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2015-11-19

Is Best Western on Bandera's horizon? Will EDC fund $100K for site prep?

By Judith Pannebaker BCC Editor

Take hours of workshop discussions debating the merits of ironing boards vs. two-burner cook tops, along with possible tax abatements; behind the scene confabs among developers and city officials; attorney consultations; and "plugging in the numbers," shake it all up and - voila! - you have a mixed-use complex that includes a hotel, restaurant and retail shops.
During a Bandera City Council workshop on Tuesday, Nov. 10, municipal attorney Habib H. Erkan Jr., senior associate attorney with the of the San Antonio law firm, Denton Navarro Rocha Bernal Hyde & Zeck, PC, presented council with a first draft of a Chapter 380 Economic Development Agreement between the city and project developers.
Once numbers and information from both city staff and developers are inserted into the draft, the completed document will be brought before council for approval. Approval virtually assures council that a much-needed hotel is glimmering like a mirage on the horizon.
The whole process has been much more amicable than the last attempt of a hotel to gain a foothold in the Cowboy Capital of the World. To secure a 46-room Best Western hotel on a vacant lot on Main Street, city council has agreed with alacrity to a request from developer Gene Longoria for a 10-year tax abatement program. As project facilitator Gene Hartman noted, the Best Western hotel chain would "fit Bandera like a glove."
As Erkan explained the sliding scale, "The first year, the hotel developer would receive 100 percent of the taxes collected on the property; the next year, 90 percent; the third year, 80 percent; and so on. The abatement will drop down 10 percent each year." According to City Administrator Lamar Schulz, the calculations would be predicated on the current tax rate.
Mayor Pro Tem Suzanne Schauman asked about the ramifications of property taxes being raised during the 10-year tax abatement period. "In that case, the developer will get his money back faster," Erkan said. He also made it clear that the city is under no obligation to pay the developer sales taxes generated by a restaurant and retail shops.
For their part, according to Erkan, Hartman and Longoria must provide details of the proposed complex for inclusion in the agreement, such as amenities; full value of the facility after completion; and a completion date and preceding phases, as well as periodic reports.
"If you want extras, such as a water catchment system, they should be placed in this portion of the agreement," Erkan told council. He cautioned, however, "This could increase the cost of the facility."
Hartman told council that plans also include a 1,800 square-foot conference room that could accommodate "15 insurance agents."
Additionally, according to the agreement, Longoria must make "good faith efforts" to purchase construction materials from within the City of Bandera and hire local contractors and an agreed upon number of full-time and part-time employees.
"Building a hotel and hiring a specified number of employees is the basis for the incentives," Erkan explained. "If the hotel is not built and employees not hired, the city can apply consequences for non-performance."
Schauman did not want the developer penalized for being unable to retain the requisite number of full-time employees. As she noted, "You can't keep full-time employees in Bandera."
Hartman said the employees would be a mix of part- and full-time, depending on seasonal fluctuations.
"I've done 20 of these agreements in the last three years," Erkan said. "I'm used to dealing with hundreds and thousands of employees, which gives the developer more wiggle room." In this case the number of hotel employees was guesstimated to be six to nine. Workers in the restaurant and retail shops are not included in the development agreement.
Additionally, a provision prohibits employment of undocumented workers.
Regarding a request from the developer that the city pay $100,000 for site preparation for the complex and parking lot, Schulz said that request would be presented to the City of Bandera Economic Development Corporation during a Wednesday, Nov. 18, meeting. "That would be a perfect project for the EDC," Schauman said.
She also pointed out that currently the vacant lot is assessed $800 in property taxes annually. "During the second year of the tax abatement agreement, the city will get $2,000, and the amount goes up exponentially from there," Schauman said. "Approving this is one of the smartest things the city has done in a long, long time.
Hartman asked council to approve a resolution of support for the project that he could take before Bandera County Commissioners. "A resolution would be very helpful," he said, adding, "It's been difficult to get in the front door with the county."
"(Hartman and Longoria) will be asking the county for a tax abatement also," said Mayor John Hegemier. The next commissioners court meeting is set for 10 am, Monday, Nov. 30.