Great Wolf Lodge proposal could take a bite out of taxpayers, along with the benefits

5

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].

5 COMMENTS

  1. Why are they stating that both properties are appraise the same amount? The property in the plan is appraised for $4,748,573.00. The market value of the land,not appraised value, the market value of the land by painted dunes was over $80 million back in 2006. Why is the city reps and mayor giving so much to the Fosters, how much kick back are they getting? Can we get the State AG involved this smells like more El PAso corruption just like the baseball stadium.

  2. The main concern is how much will the taxpayer end up paying once this transaction happens? Why can’t the City build in the Northeast?, in City owned land, rather than engage in what appears to be an unfair trade of land (size). Northeast is in need of revitalization too. Why do we offer so many incentives for this Company to do business here? Why don’t we just give them a low rent incentive on El Paso’s own land? TIRZ sounds like Empowerment Zone incentives, but is this location in an Empowerment Zone Designated Area?

    By the way when will Fred Loya open the Call Center that has promised to employ many locals. Beautiful building, yet to be open (at first glance). I wonder if they plan to move their current location to the new building at Pellicano, between George Dieter and Lee Trevino, although that was not the plan. Meanwhile the City created such a lucrative tax saving package for them who promised to create NEW jobs for the City. City Representatives you have been hired to represent your communities and look out for their interest. Stop raising taxes!

    “County Commissioners Court and City Council agreed this week to approve tax incentives totaling $400,000 in tax incentives over the next eight years to Fred Loya Insurance, an El Paso-born company that has become one of the nation’s premiere Hispanic-owned businesses.” El Paso Times April 6, 2016.

  3. This article is full of wrong facts and the writer clearly failed to verify information contained in the article.

    The proposed water park is NOT in the northeast, it is across the mountain. Rick Bonart is NOT a city official, but he is a candidate for elected office. The mayor is male, not female. And there are several other basic inaccuracies that virtually eliminate credibility. What a pity, from an ‘award winning’ publication…

    • You seem to be the one that doesn’t have their facts correct. Dee Margo is the name of our male mayor. The article states that Bonart is s long time city official running for city council NOT that he currently is one.

LEAVE A REPLY

Please enter your comment!
Please enter your name here