(Seguin) — The Seguin City Council has declined to move forward with the Lily Springs Apartment Complex on State Highway 46. The council voted 4-3 during Tuesday’s meeting to not allow the city’s Public Finance Corporation to move forward with an agreement with the Navarro ISD and the developer Lightpath Corporation.
The project was controversial to some because it would have been owned by the city of Seguin, but managed by a private firm, which would have been responsible for all of the financial risks involved in the project. In lieu of property taxes, the company would have made lease payments to the city for 75 years. That’s where the problem begins for some in the Navarro ISD. Because the project would be owned by the city, there would be no property taxes collected. That means it would generate no tax revenue for the city, the Navarro ISD or Guadalupe County. The deal initially created an uproar, with some Navarro ISD stakeholders who cried foul over the project because it would have directly impacted the district without the district receiving an adequate level of funding from the project. But this time around, the deal had been reworked. It included a new developer, with ties to the community; and it also included a new funding agreement.
The city was agreeing to give two-thirds of the revenue it would have received to the Navarro ISD over the 75-year lease agreement.
The project would have been built at the intersection of State Highway 46 and Cordova Road. It was billed as a “Class-A” apartment community, with high-end amenities. It would have been a partnership between the city of Seguin and a private developer. It has also been touted as a much needed project that would provide housing for teachers, police officers, firefighters and others who earn similar wages.
City Manager Steve Parker laid out the plans for the deal during Tuesday’s meeting. He says workforce housing is needed in Seguin. Parker says this partnership would ensure that the city would get a quality development built.
“It will be one of the nicer multi-family projects in the city of Seguin and that’s one of the benefits of us partnering with this is that the city has some control of how quality of a level of a project this is and there’s callbacks if it is not maintained as a Class-A development,” said Parker.
Lightpath was the new proposed developer for the project. It’s owned by John Kirk, who may be a familiar name. Kirk isn’t just the owner of Lightpath Corporation, but he also resides in and has children that attend schools in the Navarro ISD. He says he got involved in this project after the original developer, Vaquero Multifamily LLC, could not move forward with the financing for the project. Kirk told the council on Tuesday that his company is new, but says he has a great deal of experience with building apartment complexes like this one.
“I’ve been in the apartment development business for over 20 years. That’s been my career and earlier this year, January of this year, through faith and courage, I started my own company Lightpath and my focus is workforce housing. After developing over 20,000 units in my career across the US, I wanted to go out on my own and do it under my core values and what I believe in,” said Kirk.
The project called for a three-story apartment complex, with 282 units.
Kirk says it would be a high-quality living community for working people. He says he lives here and is excited to be able to provide the community with the quality housing that it needs.
“I think it fits the neighborhood that’s been developed there with the clubhouse. Like Mr. Parker said, it is a classic project with all your typical amenities but it’s geared toward the workforce professional,” said Kirk.
Prior to the vote, the council also heard from Summer Greathouse, a partner with the Bracewell Law Firm, which has represented the city through this process. Much like Kirk, Greathouse has a connection to the local community. She told the council she grew up along Three Oaks Road and was a student in the Navarro ISD. Greathouse says the way the law is written, it allows the city to get the workforce housing that it wants, while making the developer responsible for all of the financial risk.
“The principal purpose of the project is to own the project. It will then enter into a 75-year lease with a development partnership. The partners of that partnership will be the developer as well as equity investors. The reason that we do the public facility corporation is number one to help provide for that property tax exemption, but it also insulates the city from liability. This is as separate legal entity from the city of Seguin and then finally, it allows for the development of workforce housing,” said Greathouse.
Kirk wanted to move forward with the project, but the item was also back on the council agenda, because the city and the school district were both concerned that not moving forward might open up an opportunity for another governmental entity to creep into Seguin and completely cut the local entities out of the deal. Parker says that’s a real concern and it’s been seen in other communities.
“There have been other housing corporations across the state primarily in Cameron County who have actually gone out and financed these deals without any public input from the local governments here and actually, it has already happened here in Seguin. There’s an apartment complex on Walnut that was taken off the tax rolls in 2023 – the city was making $52,000 a year. There was no notice that was given to any of the public entities, and it is now off the tax rolls completely because now Cameron County Housing Finance Corporation bought that property and they are getting 100 percent of the rental payments moving forward and so, there is an opportunity and now there’s litigation out there that’s trying to stop all this. I think there will be some things going through the next legislative update that is going to protect some of these things, but I think we move forward with a recommendation because we think that we’d rather lock this up and make sure that we get the most benefit out of a project like this,” said Parker.
Councilman Paul Gaytan says he’s not buying the threat that this project would be gobbled up by some outside entity. He says he doesn’t believe that this is a good deal for the city or the school district.
“I don’t think that’s a credible threat being scared into doing this. If we want to do it, okay. But I don’t think we should be scared into doing it. We need to protect our city and if somebody wants to come in and steal our tax money, we are going to sue them and that’s our job. So, I don’t think you should vote on this for that reason. That’s not a good reason,” said Gaytan.
Councilman Jim Lievens, who represents the area where the complex would be built, said that he was originally opposed to the deal. But he says the threat of an outside public entity getting involved and completely cutting Seguin and Navarro ISD out of the deal is very real.
“If we voted this down, another sponsoring governmental entity, it could be a city, it could be a county, it could be a housing corporation, it could be a school district – (they) can finance this and unlike this body, this council agreed to that revenue split, there may be no such option if another governmental entity came in,” said Lievens.
Lievens comments were like those made by Navarro ISD Superintendent Mandy Epley. She told the council that the school district doesn’t like that the project would not be taxable for 75 years. But she says getting something through the proposed revenue sharing agreement, versus getting nothing if another outside entity gets involved — is the better of the options currently available with this deal.
“They would like to see it as a taxable property on our rolls but when you are asking me, do I take the deal or do I risk nothing for income to run our district, I think most of our board understands that it’s not the deal that we would like but it’s income off the property which is what we need to run our school district,” said Epley.
Kirk confirmed that there are outside public entities that might be interested in the project.
“It would force me to look at other options and take an objective approach of do I want to do this or do I flip my interest to someone else – the outside developer who doesn’t really care about the community and say do they want to do that?” said Kirk.
The council weighed each side of the issue, but in the end, the majority of the council voted to deny the agreement. Now, the waiting begins to see if another developer or public entity emerges that might try to find another way to restart this project.