Brutus over at ElPasoSpeak.com posted some illuminating information yesterday.
A developer intends to build a high rise hotel on land downtown.
The item would give the developer a 50 year lease on a piece of city owned property downtown for $1,200 per year.
The property is currently owned by the developer and is on the central appraisal district tax rolls for roughly $500 thousand. The property taxes are currently about $15 thousand a year.
The way the deal works is that the developer first gives the land to the city.
Then the developer will generously pay $1,200 each and every year for 50 years to lease the land.
There’s nothing we can do about it now. That horse is out the gate. The Hotel Association complained about it, but they only talked about how it was unfair competition for them. They never mentioned how it might affect the taxpayer, so no one cared.
The City cuts these deals with the ostensible goal of making downtown more attractive, to lure businesses, to spur economic development, to shift the tax burden from residential to commercial property owners. To do that, they cut property taxes for commercial property owners.
We lose a little bit on every deal, but we make it up in volume.
Nothing to see here: It’s all Good ….
Rich . . . I wish that whatever city I’m living at the time would give me some incentives, and I understand what you’re saying, but I don’t think you’re looking at the whole picture.
First, the developer is giving this valuable piece of property to the city, albeit with a 50 year lease, but those 50 years will pass, and then the city will own it outright. In the mean time, while getting this $13,800 annual discount on property taxes, the developer/owners of the hotel will be generating more than that in hotel/motel tax. Furthermore, they will be hiring dozens of mostly local contractors–who will be hiring hundreds if not thousands of local workers–to construct and then maintain the operations of the hotel. The owners themselves will be hiring dozens, if not hundreds, of employees of the hotel, who will be spending their paychecks locally. There will probably be restaurants, bars, gift shops, etc., in the hotel, and they will be generating all kinds of sales taxes. The guests will be staying in downtown and patronizing locally owned establishments as diverse as Anson 11, The Central, the baseball stadium, The Tap, The Briar Patch and Dave’s Loans, as well as attending events at The Plaza and Tricky Falls, etc.
Okay . . . it’s a buddy-buddy system, but there’s also logic to these incentives. It’s NOT just blatant cronyism, it’s not just greed.
I think it’s really exciting what’s happening, and good for El Paso . . . this developer is going to build a new hotel, The Paso del Norte and the Popular is being renovated.
What is it that you prefer? That downtown stays a decrepit ghost town? C’mon man. Better something than nothing, even if some fat-ass Republicans make a profit from it. That’s the way it is.
The point being that the city should NOT be entering in this kind of deal. It’s fraught with the possibility of corruption. And what makes you think the city won’t give the hotel chain a sweetheart deal down the road? Too often cities pull stunts like this and hope the citizens have short memories.
What about the benefits the city gets from the hotel? It’s a trade-off.
For about $14,000 in a tax break, they are probably going to generate much more than that for the city.
It’s not like the city is giving tons of taxpayer money to a corporation and getting nothing in return. That hotel, if successful, will return far more to the city than $14,000.
I hear you, Richard, but do you think that hotel is going to generate more guests for the city, or do you think it will only redistribute the guests we have? Are there going to be more tourists eating at restaurants, or are they just going to eat at different restaurants?
Bars and hotels aren’t economic development. They’re not making any new jobs. They’re not creating any new money. They’re not making the pie any bigger, they’re just redistributing the pieces.
Yeah, some of the hotel patronage would be patronage that would have been going elsewhere, but larger downtown development, which the hotel would be a part of, will indeed generate more economic activity. I disagree . . . bars and hotels are a part of economic development. Think of how much you yourself have contributed to the well-being of the city by drinking in bars. And owning a bar. You should be given a Conquistador Award for all you’ve given the city.
With more hotels, restaurants, bars, activity at The Plaza Theater and Abe Chavez, the rejuvenated Plaza Park, the museums, the upcoming Chicano Cultural Center, the ballpark, there will be new and more people participating. If Downtown remains blighted with no new development, none of that will happen.
I’m siding with Richard Baron on this one. I see where you’re coming form Rich (El Richi) but here’s where I disagree. I think you’re right that in the immediate term the bars and hotels will just redistribute the pie. However, over the medium to long term, if all goes well, they will in fact make the pie bigger.
Why? Because a city with a walkable, vibrant urban core will be able to attract more conventions, tourism, and other things that bring people from out of town to the city. Not to mention we’ll have an easier time convincing expat residents to return home and recent grads of UTEP, the medical school, and (soon to be) dental school to stick around.
Is it a guarantee? Hell no. It could all blow up in our face with nothing more than some wasted tax dollars to show for it. But as I see it, it’s the only choice we have. We can either make a bet (literally) that this will help our city succeed, or do nothing, and be guaranteed the same slow decline we experienced for most of the last several decades.