Eagle Pass City Council Approves To Enter Into a Memorandum of Understanding with Maverick County on Tax Increment Reinvestment Zone
By: Ricardo E. Calderon, Eagle Pass Business Journal, Inc., Copyright 2024
The City of Eagle Pass, Texas City Council unanimously approved (4-0) to enter into a memorandum of understanding with Maverick County prior to the City Council’s third reading and final approval of an ordinance establishing a tax increment reinvestment zone for an initial development of 461 acres out of the 2,271 acres Empire Industrial Park, at their Tuesday, March 5, 2024 regular meeting at City Hall.
Mayor Pro-Tem William Davis made the motion and Councilman Mario E. Garcia seconded the motion with Mayor Rolando Salinas, Jr. and Councilwoman Monica J. Cruz voting for the motion together with Davis and Garcia, while Councilman Elias Diaz was not present at the meeting.
The petition to establish a tax increment reinvestment zone for the 2,271 acres Empire Industrial Park was submitted by Beyer Junfin, Sonia Valdez-Junfin, Dr. Sergio Zamora, and Linda Zamora. According to Sonia Valdez-Junfin at an City of Eagle Pass Town Hall meeting held on February 1, 2024, the real estate investors have been negotiating with the City of Eagle Pass for the past 18 months concerning this project to establish the tax increment reinvestment zone, which places the initial negotiations at or around August 2022. However, the petition by the real estate investors to the City of Eagle Pass to establish the tax increment reinvestment zone is dated November 1, 2023, which means that the investors and the City representatives had been having negotiations for at least 15 months before filing the petition with the City of Eagle Pass.
The proposed tax increment reinvestment zone is located at the intersection of Loop 480 and El Indio Highway (FM 1021), located approximately four miles outside the city limits. The property has been submitted for voluntary annexation to the City limits by the investors subject to the City Council’s approval of the tax increment reinvestment zone. Currently, the City of Eagle Pass city limits has slightly over 6,000 acres and the addition of the 2,271 acres of Empire Industrial Park TIRZ project will increase the City limits by over 25 percent with over 8,271 acres, requiring all city services such as police protection, fire protection, ambulance services, water and sewer services, trash collection, public parks and recreation, and all other city services.
If the City Council approves the third reading of the ordinance and formally establishes the tax increment reinvestment zone, a new City of Eagle Pass legal entity will be created called the Reinvestment Zone Number One, City of Eagle Pass, Texas with a Board of Directors consisting of seven members with six appointed by the City Council and one by Maverick County Commissioners Court. The City Council is proposing to appoint themselves and the City Manager to the TIRZ Board of Directors with the Mayor designated as Chair of the Board.
According to the Preliminary Project and Financing Plan by the City of Eagle Pass and the developers, “The initial development of the [TIRZ] zone consists of approximately 461 aces of the “Property” and Additional Property of approximately 1,815 acres as defined by the Project Development Agreement. The projected TIRZ captured value of the initial development at buildout is approximately $540,662,496. The projected TIRZ captured value of the Additional Property development at buildout is approximately $1,793,178,559. The TIRZ can fund the public improvements through the contribution of the City’s and County’s real property tax increment within the zone.”
The initial development of the 461 acres has an appraised value of $1,101,588 as of January 1, 2024 and the estimated value of the total development in the project when completed will be $540,662,496, which means that the tax value increment of $539,560,908 ad valorem taxes will be divided 80 percent for the TIRZ to pay for the public improvements and infrastructure and operating costs while the City only receives 20 percent of the tax increment. However, the estimated City costs to provide all city services will be greater than the ad valorem taxes received by the City from the TIRZ and have to be paid from general revenues. To service this new vast acreage of land will require the City to hire more police officers, firemen and EMS officers, public service employees, payroll and benefits, liability insurance, and equipment to support all City services, potentially exceeding the ad valorem taxes the City will receive from the TIRZ.
Mayor Rolando Salinas, Jr. stated at the March 5, 2024 meeting that Maverick County is interested in participating in the Empire Industrial Park TIRZ and is holding a Commissioners Court meeting on Monday, March 11, 2024 to discuss the project. Mayor Salinas added that City Economic Development Director Arturo Marquez will make a presentation to Commissioners Court at their March 11th meeting regarding the TIRZ and the Memorandum of Understanding between the two entities concerning this project.
The goal is for the City and Maverick County to enter into a Memorandum of Understanding before the City formally approves the third and final reading of the City Ordinance establishing the TIRZ.
The proposed duration of the TIRZ would be for 50 years until December 31, 2074. Thus, the City would receive only 20 percent of the tax increment for 50 years instead of 100 percent if there were no TIRZ, waiving tens of millions of tax revenues over the 50 years that could pay for City services and other much needed City projects.
In addition, the TIRZ legal entity will be able to issue certificates of obligations (bonds) up to approximately $39 million to pay for the public improvements and infrastructure of the real estate project to reimburse the developers for these costs.
The City’s lead representative on the TIRZ project was former City Finance Director Jesus Rodriguez, Jr., who was terminated by the City Manager on February 22, 2024.
The City Council earlier approved the establishment of another legal entity called the City of Eagle Pass, Texas Public Improvement District No. 1 that will be able to issue up to $75 million in certificates of obligation (bonds) to benefit the same Empire Industrial Park for construction of public improvements and infrastructure.
In addition, the developers will profit from the sale of the land parcels within the industrial park itself.
This City of Eagle Pass TIRZ project is extremely lucrative for real estate developers that the City announced there is another petition or interest from developers to apply for a TIRZ project along Patsy Winn Boulevard and there are other landowners who are researching TIRZ to determine if their real estate development projects should also apply for a City TIRZ.
Some Eagle Pass taxpayers have raised concerns regarding the feasibility of TIRZ and questioned whether it is in the best interest of the City taxpayers overall to waive 80 percent on tens of millions of ad valorem taxes on real property and for such extremely long period of time of 50 years, but most taxpayers have not paid attention to what is going on at City Hall and City Council. The TIRZ only needs one more reading and approval by the City Council to become a reality.
