Cinema land

The city of Waco is seeking to withhold the identity of developers it has offered up to $5 million in tax incentives for a $25 million entertainment complex at the northeast corner of Interstate 35 and Highway 6.

Almost a month after the Waco City Council offered a $5 million incentive deal for an entertainment complex on the southern edge of Waco, the identity of the developers has not been publicly revealed, and a former mayor is questioning the need for incentives.

The proposed $25 million complex at the northeast corner of the West Loop 340 and Interstate 35 would include a bowling alley, a movie theater with at least eight screens and high-tech games, as well as retail and restaurant uses.

The city is offering a tax deal that could reimburse up to $5 million in sales and property tax revenue to the development over 10 years, through what is known as a Chapter 380 agreement. The work would include development of the entertainment venue on a 32-acre site while also paving the way, literally, for a multi-phase mixed-use project covering more of the 352 acres available, real estate agent Bland Cromwell and Waco Mayor Kyle Deaver said.

The Tribune-Herald has filed a request with the city seeking the identity of the principals of the project, who have not been publicly disclosed. Council documents refer to the developer as 35-06 LLC. State records show the limited liability corporation formed in 2013, and its manager is listed as Eric Wieser, with an address of 4301 Edmondson Ave. in Dallas. Tax records indicate it is a residential address.

City officials have said they are pursuing a tax increment financing zone to capture a portion of local property taxes, like the one that aids downtown development.

“This is not a commitment of $5 million up front,” Deaver said. “It is a reimbursement for meeting build-out requirements over a given period of time. This would involve sales taxes, property taxes or TIF-related funds for public improvements, or up to $5 million, whichever is less. We expect it to be less. What we have voted on, I think, provides incentives if they perform as agreed. They hope to get projects on line and paying taxes as quickly as possible, and we are proceeding with negotiations with that in mind.”

But at last Tuesday’s city council meeting, a member of the downtown Tax Increment Financing Zone No. 1 board, former Waco Mayor Malcolm Duncan Jr., raised questions about the city’s approach.

He said in a later interview that creating a TIF funding mechanism for a “single interest” such as the entertainment venue conflicts with precedent and policy. He said the state of Texas enabled TIF zones as a way to promote improvements in blighted areas that developers would tend to avoid. In cities such as Waco, they have contributed to renewal of downtown buildings and infrastructure.

Duncan questioned whether a TIF designation would be appropriate for a greenfield site on Interstate 35, and whether incentives are needed at all.

“The city’s website includes language that says the TIF strategy should be directed at blighted property where development would not take place within the reasonable future,” Duncan said. “Also, in our comprehensive plan, it is stated that long-term sustainable community development is most desirable where infrastructure already is in place, not stretching out to sprawl. This development is on the edge of the city limits, meaning assistance would serve sprawl as opposed to trying to contain it. We’ve spent so many years working on core developments. To go to the edge of the city limits, I question.”

Duncan said this site is in a dynamic development corridor, featuring Central Texas Marketplace, Legends Crossing and Baylor Scott & White Hillcrest Medical Center. The Waco Industrial Foundation controls an almost 700-acre tract in the city of Robinson directly across Loop 340 from the proposed development site.

The area has proven its development potential, and he recognizes the entertainment venue has the potential to improve Waco’s appeal, Duncan said.

“That’s fine. My wife is all excited about the new theaters,” he said. “But does that become the public’s responsibility? Quality of life? I think our efforts are defined more as serving the common good. I know this has been presented as a $5 million reimbursement, but it is still $5 million taken from our tax revenue. Some suggest that without the commitment of $5 million, the community would not see that $5 million, and more in the future, which is something to consider. But in middle of our talks about economic development, we discussed the goal of raising income. Creating minimum-wage jobs is no path to advancement. Is that really a viable economic development strategy? That is another part of my concern.”

Mayor Deaver said in an interview this week that he supports the incentives but takes Duncan’s questions seriously.

“Obviously I have tremendous respect for Malcolm,” Deaver said. “He and I have talked through his concerns, and we hope to meet again this week.”

Cromwell, the real estate agent in the deal, also said he wants to talk with Duncan.

Waco Councilwoman Andrea Jackson Barefield said she appreciates Duncan’s comments and that his input shows he “is still incredibly engaged and dedicated to the city.”

“I don’t know if there is a right or wrong way to incentivize this project, or not incentivize it,” Barefield said. “The people of Waco desire particular venues, and we have a responsibility to see if we can make that work. It’s not like that is the only incentivized project going on. We’re finding ways to bring business and industry to benefit the community as a whole.”

Waco Councilman Jim Holmes said applying incentives to a single commercial project “is a little bit out of the norm, but I still think it is worthwhile.”

Local investors are involved, and the site has plenty of interest, Holmes said.

“It’s a cow pasture, has been vacant forever, and it needs to be built out,” he said. “Potential projects coming in there are kind of entertainment oriented, and maybe will meet a local need and keep visitors in town another evening, another couple of days. They will visit the Silos, the Texas Rangers Museum, the Mayborn Museum, Cameron Park, and then move on to the game center for bowling, and hopefully some other things.”

The city’s economic development office suggested the council place several requirements on the developers to receive incentives. They include design and construction of the venue, completing the family fun center within two years, completing surrounding public improvements within two years, achieving the creation of a Planned Unit Development within eight months, and entering into a Master Development Agreement for the remaining 300 acres, according to city documents.

If the TIF zone does not materialize staff has recommended the city give the developer property tax breaks in addition to sales tax incentives during the life of the contract. These breaks of up to 70 percent would apply only to improvements such as streets, drainage, water and sewer utilities, lighting and landscaping and their impact on appraised values.

“This site needs improvements to be developed,” Deaver said. “It has drainage issues due to Cottonwood Creek, as well as utility issues.”

As proposed, the center would generate $28 million in annual taxable sales, and the city would receive an estimated $400,000 in annual sales tax rebates, plus an increase in property tax revenue.

Deaver said the city is not ignoring a second movie theater-related project announced for acreage between New Road and Loop 340 on southbound Interstate 35, near the Flying J travel center and Central Texas Marketplace. Houston-based NewQuest Properties is collaborating with theater giant Cinemark to develop a 143-acre site with restaurants, retail, living units and an entertainment venue featuring a 14-screen movie theater.

Cinemark spokesman James Meredith declined to comment on the possibility of a competitor across the interstate.

The city has has preliminary discussions with backers of the development on southbound I-35, known as Cottonwood Creek Market, and that he expects there will be more talks. No proposal for publicly funded incentives has been announced.

“We have been very careful not to favor one or the other,” Deaver said.

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