The Yarrington Miracle Revisited

I have two regrets about the announcement of the development planned for the northwest corner of I-35 and Yarrington Road that came out at conclusion of the nearly hour-long executive session held at the end of last night’s City Council meeting. The first regret is just that — its timing. By the time Mayor Pro Tem David Wilson officially made the announcement — 15 minutes short of midnight — the council chambers were empty. None of those who packed the chambers every time anything resembling the topic of putting a giant truck stop at that location came up for discussion were present to celebrate the realization their worst fears had vanished. Poof! There’s nothing that could have been done to correct that problem. The executive session was the last item on the agenda and the announcement that instead of a truck stop that property will now be the location of a 10,000-square-foot convenience store (albeit complete with several gas pumps, at least two of which will dispense diesel), restaurants, an upscale hotel and possibly even an office building could not be announced publicly until the entire City Council had been briefed in confidence on the specifics of the various agreements. My second regret was that council person Becky Selbera, who has worked tirelessly for years to bring economic development to the south side of Kyle was ill and could not attend last night’s session, thus missing out on the culmination of her efforts.

By talking to a number of different sources, all of whom allowed me to tell this brief story only if I would not disclose their names, I managed to piece together somewhat how all this came together. A solution to the outcry began in earnest shortly after the Kyle’s Planning & Zoning Commission illegally voted Tuesday, Jan. 26, against rezoning the property in question, thus making the city vulnerable to a lawsuit that would have guaranteed a truck stop would have been constructed on that site.

Facing increased demands from his own constituents, San Marcos Mayor Daniel Guerrero led a coterie unannounced to Kyle City Hall on Monday, Feb. 1, less than a week after the P&Z vote, seeking a meeting with Mayor Todd Webster and City Manager Scott Sellers to discuss how to rectify the situation in a manner everyone could agree upon and what to do about the growing dissatisfaction with that was transpiring in connection with that property, particularly from the residents of San Marcos’s Blanco Vista subdivision, located directly across Yarrington from the property. Quickly those discussions incorporated Hays County commissioners as well as the Greater San Marcos Partnership. These discussions involved not only what would be located on the property but who would provide and finance the infrastructure needed to make the development a reality and how would that infrastructure be provided.

The one sticking point was the objective of the owners of the property, PGI Investments. From what my sources told me (I have yet to have an opportunity to speak with anyone from PGI), one of the things PGI does really well and is considered an expert at is developing truck stops. To ask them to do anything different was against their DNA, much like telling a sprinter he must immediately become a marathon runner, and was naturally going to be met with some resistance. Ironically, their resolve to hold fast to their original intentions was only strengthened as the vocal resistance to the truck stop mounted.

What ultimately made all these discussions reach the conclusion they did, I was told, was the property owner’s willingness to at least discuss possible alternatives, even those they were not only initially comfortable with but ones, my sources tell me, they are not sure about even today. However, late this past Monday afternoon the owners agreed to a settlement in which a third-party economic development consultant, Catalyst Commercial, would prepare a development plan for the parcel that does not include a truck stop, thus allowing Webster, Sellers and the attorneys to brief the council more specifically during last night’s executive session, after which Wilson was able to announce a motion "to direct staff to work on a 380 Agreement that includes having Catalyst Commercial and Gateway Planning assisting in the development and pursuit of an interlocal agreement with the City of San Marcos, the San Marcos Partnership and to bring back to the City Council the 380 Agreement for approval as well as a budget amendment for approval."

After that motion was seconded by council member Diane Hervol, Mayor Webster translated the official language Wilson needed to employ.

"We have come to an agreement with the property owner, PGI, the owner of the Yarrington Road property and they agreed in principle with us to develop the property differently than what they had originally intended," the mayor said. "There is not going to be a truck stop planned for the Yarrington Road property."

Wilson then voiced his regrets that Selbera could not attend the session at which this was announced and went on to say "I really appreciate the county, San Marcos, PGI, our mayor and staff for all the good work on something that’s quite difficult. But I’m hoping as (the city attorney) said (this is) a win, win, win, win. I think this is what we have and that’s a positive thing for the taxpayers when those developments happen. I feel really good about this."

Mayor Webster added he wanted to thank Mayor Guerrero, the City of San Marcos and its city manager and council as well as the Hays County commissioners, whom Webster characterized as being "extraordinarily supportive." He also told council member Shane Arabie "I had given up on this and if you hadn’t smacked me around a little bit, I might have given up." He also thanked Selbera (in absentia) and Wilson for granting him the flexibility to engage in the negotiations and "I appreciate very much the trust that you had."

After the council adjourned, Mayor Webster went into greater detail:

"There won’t be any sexually oriented businesses or a truck stop there. They’re going to put in an estimated 10,000-square-foot gas station on two acres somewhere on the property — we don’t know where yet. We estimate it would have eight gas pumps. No overnights. Nothing like that. It’s essentially a typical service station/convenience store.

"The property owners have been great to deal with. Not even remotely unreasonable in any way. This is something that is out of their wheelhouse, developing a 50-acre property in a way that is not what they do. They had plans for 50 acres of stuff they knew how to do. So we’re going to bring in a partner, the Catalyst group. The City is going to engage them to help frame out what the future of that property is going to look like, to help develop a concept, a site plan. What I envision, and what I discussed with the owners, is that site plan would include office, retail, restaurant. But I don’t want to sell the project short. Hotels for sure. Hotels absolutely. We talked about hotels which could be a real opportunity to expand our portfolio of hotels.

"But I think there is a commitment there to do high quality development. And PGI is interested in that, too. I do think that forming a more formal relationship with them and help bringing the property together is going to be real important.

"We’re going to basically build a wastewater extension from San Marcos’s system into South Kyle. We don’t know exactly the cost, but we estimate it might be around $900,000. San Marcos is going to provide us 1,000 LUEs, into their wastewater treatment plant which will be gravity fed from there. So we’re going to forego for a significant number of years — estimated between five and seven (years) — having to put a lift station down there which costs about $2 million. The $900,000, because of the way it all works, as properties develop we would recoup that $900,000. So San Marcos gets a win because we’re going to finance the construction of a wastewater line extension and they’re going to get customers for their wastewater treatment plant and it strengthens our collaboration. It’s a real good starting place for things that should haven been happening all along.

"The San Marcos Partnership is going to be part of the visioning piece. So they’re the economic development apparatus for San Marcos and for the county. What we talked about and what we believe San Marcos is going to do is Catalyst will be involved in some work on the south side of Yarrington as well, so we’re going to be able to talk about complementary development on both the south side and the north side."

"It will give us a more unified vision of the area," Arabie added.

I asked how it was possible to get all these players together. The genesis, the mayor said, was when the Planning and Zoning Commission made a zoning decision based on a single use, which violates state law.

‘We were boxed in at the point," Webster said. "I had given up. Our options became even more limited than what most people thought when the Planning and Zoning Commission denied the request. Not just because they denied it but what they said about how they denied it. Then I had people running around saying ‘I don’t want a truck stop! I don’t want a truck stop!’ and when city officials do that it creates (another) potential litigation point. So I got a little downtrodden, particularly after the Planning and Zoning meeting, and I told him (Arabie) ‘We’re just going to have to roll the dice on this.’ But he got on me a little bit and said ‘Don’t give up.’

"The City of San Marcos had every reason to be angry, but they reached out to us and didn’t show any anger. They acted in good faith with us and the conversations were such that we were really working together to try to problem solve. I made it clear that I wasn’t about to throw away a development or an opportunity to develop a key piece of property. We can’t afford to do that.

"What you saw from the majority of the council on this issue is ‘We need to develop, we need commercial development’ and just flat-out kicking somebody to the curb and then insulting them on the way out would not have been the smartest thing to do.

"So the negotiations really began that Monday morning," Webster said, adding yet another confirmation to what I had already been told. "I got a phone call that said ‘Hey, you won’t believe this. They’re here.’ I got in my car, drove over, we started talking and the conversations haven’t stopped since. I’ve had really good conversations with all the county commissioners. There’s limits on what they can do, but they’re going to participate.

"So we’re going to end up doing a 380 with (PGI) because we’re asking them to do something that’s very different from what they originally planned. It’s going to end up being the kind of thing we would incentivize. I think it changes the risk quite a bit for the property owner because we’re asking them to do something they’re not comfortable doing but you can compensate for that by adjusting the risk. We’re doing that in a number of ways — financially in terms of the incentives."

"We get to guide the development in a way that’s best for all concerned," Arabie added.

"The property owner was very supportive," Webster said. "Obviously, they were a little disappointed that it was going to be difficult for them to move forward with what they wanted to do. But, to their credit, they were very willing to let me announce all this even though you can’t have a 380 Agreement until you have a concept plan. Obviously, before the documents are actually signed you have to know exactly what you’re going to do. So that visioning that needs to take place by Catalyst and the Greater San Marcos Partnership needs to happen before we can define what that agreement looks like. But we’re going to be out there recruiting to bring the things people want here."

Webster admitted he did was not aware of another instance where two cites collaborated on the formation of a single development in one of them, but he added "It would be kind of weird to have two completely stark different visions for the same intersection. If we did that, it diminishes it for both of us. Handling this the way we did also creates a platform for future collaborations. I can’t be anything but complimentary on the way (San Marcos Mayor) Daniel (Guerrero) handled himself through all this. Everyone from San Marcos was very professional all along the way and I’m grateful for their willingness to provide us wastewater because that’s going to give this area an opportunity to thrive and it creates an opportunity for us, in the short run here, put the money we would have had to use for a lift station into (Kyle’s wastewater) plant issues. But the main thing is, it really allows us to address the development needs for this particular part of our town. It’s more cost effective for the region to gravity-feed and especially in this case where we’re gravity feeding to someone else’s system. That’s all the evidence you need to prove they were working with us in good faith — that they were interested and willing to do that. And that action really made a difference for the property owner because now they are provided wastewater immediately and without this cooperation they weren’t going to. So, by the time they (the owners) were going to develop, there would have been some point in time where they would have had septic out there. So this is an opportunity for them to have wastewater when they’re ready to open.

"I guess, when all is said in done, this is a win for diplomacy."

The mayor said the appropriate zoning changes will be made after the City receives the concept plan.

"There’s not an zoning issue to deal with right this second," he said. "In my mind’s eye that property could have a little bit taller office. Hotels and restaurants will be part of it. I can’t imagine they wouldn’t be. Of course the convenience store is going to be there. I’ve always struggled a little bit envisioning retail there. To me, that’s just because of where the town is at right now. I know many of the residents of Blanco Vista think that’s a perfect place for retail, but it’s just far enough away from everyone that I don’t think it’s attractive for that.

"What’s really exciting about it, too, is we really have the opportunity, through the collaboration with the property — which is new, you usually don’t have the opportunity at this stage to collaborate with the property owner this much — it presents us with an opportunity that we shouldn’t squander.

"What I see we’re short of in the city of Kyle is office space, and the hotel. Because it’s on 35 and it’s close to San Marcos, it’s an attractive place for that naturally. I have already talked to the property owner about a little higher-end hotel because we’ve got wedding venues. So there’s a market for a step-up hotel if you’ve got wedding venues. There’s a possibility for a conference center. Whatever we find we have a need for is on the table.

"I’m convinced this was the right approach to take for the future prosperity of our city and if we follow through with what we’re planning now, every party is going to be better off."