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

August 6th, 2009
County starts road process for US Foodservice

Hays County Precinct 2 Commissioner Jeff Barton (right) speaks with US Foodservice representative Howard Falkenberg at the Tuesday Hays County Commissioners Court meeting. Photo by Sean Batura.

News Reporter

Opponents of a proposed $50 million US Foodservice facility in the northern Buda area suffered a blow Tuesday after Hays County Commissioners Court members voted 4-1 to begin the process of funding construction improvements to Turnersville Road and CR 118.

The improvements must be initiated before US Foodservice would begin constructing a 500,000-square-foot regional headquarters and distribution center near the intersection of the two roads, which might otherwise be unable to withstand heavy truck traffic from the proposed facility.

“I guess, in the end, I really wonder if you need us,” said Hays County Judge Liz Sumter (D-Wimberley), who voted against funding the improvements. “You’re a $19.8 million company. This whole county is worth about $10.8 million. I don’t know why you would need us to build or to enhance those roads for those trucks … I mean, the road that goes through Buda to take truck traffic (out) of Buda is an asphalt road. It’s not a concrete road.”

US Foodservice estimates the proposed distribution center would increase vehicle traffic by 496 vehicles per day at full build-out in 10 years.

US Foodservice officials say the facility would generate $2.7 million annually in ad valorem and sales taxes within two years. Buda City Manager Kenneth Williams said Tuesday that the facility would bring $100,000 in sales taxes annually to the city.

“In addition to the 250 jobs that will relocate to Hays County, with all the economic activity that will mean, 157 jobs could be created at our site within 10 years,” said US Foodservice Austin Division President John Fowler. “Moreover, our facility will likely attract other commercial investment to Hays County.”

Sumter said US Foodservice gave the erroneous impression that the 157 jobs would be offered to Hays County residents. Some sales people and truckers would not be hired in Hays County, she said.

“They are pay-rolled at the site,” said Fowler in response.

Sumter replied, “There’s a difference between pay-rolled at the site and created at the site.”

Sumter said it took multiple queries for her to acquire accurate local job creation figures from US Foodservice.

“The numbers are consistent with the questions as they were asked, and I think we were quite forthcoming with the information, Judge, when you asked that,” Fowler said during the Tuesday meeting. members and supporters say placing the US Foodservice facility at the proposed location would result in fewer sales taxes for the city and might cause more traffic congestion, air pollution and water waste than retail and commercial land uses for the area.

Sumter likened improving Turnersville and CR 118 to asking residents in other parts of the county to offer a tax incentive for a cause of little benefit to them.

“It doesn’t mean I don’t like US Foods, it doesn’t mean I don’t welcome you here,” Sumter said. “It just means I’m not sure this is a good deal all the way around in terms of the way I look at tax incentives.”

The county is proposing to fund the $1.8 million (including debt issuance cost) in improvements with a 10- or 12-year tax increment finance (TIF) zone within which ad valorem taxes collected by the county would only be used to pay off debt incurred by the improvements. Other taxing entities, unless they chose to participate in the TIF, would continue to receive revenue from property taxes in the zone. The TIF’s boundaries would  probably match the footprint of the Foodservice facility, the location of which would be in the Sunfield Municipal Utility District (MUD) on about 40 acres.

The Sunfield MUD is located in Buda’s extraterritorial jurisdiction. In the event the TIF could not cover the full cost of the road improvements, US Foodservice said it would pay the rest.

Hays County Precinct 2 Commissioner Jeff Barton (D-Kyle), responding to Sumter’s concerns, said he would not ask residents from other parts of the county to pay for tax incentives in Buda.

“And I don’t think we are,” Barton said. “We’re asking for a road … to pay for itself, and to help us pay for existing public streets. For me, it would be a wholly different issue if we were paying for streets within the MUD, or parking lots at the US Foods site, or streets that were internal to the US Foods site. But we’re paying for existing public roads.”

Buda city councilmembers voted unanimously in March to deny Sunfield MUD’s request that light industrial uses be allowed in part of its jurisdiction. After the city council election in May, city councilmembers voted 5-2 to add the light industrial designation to 95 acres within the Sunfield Municipal Utility District (MUD), about 40 acres of which will be bought by US Foodservice should the road improvements to Turnersville and CR 118 appear inevitable. The land use change overrode the city’s master plan, developed and approved in 2002 based on surveys of Buda residents and input from a consulting firm hired by the city. Opinion varies concerning the extent to which the comprehensive plan may have become obsolete.

Buda is being considered for a Texas Capital Fund grant in the amount of $750,000 to aid in improvements to Turnersville Road. If approved, the money will not be disbursed until US Foodservice and the City of Buda are certain the TIF will be created.

A petition for a referendum to overturn the city council’s land use change is currently being certified by Buda City Secretary Toni Milam, who said Wednesday that her analysis will be complete by the first of September. submitted almost 800 signatures and is still collecting signatures. members allege some city officials may have acted unethically before the land use change and during the Texas Capital Fund grant application process.

“On March 17, when the city council (initially) said ‘no’ to the land use amendment, all movement forward on that (grant) application should have stopped,” said Former Buda Economic Development Corporation member David Patterson during the Tuesday meeting. “They should have said, ‘It’s been voted down, we’ll come back to you if things change in the future.’ In some of our discovery, we have seen emails that involve somebody setting up a site visit on the third, fourth, or fifth of June. The significance of that is the meeting (of) the reversal 5-2 was on June 2. We have so many open records requests in — all of this is going to come out. And it’s not going to be pretty.”

US Foodservice officials said Tuesday that the capital fund grant had already been approved, though Assistant Commissioner for Communications at Texas Department of Agriculture Bryan Black said Wednesday that his agency was still reviewing the application.

Nine people spoke during the Tuesday commissioners court meeting’s public comment period. Four of the nine urged the court not to create the TIF. Those who favored the US Foodservice facility being built in the Sunfield MUD included Buda Area Chamber of Commerce President Richard Schneider, Buda Economic Development Corporation Executive Director Warren Ketteman and Texas Lehigh Cement Company President Robert Kidnew, the last of whose company is among the largest taxpayers in Hays County.

“I have heard misrepresentation,” Ketteman said during the meeting. “I have seen my councilmembers accused of underhanded dealings — lying, taking pay-offs, and my favorite: being compared to Hitler and Stalin. Folks, I’m flabbergasted … In one of the worst recessions we’ve been in, we have a company that comes to us, and wants to do business in our community, and this is the way they’re treated?”

Ketteman defended US Foodservice’s mailing of flyers in the period between the two Buda City Council land use change votes.

Said Ketteman, “How many times do you get to kick a good company in the shins before they retaliate and say, this is who we are: We’re no evil corporation. We just want to do business and take care of our customers, get people employment, pay taxes, support the school district and the fire district and the EMS and the county. That’s what this is all about. This thing has been blown so completely out of proportion.”

Hays County Precinct 3 Commissioner Will Conley (R-San Marcos) defended the US Foodservice’s mailing of the flyers. He advised opponents of the proposed US Foodservice facility to avoid letting themselves “be used,” and asked them to “think independently.”

Said Sumter to US Foodservice representatives Tuesday, “I’m bothered by you having put out a sales piece in between two votes, telling people about US Foods. That does bother me. That should have never had to occur. And I don’t know why that happened. I don’t know if it was to influence citizens to think differently about your company — although they weren’t saying they were thinking badly about your company. They were just saying it was the wrong location. So, again, a lot of things along the line on this one bothers me. It just does. This would be the first tax incentive I’ve said no to sitting up here in three years.”

Precinct 4 Commissioner Karen Ford (D-Dripping Springs) said some of her constituents to whom had mailed flyers contacted her to oppose “corporate welfare” for US Foodservice.

“Clearly, I do not call this corporate welfare,” said Ford of the proposed TIF agreement. “I think this is a benefit to the county.”

Ford said she had never been given a satisfactory answer as to why US Foodservice could not locate its facility in the industrial areas specified by Buda’s comprehensive plan.

“But when you have sort of a violation of that plan … our court is very big on planning,” Ford said. “We can’t plan for that kind of land use, but clearly, Buda did. And it just seems like a little bit of a slap in the face to go beyond that.”

Sumter expressed concern about the average salary figures supplied by US Foodservice.

“And then the other problem that I also had was that when you start talking about the average salary, the way that’s determined is also bothersome,” Sumter said. “When we finally got down to $14 an hour for the truckers, plus incentives, and $11 an hour for your warehouse folks, plus incentives, I put the figures to be $11 an hour, and that’s $22,000 a year. And you’re telling me the average is between fifty and fifty-five. That’s double the salary and incentive. That’s huge.”

Replied Fowler: “It’s intended to be double the salary. It’s piece pay. That’s exactly how they’re compensated and all I can give you is the amount of money that they make on average, which is direct from my payroll numbers.”

US Foodservice representative Howard Falkenberg said Wednesday that piece pay is incentive pay based on amount of product handled with the considerations of customer satisfaction and quality control. Falkenberg said average pay for drivers is between $45,000 and $50,000, and for warehouse personnel is $50,000-$55,000.

Concerning the $14 per hour for truckers and $11 per hour for warehouse personnel quoted by Sumter, said Falkenberg: “They were statements of base pay to comply with Texas Workforce Commission requirements, but they have nothing to do with what our personnel actually earn.”

Sumter said she was concerned about possible adverse effects US Foodservice trucks may have on local traffic patterns if turnaround lanes near the Main Street Buda bridge are not constructed. Sumter said the turnaround lanes may not be funded if construction bids come in too high to add turnaround lanes to the Buda Main Street Bridge project being funded through CAMPO using limited federal stimulus dollars.

Immediately after Sumter explained her impending “no” vote, Barton responded with an oblique reference to Sumter’s absence during last week’s vote on economic incentives to Grifols, Inc. Commissioners had voted unanimously to refund Grifols, Inc. 75 percent of personal property and inventory taxes taken annually for ten years on each phase over a term of 15 years in exchange for the location of a biomedical facility — an offer the company recently accepted along with a similar offer from the City of San Marcos.

“We’re all going to see (this issue) through our own lens,” Barton said. “I know you had some questions about Grifols economic development (tax incentives) as well. You weren’t … (you) didn’t vote against it, but didn’t vote for it either … I think that US Foods would be glad to build an asphalt road for us if that’s what we asked them to do. I don’t think that would be in our best interest. We would be letting them off the hook cheaply if we asked them to build an asphalt road.”

Barton said he asked US Foods and Sunfield MUD to pursue “restrictions on land use that go beyond the City of Buda’s jurisdiction,” such as prohibiting slaughter houses in the MUD. Barton said he has a tentative agreement he hopes to formalize before the TIF is implemented.

Falkenberg declined to speculate about the course US Foodservice would take if the referendum were to be put on the ballot. He said the company is assuming the city council’s land use change is not a decision subject to a referendum, in keeping with a decision in mid-July made by Buda City Attorney Susan Rocha. Barton recommended the court refrain from finalizing the TIF agreement until the petition for referendum is certified and the City of Buda indicates what course of action it will take. Barton said the commissioners court should still move forward with the TIF if litigation involving the referendum ensues.

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0 thoughts on “County starts road process for US Foodservice

  1. Great article. One suggestion though, shorten it down a little bit, you do have to keep the reader’s attention. And although the subject may indeed be well worth the length, I doubt a lot of readers will stick around to find out all about it. It’s just too long.
    I read through the whole thing, just so that I may remain informed on the matter, but next time I may have to reconsider even beginning to read it. Just my opinion.

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