by Rick Bonart
While Council investigates trivial gas card infractions, millions of public dollars are being wasted. Left unchecked, these losses will continue to rise to over a billion dollars.
In 2018, a prior City Council set in motion a scheme to bring Great Wolf Lodge to El Paso. The plan required trading 2313 acres of PSB land in northeast El Paso for 44 acres at the intersection of Artcraft and Interstate10. Those 44 acres were owned by Paul Foster. Both parcels were dubiously valued at $18M.
To circumvent the normally required competitive bidding process and enable the trade, Council created two Tax Increment Reinvestment Zones, one for each parcel (TIRZ 10 &13).
In 2021 Great Wolf Lodge bailed. The public was told if the deal did not go through, the trade would be abandoned. However, that was a lie, and so far has cost taxpayers about $26 million.
You might ask how this is even possible. The simple answer, greedy shenanigans disguised as economic development projects frequently lose money. It’s as easy as 1, 2, 3.
1. When the City acquired the land, it became public property and stopped generating property taxes. A million dollar hit to the general fund (so far).
2. The City did not own the 2313 acres used in the trade, and now must repay the PSB with interest for 30 years . That’s a $4M loss so far ($800,000 /year for 5 years).
3. The consequence of making the 2313 acres into TIRZ 13 is 75% of those property tax dollars are diverted from the general fund, at minimum another $200k/year. As construction continues in that area, property values will rise and the losses will increase. The estimated loss over 50 years is $650 million.
All in all, this failed deal has cost taxpayers $24M (includes$18M land cost) and will continue to cost more than $2M each year. This assumes the 44 acre TIRZ10 will be gifted to any new business as promised to Great Wolf.
On May 29, at City Council, I asked the Mayor, Why not terminate TIRZ 10? His only reply was the 44 acre parcel was red hot! Then why not sell now? He didn’t answer. However, [Senior Economic Development Specialist Ms. Elizabeth] Gibson from economic development stated the City was hoping to get state grant money for a new motel.
I hope Mayor [Oscar] Leeser is right, and there is interest in the property, because just to break even that 44 acre parcel must sell for at least $24M ($18M original price + $6M in lost income).
To avoid continued enormous losses TIRZ10 and 13 must end, and the note to the PSB needs to be paid off.
I have little hope. Our economic development team is embarking on yet another no bid, motel on the red hot 44 acre TIRZ 10. This new scheme will likely only benefit some out of town Corporation as long as the 100% tax rebate remains in effect..
Understand that even if a motel is built on that property, the City will get zero property tax from that location, the note to PSB will continue to require $1.2 M annual payments for the next 25 years, while the 2313 acre parcel will rob the general fund of a half billion dollars over the life of TIRZ 13.
It’s so deceptive for the City’s economic development department to make rosy predictions and promises of huge benefits, while zeroed in on just one aspect of these deals. In reality, when viewed holistically, these deals are huge burdens that deliver higher taxes to residential property owners.