(Seguin) — A proposed large multi-family housing project will help to provide much needed housing for working families in the area. The high-end development might also help the city fund some of the necessary improvements along Link Road, next to the Navarro ISD schools.
Lily Springs would be a $58 million apartment complex, with nearly 300 units and that would be built at the northeast corner of Cordova Road and State Highway 46. The project would be a partnership between the city of Seguin and a private developer, Vaquero Multifamily LLC.
James Plummer is an attorney with Bracewell, the law firm hired by the city to make sure its interests were protected in this deal. Plummer says the Lily Springs project would call for a private investment to be made by Vaquero, but it would also make the city the owners of the apartment complex using the Public Finance Corporation option.
“A public facility corporation is nothing but a separate legal corporation. It’s created by Section 303 of the Texas Local Government Code. You’re authorized to create it and you created this 10 years ago and it sat around dormant. Now, Vaquero has proposed to construct a 288-unit apartment project with an estimated cost of approximately $58 million. The principal purpose of this PFC is to own the project. So, you will physically own the project and you will lease it to the Vaquero’s Development Partnership,” said Plummer.
Plummer says, even though the city will be the owner, most of the risks will be assume by a private company. He says ultimately this is a very good deal for the city.
“The reason we do this is because that structure insulates the city from liability. They have to go out and get all the debt. They have to raise all the equity. They will operate the project even though you own it, they will lease it from you for a 75-year term and they will operate it and this entity takes it out of the city and just puts it in a separate corporation. This will allow 100 percent property tax exemption. A 50 percent of the units are 80 percent of medium income and that’s all provided by state law. You are not granting an exemption or an abatement. Simply by you owning the building, it will be property tax exempt just like the building that we are in. It happens automatically under state law,” said Plummer.
All the financing for the project will come from the developer and local taxpayers will not be subsidizing this project in any way. It will be owned by the city in the end, but it will be managed by a private firm, and it will be a high-end residential development.
“The developer is going to assume all financial risk in this project. They are going to bring the capital to build this project. You will have no investment in this project. You will not have to put up any money for this project. They are going to guarantee construction completion, costs and all operations and they’ll go out and get the debt. This isn’t a deal where we are issuing bonds or anything like that. They will handle all of that side of the transaction,” said Plummer.
Once the deal is closed, the city would get sizable payment right away, and that’s how this project could help the city tackle some of the needed work on Link Road. City Manager Steve Parker says they are looking at setting aside $500,000 to help deal with some of the congestion near the schools on Link Road.
“We understand that is a safety issue as well and we are recommending that that $500,000 – we actually negotiated that with Vaquero because (initially) it was in there for $250,000. They agreed to raise that to $500,000. We are recommending that that closing money will go to improvements on Link Road. I know the county is also looking for funding to maybe participate as well so hopefully, there’s some good things happening as far as Link Road goes and we would be happy to update those citizens,” said Parker.
This Lily Springs project should not be confused with public housing. This is not a low-income housing project. In fact, Parker says that this apartment complex will be high-end, but it will be aimed at providing housing for teachers, police officers, firefighters and other workers who are part of the local workforce.
“It’s a really good tool to keep up high quality. If you remember the pictures of that development that night – very high standards. The city owns that. Overall, this is something that staff is very interested in because if we are going to be sustainable, we’ve got to have places to live. This is really marketing towards first through third year teachers. You know a lot of big cities like the city of Austin and so forth, they have to recruit teachers from far away to come into their communities. This is for our government employees, our fireman, policeman first through third year. It’s for our manufacturing workers here that could do that but the way that we like it is because it starts off as a Class A project and it remains a Class A project because the city is really involved from the very beginning,” said Parker.
Vaquero officials also made a brief presentation to the council during its meeting last week. It again pointed out that this would be a first-class development that would feature several quality amenities to improve the quality of life for the residents that live there. The council unanimously approved a resolution that would allow the deal to proceed, which means that Vaquero can now go forward with its plans to secure financing for this joint venture with the city of Seguin.