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

February 17th, 2010
San Marcos council tables Alamo theater incentive

021610alamotableSan Marcos Mayor Susan Narvaiz, left, and Triple Tap Venture’s Neil Billingsley-Michaelson, right, discuss the San Marcos City Council’s tabling of a $2.5 million “grant” for Triple Tap during a recess at Tuesday night’s council meeting. Photo by Andy Sevilla.

By ANDY SEVILLA
Associate Editor

Just out of executive session Tuesday night, the San Marcos City Council tabled action and open discussion on a proposed $2.5 million incentives package for the location of an Alamo Drafthouse in the vacated Best Buy building at the Springtown Mall.

San Marcos Mayor Susan Narvaiz said after the council meeting that the tabling was necessary due to technical failures preventing San Marcos residents from accessing background information about the incentives until Tuesday morning. Narvaiz also said that the tabling would allow “more time for discussion.”

Narvaiz said Tuesday’s council meeting was the first time the whole council discussed the matter.

The Springtown Mall, owned by Lamy-Springtown Mall, Ltd., is listed for foreclosure in the March 2 auction on two parcels, one of which hosts the property Alamo Drafthouse wants to move in to. The Springtown Mall owners are in default to Thrivent Financial for Lutherans by nearly $10 million, though Hays County has appraised those parcels at almost $8 million, providing for an approximate $2 million in negative equity.

A perplexed standing-room only council chamber was in awe after hearing deliberations on the matter were tabled before councilmembers even came out of executive session. That however, did not keep San Marcos residents from weighing in on the subject.

“Remember this is a mess that we created in city council by paying to move businesses (Target, JC Penny, and Bealls) out (to the StoneCreek Crossing on the city’s south side),” San Marcos resident Rob Roark said to the council. “… We don’t want bailouts of city council fiascos.”

Roark alluded to the $6 million in sales tax rebates offered to StoneCreek, enabling the three main Springtown tenants to relocate there.

Narvaiz said the $6 million in sales tax rebates were necessary for StoneCreek Crossing because the General Land Office (GLO) was luring the big-box stores into property that would have removed them from the city’s tax roles. Narvaiz said the GLO was essentially competing with the city for the national retailers, a fight she wasn’t going to lose.

“I think the council has been very responsible with all our economic development decisions,” Narvaiz said. “… We’re protecting our current revenue stream with all that we do.”

Narvaiz said the council was prepared to provide the millions in sales tax rebates to StoneCreek Crossing so that revenue would continue to flow in to the city’s general fund, 48.1 percent of which comes from sales taxes. She said the sitting council in 2006, in the initial negotiating stages, made a commitment to revitalize the Springtown Center after they incentivized Target, JC Penny, and Bealls to go to StoneCreek Crossing.

The council is now tasked with considering a $2.5 million interest-free loan to Triple Tap Ventures, LLC, for the redevelopment of the old Best Buy building to bring the Alamo Drafthouse to San Marcos. The loan for the six-screen, 23,250-square-foot theater is estimated to be repaid in nine years, though the term is for 10 years, not including property tax revenue repaid from increased sales and property tax revenues.

The increase in city sales tax and property tax generated above 2009 levels would offset the loan amount, effectively making it a “grant”.

Said San Marcos resident Steve Harvey during the citizen’s comment period, “Let’s call it what it really is. It’s not a loan, it’s a gift.”

Narvaiz said the proposed $2.5 million incentives for Triple Tap are a “grant” and “not a loan.” She said public and private partnerships are necessary in the current economic climate, whereas a few years ago, she said, incentives may not have been imperative.

“It’s a grant predicated on increased revenues,” Narvaiz said.

Last summer, The Springtown Mall owners put forth a request of an interest-free $5 million loan to be repaid over 23 years in hopes of redeveloping the property. The proposal was unanimously shot down by councilmembers after much resident uproar.

The developers later pulled a second request for a $3.9 million loan with a maximum six-percent interest rate for the duration of the six-year loan. From 2011 through 2016, the city would have rebated 50 percent of the project’s generated city sales tax above the vacant Springtown Mall’s current levels. That money would have defrayed the developer’s interest payments and provided up to $600,000 for architectural enhancements.

Many of the San Marcos residents facing the council Tuesday night criticized the elected officials for considering millions of dollars to incentivize the attraction of below living-wage jobs.

When asked if incentivizing Alamo Drafthouse jobs was a worthy investment, Narvaiz said she looks at the totality of the opportunity. She said “a $9-an-hour job is sometimes a step up for some of San Marcos’ residents.”

Narvaiz said the $2.5 million grant will allow the Alamo Drafthouse to locate where it will be successful.

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0 thoughts on “San Marcos council tables Alamo theater incentive

  1. Perhaps we as a community can step it up a notch and elevate our vision with more creativity. During the past year several citizens have articulated forward thinking ideas on the subject of Springtown Mall. A traditional “mall” approach may be beyond its prime there. We could have better utilization of that land. Maybe the best use is to let it settle down through the foreclosure process, then with a more affordable start, tear it down and build a mixed-use vertical development, complete with office, living (think, retail and other establishments that cater to the residents in the new development as well as drawing in others), and entertainment. Alamo Drafthouse can fit into that scenario quite nicely. In fact, I bet they would financially do even better with such a concept, compared to being just an anchor tenant in just another strip mall location. Last night at City Hall during the public comment period, I asked our city leaders to not sell our city short. We have so much to offer, and as a community we need to develop an inspiring vision for the even better community we want to become, both for our current and future residents.

  2. why limit to this one business? our city council can’t come up with something better than movies and beer? let it go into foreclosure – it’ll be a bargain for whomever buys it.

  3. Hats off to you Mr. Harvey, mixed use development makes a great deal of sense, especially long range.But I would not hold my breath; commercial real estate developers rarely think long range. And that location has a couple of problems, I35 and the railroad tracks. Granted long range those could very well be advantages, but to put in residential it would require major buffering.

    As for the Council tabling the action, at best I would judge it as gutless. At worst, let’s see how they try to hide it on the agenda next time.

    Kudos to the good citizens of San Marcos for packing the meeting.

  4. On a slightly different but related note…it was nice to see Thomason vote against ordinance 2010-27R that would have provided $600k+ in tax abatement for an apartment complex. The item ended in a tie with 3 for and 3 against with Chris Jones recusing himself. Due to the tie, the motion failed! I bet no one would have ever in a million years thought Thomason would vote with Thomaides and Bose on an issue such as this! Maybe Thomason is the fiscal conservative some claimed he would be! Let’s all hope!

  5. Interestingly, I heard all the speakers during the citizen comment period Tuesday night, and do not recall “many” residents raising concern about the “below living- wage jobs.” I did, however, hear consistent concerns about the city spending money to support a large-scale business that many feel don’t really need the incentive. It’s not that simple, however. Neither is the “let’s just let it go into foreclosure” or let’s just ‘tear it down” and start over. This is not a completely vacant property we are talking about. There are existing businesses there which provide jobs for San Marcos residents. What is to be done with that? Residents don’t seem to have a problem with the city spending money in the downtown area. That money would also support existing for-profit businesses. Perhaps it is the amount then.??? I wonder if citizens would support the city in spending a lesser amount to assist the existing Springtown businesses in relocating to another area within San Marcos.
    On another note, I do like your vision, Steve. A mixed use development would be a great addition to the San Marcos community. The question lies in how do we get there and what do we do in the meantime. Sitting and waiting is not a feasible option for everyone involved.

  6. I think the mixed use concept for this location has real merit. I am not an urban developer, I am just a regular citizen and member of the community, but some smart experienced people are telling me this (mixed use concept) could work. Maybe some interested citizens can get together sometime next week in person to brainstorm the concept. I think a grass roots approach could bring fresh thinking to the table. Anybody interested?

  7. Theresa……. you say ” Residents don’t seem to have a problem with the city spending money in the downtown area” could you name one businesses located Downtown that got any incentives from our city council? If you think that fixing the side-walks downtown 10 years ago was incentives, you’re wrong, it’s all paid for from taxes the downtown businesses pays to the city. as a matter of fact the city get more out downtown than it puts back in there.

  8. Let it go to foreclosure. Maybe TSU will buy it and build a giant parking garage to shuttle students and relieve the downtown parking situation. By the way has anyone considered that the reason the stores moved south might be to improve the potential operation of the ‘convention center’ for the city? How is that performing these days? Are they making any money?

  9. Yeah, the mixed use concept worked so well at Sanctuary Lofts, let’s try another one at Springtown. Wait, isn’t Sanctuary Lofts on the verge of foreclosure too??? Uh-oh…..

  10. I will assume that Mr. Harvey is thinking of something more along the lines of The Triangle in Austin, I know I am, rather than Sanctuary. Sanctuary has been financially troubled from day one.

    Think the Vista Del Blanco plan from a couple of years ago. But I believe they have put that project on hold.

  11. I wouldn’t be opposed to some assistance for the remaining tenants to relocate, but I wouldn’t be in favor of it, either, without some details regarding what it would look like. It is interesting that you seem to assume that those tenants would remain, if this bailout went through, but I keep hearing that leases for existing tenants are not being renewed and I am not sure how Sylvan Learning Center fits into an “entertainment district,” or whatever it is that is proposed for this center now.

    I am also not clear how Alamo Drafthouse would cover the revenue that was generated by Target, Best Buy and JCP. It is entirely possible that this “revitalization,” would require even more money, a little ways down the road. Of course, at that point, as with Stone Creek, the city would likely feel that the only option would be to throw more money at the problem, lest we see our initial investment evaporate.

  12. Some of the smaller, remaining tenants, that is. I can’t imagine any justification for assistance to IHOP, or Furr’s, or Applebees, etc. Of course, I never hear anyone from those places talking about relocating anyway. Who, other than Sylvan, needs to get out of there? Just curious.

  13. Dano, Sanctuary Lofts is the poster-child for poorly designed vertical mixed use. The spaces they built are the wrong size, lack visibility, and perhaps most importantly, are too detached from other similar businesses. Basically, they found a way to make that project feel isolated because none of the neighboring properties have followed suit with redevelopment. You need some concentration to achieve success with with vertical mixed use. Also, Sanctuary Lofts was forced to build nearly two full decks of parking garage that reality has shown they did not need. I did a vehicle count in their garage when the place was at 95% occupancy, and the two top decks of the parking garage were empty. Keep in mind that this was mid-week and early in the morning, when the most residents should be home. Also, they made some errors in financing, etc. The situation with Springtown Mall is far more similar to The Triangle than Sanctuary.

  14. When we do incentives, we need to get more for our money than we have in the past. Look at what the City of Austin is considering in their meeting this evening. LegalZoom would receive from the City of Austin $20,000 total per year for 10 years, in exchange for a company that plans to create 600 jobs over the next 5 years, with starting salaries at $29,000 per year, and overall average wage of $42,000. Plus, the jobs they are creating fit the profile of the currently unemployed in Austin. Yet, here in San Marcos, we’re talking about giving a $2.5 million dollar gift to Triple Tap.

  15. It’s too late for Applebee’s….they closed their doors about a month ago.

    But who cares about them anyway? They’re a “big bad chain” and not worthy of our sympathy or our assistance. I guess the 50-60 people who lost their jobs care, but that’s small potatoes compared to keeping our City “small business friendly”, right?

  16. My thought on mixed-use development is that those who actually live in the development can tend to be the only ones who use the services offered by the retail parts of the development. Has anyone here ever shopped or purchased anything from a store at the Triangle….or Sanctuary Lofts for that matter?

    I also don’t buy the argument that adding more restaurants to San Marcos is providing “low end jobs” that “don’t pay living wage”. I can tell you for a fact that many of the waitresses at local restaurants can clear $15-18 per hour with their tips. Why is that job any less deserving of incentivizing than a $30,000 per year desk job somewhere? Is it simply because the desk job might require a college degree?

  17. Did Applebees close because of Springtown? Restaurants close all the time. They even close at the Outlet Mall. I don’t need to think they are a “big bad chain,” to think that they don’t need my welfare.

  18. The desk job has more room for advancement, probably pays benefits and gives people a reason to stay here, which would go a long way toward solving many of the “us and them” issues that arise from such a large segment of our population being so transient.

    Also, having worked at many of those “$18 per hour with tips” jobs, as did my wife and many friends and family, I can say “for a fact” that very few of those jobs pay that kind of money for 40 hours per week. The fact that the per capita income in San Marcos works out to about $7.75 per hour bears this out. Also, most people who work those jobs, do not consider them to be long-term careers.

  19. Also, “desk job” is pretty broad. It can cover sales, marketing, accounting, IT, production, development, HR, etc and each area has its own path to advancement.

    Now, if someone wanted to offer Target an incentive to move their corporate headquarters to San Marcos (or even their regional office in Dallas), or Dave & Buster’s HQ, or even Triple Tap (although they are pretty small – but maybe something appropriately sized to the number of real jobs they would bring to town), that might be interesting. Maybe when these guys start asking for incentives, we should start upping the ante.

  20. At a minimum, they ought to be meeting with our economic development folks, to see if there is any possibility for a larger relationship and the incentives (if there are any) should be driven by how well the company’s plans line up with our economic development goals.

  21. Comparing any property in San Marcos to the Triangle is ridiculous. We don’t have even a fraction of the population or the income. The Sanctuary was doomed by the same errors as what kept Blanco Riverwalk from happening – developers imposing Austin paradigms on San Marcos. This town is more Dollar General and less Nordstroms. More mobile home and less loft. Springtown is still a good location, convenient for most of San Marcos – and there are still a lot of retailers without a branch in San Marcos. With the current economy it might sit empty for 2 or 3 years but eventually those spaces will fill back up.

    That said, if Alamo does happen (hopefully without any subsidies), we could use a new bowling alley. Ours sucks. And if someone wanted to put in a rollerink that would be cool. Maybe we could host the Tx Roller Derby.

    Btw, Dano, I have shopped at the Triangle, The Dominion and Pearland Town Center – all similar “lifestyle centers”. I don’t care for them because traffic is usually a hassle and they have a disneyland, manufactured-culture kind of a feel. But they all depend on traffic from outside the development and they’re all high rent.

  22. “This town is more Dollar General and less Nordstroms. More mobile home and less loft.”

    Right, so we can make substantive improvements to the economy, or we can subsidize these businesses, so that it looks like we are doing well. One is fairly easy and yields immediate (if superficial) results. One takes considerable work and take longer to really have an impact, but the impact lasts long after the subsidies are gone. Traditionally, we choose the former.

  23. I think it would be awesome if someone would come in and make Springtown a “family-oriented” entertainment venue. I like the idea of a more modern bowling alley, perhaps a roller rink and miniature golf course,too. Wish I knew someone with the money to actually make something like this or the live/work/play concept happen. I don’t think anyone will be getting enough money from a bank anytime soon. I assume this is one of the reasons government incentives are being sought after.

    BTW, Steve, I’m just an elementary teacher turned small business owner so I don’t have a heap of knowledge or experience in this realm but I’d be happy to brainstorm the mixed-use concept with you.

  24. Theresa makes a good point….how much of the recent “run” on companies seeking incentives from city government has been caused by the tightening of the credit markets? It is next to impossible to get bank financing for a deal anymore – even with good credit and a good business history.

  25. It would be interesting to create a spreadsheet to denote how we as a community are doing with our incentive dollars. Yes, when it is a good deal that makes sense for all involved, I am all for economic incentives to bring new jobs to our community. Here are some numbers that immediately come to mind:

    Grifols, for $1.8 million, 190 new jobs at average salary of $38,571
    Stone Creek Crossing, for $6 million, ?? new jobs at average ?? salary
    Triple Tap, for $2.5 million, ?? new jobs at average ?? salary

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  27. Sorry for the double-post, but some things are worth saying twice and this is where the traffic has been.

    I just read that Austin is offering $200,000 to Facebook, to open a new facility, with 200 jobs @ $54k per year. The deal also includes $1.4 million from the Texas Enterprise Fund.

    Hmm, $2.5 million for a bar/movie theater, or $1.6 million, for 200 tech jobs – which sounds like economic development to you?

    Also, the Texas Enterprise Fund, according to the Governor’s website:

    “provides the state’s leaders with a “deal closing fund” that has the flexibility and financial resources to help strengthen the state’s economy. The fund can be used for a variety of economic development projects including infrastructure and community development, job training programs and business incentives. Before funds can be awarded, the governor, lieutenant governor and speaker must unanimously agree to support the use of the TEF for each specific project. ”

    Are we tapping into this fund? Are we even aware of it?

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