid, I’m going to say it ) fees, incidentals, rewards and bonuses for conquering new turf.

  27. Griffin,

    He/she is talking about a RECALL petition, which is very different than the referendum petition BudaFirst used. Referendum petitions are rarely effective in the State of Texas, regardless of specific wording of city charters. To some extent we should be greatful, as initiative/referendum is what got California into the mess it is in. Recall petitions on the other hand have fairly high success rates presuming they reach the number of signatures necessary to force a recall election. While recall cannot effectively undo a contractual obligation like an economic agreement, the threat can be effective when the right person/group presents the threat. Even if the threat is not effective, a successful recall can prevent the similar inappropriate economic incentive agreements in the future (because you have somebody else “on your side” up there and have the political capital to intimidate the others that know you’ve been successful in removing one of their comrades).

  28. That is true. I’m curious what the minutiae of a recall petition is. We also have regular election in November for the Mayor and the seats currently head by Mr. Bose and Mrs. Porterfield.

  29. This is the agreement that was just, finally, available to the public.

    ADDENDA
    1. Consider possible offer of incentives to Triple Tap Ventures, LLC for the
    redevelopment of the old Best Buy Building (Springtown location) for occupancy
    by Alamo Drafthouse Cinema.
    POSTED on Thursday, February 11,2010 at 3:00 p.m.
    ~)1{~
    Sherry Mashburn, City Clerk
    Notice of Assistance at the Public Meetings
    The San Marcos City Hall is wheelchair accessible. The entry ramp is located in
    the front ofthe building. Accessible parking spaces are also available in that area.
    Sign interpretative services for meetings must be made 48 hours in advance of the
    meeting. Call the City Clerk’s Office at 512-393-8090
    I certify that the attached notice and agenda of items to be considered by the City
    Council was removed by me from the City Hall bulletin board on the
    _____________ day of _
    Title:—–
    Proposal
    WHO: Alamo Drafthouse Cinema
    WHAT: Redevelopment of old Best Buy at Springtown Center
    AMOUNT: $2,500,000 Loan
    TERM: 10 years
    INTEREST: 0%
    PROPOSAL: Site – Old Best Buy at Springtown Center, 23,250 Square Feet
    Screens: 6
    Total Seats: 600-700
    Annual Guests: 250,000 to 295,000
    Estimated Annual Revenue: $5 million to $5.9 million
    Estimated Employees: 70 to 80 (additional 30 in summer)
    LOAN: Triple Tap San Marcos Theater, LLC dba Alamo Drafthouse Cinema
    REPAYMENT: Estimated repayment time – Nine Years – not including property tax revenue
    Repaid from increased Sales & Property Tax revenues. Springtown
    Development would be responsible for any gap in repayment.
    The City’s assistance in redeveloping the old Best Buy will allow Springtown Development to
    potentially redevelop the remainder of the shopping center.
    Springtown Development is proposing to redevelop the shopping center into a mixed use area
    including Retail, Office and Residential, similar to a project they recently completed in Austin on
    5th Street & Pressler (see attached).
    Springtown Development was notified this week by their lender that the property was to be
    foreclosed on March 2, 2010.
    Shopping Center: 108,000sf(84,500sfnet of Alamo)
    Existing Leased Space:
    2009 Sales Tax Revenue: $54,000 , (24,000sf x $150/ft = $3,600,000 In sales)
    [3,600,000 x 1.5% = $54,000.00]
    Alamo Drafthouse $5,000,000 sales by 3% per year for 10 years =
    $57,319,394
    $57,3 x 1.5% = $859,791 in taxes over 10 years
    126,750*
    228,150**
    234,994
    242,044
    249,305
    1
    2
    3
    Year 4
    5
    6
    7
    8
    9
    x .5 (occupancy) x 200/ft x 1. = $126,750
    x .9 x 200/ft x 1.5% = 150
    2009 Taxes
    $3,349,919.00
    (540,000.00)
    _$2,809,919.70
    C:Documents and SettingsmenchacaJickLocal SettingsTempormy Internet FilesContent.Outlook3MLSAJlFTax Analysis.doc
    Springtown Term Sheet
    Recipient: Triple Tap Ventures LLC (d/b/a Alamo Drafthouse Cinema)
    Loan Amount: $2,500,000
    Center: Approximately 19 acres, Springtown Shopping Center, San Marcos, Texas
    (including the Target Parcel)
    General Terms
    41; Loan Amount to be paid by the City to Recipient for improvements including
    renovations, furniture, fixtures and equipment to convert the old Best Buy
    space into an Alamo Drafthouse Cinema.
    • Loan will bear no interest.
    • Loan Amount be placed an escrow account and Recipient will make
    periodic draw requests as improvements are completed.
    • The increase above 2009 taxes in the City’s sales tax and ad valorem tax
    revenue generated from (“Tax Repayment”) from and after the Effective
    Date will be applied to offset the Loan Amount.
    • Any unpaid balance on the loan (after deducting any offsets described above)
    will be due on or the 10th anniversary of Recipients’
    opening of an Alamo Drafthouse Cinema in the Center.
    Covenants
    • Recipient agrees to open and operate an Alamo Drafthouse Cinema at the
    Center for the term ofthe loan.
    • Recipient agrees to use good faith efforts to hire local businesses to assist in
    the construction ofthe Center.
    C:Documents and Settingsmenchaca_rickLocal SettingsTemporary Internet·
    FilesContent.Outlook3MLSAJlFTerm Sheet with City l.doc

  30. “The increase above 2009 taxes in the City’s sales tax and ad valorem tax
    revenue generated from (”Tax Repayment”) from and after the Effective
    Date will be applied to offset the Loan Amount.”

    This is the real booger in the details. This is not a loan. This will be repaid by taxes normally owed by Alamo Draft House. It is not coming out of their pocket. To characterize this as just a 0% interest loan is deceptive.

  31. Snap reaction, but this is way more than a loan. They get back whatever additional property taxes they pay after the renovation; they also repay the loan with increased SALES TAXES (?) and the City gets no interest. In exchange, the City gets .. NOTHING with all deference to an empty, vague idea that Springtown will redevelop the rest, that Triple Tap will use “good faith” to use local vendors, that the theatre will create some minimum wage jobs and that the City will have default recourse against an empty shell created for this project alone.

    As much as I like the concept of Alamo Drafthouse, I pledge to never go to one which comes into town on top of the backs of the citizens.

  32. I would like to see the city council extend no or low interest loans to local business. That way when the owner makes a profit their profits stay in the community. But that common sense somehow eludes our great leaders.
    As a student I think having a drafthouse here would be great, I would not have to go to starplex and deal with children and a poor movie selection. But at the same time, most of the college students I speak with are becoming less interested going to movies in general, we all have nice HD tvs, blue ray, and net flix. IMHO, investing in a mode of entertainment that might be less popular in ten years is not good business sense on the part of our city.

  33. Too many threads. I’m curious to know if this is expected to result in any net-new movie goers? How much revenue do our current theaters generate? How many people do they employ? How will new, subsidized, competition change their situations? Will this actually increase the revenue the city generates from theaters, bars or restaurants, or will it just shift the existing revenue around?

  34. If this goes through I’m sure I’ll get dragged to Alamo but I’ll have to hold my nose. Has anyone heard from the owner of Tinsletown? I gotta figure he’s not too happy about it. Reminds me of when the city got into the health club business over at the acitivity center. There has to be a smarter way to use our resources to incentivize development of Springtown. I hate to suggest it but what if you gave that same money to Target in exchange for them lifting the deed restrictions? (not that I’m in favor of giving more money to Target or StoneCreek)

  35. I heard a rumor one time that the owner of the Starplex somehow wrangled some sort of exclusive rights to be able to show first-run movies in San Marcos as part of his deal with the City. As unlikely as that is to be true, it could cause a huge issue with Alamo if it IS true.

    I don’t know how often Alamo shows current releases and how much they focus on stuff like Wizard of Oz/Pink Floyd or Rocky Horror, but I would be reticent to open a theater anywhere if I wouldn’t have the right to show current releases.

  36. I had also heard that the owner of the current megaplex also owns the Showplace and was going to do something along the Alamo model there. That was a couple of years ago, but came from someone on the planning commission…

  37. Griffin, from our City Charter: “The people of the city reserve the power to recall any elected officer of the City of San Marcos and may exercise such power by filing with the city clerk a petition demanding the removal of the officer, signed by at least ten per cent of the qualified voters of the city.” (Sec. 6.06. Power of recall.)

    One can see the entire City Charter online at the City website: at the home page, click on City Hall, then select City Clerk, then select Code of Ordinances. You can then do searches to find the relevant sections.

  38. Starplex:

    Avatar
    The Blind Side
    The Book of Eli
    Dear John
    Edge of Darkness
    From Paris with Love
    Legion
    Percy Jackson & the Olympians
    Tooth Fairy
    Valentine’s Day
    When in Rome
    The Wolfman

    Alamo:

    The Wolfman
    Percy Jackson & the Olympians
    Valentine’s Day
    From Paris with Love
    Dear John
    Edge of Darkness
    Legion
    The Book of Eli
    Paparazzi

    That’s nearly 100% overlap. So, what is the net-new business? Particularly when you take lost bar and restaurant business into consideration? I suspect there will be some net new, but I doubt it will be nearly 100% net new.

  39. Thanks Steve. Been busy all day but that’s about what I expected; percentages based upon total registered voters. Could be hard with all the Texas State students who have since moved, but certainly possible if absolutely necessary.

    I have also heard the same thing Jesse has but I think the proposal was rejected. That’s why we haven’t heard anything recent on the project. ADH might want to know why they rejected the idea.

  40. Well, the council tabled it this evening. I wonder why it appeared all of the sudden and then vanished (for the time being) all of the sudden.

    More than doubling our long-term debt during the past several years will come home to roost in the future, to the detriment of the future citizens who live here.

    This proposed $2.5 million dollar “loan” is actually a gift, let’s call it like it is instead of trying to dress it up as something suave and sophisticated. Folks, we don’t have an extra $2.5 million to give this deep-pocketed developer.

    Let’s not sell our city short. There are many great reasons for people and businesses to want to be in San Marcos, without holding us hostage to more (taxpayer dollars) government handouts. Mortgaging our city’s economic future is not prudent.

  41. Bob, you know it is funny you would mention incentivizing the elimination of the no-compete restrictions at Springtown. A number of folks at the city suggested adding that as a stipulation for the $4M increase at StoneCreek if it was going to pass. I don’t think that information ever made it to Council.

  42. Its a shame we cant take property like this and section it out for small business start ups. Everyone in town has something their good at doing thats marketable in that location. Why not let them set up shop and build a community that knows how to buy things from itself and teach others to do the same. When the money stays in the neighborhood things seem to work more for the people.

  43. There is nothing wrong with ideas and everybody has got a few, but WE can’t “take property” and put it to what WE think is a better use. WE don’t own the property and WE don’t get to say what happens there. All WE get to do is set reasonable restrictions on what cannot happen there and provide some incentives for ideas that mix with the City’s overall plan.

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