A developer’s plan to create transformative changes to the old Texas Instrument property are one step closer to reality after the Stafford City Council approved the first reading of the project by a 6-1 vote last week with the mayor voting no, citing “serious and grave concerns.”
The council is expected to revisit the issue tonight (April 11) with public commentary and a final vote. If approved, the city still has to wait for 60 days before any action can be taken, according to the city attorney. This allows anyone to create a petition to force an election on the project.
Supporters of the plan question the motives of Mayor Leonard Scarcella, who says that the way the plan is financially structured, “the City of Stafford will pay out nearly $18 million while collecting less than $5 million for a $13 million deficit of city funds.
“In the outer years, we’ll get $3 million once Street Level Investments is paid out. But for now through 2024, we will be paying out that substantial amount of money and only getting a minimal amount of money and that will impact our ability to continue without a city property tax,” Scarcella said.
Mayor Pro Tem A.J. Honore disagreed, accusing the mayor of deliberately putting out misinformation.
“We have grown accustomed to hearing him intentionally mislead people. I attempted to directly refute his comments by stating this is a performance-based contract. Meaning no revenue goes out unless it comes in first,” Honore said in email conversations with the Fort Bend Star after the meeting.
Honore’ said that if the city doesn’t use incentives to bring new business and sales taxes to the city they will be in trouble.
During the council meeting, Honore explained that the city paid consultants who showed that the city needed to respond to its shrinking sales tax revenue problem.
“Over the last 10 years, since 2008, our country has seen the greatest economic comeback in the history of this country. During that time, Stafford lost their position in sales tax revenue. While the country had significant growth, Stafford lost. We used to have 15 percent share sales tax revenue in Fort Bend County, we now dropped down to 7 percent,” Honore said.
Honore suggested that the dip in sales tax revenue plays a part in the mayor’s fight against the project.
“Is it because the mayor doesn’t want people to know that Stafford lost during the biggest boon in the country? Is it lack of understanding? … Is it intentional misinformation?” asked Honore during the meeting.
“For years the mayor has been using the SEDC (Stafford Economic Development Corporation) to subsidize general fund expenditures rather than investing in economic development projects. Now that the SEDC leadership is committing $3.5 million of the $8 million funds for their intended purpose, the mayor will have to develop a new vision for funding capital expenditures for the city. The irony is that economic development will do that. He lacks long-term vision and planning to understand how economic development will mature into serving the purpose of funding the city’s budget,” Honore said.
Honore and others have said there is no risk.
“The way it is structured by our attorney and economic developer, they got rid of the risk. The developer will build a $6.5 million road. When they build it, it will deed to the city a $6 million asset for $3.5 million. How is it risk when you are sharing new revenue? I find it hard to understand why anyone would be against this project,” Honore said.
For the last six years, the city has been exploring what to do with the 192 acres of the former Texas Instruments campus bounded by U.S. Highway 59, West Airport Boulevard and FM 1092/Murphy Road.
Street Level Investment developers have a $500 million proposal for the property that could become a regional attraction for Stafford with shops, a central park, restaurants, high-end apartments, food halls with artisan chefs and a hotel. About $500,000 from the hotel tax will be used to generate tourism and attract more money to the area.
City leaders have had years of meetings and reports from consultants who say that the city needs to grow its sales tax base by using incentives to bring money to the city. Stafford is Texas’ largest city with zero property tax, which has been a big draw for businesses looking to save money.
“This is a comprehensive development project, but not complicated. There are three possible outcomes confirmed by the city’s third party economic impact expert, Economic Analytics Consulting, LLC,” Honore explained after the meeting.
He said that no development would not generate sales tax revenue. Development without incentives would bring 10-year revenues to Stafford estimated at $3.1 million. Development with incentives, he said, brings 10-year revenues to Stafford estimated at $32.5 million.
Honore said the developer will spend $6.5M million to build Network Drive, which will be owned 100 percent by the city at no cost to the general fund.
“The SEDC will reimburse the developer $3.5 million after they deliver the road to the city,” Honore said. “SEDC currently has over $8 million in available cash restricted for economic development projects of this type.”
“The Developer will be reimbursed up to an additional $8.4 million plus accrued interest over the next 10 years for mandatory infrastructure cost (mostly underground utilities). The reimbursement is on a graduated performance-based sharing agreement limited only to revenue generated by the project in access of the first $250,000 retained solely by the city,” he said. “This agreement has been misrepresented by the mayor. Facts reveal the city’s General Fund will not pay one cent out of pocket to the developer, it is 100 percent performance based.
“In addition, the cost for expansion of West Airport and Kirkwood Drive are county mobility bond projects necessary no matter what development gets built. In 2002 Stafford represented 16 percent of Fort Bend County’s sales tax revenue. Today we are less than 8 percent. This project is Stafford’s best opportunity to avoid a property tax. Staying the course advocated by the mayor is not going to reverse the economic hardship caused by lack of vision over the last 10 years,” wrote Honore.
Wen Guerra, city councilman and president of the Stafford Economic Development Corporation, which also approved the project, addressed the mayor’s money concerns at the meeting.
“This is EDC money, not city coffer. This money was accumulated for economic development and will keep us on track for no property tax,” Guerra said.
“The mayor has his concerns, that’s his right, but a supermajority don’t agree with his numbers. After reading all the information by both parties, the City Council and EDC, we support it. We are not pitching numbers out of the sky. This is not smoke and mirrors. Mr. Robinson (the developer’s attorney Steve Robinson) gave us a perfect scenario of how the funding will go,” Guerra said. “We are achieving goals, through this investment, that will benefit the whole community.”
He was referring to the reports from the developer’s attorney and spokesman, Steve Robinson.
Before voting, the council heard public comments from Robinson, Jeff Wiley of the Greater Fort Bend Economic Development Corporation, and a council member candidate who suggested the city not pursue the new road.
The mayor is unfazed by claims of misrepresentation.
“If you challenge my numbers, you are challenging their (developers) numbers because what I’ve given you is based on their numbers,” Scarcella said. “Considering we will get in $4,800,000 and we are paying out $17 million. If their numbers and timetable are correct, that will put us in a very difficult situation. You can frame it any way you want, misinformation or whatever else. I am critically concerned about the next six years under this proposed agreement and I will respectfully vote against it with the understanding that my vote is based on their info. I have great skepticism on how we will get through the first years in a solid way.”
During the April 3 hearing, attorney Robinson also challenged the mayor’s idea that the developer was not paying property taxes.
“This is important,” said Robinson. “The city does not have a property tax but that does not mean we are not paying a property tax in order to allow this to move forward. The developer agreed to a 51.5 cents tax levied in the defined area. We said if you will permit we will use it for supplemental police to make sure we have a safe environment. There is no tax avoidance; in fact, it’s a higher tax,” Robinson said.
He said the state deed would show that within those 192 acres, it says you pay 18 cents for water and sewer but 51.5 cents for the defined area tax.
“The mayor said he was skeptical the proposal would generate the funds the developers said they would.
“In order to generate the money, everything has to be functional, full steam come January 2022. To be where you are today and say that you are collecting $150 million by 2022 seems to be an optimistic projection,” said the mayor.
Robinson countered that it would seem optimistic if they were just starting.
“We began having this discussion many years ago and began permitting and developing the portions we knew were feasible without this agreement and with the understanding, we had agreements with the WDIC No. 2 and the county. To the credit of the developers as a partner of yours, we didn’t stand still. They already have a whole lot of money into this project with the expectations. Can we create the environment we want without this agreement, absolutely not. They have been patient, more patient than I, and to y’all credit you analyzed and hired great outside counsel and taken your time. But it is time to move forward and make it what it can be. We will make this project what it can be,” Robinson said.