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by SEAN BATURA
The San Marcos City Council has its eyes on five prime downtown properties, four of which are owned by Hays County and one by the United States Postal Service.
Though the city has expressed interest in the fate of all five properties, two in particular were singled-out by council members at their regular meeting last week: the 39,546 square-foot former HEB and Hays County Justice Center at 110 MLK Drive, and the 18,660 square-foot building at 301 North Guadalupe Street now being used as a post office.
One reason council members are interested in the 110 MLK Drive property is its location close to railroad tracks upon which future commuter trains may travel. The Lone Star Rail District, a public agency tasked by the Legislature with developing a commuter rail service to connect communities along the I-35 corridor, recently initiated a study to relocate freight trains off that track to make way for commuter rail.
Council members John Thomaides and Ryan Thomason expressed interest in buying or partnering with a private entity to buy the post office property to ensure it stays on the tax rolls later. Both men said they worry Texas State University may buy the property.
“As long as we keep it out of the university’s hands, I could get on board with a lot,” Thomason said.
Thomaides said the site “could be so many cool things” if put in private sector hands.
“I’m not interested in excluding anyone from acquiring that land and doing something cool with it,” said council member Kim Porterfield.
Council member Jude Prather strongly urged his colleagues to consider selling the city’s property at 630 East Hopkins Street, which houses City Hall. Prather supports relocating the city’s headquarters to one of the five properties downtown. He recommends building a downtown city hall with a parking garage for commuter rail users and said the city should sell its property on Hopkins Street to finance the move. Prather said the city should also sell the 19,421 square-foot building across the street from City Hall leased by the Army.
The county appears more receptive than USPS in giving the city right of first refusal for its properties. USPS has said it will only sell to the highest bidder, though City Manager Jim Nuse said there may be hope.
“We are aware of a particular situation in New York City where [a USPS property] was disposed of other than to the highest bidder because there was political pressure and it was for the economic development of New York City,” Nuse said. “What I’ve been saying to [USPS] is, that block in downtown San Marcos is every bit as important to the citizens of San Marcos as a square block in Manhattan is to the people of New York City.”
At their meeting Tuesday, Pct. 3 Commissioner Will Conley told city council members the county is willing to be “patient” if the city is interested in the county’s properties, though he and his colleagues want fair market value.
“If that interest does exist, then now would be the time to really start moving that ball forward, since we have buyers at the table and people interested in those different properties,” Conley said to the council.
Conley said he and his colleagues plan to use the proceeds from the property sales or leases to service the county’s debt. The county recently relocated many of its operations to a new 232,000 square-foot government center off Wonder World Drive, and thereby vacated four buildings downtown totaling about 66,188 square feet. The county sold certificates of obligation for the new building and is scheduled to pay about $120.4 million – $67.3 million in principal and about $53 million in interest – by the time the county pays off the debt in 2035.
“Downtown San Marcos is extremely important to Hays County, the county commissioners, the county judge…and we want to make sure that it’s successful not just today but for many years into the future,” Conley said.
According to Assistant City Manager Colette Jamison, USPS sent the city a Jan 19 notice of its intention to hire a local realtor and put issue a bid for the property in 30 to 45 days, though she said there has been no indication the property is now on the market. On Dec. 13, 2011, USPS announced it would delay the closing or consolidation of any post office or mail processing facility until May 15.
The USPS property is being reappraised and the appraisal district has not assigned a preliminary value yet. The district assigned the following 2012 preliminary appraised values to the county’s downtown properties for sale or lease:
Matthew Lewis, city development services director, told council members there is 53,000 square feet of additional office and retail space lying vacant downtown. He said most of the properties include Class C office space. Class C space is offered to tenants at rents below the average for the area, according to Building Owners and Managers Association International.
The city and county recently created Tax Increment Reinvestment Zone No. 5 to capture some of the tax revenue from rising downtown property values and apply it to either redevelopment of the old Hays County Justice Center, or to other projects downtown such as the building of a commuter rail stop adjacent to the old justice center, sidewalks, signs, bicycle racks, and stormwater detention ponds, among other items. The city projected TIRZ No. 5 will generate $331,019 by 2017.
Redevelopment of the old justice center would involve using TIRZ funds to help a deep-pocketed “master developer” demolish the building and construct a mixed-use center of up to five stories, with residential on the upper floors and retail on the ground floor. The county has the discretion to submit a proposal to the TIRZ No. 5 board.
According to a staff presentation to the city council, redevelopment of the old justice center must, in order to be eligible for TIRZ funding, support the commercialization of technology and research, maximize potential under the SmartCode zoning code, facilitate a walkable mixed-use development that provides opportunities for professional office and urban residential as well as civic institutional components, provide infrastructure improvements that facilitate place-centric contexts and/or place-based linkages to the future rail station and/or to the downtown square, and facilitate a development that leverages and supports additional adjacent development in terms of design under the SmartCode, pedestrian contexts and market potential.