Local officials blindsided by 2-million-dollar downtown land acquisition

Sierra Martin | Managing Editor

The City of San Marcos purchased three plots of land on Guadalupe Street downtown with money acquired through the Tax Increment Reinvestment Zone (TIRZ), a $2 million land acquisition many County Commissioners on the TIRZ board seemed unaware of.

A TIRZ is a type of financing incentive that reimburses a developer’s eligible costs for approved infrastructure improvements. A developer may present a proposal to build infrastructure that would help increase the assessed value in that area to $60 million over a period of 15 years.

The land acquired by the City of San Marcos with the assistance of the county with TIRZ funds is located downtown on 128, 140 and 152 S. Guadalupe Street. Currently, the Comet Cleaners dry cleaner and Street Eats vacant building resides on the property.

Although the purchase of the 0.95 acres for $2 million has been completed, there is no reported plan for what to do with the property, and the city is evaluating the next steps.

The TIRZ board members include Mayor Jane Hughson, County Commissioners Debbie Ingalsbe and Lon Shell, Council Member Maxfield Baker and Kyle Myleus.

Debbie Ingalsbe Commissioner, Prec. 1 asked the TIRZ board to discuss property acquisition with the county in the future.

“I don’t remember us talking about these specifically in any detail,” Ingalsbe said. “And I was under the impression that the financing plan, we were putting them in categories and then we were sort of figuring out how to fill up those categories with projects and then voting on those individually whether it was for the justice center or the ally expansion. All of those I know we talked about specifically and with exact dollar amounts.”

Lon Shell, Commissioner Prec. 3 agreed with Ingalsbe, not recalling approving on acquiring the three properties or the purpose of purchasing them. 

“We said we are going to put $2 million dollars towards property acquisition, what are the options, where would we choose to invest there and why, and what is the number one need from a property acquisition standpoint,” Shell said. “That’s how I was looking at it. That’s why I was surprised when we found out that the property has already been acquired… I would think in the future, we should get into a little more detail on how we spend the categorical dollars by project and talk about kind of what the uses will be, especially for the acquisition. And I kind of heard about what some of the ideas were possible, but I don’t really know the real reason for acquiring these three lots.”

City Manager of San Marcos, Bert Lumbreras, agreed that moving forward the extra step of further discussion or executive session should be factored into how to allocate the budget in the future.

“I think what you’re asking is very much reasonable and something that we should do, and it’s really our responsibility…” Lumbreras said. “We will incorporate that extra step because it is necessary, and you’re right we should have done that just to make sure that everybody’s on the same page so we’ll definitely factor that in the future.”

According to Finance Director Bree Kelco, the city anticipates $4.2 million in projects through 2021, leaving the city with $500,000 in the TIRZ budget until 2023. The TIRZ fund is expected to be 4.7 million dollars, with the city contributing 25% of the money towards projects. Initially, the city planned to contribute 75%, but due to a budget shortfall, has decreased the amount.

If a project is predicted to go over budget and the city cannot fund the excess, the TIRZ board will meet again to consider how to finance the unanticipated cost. By the end of 2022, if the majority of the remaining $500,000 in TIRZ funds would be depleted, potentially putting the city in the position of being unable to make a property acquisition until 2023 if city funds are replenished.

Lumbreras said that even though the property is categorized as being used for parking purposes, there will still be future discussions on how the property can benefit downtown. 

“I want to clarify that it was never in the city’s interest or intent to utilize that area and wipe out the buildings to start putting in a parking lot there,” Lumbreras said. “That may be some of the consideration, but that never was the original intent as a whole.”

According to Laurie Moyer, San Marcos Director of Engineering, the three lots had groundwater contamination due to dry cleaning projects from Comet Cleaners. The land is enrolled in the Texas Commission of Environmental Quality’s voluntary cleanup program, and $225,000 was withheld from the former property owner to go through the TCEQ process.

Local officials are still trying to determine if the properties should remain in the condition they are. The demolition process would be lengthy because it is downtown and will have to go through the historic demolition process.

According to the TIRZ Board meeting, other projects previously approved by the board include ally improvement projects, sidewalk and landscape improvements, downtown pedestrian safety improvements, and a downtown shuttle pilot program.

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