The City of Waco wants to shower as much as $5 million in tax incentives on a developer who has proposed building a $25 million family entertainment and restaurant complex, but officials are refusing to name the developer.
The move comes at a time when local governments are increasingly taking advantage of a 2015 Texas Supreme Court ruling that allows them to keep details of contracts hidden from the public.
And it also comes as the Texas Legislature is considering a bill to compel government officials to release pertinent financial information in those contracts so taxpayers can better understand what they might be paying for.
What makes the Waco case unusual is that many other details of the proposed development, plus a breakdown of the tax incentive package, have been made public, according to Joe Larsen, a First Amendment attorney and a board member of the Freedom of Information Foundation of Texas.
There is nothing in state law governing economic development negotiations that specifically allows a city to protect the identity of a developer, Larsen said
When the Waco Tribune-Herald submitted an open records request for the developer’s name, city officials requested a ruling from the state attorney general’s office on whether they must comply under state law.
“As far as I know, there are no formal opinions on this, so basically it’s a dogfight,” Larsen said. “My reading of section 552.131(a) is that it applies only to information that relates to economic development negotiations between a governmental body and a business prospect, not the identity of the prospect.”
Requests for comment from the offices of Mayor Kyle Deaver and Assistant City Manager Bradley Ford,the city’s point person on the proposal, drew no response.
The city’s Economic Development Office revealed details of the project and the city council approved the tax incentive package on Feb. 19. The development would include a movie theater, bowling alley, an interactive entertainment center and restaurants on 32 acres off of Interstate 35 on the city’s south side, the Tribune-Herald reported.
The council approved a deal that would allow the developer and the city to evenly split the first $10 million of sales tax revenue during the development’s first 10 years. After that, the city would keep all the sales tax revenue.
The council intends for the incentive to offset the cost of building infrastructure for the immediate project and future development of more than 300 adjacent acres, according to the Tribune-Herald.
The council is also considering using two tax incentive mechanisms — a tax increment reinvestment zone and a tax increment financing zone for the area.
Tax increment financing zones are generally created by cities as property tax breaks for developers to work in blighted areas. Former Mayor Malcolm Duncan Jr. told the Tribune-Herald that offering tax deals to developers of desirable undeveloped property “conflicts with precedent and policy.”
Duncan is a board member of the city’s Reinvestment Zone Number One, created in 1982 to provide incentive for developers who helped revitalize property along the Brazos River.
A message left with Duncan asking for comment on the project by The Texas Monitor was not answered.
City documents identify the developer only as 35-06 LLC, referring to an unnamed limited liability corporation. According to state comptroller’s office records, the registered agent for the LLC is Eric Wieser with an Edmondson Avenue address in Dallas.
A call Tuesday to a phone number associated with the address was not returned.
Ideally, the state’s government transparency laws should be interpreted to give the benefit of the doubt to the citizen requesting information, Larsen said. However, the state Supreme Court in 2015 created what has become known as the Boeing Exception, allowing contract information to be shielded from the public.
Since then, companies have increasingly pressured local governments to keep their negotiations secret and the attorney general has tended to side with the companies, as The Texas Monitor has reported.
“I would argue that the name of the party receiving the incentives is more important than the amount of the incentives,” Larsen said. “How is the public supposed to be able to tell if there is some kind of conflict of interest in the deal?”
Mark Lisheron can be reached at [email protected].