Dear Mayor and City Council

Dear Mayor and City Council.

This is an open letter with some observations following the Wednesday
Council Meeting to discuss the Esperanza Development Agreement ("DA").

1) I must say I felt a little sorry for some of the "Boerne Forward"
supporter wearing the "Yesperanza" cards. I spoke with several who
were under the impression this is a vote "for" or "against" the
Esperanza development. I sat next to a young couple and asked why they
were in favor of the "Development Agreement" and they told me how the
town needed more low cost housing so their friends who used to live
here could move back. They had no idea why they were supporting the DA
over annexation. Several speakers talked about how it will bring more
services to our area. This is about the smartest way to move forward
(annexation or Development Agreement), not about whether to move at all.

3) The City manager when asked if he used the same sales projections
for the Annexation as for the DA, said, "no" that he used a 15 year
build out instead of 10 years used on the "cost negative" model. I was
appalled. This deliberately makes the annexation look less favorable
as the payoff is slower than the numbers used in his "cost negative"
model he prefers.

4) The top reasons the City Manager presented that he and his staff
favored the DA over annexation was because it 1) avoided litigation,
and 2) it put "less pressure" on he and his staff during the years
before the annexation paid for itself (which he unfairly pushed out in
the future). Those reasons are based on fear. Fear is not from God.
Making a decision based on fear is not God's will for Boerne.

Jefferson Morgenthaler's open letter to you on February 4, 2008 points
out several issues deficiencies in the DA which need to be addressed
to protect Boerne. Having been made aware of these issues, approving
and executing this document would be negligent.

I would encourage you to annex the property so the city can realize
the tax and utility benefits immediately. The initial cost for
annexation can be financed using bonds just like other growing cities
do. It is a fraction (~10M) of the recent school bond (~98M) we passed
a few years ago. Besides, if the development does not grow as fast as
projected (which many believe it will not) the expenses are far lower.

Thank you.

Thom Dunaway

Open Letter to the Boerne City Council

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

The End of Boerne as We Know It

The End of Boerne as We Know It- a Report on Last Night's City Council Meeting.

The influence of Marlin Atlantis of Dallas, the developer for Esperanza, was in full evidence last night. We've come to expect this from those who have been hired by MA, that's understandable. It is the City staff, who are tasked with looking out for the welfare and safety of it's residents, that were center stage last night. MA could not have hired better representation than they had from the City employees- from the City Manager on down.

Since the development agreement has been kept out of the public eye (requests for copies have been denied), citizens are left to listen to the discussions and presentations as they unfold in Council.

While two Council members have repeatedly asked for staff to run different scenarios to determine what might be the best long term outcome for this property from the taxpayer's standpoint, the lack of due diligence by the City staff in this area was glaring. The City has the option of not approving Esperanza's water control district and annexing the property or allowing a MUD. No one knows what the pros and cons of these scenarios are, especially from a financial standpoint, because the City has failed to do a thorough study of them.

Even the most basic due diligence, such as determining road impacts, was not done. When asked by a concerned council member how the staff could state that MA's $2.3 million road contribution would even begin to address the impact on roads from this development that will double the size of Boerne, the Assistant City Manager made a most remarkable statement. He claimed that the impacts couldn't be quantified. The City Manager then added that it had already been determined by the County Citizen's Transportation Committee that expanding Herff Rd. and it's proposed extension to Main St., was needed with or without Esperanza. This was incorrect.The facts are that the Citizen Committee spent the better part of their year trying to find solutions to the traffic generated by Esperanza, and even with all their multi-million dollar proposals, still came to the conclusion that River Rd. and Herff would remain at unacceptable levels of service.

As to not being able to quantify the impacts or costs, doing an accurate and in depth traffic impact analysis is such a standard procedure, it would be considered irresponsible by any City to not conduct such a thorough study for a development that will double the amount of traffic on it's streets. The staff knows full well that this is what TxDOT and numerous other engineering companies do, not to mention many city engineers.

As to the costs, generic construction costs show that two additional lanes added to an urban arterial runs around $4.8 million a mile and a new two lane arterial is around $5.6 million per mile- not including the right of way costs of condemnation proceedings and buy-out. Bridges, such as the one at the intersection of Herff and River Roads, are quite expensive, as complex environmental mitigation measures are required during construction. The duplicity evident by the staff over this issue was nothing short of irresponsible.

Due to issues such as traffic and the sheer size of the development, the request for a more in depth look at the alternatives had been made by Councilmen Rob Zeigler and Bob Manning. The City Developer's 10 minute response was that he had done a rough estimate of the maximum number of houses that could be built in the MUD or annexation scenarios. That was it. No cost analysis to determine what the tax revenues might be, no profit and loss analysis, no comparisons of how lower density would impact our roads, the advantages of controlling zoning to allow for adequate commercial development to serve that area (and capturing the full sales tax from it), lowered costs for services and school bonds if the density were lower, etc.

Even the lawyer hired by the City commented in an earlier workshop that he had been tasked with 'getting to yes' for the development.

City staff, and some Council members continue to raise the specter of what will happen if an agreement isn't met. It is worthwhile to consider the consequences they fear:

Loss of $2.8 million for roads- This doesn't come close to covering the actual cost of doubling the cars on our roads. How much would we save on road bonds if the number of cars were lower due to less density from proper zoning and commercial services within the development?

Loss of 'amenities' - The City, like other responsible municipalities, has routinely asked for certain amenities within new developments, required impact fees and would do so with Esperanza. Again, how would a reduction in 7,000 residents also reduce the need and costs for fire station, library, park space and other 'amenities' ? They have not studied this.

Land donated - While land for new schools is helpful, the population of Esperanza will require new and higher school bonds much sooner than if it were less dense- it is the reason why the schools are having to be built in the first place. The cost of land is a very small percentage of the total cost of building, staffing and educating students. This continues to be glossed over.

The City will lose control over how it is developed - This won't happen if it is annexed. This is also most consistent with the Master Plan, which states that a water district like this should be avoided within the ETJ and proactive annexation should be used.

We will end up paying for the infrastructure - The utility services are already in the area. The estimated cost to connect is about $5 million. The developer will be responsible for internal infrastructure, and the City will gain the revenue from the utilities. This has been standard procedure. Can commercial tax revenue and lower road costs make up for this $5 million outlay? What if you add in taxpayer's cost for larger school bonds? No one has studied this.

Aside from the figures and the unresolved traffic congestion problems, there is still the issue of what such rapid and dramatic change to Boerne and our quality of life means.

Surely a change of this magnitude requires a sincere and legitimate study to determine the true long term impacts. With everything to gain from doing a thorough analysis-not to mention taking the time to determine the desires of City residents- it is more than reasonable to not rush to a vote on January 22.

However, the two Council members who attempted to raise these questions last night, were jeered and laughed at by members of the audience affiliated with this development, who showed up in force at City Council.

The saddest observation of all is that City residents are failing to show up and participate in a decision that will bring about the demise of Boerne as we've known it. They have relinquished their future to outside developers.

Remember this 10 years from now when we are in a crisis of congestion on River Road and Main Street, school bonds and taxes are skyrocketing and developer funded candidates sit on City Council.

Anonymous