It is my intent to try and lay out in a sequential way, the reasons why I believe this (Esperanza) agreement should be laid aside.
To begin with, let me put this into context, as a taxpayer and citizen.
Having advocated for, and participated in, the development of the new Master Plan, the proposal of a WCID within the ETJ raised red flags for residents. The Master Plan advises against one. Given this, annexation has always been an option that was encouraged and a study of the pros and cons of it has been advocated. Knowing this, citizens were given assurances from the outset, that the City’s ‘lack of opposition’ in Marlin Atlantis’ application for the WCID, would allow the City to turn it down, if it was determined to not be in the best interest of its residents.
I would like to remind you of the following comments:
“In an interview with the Star…Macias stressed that his decision to support a bill creating the WCID #2 hinged primarily on the fact that the City of Boerne would ultimately control the district’s fate…..In neither SB 1245, nor in Macias’ substitute bill, can the WCID#2 take effect without the consent of the Boerne City Council…”My overarching reason for supporting this is that the legislation will give local control to the City of Boerne,” Macias said.” Boerne Star, May 18, 2007
“Wentworth also pointed out that, even if the WCID bill does pass the Legislature, the city of Boerne must still pass a resolution consenting to the creation of the district for it to become operational.” Boerne Star, March 13, 2007
“Kugel (of Marlin Atlantis) claimed… WCID will require city consent before confirmation election can be held to create the district.” Senate Hearings in Austin
“…Baker said, Marlin Atlantis does not want to be annexed by the city, although he said there is nothing to prevent the city from annexing all or part of the development at any time.” Boerne Star
And perhaps most importantly, we witnessed the following:
“The council vote in favor of the resolution expressing no opposition to the introduction of legislation creating WCID #2 was sought by Marlin Atlantis and it will facilitate moving the project forward. But there is no assurance that the city will allow it to be activated.
In fact, the city has more control over Esperanza’s future if the Legislature created the WCID than if it does not. A WCID created by the Legislature requires an affirmative action by the city to be activated…….
Councilman Bob Manning called City Attorney Mick McKamie to the podium Tuesday night to drive home this very point.”
Given this context, presented to citizens, it was with great dismay that I saw that the City’s ‘analysis’ of an annexation scenario, begins with the assumption that Marlin Atlantis will turn this into a litigious issue. From a citizen standpoint, this feels as if either the City or Marlin Atlantis has broken faith with its residents by misleading them at the outset, or, at the very least- the City Attorney failed to give adequate legal advice as to this liability from the beginning.
Having attended the hearings in Austin for the WCID, I can assure you that the transcript for those hearings contains the assertion, repeated over and over again by Senator Wentworth, attorneys for Marlin Atlantis, Marlin Atlantis owners, Mr. Jolley, Mr. Coyle and other supporters- that the City could deny this agreement at anytime. The Senate Committee members stated that this was the basis for their approval- that the City could choose ‘not to approve.’
In evaluating the annexation scenario, one can find the following failings:
1.) A unilateral assumption that litigation will occur. This begs the question of integrity, given the numerous comments (such as those above) on record. If this is an indication of who we would be contracting with, then what cause is there to trust other assurances made? Based on the record, I believe that they would not win and furthermore, it would be a PR nightmare to bring suit against the City, given the sound reasons and obvious advantage to residents in annexation. This is a Staff opinion that biases the outcome considerably. Conversely, it assumes that there will not be any future legal problems with whoever ‘owns’ Esperanza in enforcing the Development Agreement.
2.) Based on a litigation scenario, another unfounded opinion assumes that build out will be delayed for 3 years.
3.) A build out delay skews every other category- all collectible taxes, fees, sales tax, etc.
This is a substantial amount, particularly where it concerns ad valorem taxes.
4.) An unfounded assumption that the City will not require any trails, green space or amenities (as has been standard in other developments). This also assumes that the developer has no desire to include these to improve the marketability and price of the homes. These basic amenities are standard requests, and are supported by the Master Plan. But, instead of the possibility of it being potential income, a deduction is made in the expense column.
5.) An assumption that homes would be priced 15% less. This is unsupportable conjecture. Even if there were merit to this assumption, Mr. Thompson states that he calculated the average home price with a 15% reduction would be $250,000.
This price affected the anticipated ad valorem taxes collected. Although it is not clear what figure was used in the current packet, or the Agreement analysis, Esperanza has said its average home price will be $312,500. Using this figure, a 15% deduction yields a home price of $266,250. This is $16,250 more than Mr. Thompson’s analysis. This discrepancy also affects the ad valorem taxes collected.
6.) In an explanation of the Cost Neutral Graph, they use a figure of 2222 homes for annexation vs. 2480 homes with the development agreement. The 260 home difference will affect several categories of income, including sales tax, fees, ad valorem tax, etc.
7.) One of the most egregious omissions to the calculations is the failure to add in road impact fees. Ord. No. 2007-63 states that a developer can be required to contribute the fair share of road impact costs, as determined by the criteria set forth in the ordinance.
Without even having to revisit the scope of the traffic impact ordinance (the anticipated impact of the development determines the level of study and the distance and scope of the impacts, which in this case, would meet the maximum amount allowable), it is readily apparent that a minimum of $2.8 million would be required since their “fair share” of impact has already been agreed upon.
Not only does the analysis fail to include this amount in its income column for annexation, it actually includes it in the expense column for annexation.
This omission is glaring. I cannot determine what other impact fees may not have been included as income for the annexation scenario.
All of the above combined, can only point to an obvious bias in the determinations. I can find no other logical explanations.
In spite of these unfounded, overlooked or miscalculated figures, the annexation scenario still comes out ahead as a good financial choice for taxpaying citizens.
One must consider then, how different the bottom line would have looked with the proper approach to the analysis.
In addition, the pros and cons list is equally tilted. There is no mention of the many liabilities such as a downturn in home prices due to the economy and its impact on the various income categories or failure to perform and the legal costs associated with that scenario.
This leads to the second consideration, that of the advisability of this agreement from a legal perspective. The general feedback from those who are familiar with such things, supports the concerns that I and others have expressed from the beginning- government by developer is a shaky proposition.
Since this agreement can be altered at any time that the Council so approves, it paves the way for future PACs of disgruntled Esperanza citizens to fund candidates for City Council. The complications inherent in this arrangement are numerous.
Annexation, with its accompanying City governance, places future development on an equal playing field and assures us the freedom to govern as future circumstance and needs dictate is best. The liabilities in this agreement appear to warrant further legal study, and one must assume that concerned citizens will hold it up to that level of scrutiny.
The fact that records request for studies has been denied, the agreement was available for only 5 days and the lack of a true Public Hearing, limits citizen involvement and government transparency. One example of issues of transparency is the lack of information, within the packet or in Council meetings, regarding the future road plans within Esperanza. The map itself does not clearly identify the amount of proposed ROW for TxDOT or identify the Adler extension plan as a by-pass for SH 46. If this ROW is adopted in this agreement, it will have circumvented public input on roads that will require imminent domain on adjoining properties.
In his denial to my Open Records Request, Mr. McKamie told the Texas Attorney General’s Office:
‘The development agreement is the largest and most complex in the history of Kendall County, and likely the entire state.”
Given the issues raised here and by other concerned citizens, this declaration by Mr. McKamie should create more than reasonable doubt as to the advisability of approving this agreement under these circumstances.
In summary, the promise given to citizens was that the City would have the freedom to choose the best option for its residents. The annexation scenario produced by the City is seriously flawed and correction of those deficits would yield even greater margins favorable to the City. Even with these flaws, the financial outcome is favorable over the Agreement.
Upholding the expressed wishes of the citizens contained in the Master Plan, the prospect of the legal failings of this agreement and the precedent it sets for the future, are sound reasons to not approve this agreement.
Thank you so much for your time and effort in this matter. I wish only the best for you our community.
Sincerely,
Paula Cairns
