Eagle Pass City Council Approves to Establish a Tax Increment Reinvestment Zone (TIRZ) on 2,300 Acres
By: Ricardo E. Calderon, Eagle Pass Business Journal, Inc., Copyright 2023
The Eagle Pass, Texas City Council approved at its special meeting held on Tuesday, December 19, 2023, on a split three in favor and one abstention vote count to “proceed” with an “introductory ordinance with Texas Tax Code Chapter 311 regarding the establishment of a tax increment reinvestment zone (TIRZ) in which the proposed zone consists of approximately 2,300 acres of property generally located south of El Indio Highway inside Loop 480.”
The City of Eagle Pass received a written request on November 1, 2023 from Sonia V. Junfin and Beyer Junfin, owners of the 2,300 acres property, to designate the 2,300 acres as a Tax Increment Reinvestment Zone. Additional owners include Sergio and Linda Zamora.
The establishment of a Tax Increment Reinvestment Zone requires the City of Eagle Pass to establish a city-owned legal entity to manage the TIRZ and issue tax increment bonds to finance the improvements for the private investment project. The applicants estimate that as much as $39 Million will be required to finance the public infrastructure improvements on the 2,300 acres. This is in addition to a previous approval by City Council through resolution of a Public Improvement District for the same private property that may issue up to $75 Million of certificates of obligation (PID Bonds) for the development of the public improvements on the property.
The local tax entities such as the City, County, School District, and Hospital District will all have to agree to participate in this TIRZ project, but local tax entities will only be allowed to retain the taxes paid on the original base value of the property at the time of its creation. Thus, the increased tax increment value of the property as it is developed will go towards the TIRZ to pay for any bonds that it might issue to finance the infrastructure improvements. The proposed term period of the TIRZ is for 50 years.
Analysts point out that the City will have to provide all city services such as fire and police protection, trash collection, water and sewer, parks and recreation, and all city services to the 2,300 acres, which will be paid by city taxpayers from the general revenues of the city coffers.
The City of Eagle Pass has not done any comprehensive economic, financial, and legal analysis by experts on the advantages and disadvantages of establishing a TIRZ, nor has the City held any public town hall meetings, public forums, or created a blue-ribbon committee to study the proposal requested.
City Finance and Business Director Jesse Rodriguez made the presentation on behalf of the City to the City Council at the December 19, 2023 meeting. Rodriguez was nervous during his presentation and appeared to be weathering a cold or flu, affecting the clarity of his public presentation to the City Council and the public. Rodriguez is not an attorney nor an expert on TIRZ. The tension at the City Council chambers was so thick that one could cut it with a steak knife.
City Attorney Ana Sofia Berain-Garcia did not address nor made a presentation to the City Council with a legal analysis of the TIRZ project during the open meeting.
The City Council went into Executive Session to consult with the City Attorney Ana Sofia Berlin-Garcia regarding the agenda item as well as other agenda items.
Upon returning from Executive Session, City Councilman Elias Diaz made the motion “to proceed” with the Tax Increment Reinvestment Zone, which was seconded by City Councilman Mario E. Garcia. Voting in favor of the ordinance was Mayor Rolando Salinas, Jr. and Councilmen Diaz and Garcia while Mayor Pro-Tem William “Billy” Davis abstained from voting. An abstention is tantamount to a “No” vote. Councilwoman Monica J. Cruz was absent.
The Eagle Pass City Council held a public hearing prior to the public vote on the TIRZ in open session to allow any interested person to speak for or against the inclusion of property within the zone, the creation of the Tax Increment Reinvestment Zone, its boundaries, or the concept of a tax increment financing. The tension at the public hearing was so thick that one could cut it with a steak knife.
At the City Council public meeting, Eagle Pass veteran and former U. S. Customs and Border Protection (CBP) officer, Albert Daniel, addressed City Council and told them that “there should not be all that much secrecy” regarding the establishment of a Tax Increment Reinvestment Zone. Daniel noted his experience with foreign investment zones as a former CBP officer at the Eagle Pass Port of Entry and how he had been dealing with the Ports to Plains issue for over 25 years and previously made some suggestions to City representatives such as City Councilman Elias Diaz. Daniel concluded by stating his opposition to the Tax Increment Reinvestment Zone: “I’ll be fighting this all the way.”
The next speaker to address the City Council was retired public school teacher, small businessman, and Rio Grande River advocate, Jessie F. Fuentes, who told City Council that he was “very concerned with what they were proposing” at the meeting, the establishment of a Tax Increment Reinvestment Zone.
Fuentes told City Council that he opposed “taxpayers dollars should not be invested in a private equity investment” and that he opposed the creation of a second City of Eagle Pass-owned legal entity, the Tax Increment Reinvestment Zone, to issue certificates of obligation (tax increment zone bonds) to finance the development and construction of improvements at a privately-owned real estate investment property.
Fuentes noted how City Councilwoman Monica J. Cruz previously stated at an earlier City Council meeting on November 7, 2023 in which the City Council approved the establishment of a Public Improvement District for the same private real property how the City Council, particularly herself, had been less than transparent and open with taxpayers regarding this project. Fuentes was surprised Councilwoman Cruz was not present at the December 19th City Council meeting.
Fuentes advised and read the qualifications of a real property to become a Tax Increment Reinvestment Zone to City Council, specifically that to be designated as a TIRZ an area or property must be unproductive, underdeveloped, or blighted and substantially arrest or impair the sound growth of the municipality creating the zone, retard the provision of housing accommodations, or constitute an economic or social liability and be a menace to the public health, safety morals, or welfare in its present condition and use.
Fuentes questioned whether the subject property met the qualifications to become a TIRZ. He added that the City of Eagle Pass has other properties and projects that require attention and improvement rather than a private equity investment real property that is four miles outside the City limits and requires annexation. He added that he is concerned that a second City of Eagle Pass-owned legal entity, in addition to the Public Improvement District, will be established by City Council to finance the improvements of this private equity investment property without the benefit of pubic town hall meetings with taxpayers or a public referendum election to provide taxpayers an opportunity to vote whether to approve this project. He concluded cautioning City Council from approving the TIRZ without the benefit of more open and transparent information to taxpayers of the City of Eagle Pass.
Eagle Pass businessman and pecan orchard farmer, Hugo Urbina, who is a neighbor to the subject property addressed the City Council during Citizens Communication. Urbina told City Council that the City should understand the definition of a “developer” whose job is to develop and increase value to a real property, but that the City should not be responsible to incur this type of public liability (TIRZ Bonds) for private developments. He added that the City should hold itself to higher standards as a community to avoid getting “hickies” such as the recent Maverick County bond issue. He noted that if he were the developer he could improve the value of the property without having the City incur any public liability. The gist of Urbina’s statement to the City Council was the City should review more closely the advantages and disadvantages of the establishment of a Tax Increment Reinvestment Zone after having the benefit of appropriate economic, financial, and legal analysis by recognized experts.
Eagle Pass Certified Public Accountant and applicant for the establishment of the TIRZ, Sonia V. Junfin, addressed City Council advocating for the approval of the TIRZ as it will increase the economic and real property values of the community. She noted all of the tax entities will benefit from the increased value of the property and economic development generated from the project.
Junfin stated that the proposed value of the 2,300 acres once completed will be $400 million. The TIRZ will facilitate the development of residential, commercial, industrial, and other compatible land uses.
Upon returning from Executive Session, Mayor Salinas called for Agenda Item No. 1 and City Coucilman Diaz made the motion and Councilman Garcia seconded the motion to “proceed” with the establishment of the TIRZ and approval of “an introductory ordinance,” which resulted in a split three votes in favor and one abstention.
There are some discrepancies arising from the City Council public meeting establishing in that the proposed “introductory ordinance” listed on Agenda Item No. 1 was not publicly posted with the Agenda, leaving the public totally clueless as to the specific language and terms of the “introductory ordinance” establishing a second City-owned legal entity with bond issuing capacity to finance the development of the 2,300 acres.
As a matter of fact, this publication requested through a Texas Public Information Act request all of the documents concerning the establishment of a Tax Increment Reinvestment Zone and received an official reply from the City of Eagle Pass that there were no such documents available.
Upon further public records requests, the Eagle Pass Business Journal was able to obtain a copy of a map of the 2.300 acres boundaries with legal description and the request by the owners to the City for the establishment of a TIRZ on the subject property. But no proposed “introductory ordinance” has been published to the public by the City for taxpayers to review and comment.
City taxpayers have many questions regarding the establishment of the TIRZ and how the City will create, manage, and operate the TIRZ City-owned legal entity established to finance the public improvements for the private real estate project, as well as public liability issues.
The City Council also approved to authorize the Interim City Manager to negotiate a Development Agreement between the City of Eagle Pass and Sonia V. Junfin, Beyrer Junfin, Sergio Zamora, and Linda Zamora for the development of the 461 acres of the same property previously approved for the establishment of Public Improvement District. Mayor Pro-Tem William “Billy” Davis made the motion to authorize the Interim City Manager negotiate the agreement but bring it back to City Council for final approval on Agenda Item No. 12 in the meeting, which passed on a 4-0 vote. Councilwoman Cruz was absent.
