(Seguin) — The Seguin City Council Tuesday night got an earful about its plans to partner with a developer for the construction of a $58 million high-end apartment complex to be built at the corner of State Highway 46 and Cordova Road. The joint venture would be funded by the developer but owned by the city of Seguin. The city used a state law that allows for the creation of a Public Facilities Corporation (PFC), which will own the property own behalf of the city. Because it’s city-owned, it would not be taxable, which means no property taxes would be paid over the life of the 75-year deal.
Concerned citizens and elected officials alike spoke out during Tuesday’s council meeting. The item was not on the agenda and no action was taken, but those who opposed the deal addressed the council during the Citizens to be Heard portion of the meeting.
Navarro ISD School Board President Renee Rehfeld shared a resolution approved by the Navarro ISD Board of Trustees, which met earlier this week to discuss the project. Rehfeld says the deal between the city and Vaquero Multifamily LLC will cause harm to the Navarro ISD. She says the school board is asking the city to reconsider this project.
“The board of trustees for the Navarro Independent School District calls on the respective governing body of the city of Seguin to do three things. 1. Prioritize its community including the district and the students it serves. 2. Reevaluate the development and its overall long-lasting impact on the district’s ability to accommodate the growth the community is experiencing and 3. Refrain from binding the district to a unilateral and arbitrary decision made solely for the benefit of the city that ultimately cripples the district and its ability to serve its students and fulfill its educational purposes,” said Rehfeld.
Guadalupe County Judge Kyle Kutscher also spoke out against the project. Judge Kutscher made clear that he was speaking as an individual, because the Guadalupe County Commissioners Court had not yet discussed the issue, although he said that would likely happen in the future. Judge Kutscher says his biggest concern is how this will negatively impact the Navarro ISD.
“A project like this as has been mentioned, cuts the legs out from other taxing jurisdictions like the school district and the county. The county has many different funding sources, sales tax, property tax – we take funds from taxpayers for public benefit from all different areas, but the school is really limited on their ability to serve the kids in the Navarro ISD. You have a school district that is inundated with residential development, and I know in the presentation of this project, there has been a lot of information regarding and surrounding needing to increase density of development to help bring commercial ventures into that area but again, you have the district that is drowning in residential development. Look at any project that is going on. You have thousands and thousands of homes either in the pipeline, under construction or being talked about so I find a little bit of that conversation suspect but I understand the intent. The city council is trying to find unique ways to fund special projects and also get additional commercial value out in the area, but you have a school district that approved a $130 million bond that is going to build a high school that hasn’t started construction yet that will probably be filled up before the doors open,” said Kutscher.
Judge Kutscher says the school district is trying to address some of that growth, but this development doesn’t help them either financially, or with its management of the growth that’s occurring in the district. He says he knows the city plans to use some of the money that it receives from this deal to help make road improvements near the Navarro ISD schools, but he says that won’t do much to advance that work. He also says it makes it harder for the city to partner with other taxing entities when it goes it alone on a project like this.
“I know there has been comments about the school needing to separate its campuses, but that ship has already sailed, and we have a problem with the roadway. A half a million-dollar payment to the school district is not going to truly fund the roadway improvements. It’s only going to start the design and acquisition of right-of-way so there’s a huge need and funding gap that is going to be present. As was mentioned, on the school funding side, at $58 million construction with an anticipated $78 million sales price in four years, the school does not get to use that funding and appraised value for future bonds to build structures either on the M&O or debt service side. The same on the county side, we work through partnerships with the city and the county on things like the hospital, on roadway improvements, on libraries – we talked about joint fire stations. The county loses out directly $200,000 of taxable value on this one structure alone. Although the city in turn is going to come to the county and ask us to fund a portion of Link Road and a fire station. When we have ventures like this that are entity specific and don’t spread that taxable value, we limit ourselves in the ability to partner in those types of things,” said Kutscher.
Kutscher also spoke about the various revenue streams that the project will generate for the city of Seguin. He admits that it will make the city money. He says it may financially benefit the city, but it could prove costly to everyone else that would be impacted by the development.
“My point is and please don’t take this the wrong way. I just want to be honest with you and we are professional, we are partners, you deserve me to be blunt and honest – this looks like an opportunistic venture for the city to be able to take the funding and the revenue and the taxing structure from the school district and the county and be able to keep it for the city. If we are going to truly be partners moving forward, we have to communicate through these types of ventures. Ya’ll have an opportunity because this is not a done deal yet. The only thing that has been approved is the term sheet. There are still three separate documents that have to be approved by city council which are the lease agreement, the development agreement and the regulatory agreement. I respectively request that ya’ll bring this back, advertise this, communicate with the partners — let us know so we can get these questions answered and we’d like to be a part of that discussion,” said Kutscher.
Tammy Harborth used a failed attempt to build a PFC project in the San Antonio area to raise questions about the process used in Seguin. Harborth quoted news stories about the proposed PFC apartment complex that was ultimately voted down by the city of Castle Hills. She says they had a more transparent process that sought more input from everyone involved. She says that wasn’t done here in Seguin, which is why they still have so many unanswered questions about the deal.
“Geronimo’s commercial tax base is limited at best and consist primarily of residency. While our time has been limited to research this issue, we have not been able to find any evidence of discussion made between the Seguin City Council, Vaquero or Navarro ISD regarding neither tax laws revenue nor any funds to offset that loss. There’s been $500,000 allotted of funds mentioned of the work needed on Link Road but since a portion of Link Road is in the city limits of Seguin, there’s been no discussions as to which areas this may include which will be done and what $500,000 could potentially offer for an expansion and improvement project,” said Harborth.
Jodi Koenig raised several questions about the process and about the involvement James Plummer, an attorney from Bracewell that has helped to advise the city on the PFC project. Koenig questioned if the city got a full presentation on the pros and cons of the project. She says that’s why she thinks more study needs to be done.
“But we are saying there is enough in the ethos about Mr. Plummer’s dealings with PFC entities and the developers who make millions on the sale of these projects. To enlisted questions and in-depth investigation for the sake of Seguin, both city and county entities that will lose out on sales tax funding and NISD who will lose hundreds of thousands of dollars needed to fully educate our children,” said Koenig.
The council did not respond to any of the comments made Tuesday night, because the item wasn’t on its agenda. But city officials have consistently stated that they believe this Class-A apartment complex is a good deal for Seguin. They say it not only provides much needed housing for working families in Seguin, but they say it will also help to bring in other retail and restaurant developments to Seguin. They say those are the things that people have been asking for in Seguin for decades, and they have to encourage these kinds of developments to make that happen. City officials have also suggested that the deal is done and there’s no going back on this project, but others, like Judge Kutscher, have suggested that may not be true.