The Foster-Regency proposal to build a shopping center on the 50-acre site where the old Farah Manufacturing plant now sits vacant in exchange for $12 million in city and county tax incentives may be dead.

El Paso County Commissioners Court today voted 3-1 to deny today the 10-year tax incentive package on a motion by Commissioner Luis Sarinana that County Judge Anthony Cobos and Commissioner Miguel Teran supported.

Commissioner Veronica Escobar cast the one vote for the proposal, which was slightly different from the incentive package City Council approved by a tie vote, with the mayor breaking the tie in favor, on Sept. 16. [link] Commissioner Dan Haggerty was absent.

West Miller of the Houston-based Regency Centers said the plan is dead unless something changes.

“We told everyone at the county and the city if we did not receive the net present value of $12 million, we could not go forward with the project, just as the other … developers did before us, including one of our opponents here today, Simon Properties,” Miller said.

“We’re not doing anything now. There won’t be a shopping center built. Until we get an incentive that we can live with that we’ve requested from the city and county, we cannot go forward. We wish we could but we cannot.”

Escobar said she opposed the project initially but came to support it because of the property tax money it would generate for the El Paso school district, county hospital and community college for the decade that the city and county would not be receiving them.

“The compelling piece for me is that it would continue what I see as the ongoing shift effort to shift the tax burden away from residential properties to commercial,” she said.

Teran offered a brief explanation of his opposition, saying, “I guess no one has shown me where we’re going to get new dollars to come and purchase here and create this new money,” he said. “Nobody has demonstrated that at all.”

Cobos said he initially supported the Foster-Regency proposal but ran into a big problem understanding why the developers are asking for $12 million – or $18 million over 10 years – in property and sales tax rebates to clear the Farah site when the city’s own figures indicate the demolition and removal of the plant would cost $6.3 million.

“That’s $18 million to remove $6.3 million in blight,” he said. “So where’s the other $11.7 million? That is the reason I’m against it. It is because the developer needs $11.7 million to make the project palatable as far as profitability.”

Cobos said there is another problem having to do with a little-known difference between the destination of the city’s sales tax revenues and the county’s.

When the county decided to adopt a half-cent sales tax in the late 1980s, it had to rollback the county’s property tax rate by the amount of money generated by the first year’s sales tax.

So, while reimbursing new sales taxes to Foster Regency to offset the demolition of the Farah plant and preparation of the site wouldn’t hurt the city because it would involve money the city had never seen, it could affect county taxpayers in a very different way, Cobos said.

“They say there is no risk, but there is a risk,” Cobos said.

If shoppers quit going to the stores they used to frequent and start going to the Foster-Regency center, which would be known as The Fountains, then the sales tax revenues would go to the developers for a decade instead of offsetting county property taxes, Cobos said.

For the fiscal year that ended Oct. 1, Cobos said, the county’s sales tax revenues rose 7.4 percent or $2.4 million.

“Guess what happened to that,” he said. “It went to offset the property taxes. So, County of El Paso taxpayers received a $2.4 million reduction in their property taxes.”

Those new revenues could be lost to the county and to taxpayers under the proposed deal, he said.

***

To reach David Crowder, write to dcrowder@epmediagroup.com or call (915) 351-0605