Update: This story was changed on Nov. 5 to correct a reference to the proposed location of the water park and also to correct a reference to Mayor Dee Margo. The Texas Monitor regrets the errors.
The El Paso City Council on Tuesday is expected to consider a land trade and incentive package that will cost taxpayers tens of millions of dollars to bring a water park to the city’s northwest side.
The City of El Paso has provided no total estimate of the lease agreement, tax breaks, grants and infrastructure costs offered to lure the national Great Wolf Lodge water park chain. Opponents of the deal estimate the total package at the local, county and state level will cost at least $174 million.
Rick Bonart, a longtime city official who is running for a seat on the council, said current city officials have repeatedly lied to the public about their dealings with Great Wolf Lodge and about their creation of large tax abatement zones on two prime parcels, one of them a 44-acre site proposed across from West Towne Marketplace, just off Interstate 10.
“Why are we being asked to offer all of these incentives, these improvements in one of the fastest growing areas of the city?” Bonart said Friday in an interview with The Texas Monitor. “These are normally development costs, the cost of doing business. That sound you hear is the giant sucking sound of money leaving the city.”
The Texas Monitor on Friday contacted the office of City Manager Tommy Gonzalez requesting a detailed breakdown of the taxpayer-supported incentive package and the reasoning behind offering it to the developer.
No one had responded at the time this story was published.
Until this week, city officials had denied they were working to put together a deal with Great Wolf Lodge, although Mayor Dee Margo has in the past said he liked the idea of bringing the water park chain to El Paso.
On Thursday, when officials announced the proposed deal, however, Jessica Herrera, Economic and International Development Department director, said the city had been negotiating with Great Wolf for nearly four years.
Herrera said Great Wolf is prepared to spend $160 million on a development that the city estimated will have a $680 million overall economic impact throughout the life of the agreement. The project would provide 1,200 jobs during construction and the water park would employ nearly 400 people, she said.
Great Wolf would have a “major economic impact with a visitor draw of more than 500,000 people per year,” Herrera told the El Paso Times.“It supports our business recruitment, retention and expansion efforts” as an anchor for other development, she said.
To make the deal happen, city officials used their legal authority to create a tax increment reinvestment zone or TIRZ for a 44-acre parcel owned by FSW Investments, one of several companies owned in turn by El Paso billionaire Paul Foster. The site is in the northwest foothills of the Franklin Mountains.
Such reinvestment zones are predominantly used to encourage development in blighted areas of a city. Until now, that was the only way they had been used in El Paso.
While complicated in their details, reinvestment zones allow cities to offer special incentives, particularly tax relief, to developers. The cost to the city for infrastructure and other costs is borne by taxpayers for the length of the agreement.
After creating the reinvestment zone in May, the council reached an agreement in principle to trade 2,313 acres of city-owned property adjacent to the Painted Dune Golf Course to FSW Investments. Both tracts, according to the city, have an appraised value of $18.6 million.
The council is being asked to consider a deal that would allow the city to lease the 44-acre tract to Great Wolf for the water park plus a 350-room resort hotel and convention center. The project is estimated to cost $160 million.
In exchange, Great Wolf would own the property at the end of the 10-year lease. The El Paso Water Utility would contribute $5 million toward completion of the project. The city would pay an estimated $520,000 for road improvements.
The city is offering to forgo property and city sales taxes for 15 years, according to KTSM-TV in El Paso. The development would pay only half of the normal hotel occupancy taxes during that time.
If approved by the Texas comptroller, the deal would also include exclusion from state sales taxes and state hotel occupancy taxes for 10 years. Additional tax exclusions might kick in under the state’s Convention Center and Hotel Program if Great Wolf hosts conventions, according to KTSM-TV.
City officials have not released any estimate of the total value of local and state tax relief for Great Wolf. Bonart estimated that over the 15-year length of the agreement, Great Wolf would save $144 million by leasing and acquiring the land, $33.5 million of that in hotel tax savings, $31.5 million in sales taxes on rooms, $25 million on property taxes and another $15 million on personal property taxes.
The state incentive package, Bonart estimates, cost taxpayers another $30 million over the length of the agreement.
“They’re counting on the general public’s inability to comprehend a fairly complex idea in a TIRZ,” Bonart said. “Simply put, a TIRZ is an incentive. Incentives cost money. And the money is going to come from taxpayers.”
Mark Lisheron can be reached at [email protected].