With an eye on reining in sprawl, the Waco City Council has commissioned a study on whether developers should pay one-time impact fees to offset the costs of public infrastructure needed to support what they build.
Another day, another hotel dotting the Waco skyline or in the works.
In reality they do not arrive that often, but some say it seems that way.
Recently a $6 million construction permit was issued for a 97-room Staybridge Suites in The Colonnade development on Woodway Drive, near the Regal Jewel movie theater. And Kary Lalani, with Lalani Lodging, said Saturday his family has chosen land on I-35 in Bellmead as home to a Home2 Suites by Hilton.
It will have 95 units for extended stays and ground could break next year, Lalani said. The company he leads already has a stake in lodging locally as developers of Hilton Garden Inn and Homewood Suites by Hilton.
Six hotels are going up right now in Greater Waco, including a 115-room Aloft on South 11th Street and a 125-room Springhill Suites at University Parks Drive and Interstate 35, both within a shout and the flying dust associated with the $341 million widening of the interstate.
Within two years, Waco should have 652 additional rooms available to tourists, conventioneers, athletic teams and overnight visitors wanting to sample Magnolia Market at the Silos, Cameron Park Zoo, Waco Mammoth National Monument, the Dr Pepper Museum, Mayborn Museum, Elm Avenue and the thriving entertainment, arts and dining venues.
At least that many properties have been announced, four by Kiran “Kenny” Bhakta and his KB Hotels LLC, owner and operator of Hotel Indigo Waco. Land clearing has started for three — Cambria Suites, Even Hotel and Holiday Inn Express — on land bordered by Martin Luther King Jr. Boulevard, Bridge Street and Taylor Street, near the blossoming Elm Avenue district.
Those three brands will bring more than 360 rooms to the site.
Bhakta’s team has also broken ground on a 105-room Element Hotel by Westin near Waco’s traffic circle, now home to Magnolia Table, Chip and Joanna Gaines’ restaurant in the renovated Elite Cafe building.
Asked if the Waco lodging scene has reached flood stage, Bhakta spokeswoman Jacquelyn Baumann hinted at saturation.
“I think we’re on a dangerous slope,” Baumann said by phone. “We’re definitely at a point of reaching maximum capacity for new hotel growth, based on hotels under construction, permitted and announced.”
She said the three Bhakta-announced hotels in East Waco will move forward as planned, with groundbreaking scheduled in a few weeks.
“These were strategic and well thought out, located to serve conventions, downtown growth and Baylor University,” Baumann said.
She suggested other hoteliers eyeing Waco may want to delay commitments until the current crop of new arrivals have a track record. She also said the city of Waco might be better served shifting its focus to industry recruitment and job creation.
“The time of focusing on hotel development has passed,” she said. “Bringing in more business and industry, creating higher-paying jobs in the community, would be a better expenditure of time and resources. This approach, focusing on the future and tech-related jobs, also would help the hotel industry.”
Lalani, with Lalani Lodging expressed similar concerns.
“Yes, we are concerned with all of the inventory/new hotels that are coming online,” he said via email. “Anytime a market is expected to absorb inventory at the rate and volume that Waco is anticipated to bring online in such a short window, it will absolutely have implications for the current hotels.”
He also said he has misgivings about how economic development subsidies or public funds, including tax abatements and Tax Increment Financing grants, have been used to support construction of new hotels.
“There should be no incentive or public subsidy for an industry that is seeing the kind of growth that the hotel sector is seeing in the Waco area,” he said.
He said such approach “is a poor use of public funds.”
McLennan County Judge Scott Felton, formerly an executive with the Wells Fargo banking chain more than three decades, offered a different take.
He said hotel oversupply is not around the corner. He believes the city is positioning itself to attract heftier and more lucrative gatherings.
“In visiting with different trade associations over the years, Waco was not a fit for their larger annual meetings, maybe quarterly meetings, as we did not have enough high quality rooms,” Felton said. “Now we can go after those we missed.”
The county has a sizable stake in the success of the hotel industry. It is well into a $35 million multi-phase expansion of the Extraco-branded fair, rodeo, sports and livestock complex at Bosque Boulevard and Lake Air Drive. Taxpayers approved issuing bonds in 2017, with a 2% hotel occupancy tax and a 5% levy on car rentals assigned to retire the bonds.
“We’re already seeing double-digit growth in that fund on an annualized basis based on collecting those taxes 15 to 16 months,” Felton said. “It is generating $2.4 million a year, and our committed debt service is $1.875 million annually. We have 40 years by statute to pay off the debt. I can see the excess cash flow, which is $400,000 now, growing to $500,000 or $600,000 as other hotels come online.
“I’m not an expert economist, but I’ve been a banker 30 years, so I’ve talked with many. Things change, go up and down, but Waco has become a very popular spot. The feedback I get as I travel around the nation is positive. Waco, Texas, is a good place to visit.”
K. Paul Holt, executive director of the local office of the Associated General Contractors of America, said concern about overbuilding is nothing new.
“The question of how many rooms are too many has been asked since the Hilton was built in 1984,” Holt said, referencing the city’s much anticipated downtown convention hotel. “The large meeting hotels should really help the convention. We hit a plateau a couple of times, when the size of meetings were capped due to lack of rooms. That has bumped up in a positive way.”
He said local hotels once filled only when Baylor hosted football games.
“We have way more events that pull people into town now,” Holt said.
Waco Councilman Dillon Meek said he finds confidence in the fact Waco recently has enjoyed the highest hotel occupancy rate in the state.
“I think that’s a good sign for market demand,” he said by phone.
Carla Pendergraft, director of marketing at the Waco Convention and Visitors Bureau, provided statistics from the Texas Hotel Performance Fact Book showing that Waco’s occupancy rate during the first quarter this calendar year stood at a state-high 73.8%. The statewide average was 65.4%.
Pendergraft said second-quarter totals are not yet available. Last year, Waco’s second-quarter rate was 82.7%, also the highest in Texas.
She reminded that not only are six hotels are under construction, two new hotels opened last year: a 111-room Hilton Garden Inn and a 101-room La Quinta del Sol, which replaced a La Quinta near Baylor University that was demolished to make way for the Interstate 35 widening.
Waco’s hotel supply stood at 3,711 rooms before those additions.
“The market will decide when a sufficient number of hotels has been built to satisfy demand,” Pendergraft said by email. “There are many sources of information available to the financiers and developers that allow them to measure hotel demand and supply, and changes in those over time. Clearly, Waco has been underbuilt for hotels for several years now, and we are glad that supply is finally rising to help meet demand.”
Megan Henderson, executive director of City Center Waco, said each new hotel “will create a different vibe, a different atmosphere” that will contribute to the overall appeal of spending a day, weekend or vacation in Waco.
“I don’t think we’re knocking at the door of too many hotel rooms,” she said.
Whether a useful tool for encouraging economic development or a threat to it, impact fees could be coming to Waco by next year.
The fees, which city governments charge developers to offset the cost of roadways, water and sewer expansions needed to support new residential or commercial construction, have become more common in Central Texas in recent years. City Manager Wiley Stem said impact fees help shift the cost of new development from current city residents to developers and, by extension, new homeowners and businesses.
“That is an equity issue, to be able to maintain that growth without stripping money away from the central city,” Stem said. “I think that’s a complicated balancing situation.”
The city of Waco hired planning firm Freese and Nichols Inc. to conduct an impact fee study that started in January, the first step in a lengthy process to determine whether Waco will implement the fees. A new committee also started meeting this month to calculate proposals for how much to charge. The fees could be ready to go as early as January, Stem said.
With an eye on reining in sprawl, the Waco City Council has commissioned a study on whether developers should pay one-time impact fees to offset the costs of public infrastructure needed to support what they build.
He said McLennan County’s population has been growing faster than projected, and if the higher rate holds, it would clear 300,000 people by 2030.
During one meeting this year, about 1,100 residential lots came before the city council for approval.
“We started seeing lots of subdivision plats come through Planning and Zoning,” Stem said. “There was one council meeting where I think we approved maybe 600 lots on (Highway) 84 and two or three new subdivisions in the China Spring area.”
While every part of the city is growing, residential development along Ritchie Road, in the Highway 84 Corridor and in China Spring, primarily in undeveloped areas, has taken off in a way that would benefit from impact fees, Stem said. However, any new development comes with a need for more sewer capacity.
“We also need to do some water work,” Stem said. “We have enough water out there, but we need to get some lines and increase line sizes to accommodate more.”
Planning Services Director Clint Peters said the fees would be based on infrastructure improvements the city projects would be needed in the next 10 years. A development expected to bring an increase in traffic would require a higher roadway fee, he said.
“They’ll start calculating the numbers and that’s ultimately how you set your fees,” Peters said. “It’s percentage of what you want to get back from development to serve those areas.”
Roadway impact fees are site-specific, because of restrictions on using fees collected from one area to make improvements in another area. On the other hand, water and sewer impact fees would be based on the number of connections a development will have. Though water and sewer fees can be used on any part of the system, there are restrictions on how the fees can be used.
“It can only be used for capacity,” Peters said. “You can’t use it for maintenance of existing infrastructure. That’s when cities can get in trouble and where cities can violate state law, is if they’re not using it for what it’s collected for.”
Peters said the county’s population has been growing at a 1.4% annual rate, which is significantly higher than the 1.07% annual rate projected by the city’s comprehensive plan.
“It doesn’t sound like a whole lot, but it is,” Peters said. “To hit that growth, they’re thinking 600 (residential) units every year.”
Impact fees also present an opportunity to shape and direct growth by encouraging or discouraging development in specific parts of the city.
“It could be different rates for different areas,” Peters said. “It’s just what makes the most sense to have continued growth and sustainable growth.”
High-growth areas with little to no infrastructure would likely have high fees, but areas like downtown Waco may have none.
“Really, it’s the dilemma that all cities face,” Peters said. “Here’s the use that we need to accommodate, the growth with infrastructure, but if it’s going to price out development from the market, you need to re-evaluate that.”
Industrial development at Interstate 35 and Highway 6 could prove to be a high impact area, along with the residential growth.
“On roads like Franklin and Washington, we’re really only using about 20 or 30% of the capacity,” Peters said. “So A, you’re really not going to need a lot of new roadway construction, and B, you can’t use it for maintenance. The existing capacity can handle all the projected growth in that area.”
State law requires impact fee rates to be revisited and adjusted every 5 years based on new data.
Scott Bland, owner of Jim Bland Construction, said he and three other members of the Heart of Texas Builders Association are part of a new committee working to calculate the fees.
The new committee met for the first time July 16 and also includes members of the city’s Plan Commission. Along with the study Frees and Nichols is conducting, the new committee is part of the legal requirements the city must meet before implementing impact fees.
“As developers, we’re concerned about the costs getting added to a home,” Bland said. “We also understand the need for the city to recoup the costs of development. We’re hoping to work with the city to find an equitable balance.”
Bland, who is also a member of the city’s Capital Improvement Committee, said the cost of housing in Waco, while still more affordable than other Texas cities, has been catching up.
“We appreciate the fact the city is incorporating us into the discussions,” Bland said. “We’ll at least be part of the process. We’ll know what’s coming.”
Bland said if the city overreaches with its fees, growth could halt or stagnate.
“If the city makes it cost-prohibitive, we’ll (developers will) have no choice but to look at other cities,” Bland said. “We don’t want it to come to that, that’s why we’re working together.”
The change also could encourage developers to target areas with lower or no fees for infill development, construction of individual homes on lots in already-developed areas like downtown, Bland said. He said infill is less common at the moment in Waco. His company does no infill work currently, but that could change within the next 10 years.
“As it becomes more and more expensive to develop in open areas, at some point we’ll start going into older parts of town, tearing down old buildings and rebuilding,” Bland said.
He cited the Park Cities neighborhood of Dallas as an example of that kind of development.
Jeff Whitacre, vice president of Kimley-Horn Associates, served as project manager for the city of Midland’s impact fee study. Midland, which is growing about twice as fast as Waco, is on the cusp of implementing the fees after its city council passing them on first reading last week.
According to Midland’s impact fee study, Midland has a need for more single-family housing, and its fee proposal includes a 25% discount for single-family developments. Midland’s report estimates the city will need $575 million in capital improvements in the next decade, including about $215 million that will be directly tied to needs created by new development.
Whitacre said transparency and community involvement are key to implementing the fees smoothly.
“In theory, everyone has access to what is going on,” Whitacre said.
He also said the process does not always work, citing anecdotes of residents showing up en masse to protest impact fees they mistakenly believed would apply to their existing businesses.
Residents signing up for food stamps in Minnesota are provided a brochure about domestic violence, but it doesn’t matter if they even read the pamphlet. The mere fact it was made available could allow them to qualify for government food aid if their earnings or savings exceed federal limits.
As odd as that might sound, it’s not actually unusual.
Thirty-eight other states also have gotten around federal income or asset limits for the Supplemental Nutrition Assistance Program by using federal welfare grants to produce materials informing food stamp applicants about other available social services. Illinois, for example, produced a flyer briefly listing 21 services, a website and email address and a telephone number for more information.
The tactic was encouraged by former President Barack Obama’s administration as a way for states to route federal food aid to households that might not otherwise qualify under a strict enforcement of federal guidelines. Now President Donald Trump’s administration is proposing to end the practice — potentially eliminating food stamps for more than 3 million of the nation’s 36 million recipients.
The proposed rule change, outlined this past week by the U.S. Department of Agriculture, has highlighted the ideological clash between Trump’s attempts to tighten government entitlement programs and efforts in some states to widen the social safety net.
It’s also stirred outrage and uncertainty among some who stand to be affected.
“I think it’s pretty rotten,” said Lisa Vega, a single mother of two teenage boys in suburban Chicago who applied for food stamps last month after losing her job. Because she receives regular support payments from her ex-husband, Vega said her eligibility for food stamps likely hinges on the income eligibility exceptions that Trump’s administration is trying to end.
“A lot of these politicians don’t realize that us Americans out here are living paycheck to paycheck, one crisis away from being homeless,” Vega said. “You’re just going to take this kind of stuff away from us when we need it the most?”
Agriculture Secretary Sonny Perdue said the proposed rule change is intended to close a “loophole” that states have misused to “effectively bypass important eligibility guidelines.”
Current federal guidelines forbid people who make more than 130 percent of the poverty level from getting food stamps. But many states believe the cap is too restrictive, especially in cities with a high cost of living, prompting them to bypass the limits.
At issue is a federal policy that allows people who receive benefits through other government programs, such as Temporary Assistance for Needy Families, to automatically qualify for the food aid program known as SNAP. The practice, called categorical eligibility, is intended partly to reduce duplicative paperwork. It has also allowed states to grant food stamps to more people.
In 2009, Obama’s Agriculture Department sent a memo to its regional directors encouraging states to adopt what it termed as “broad-based categorical eligibility” for food stamps by providing applicants with a minimal TANF-funded benefit such as an informational pamphlet or telephone hotline. Among other things, Obama’s administration said the expanded eligibility could help families stung by a weak economy and promote savings among low-income households.
Most states adopted the strategy. Thirty states and the District of Columbia are using income limits higher than the federal standard of $1,316 monthly for an individual or $2,252 for a family of three. Thirty-nine states and the District of Columbia have either waived asset limits entirely or set them above federal thresholds, according to the Agriculture Department.
The department’s inspector general has raised concerns about the tactic. It also came under public scrutiny last year after self-described millionaire Rob Undersander testified before the Minnesota legislature that he and his wife had legally received about $6,000 in food stamps over 19 months because his considerable assets and Individual Retirement Account withdrawals didn’t count against his eligibility.
Undersander, who is a Trump supporter, told the Associated Press this week that he had been trying to make a point — not game the system — and praised Trump’s administration for proposing to tighten eligibility standards.
“I think that states just found this loophole, and then I think they’ve been abusing a loophole,” Undersander said.
Although Undersander failed to persuade Minnesota to change its policy, critics were more successful in Mississippi. On July 1, Mississippi implemented a state law prohibiting its Department of Human Services from using noncash benefits in other programs to trigger food stamp eligibility.
The Waco Police Department carried out a focused enforcement effort at the Trendwood Apartments in East Waco last week, responding to a high call volume there and complaints from residents in the complex and the surrounding neighborhood.
From January 1 to July 15, Waco police received almost 300 calls for service at Trendwood, 1700 Dallas Circle, including 21 calls related to assault offenses, according to police records.
“What we know is that often times criminal behavior is brought into this area from nonresidents,” Waco police Sgt. W. Patrick Swanton said in a press release on the operation. “Our officers will continue to make the safety and peaceful living for our citizens a priority. This type of partnership between law enforcement and the community is what our city is all about.”
During the operation Thursday, which involved several of the department’s units, officers filed charges related to the following:
Officers also issued eight criminal trespass warnings to nonresidents barring them from returning to Trendwood.
In February, Kennedy Wayne Hardway was arrested after a shooting that at Trendwood during an argument with a woman. At least one shot was fired that entered a room where a 10-month-old baby was sleeping. The baby was not injured.
In late May, Waco police investigated a shooting at Oscar Duconge Park they believe was related to a confrontation that started at Trendwood, which is five blocks away. No injuries were reported, and no arrests were made.
About two weeks ago, police arrested Monique Ann Baylock, 26, of Waco, at Trendwood, after they say she used a broken pair of scissors to stab another woman during a fight.
Trendwood assistant property manager Mary Sanchez said new management took control of the property about a year ago and is committed to reducing unsafe behavior in and around the complex.
“We have informed our residents that we are working hard and diligently as we can to ensure their safety,” Sanchez said. “We are trying to take the necessary measures to complete that task.”
Sanchez said Trendwood does not deserve a reputation of being a “bad place to live,” but a lot of outside activity seems to affect tenants. She said management has posted notices to residents to not allow illegal activity or suspicious individuals around their homes and to report anything to management that raises concerns.
Trendwood participated in the city’s Crime Free Housing Program for several years, until it was suspended from the program in 2017, said Waco police Sgt. Jared Wallace, the Crime Free Housing Program coordinator.
“We want them back in our crime-free program and we know the reason they are having problems over there is because they are not a part of the program,” Wallace said.
The city program includes training for property managers; specific safety measures including standards for doors, locks, security lighting and address markings; and free safety events for residents focusing on neighborhood watch concepts, according to the city website.
The Villages apartment complex, which has a slightly higher unit-count than Trendwood and also offers income-based Section-8 rental assistance, was the first complex in the city to be certified through the program, Wallace said.
“That area (around Villages) had a reputation and that was something the neighborhood was worried about,” he said. “We worked and worked and we established a relationship with the owners and management at the Villages and the tenants to turn that around. To our surprise, they were the first program certified to meet all of our standards, and this was a significant program for us.”
Wallace said the Villages still generates a large call volume, a total of 218 calls for service from Jan. 1 to July 15, but the numbers are significantly lower than the years before the crime-free housing program started.
“We honestly believe if we can build the relationship back with Trendwood, we could reduce some of the issues that Trendwood and police are consistently dealing with,” Wallace said.
Sanchez, the assistant property manager at Trendwood, said the partnership with the police department would “be exceptionally beneficial.”
“We need our residents to help to enforce that as well,” she said. “We do what we can and this is why the crime-free program would be exceptional. We are working very, very hard to get Trendwood back to where it needs to be.”
District 1 Councilwoman Andrea Barefield said Waco police met with council members before the enforcement operation at Trendwood on Thursday. Residents in the area have complained about safety, though concerns have not only been specific to Trendwod, Barefield said.
“Your home is your home and a place where you should feel safe, but sometimes it’s in an area that is sometimes heavily laden with crime and it is not where you want to be,” she said. “When we meet with neighborhood associations, we talk about some of the tools we can get in neighborhoods to help.”
A strong community partnership with police is one of those tools, Barefield said. Regardless of the approach, restoring a sense of safety to a neighborhood requires a sustained effort from residents and officials alike, she said.
“We have to be relentless in monitoring our neighborhood, because one bust or one operation isn’t going to make this go away,” she said.