June 24, 2008
The gloves came off during Tuesday’s City Council debate over Paul Foster and Regency Centers’ proposal for tax incentives to develop the 55-acre, Farah Manufacturing site near Cielo Vista Mall.
Artemio de la Vega, the owner of the Las Palmas Marketplace whose sister recently married Foster, ripped his brother-in-law’s proposal, labeling it “not worthy of public support.”
West-Central city Rep. Susie Byrd called the strident opposition by Simon Properties – owner of Cielo Vista and Sunland Park malls – to the Foster-Regency proposal hypocritical since Simon lobbied hard for a $20 million subsidy to develop the same property in 2001.
Then City Council toughened its stance and raised the bar on Foster-Regency getting the subsidy they’re after.
If taxpayers are going participate in the retail development of the old Farah site, then City Council doesn’t want just another mall or pretty shopping center with the same old stores but something special, unusual, innovative and new to El Paso.
That was the guidance council members gave City Manager Joyce Wilson and the city’s legal and economic development staff before sending the proposal back to them for more negotiation with Foster-Regency.
Simon Properties’ Vice President Ron Vosper got his licks in by pointing out that the $12 million figure city officials have been using in discussions of the reimbursements of property and sales taxes that Foster-Regency are seeking from the city and county is really more like $18 million.
The city’s Economic Development Director Kathy Dodson then explained that the proposal actually calls for $19 million in rebates, of which $12 million would come from the city over 10 years.
The $12 million figure has been used referring to the total subsidy because it is the “net present value” or what the $19 million in city and county tax reimbursements would be worth in today’s terms. The net present value of the city’s reimbursements, if approved, would be $8 million.
Foster and his partner Brent Harris have maintained that they and Regency are not seeking the tax incentives to give their future retailers a break, but to help with the $21 million demolition and removal of the blighted Farah buildings and preparation of the site before anything “goes vertical.”
Vosper said the true cost of the demolition and debris removal would be more like $5 million and offered to help pay for it – along with other unnamed and yet unrecruited participants – if Foster-Regency would just give up the tax subsidies.
“I think we also need to take into additional consideration that in the estimates we’ve seen, the city is being asked to participate in $21 million in site-work improvements to, quote, remove the blight,” Vosper said. “The building itself is closer to $5 million to level the playing field.
“Everything above that unevens the playing field with other developers in town.”
Byrd reminded Vosper that seven years ago, Simon Properties was standing in the same spot as Foster Regency asking for a bigger subsidy.
“I find it very hard to listen to you now," Byrd said. “You just don’t want competition.”
Vosper said that was a long time ago and the company’s request only consisted of one meeting with then Mayor Ray Caballero.
Byrd said that was untrue.
“For six months you were lobbying us,” she said. “I worked for the mayor at the time. You would not let go of it. You had the chamber riled up; you had the realtors riled up.
”I just wanted to point out that I really do believe you’re being very disingenuous in advocating against this.”
Voster said, “I wasn’t there back then, but I can speak to the fact that in today’s market, it’s absolutely the wrong thing to do.”
Representing Foster and Regency, Harris said if no deal can be reached, they will have to do something different with the property, which sits adjacent to I-10, visible to passers-by.
Unlike past developers who made their purchase of the site contingent on a deal with the city, Foster has already bought the Farah site.
“With Paul’s philanthropic gestures toward the city and he’s given a lot to the city, he felt that someone locally needed to buy that property and try and do something,” Harris said. “We think this town is underserved from a retail standpoint. All the studies show that.”
Their proposal calls for a posh, lifestyle center, but the exact definition of that term came in for debate. The proposed center was described as a fancy but ordinary power center without the kind of high-end retailers found in other cities’ lifestyle centers.
De la Vega commended his brother-in-law for his philanthropy and leadership, but urged the council to look past all of that and focus on the proposal.
“I think we all benefit when we actually produce things that are worthy, new and exciting,” De la Vega said. “That comes out of taking a risk. …
“I got involved because the Foster-Regency project is not worthy of public support. In fact, it is a dangerous proposal because it hurts the city and the taxpayers. It is a clear intent to identify retailers, key retailers along I-10, and congregate them in an area at the expense of the taxpayer.”
Both de la Vega and Vosper said their retailers have already been contacted by Regency about the possibility of moving to the new center if and when it is built.
De la Vega said a true lifestyle center is nothing like El Paso has seen, offering not only quality amenities but expensive stores that serve wealthy neighborhoods and lures high-income shoppers from out of town.
He conceded that now is a terrible time to attract high-end retailers that are taking losses and trying to survive today’s economy.
But, he said, there are better ways to develop the Farah property than Regency is proposing that would not pirate retailers from existing shopping centers, and if Regency cannot do it, others can.
“You have to be really careful,” he said. “When you ask for money from the community, you had better bring a lot to the table and offer something great for the city of El Paso and its taxpayers.”
Eastridge/Mid-Valley Rep. Steve Ortega, South-West Rep. Beto O’Rourke and Byrd said they would not support tax incentives for a power center with the same retail stores El Paso now has.
The council unanimously supported a motion by East-Central Rep. Emma Acosta sending the proposal to the city staff for further negotiations on an agreement that would only let Foster-Regency receive sales tax rebates for retailers new to El Paso, prohibit pirating other local retailers and encourage a mixed-use development, not just retail stores.
“We just have to see if we can come to a meeting of the minds,” Dodson said afterward. “Council members don’t want this to be just another big box center like you already see all over town.”
Despite the national economy, she said, El Paso has one of the best retail environments in the nation and could be attractive to higher-end retailers.