City council makes major decisions on the road that defines Kyle

 Whether anyone wants to readily admit it or not, Kyle is defined not by its pies, nor its fajitas, nor its balloon festivals nor even its heritage. The truth is Kyle is defined by a road. A highway. Interstate 35.

Interstate 35 is the reason Kyle has experienced its 21st century growth spurt. Population growth follows major arterials extending from major metropolitan areas. Upon graduating from college, I spent the next 46 years of my professional career in Dallas and witnessed this pattern of population growth first-hand. The road that defined Dallas was North Central Expressway, a six-lane freeway extending four miles north of downtown that became a four-lane one for the next nine miles to the northern city limits. It was a traffic nightmare. But when the Texas Legislature created the Turnpike Act on June 9, 1953, tollroads began to take shape in the Dallas area. What is now Interstate 30 between Dallas and Fort Worth was originally constructed in 1957 as a tollroad known as the Dallas/Fort Worth Turnpike. That arterial stimulated the growth of Arlington and Grand Prairie and facilitated the construction of Six Flags Over Texas which opened midway on the Turnpike Aug. 5, 1961.

To help alleviate the traffic headaches on North Central Expressway, the highway powers-that-be decided to construct a tollroad from downtown Dallas to the northern city limits that could serve as an alternative to North Central Expressway. Construction began in 1966 and it was completed in 1968 when it reached Interstate 635, 8.7 miles north of its origin point. The reason the Dallas/Fort Worth Turnpike became a free highway in 1977 is because J.H. “Jack” Davis, the engineer-manager for the Texas Turnpike Authority, said in 1968 that "When revenue bonds for a project are finally paid off, the facility reverts to the state as part of its highway system, to be used free." Those behind the turnpike could have continued to issue bonds for additional construction projects, but for some unknown reason they didn’t. The folks behind the Dallas North Tollway were not going to make that same mistake. So, in the mid-1980s, work commenced on extending the Tollway northward another 22 miles so that by mid-2007, it extended all the way to U.S. Highway 380, which connects Denton and McKinney in North Central Texas. Plans are in place to extend it another 30 miles northward to the city of Gunter. In short, bonds on that road will never be paid.

When that first section of the extended Dallas North Tollway north of I-635 opened in 1987, there was nothing but empty fields on either side. That fact is hard to imagine today on a highway whose frontage roads are packed with multi-story office buildings, shopping centers, restaurants and, yes, even the headquarters of the Dallas Cowboys pro football team.

Because gravitational pull in Texas is generally north to south, growth emanates from major metropolitan areas to the north first before it begins flowing south. That’s the reason for the Dallas North Tollway. It’s also why here in Central Texas, cities like Round Rock and its neighbors began their growth spurts before Kyle. But when I-35 north of Austin essentially became a contiguous urban center all the way through Georgetown, the eyes of developers turned southward. It’s hilarious today to hear long-time residents of Kyle speak wistfully of some “good old days,” and pine for that time when the city still had a population of around 5,000 and wonder why so many people suddenly discovered the city. It’s because it’s on the freaking interstate. Anyone who didn’t realize this growth was inevitable was completely out of touch with reality. Physically speaking, one could argue Wimberley is a far more desirable place to live than Kyle. But Wimberley is not located on a major arterial. Even Dripping Springs, with its bevy of wineries and other charms, is not located on an arterial that can compare with I-35 and that’s why Kyle’s growth dwarfs that of Dripping Springs.

The theory that development follows major arterials will also have a major effect, within the next 20 years, on FM 1626. FM 1626 is a strange road in that it’s the only highway of its comparative length (13.3 miles, approximately) I’m aware of that begins and ends at the same highway — in this case, the aforementioned I-35. But while I-35 is occupied predominantly by motorists driving through Kyle, FM 1626 will be the major arterial for commuters living in Kyle and Buda driving to workplaces in West Austin, particular those major employment centers lining both sides of Highway 1, or, as it is more commonly called, the MoPac Expressway. By the year 2040, expect FM 1626 to be completely commercially developed from the 45 tollroad into Kyle.

But back to I-35 which also defines Kyle in other ways. There exists in Kyle a divide that is not only physical, but also cultural and political. The divide is between the east side of Kyle and the west side. There is a feeling, not completely without foundation, that the west side of Kyle prospers while the east side languishes — the west side gets the better, wider roads and a quicker response for street repairs than the east side. It is a widely held belief on the east side of Kyle that all the best stores, all the best eateries, all the best developments, the more prestigious subdivisions, the superior schools are all located on the west side of I-35. And the dividing line between that east and west is, of course, I-35. 

This dividing line was a significant focus of Tuesday’s city council meeting. First, the council voted 5-1 to deny a request to amend the city’s Comprehensive Plan to allow for warehouse and construction-manufacturing zoning to the Regional Node Land Use District. This district essentially runs along either side of I-35 from the northern to the southern city limits with an area between Kohlers Crossing and City Lights carved out as other districts. This vote makes sense for a number of reasons. As I mentioned earlier, the overwhelming majority of motorists on I-35 are not residents of Kyle; they are driving through the city. I get a kick out of all the egotists in Kyle who complain about all the drive-through restaurants in the city, thinking all those restaurants were built for them when they actually exist for those folks driving through town on I-35. I am a big believer in the concept that one way to reduce the tax burden on Kyle residents is to increase that burden on out-of-town residents. And one of the more impactful ways to do that is to line I-35 with magnets that will irresistibly pull motorists off the highway and into businesses where these out-of-town visitors will willingly part with their sales tax dollars. Warehouse and construction-manufacturing simply will not serve that purpose. Restaurants, shops and entertainment areas are far more likely to accomplish this. I was a member of the Planning & Zoning Commission that carved out this Regional Node and this “magnet philosophy” was the reason I fought so hard for its inclusion in the land use map. I also fought for it to avoid another public battle such as “The Great Godzilla Truck Stop Fight” of 2016, when a developer wanted to locate a mega-truck stop at the northwest intersection of I-35 and Yarrington Road. (If you have forgotten this episode or are simply unaware of Kyle’s recent political history, you can read about it here.)

Council member Robert Rizo cast the lone vote against denying this request to weaken the Comprehensive Plan.

The second significant vote the council took relating to the road that defines Kyle was one in which the council approved the terms in an agreement that could lead to additional major commercial and apartment developments that will be not only be located along or near I-35, but, again, on the west side of the interstate.

Three parcels of land are involved in this agreement. The first is located on the west side of I-35, just north of the Old Bridge Trail, the road that runs in back of the H-E-B complex. The second is bordered by Marketplace Avenue, the Santa Fe railroad tracks, FM 1626 and the Oaks on Marketplace apartment complex. It is supposed to include five restaurant pads and two retail buildings toward the 1626 side of the project; and four four- or five-story apartment buildings with ground level retail along with three additional three-story apartment buildings on the Oaks end. The boundaries of the third parcel are Marketplace Avenue, Physicians Way, City Lights Drive and Kyle Center Drive (the road behind the ER center and Chicken Express on the I-35 southbound frontage road). This parcel is planned as a mixed-use development that will include a pair of four-story buildings along Marketplace and at least seven three story buildings that will all feature retail-type establishments on the first floor and apartment/office spaces on the others.

Under the terms of the agreement the council approved, the city agreed, among other things, that:

• The developer shall receive an amount equivalent to 50 percent of the ad valorem taxes levied by the city collected from the development and received by the city each year, excluding taxes levied on the base value of the property. The base value of the property shall be the taxable value of the property as appraised by the Hays County Appraisal District for tax year 2021.
• The developer shall receive 50 percent of the city’s 1 percent sales taxes collected from the development and received by the city each year. The sales tax rebate shall not be applied to the city’s .5 percent sales tax enacted for property tax reduction.
• The city shall assist the developer in negotiating with Hays County to enter into an agreement for tax rebates similar to the above terms.
• The tax rebates shall continue until either 15 years from the date the final certificate of occupancy for the initial commercial space is issued for the project or until the developer receives a total reimbursement of $13 million, whichever comes first.

The developer agreed, among other terms, that:

• It will build a minimum of 14,000 square foot of commercial space in the first parcel mentioned above within 24 months after the issuance of all required permits.
• The four-or five-story mixed-use buildings in the second parcel mentioned are intended to have a cumulative minimum of 18,000 square feet of commercial space.
• In the third parcel, the mixed-use buildings fronting Marketplace Avenue and the buildings fronting Kyle Center Drive are intended to have a cumulative minimum of 15,000 square feet of first-floor commercial space. The buildings in this parcel fronting Physician’s Way and City Lights Drive are intended to have a minimum of 15,000 square feet of space on the first floor that is suitable for conversion to commercial space or live/work space.
• It will install “a 12-foot-wide sidewalk along Marketplace that is integrated and connected to the citywide trail system, with design tailored to include pocket parks and trail-oriented retail where appropriate, in the discretion of the developer with city input. It is intended that the sidewalk will have a trailhead connection point to a to-be-constructed pedestrian bridge (such bridge to be designed, constructed, and maintained by the city at its sole cost and expense subject to (a) developer contribution … crossing over the railroad tracks adjacent to Marketplace. The exact location of the bridge and the trailhead to be determined at a later time with the mutual cooperation and agreement of the city and the developer.”
• “Public art pieces, preferably from local artists, will be included in the development as appropriate in the discretion of the developer, with the involvement and approval of the city.”

This agreement was also approved in a 5-1 vote. This time, council member Yvonne Flores-Cale cast the lone dissenting vote. (Mayor Pro Tem Rich Koch was absent when both votes were taken).  I reached out to both council members Flores-Cale (on Thursday) and Rizo (yesterday), offering them the opportunity to explain why they voted in the minority, but, as of the posting of this article, neither chose to defend their actions.

Costco coming to Kyle

Costco, the membership-only big box retail store — the fifth largest retailer in the world — will open a location in Kyle in front of the EVO entertainment complex, possibly as soon as a year from now.

The public announcement was made today at the State of the City address and was made possible by action taken earlier in the day during an emergency meeting of the city council.

The Kyle location will be Costco’s 814th worldwide location and the 563rd  in the United States. In 2020, the last year this information was available, Costco had 105.5 million members worldwide. Costco stores range in size from 73,000 to 205,000 square feet, with the average store being 143,000 square feet. The Kyle location is planned to be 150,000 square feet, according to an announcement today from the city.

“The new Costco location will be located along Interstate 35 between Kohlers Crossing and Kyle Crossing in the Dry River District Development, a 65-acre mixed-use commercial development by Endeavor Real Estate Group that is anchored by Evo Entertainment and Home Depot,” the city said in its announcement.

Today’s announcement is a major victory for City Manager Scott Sellers who has been working behind the scenes since his arrival in Kyle in January of 2015 to land a Costco here.

“We have been working to make Kyle a hub for high-paying and high-quality jobs along the I-35 corridor and having a company like Costco invest in our city is a valuable opportunity for our strong and always growing workforce” Sellers said today in a prepared statement. “Costco is not only one of the top retailers in the world, but they also have a proven track record of taking care of their employees with very competitive wages and benefits.”

Costco’s minimum wage is $16 per hour and the average wage for hourly Costco employees in the United States, excluding any overtime premium, but including an extra check component, is around $24, according to the city’s announcement. The new location in Kyle is expected to create approximately 225 jobs.

Brian Whelan, Costco’s Northwest Atlantic Division senior vice president, who represented the company at today’s State of the City luncheon, said he hopes construction on the Kyle store will begin early next year and that it will be open to the public by July 1, 2022.

The Kyle City Council met early today to approve a Chapter 380 Development Agreement, which, according to Mayor Travis Mitchell, provides Costco “with about $5 million in tax rebates over 15 years. It is projected that Costco will produce about $11 million on top of that $5 million in revenues (to the city). So that’s just under $1 million a year net benefit to the city. Certainly a win for us.”

Mitchell emphasized the city’s overall commercial growth during his luncheon State of the City address today noting that last year Kyle issued new permits for 761,000 square feet of commercial space.

“Even during the pandemic, that was a record for Kyle,” the mayor said. “And yet, in perspective, in the first five months of this year, Kyle has issued permits for 1.3 million square feet of commercial space. That means 2021 has already shattered the records of all previous years.

“The City of Kyle remains eager to offer incentives for high quality commercial development,” Mitchell said. “But I want to publicly state, our standards are high. Candidates for permits must clearly demonstrate how they will help the city continue to prosper, in the short term and in the long term. Costco will do that and that’s why we are proud to partner with them. 

"We’re looking for high-end jobs, high-end retail, vertical mixed-use, vertical Class-A office, boutique hotels and sit-down restaurants,” he added.

Two American companies — Walmart and Amazon — rank as the first and second leading retailers in the world, and two German corporations operating discount grocery stores — Schwarz Gruppe (operating under the Lidl and Kaufland brands) and Aldi (operators of 10,000 stores in 20 countries) — rank third and fourth on the list of the world’s leading retailers.

Three new buildings coming to Hays Commerce Center

The city’s Economic Development Department and HPI Real Estate Services and Investments have partnered to bring three major developments to the Hays Commerce Center, creating an additional 380,000 plus square feet of commercial industrial warehouse and office space along west side of I-35 north of Kyle Crossing, a city spokesperson announced today.

The Hays Logistics Center Building 2 will be a 206,000-square-foot development aimed at attracting large e-commerce distributors with features like cross-dock loading and unloading, 32-foot clear height and an ample truck court area for high-traffic distribution/fulfillment needs. The center is being developed in partnership by HPI and Hillwood Investment Properties.

Hays Commerce Center Building 3 is planned as a 68,240-square-foot building with flexible speculative suites ranging from 11,800 to 68,240 square feet that is projected to be ready by the end of 2021. The building is suited for office and warehouse space with a 28-foot clear height, dock high doors and oversized loading ramps.

The third project is Hays Commerce Center Building 4, a 106,673-square-foot building with 53,166 square feet available that is also projected to be ready by the end of 2021. The building will have a 32-foot clear height to allow for large inventory capacity, as well as dock high doors, oversized loading ramps and a 180-foot truck court that will connect with Building No. 3. HPI is the sole developer on these last two projects, the city’s announcement said.  

“Our goal for Kyle is … creating a thriving local economy that attracts quality businesses and employers so that residents can live and work in their community,” Kyle Economic Development Director Diana Blank-Torres said. “We’re excited to see the continued growth and availability of speculative space in Kyle because it only enhances our ability to attract and retain quality companies and employers.”

HPI Industrial Project Partner Davis Bass said these new developments “will allow us to accommodate a growing range of industrial tenants looking to service the Austin-San Antonio region. Having large bulk warehouse and manufacturing space, shallow bay flex space, as well as some dedicated retail pad, Hays Commerce Center will help create a thriving economy in the City of Kyle.”

The Hays Commerce Center is 100-acres of parceled land located in the northwest corner of Kyle. HPI Real Estate Services and Investments, in partnership with the city, broke ground on the project in 2018, with the intention that it will expand to become, in the city’s words, “a prominent mixed-use development at the center of one of the nation's fastest growing corridors.”

City to host business development webinar

The city’s Economic Development Department is partnering with the Kyle Chamber of Commerce and Workforce Solutions Rural Capital Area to host a free webinar called “Ready. Set. Thrive! Empowering your Business through Workforce Solutions” on Tuesday, May 4 starting at 10 a.m., a city spokesperson announced today.

The event will kickoff Economic Development Week in Kyle, although that celebration is actually a week after the webinar, May 9-15. 

“The webinar will have an array of panelists from regional organizations — including Workforce Solutions Rural Capital Area, Austin Community College and Hays CISD — who specialize in workforce development and helping employers grow their businesses by utilizing the public workforce system, regional resources and data-driven strategies to attract and retain talent,” the city’s spokesperson said.

Interested individuals can register for the webinar by clicking here.

Short course: Tax Abatements 101

In response to an article I wrote about an economic development project that should be approved by the City Council without much disagreement tonight, a David C. Crowell wrote on Facebook: "How much more will the actual taxpayers be on the hook for because of this tax break for an absentee landlord?"

Semi-legitimate question that deserves a wider response than one simply posted on Facebook (although, obviously, this reply will appear there as well).

The short answer is zero. Nothing. Nada. Zilch. But the question deserves a more detailed response than that so let me see if I can provide that detail while, at the same time, reducing this down to its simplest terms.

Let’s say you are the owner of an undeveloped piece of land and your current property tax bill on that land is $10,000. But now you’ve decided to develop that land into some kind of commercial/industrial usage and you know you are going to need basic city services on that property like water lines, wastewater lines, probably even effluent water lines and other utilities and the new infrastructure required on the property is going to cost a hefty bundle. So you go to the city to discuss it and the city hits you with the fact that it isn’t going to pay for it. "That’s going to be up to you," the city tells you. "But you can recoup your investment with the lease payments you receive from whatever tenants lease the facilities you are providing. And since this is a triple freeport area you should have no trouble attracting tenants willing to pay premium rates.

"But, we actually really want this development to happen," the city tells you, "so we’re willing to make you a deal." And the deal they offer you is a five-year, TIF-based (TIF being the acronym for tax increment financing) property tax abatement nearly identical to the one on tonight’s council agenda. Here’s how it works:

Because of the development you place on this project, the value of that land appreciates to an extent that your property tax bill the following year is $25,000, a $15,000 increase on the year before. The city’s offer is that if you pay that $25,000 tax bill on time, it will give you the $15,000 difference back, as long as all the buildings you placed on the property are vacant. However, if, say, 30 percent of those buildings have been leased, that $15,000 will be reduced by that 30 percent, so your rebate will be $10,500. In each of the five years of this deal, that percentage of the rebate drops another 20 percent (yet all the while the city will continue to receive at least the $10,000 in property taxes it would have had the property never been developed). So in Year two of the agreement, if the property tax bill would normally have ballooned to $40,000 and now you have 80 percent of the buildings leased, you would receive a rebate of $4,800 (80 percent of the $40,000 minus the original $10,000 and then 20 percent of that total).

You are being repaid for the remainder of your original infrastructure investment from the lease payments you are getting as a result of your development being so attractive to potential lease holders due to the triple freeport exemption. It’s important to note here that you, as the owner and the developer of the land, are not entitled to this exemption. That is a tax exemption based not on land value, but on inventory value. So it is only of use to those who would want to lease one of the facilities on your property. For example, I have a company that manufactures smart phones. I import all the parts needed to manufacture the phone, assemble them and then ship the phones to the companies that will eventually sell them to the public. Triple freeport exemption means the (1) county, (2), the school district and (3) the city exempts me from having to pay property tax on those parts as long as they leave my facility inside a smart phone within 175 days from the day I receive them. I think you can see why someone like a smart-phone manufacturer or really any kind of a distribution center would seek out locations with this triple-freeport exemptions. And that's what makes your development so appealing to potential occupants and increases the likelihood it will be a success.

But I don’t want anyone to just take my word on how this process works so I ran this whole thing by Assistant City Manager James Earp, the guru the city selects to negotiate and draft economic development agreements. He was kind enough to take some time out of what I believe is a vacation cruise he’s taking in the Gulf of Mexico to read all the above and then tell me "the way you describe it seems sound."

So there’s that.

Boom like that

Majestic Realty's Lewisville development

The mushroom cloud might not be visible to the naked eye, but it’s there, rising in the sky near the southwest corner of Kyle Crossing and Kohler Crossing. If all goes according to plan, that will become the site of a half-million square feet of primarily logistics-based office/industrial/warehouse space — arguably the most significant economic development project the city has witnessed in at least the last half decade.

The City Council will consider and, if its members are thinking clearly and with the best interests of the city firmly implanted in their minds, will approve a set of economic incentives to allow the project to move forward. The city is nowhere close to giving away the store on this deal. Quite the opposite, in fact; this is an excellent deal from the city’s point of view. As I interpret this, the city will be giving the developer a limited property tax abatement for five years, beginning from the time "the developer completes and receives a certificate of occupancy for the project," which, of course, will be after the two-building project is built on the campus. The abatement decreases by 20 percent in each of the five years and only applies to the unleased portion of the project. "By way of example," the agreement states, "if in year one the developer leases 50 percent of the rentable square footage of the buildings on the property, then the incentive payment will be reduced by 50 percent."

These kind tax abatements makes sense because the city doesn’t really loose any money on the deal. No matter what, the city is going to continue to receive the property tax on that land based on its current valuation whether or not it is developed. The rebates come from increased valuations caused by the development. And, in this case, within five years, or even less if the project is fully leased before that, the city will collecting property taxes on land with a significantly higher valuation without having to rebate a single cent.

This is also wonderful news for homeowners who will now have a major business development sharing the city’s overall property tax burden.

"I could not be happier to bring this latest project before the council for a vote," Mayor Travis Mitchell said today. "Jobs are coming to Kyle."

The other piece of good news in all of this is the identity of the developer, Majestic Realty Company, a privately-held outfit that’s been successfully doing business longer than the overwhelming majority of Kyle residents have even been alive. Majestic Realty was founded by Edward P. Roski in 1948 and to give you some idea of its stability, its current chairman is the founder’s son, Edward P. Roski Jr.

"Like my father, I have always believed in the importance of investing in, and being active members of, every community in which Majestic is located," according to a letter signed by the current president and chairman of the board on the company’s website. "This core philosophy remains an integral value, impacting how we do business. Our business model of maintaining ownership of all our properties creates a vested interest for us that each one is a long term success and it also requires that we help build sustainable communities. Likewise we build long term relationships with our tenants and financial partners, helping our tenants address their real estate needs as their businesses expand across the nation. Beyond building environmentally friendly projects which create jobs close to our population centers and generating revenue for their cities, our Majestic Realty Foundation works closely with local organizations to help improve the quality of life for the at risk and underserved." (I’ll get back to that Foundation below.)

Majestic is currently involved in development projects in 10 states, but considering only its Texas projects will give you some idea of the company’s breadth and scope. It’s largest Texas project is a 215-acre master planned business park that is designed, upon completion, to total more than 3.2 million square feet of Class A warehouse and distribution facilities in seven buildings along State Highway 121 in Lewisville, just five miles from the DFW International Airport. As will be the case in Kyle, the tenants in this project will be able to take advantage of triple freeport exemptions. It’s second largest deal is a 320-acre master planned business park on I-35W just south of Fort Worth that includes 1,344,000 square feet of industrial space. It is also developing a project called Port Grande, a 1,952-acre master planned logistics park situated along the U.S.-Mexico border adjacent to IH 35 in Laredo. From what I can tell, the Kyle project will be the fourth largest of the six developments Majestic has in Texas.

"Our agreement with Majestic Realty is another step in Kyle’s quest to be an employer-friendly city," Mayor Mitchell said. "We started a few years back by targeting the light industrial industry — in earnest. To accomplish this, the city worked with the school district to become a triple-freeport tax exempt community. Since the district’s vote last year, we have gone from zero to nearly one million square feet of speculative industrial space. It’s a phenomenal exclamation point recognizing the validity of our efforts to become a triple-freeport tax exempt community. I could not be happier to bring this latest project before the council for a vote. And I remain grateful to Hays CISD for their trust in our team. Jobs are coming to Kyle."

This development could have more benefits than the ones that immediately draw your attention, i.e., two logistic centers totaling 500,000 square feet. In 2002, the company launched that aforementioned Majestic Realty Foundation, which, the company brags, has "placed grants totaling more than $10 million in hundreds of programs, organizations and communities throughout the country." The company is also a member of the U.S., Green Building Council and recipient’s of the EPA’s Environmental Justice Achievement Award. "Majestic Realty Co. has built a strong foundation and evolving expertise in green building and environmentally responsible design and service delivery," according to a corporate statement. "We are committed to a fully-integrated approach with not only the capability to build green, but implementation of a corporate philosophy which encourages sustainable practices."

The council will also decide whether to formally post notices of public hearings on the proposed annexation of four areas of land totaling nearly 260 acres, but that land growth of the city, designed primarily to ensure that the redesigned Highway 150 continues to be within the city’s limits, pales in comparison to the economic growth inherent in the Majestic project.

Also on the agenda, is the formal presentation of something I discussed following the last council meeting — the joint fundraising effort with the Make-a-Wish Foundation to pay for the construction of a roller hockey rink in Gregg-Clarke Park, just the type of a project a corporate partner like the Majestic Realty Foundation would likely be a part of.

Some at city suffering from premature exclamation

So I was having this conversation one night last week with one High Ranking City Official (who henceforth shall be referred to as HRCO and who shall remain nameless only because this person probably did not know elements of this conversation would be made available to one and all at the time that it took place). Anyway HRCO asked me if I was planning on attending Tuesday’s groundbreaking of what is now being called the Hays Logistics Center.

This apparently is a pretty big deal. It will take place at 10 a.m. on that land being developed as a business park across Kyle Crossing, north of the Home Depot. Eventually, it’s supposed to be a two-building complex, although, officially, this groundbreaking will be for the first of those two, a 220,000-square-foot structure scheduled to open by the end of the year.

I’m not much for groundbreakings. I appreciate their ceremonial content, but, mostly they rank just below hairstyling for me as a spectator sport. Besides, as I told HRCO, by nature I’m a night person who usually calls it a day around 3 a.m. and tries to be awake and functional no later than the crack of noon each day. Watching dirt being turned at 10 a.m.? Not so much. Not only that, I said, but I have it on good authority an even bigger announcement of a more important economic development deal for Kyle is about to be unveiled any day now.

"That’s true," HRCO, who is more than HR enough to know about these things, told me. "But this one is pretty significant as well."

"I guess that’s true," I replied, "since I learned it wouldn’t even have been possible had we not had That Triple Freeport Thingee."

I guess I should pause in this narrative to explain the term That Triple Freeport Thingee. Section 11.251 of the Texas Tax Code exempts facility owners from having to pay property taxes on "goods, wares, ores and merchandise other than oil, gas and petroleum products" providing those "goods, wares, ores and merchandise" leave the state within 175 days after they arrive here. Section 11.437 of that same code extends that same exemption to "’goods in transit’, described as goods acquired inside or outside the state, detained at a facility in which the owner of the goods has no direct or indirect ownership of the facility, detained for storing purposes by the person who acquired or imported the property, and then shipped to another location in or out of this state within 175 days." These tax breaks are called "freeport exemptions." Now, as most property tax payers know, the three primary collectors of property taxes are the city, the county and the local school district, with that last collector collecting the lion’s share of the taxes. It takes all three of those entities granting those just described exemptions for a community to have That Triple Freeport Thingee. For a long time, only Hays County and the City of Kyle granted those exemptions here which sent major developments such as the Samsung semiconductor facility that went to Manor and the Amazon fulfillment warehouse in San Marcos looking for those more economically favorable locations. After a steady period of portraying the Hays Consolidated School District as the villain in the area’s pursuit of economic development and genuinely working really hard to make the school district look bad and feel guilty, the no-growthers on the school board were ultimately beaten down to the point where they finally gave in last year and granted this "freeport exemption," finally giving this area the much desired That Triple Freeport Thingee.

However, when I credited That Triple Freeport Thingee to HRCO as making the Tuesday groundbreaking possible, I was stopped short.

"Well, that’s not exactly true," HRCO told me.

"What do mean ‘That’s not exactly true’?" I replied. "I mean the City’s official announcement about this project — right there on the City’s web page — reads, and I quote, ‘Both developers added that this project would not have been possible without the passage of the freeport tax exemption by Hays County and Hays Consolidated Independent School District in 2016 and 2017.’ (Side note: I have not been able to contact either developer — Hillwood Properties out of Dallas and HPI Real Estate Services & Investments of Austin — to determine if they did truly say this.) And our own, highly trusted, mayor tweeted ‘This project made possible by the @HaysCISD school board’s freeport vote last year.’ Are you telling me these folks are engaging in some form of hyperbole?"

"What I’m saying is Triple Freeport really doesn’t factor into this project," HRCO said. "For all practical purposes, this is, right now, just going to be an empty building. Now, perhaps some future tenants in those buildings will be able to use the freeport exemptions. And perhaps the developers are building this project because they believe the exemption will help them land tenants. But for right now, this is just going to be an empty, leaseable building that didn’t require triple freeport to be constructed,"

I found the entire conversation terribly deflating. Next thing I know someone will be telling me there’s no Santa Claus. Funny thing about this new knowledge, however. It actually made me decide to set the alarm Tuesday morning so that I can be semi-awake enough to attend the groundbreaking.

However, I still draw the line at hairstyling tournaments.

Another one bites the dust

I must admit I’m a tad conflicted right now.

A couple of weeks ago I took Kyle’s 2018 Community Survey and, as I recall, question No. 7 asked "What specific stores and restaurants would you like to see in Kyle?" I don’t remember my exact answer to this question. Last year I replied to a similar question that I would love to have a Container Store here in Kyle. The Container Store located closest to us is across US 183 from the Arboretum in North Austin. That’s 32 miles away — 37-minute drive time if there’s no traffic. Not insurmountable, by any stretch of the imagination, but not exactly convenient either.

But when I think about it, I realize that just about anything I want from the Container Store I can purchase on-line without ever having to leave my home, without having to deal with the traffic. Then I recall what I wrote about Kyle’s Christmas period sales tax receipts taking a severe hit and attributing it to the likelihood that more and more Kyle shoppers are purchasing goods on-line. I mean, you can even get home delivery of your groceries.

Then, in today’s Austin American-Statesman I read where Toys "R" Us is making preparations to close all their stores, at least all their U.S. stores.

And this got me to wondering whether Kyle is seeking 20^th Century solutions to 21^st Century problems. Are brick and mortal retail outlets what Kyle should be working toward or what local shoppers really want?

The same is true when it comes to transportation. There are those in Kyle who are demanding mass transportation options when our neighbors to the north, who, in Cap Metro, have a well-evolved mass transportation infrastructure in place, but one that is steadily losing ridership. Here we are, entering an era when most transportation experts are predicting driverless cars will dominate our roadways, and there are those still wondering why we don’t have bus or rail service.

Council members were briefed, during the executive session at the most recent City Council meeting, on the progress of negotiations involving four economic development opportunities, dubbed "Project Maria," "Project Electric Light," Project Last Mile," and "Project Purple Mountain." Three different sources, all of whom obviously wish to remain anonymous, have told me one of those has the potential to be "a real game changer" for the city. The first three of those projects have appeared on a number of recent agendas ("Project Purple Mountain" recently replaced one with the codename "Project Caribbean Dream.")

With Toys "R" Us being the latest in a long line of retail/restaurant outlets to bite the dust, here’s hoping this "real game changer" is not a brick-and-mortar store or restaurant like one the city asked about in its survey, but a significant employment center, something that could go a long way toward solving those transportation concerns as well as generating a major new source of municipal revenue.

Yep. The more I think about, the more I realize that the last thing we need here is a Container Store — that question No. 7 is not the one the City should be asking.

Tenorio must persuade the persuadables

Before I officially retired, I spent 20 years as a partner in a media consulting/crisis communications company and in that line of work I attracted a large number of political clients from all over the country, up to and including clients running for President of the United States. One piece of advice I gave to all these political clients was that their audience could be divided into three sections: (1) those who fervently agree with everything you say and stand for, (2) those who just as fervently disagree with everything you say and stand for and finally, (3) those who haven’t made up their minds one way or another. I argued that addressing just that first group was like preaching to the choir. You want to make sure they stay on your side, but you can’t win by devoting all your attention exclusively to them. I also said trying to talk to the second group was not only a complete waste of time (you’re never going to get them to admit "You know, you’re right and I’ve been wrong all these years" — that’s never going to happen), but sharing the conversation with this group gives them another opportunity to get their grievances aired. The group you need to speak to — the group you need to convince — is that third group. Persuade the persuadables.

This is advice council member Daphne Tenorio needs to follow right now.

I say this because of the publication yesterday evening of Tuesday’s city council agenda, specifically items 9, 10 and 11 on that agenda.

I’m not sure of any of the actual specifics but here’s what I expect to go down at Tuesday’s potentially spirited meeting. During the discussion on Item 9, council member Travis Mitchell, possibly joined by one or more of his council colleagues, will outline discussions held in executive session designed to attract an economic development to Kyle. Either during that discussion, but most likely in the discussion on Item 10, Mitchell, again possibly joined by one or more of his council colleagues who participated in these executive sessions, will allege that Tenorio either (1) failed to disclose her ownership of a business interest that stood to benefit from this economic development and thus failed to recuse herself from the discussions designed to pursue the development or (2) based on the information she gained in these private executive sessions she then purchased ownership of a business interest that would benefit from this economic development.

Then comes Item 11 in which Tenorio apparently plans to speak "about potential, perceived or real conflicts of interests as it relates to all council members."

In other words, she’s going to play her (President) Trump Card. Her message is essentially going to be: "OK, I’m dishonest. I’m a crook. But I thought I could get away with it because all the other council members are just as dishonest and just as crooked as I am." Just like Trump’s blame game, I’m betting that message will play well with her base (in fact anecdotal evidence suggests it already is), but it’s not going to convince anyone else. It won’t persuade the persuadables.

Item 10 on the agenda says "discussion and possible action" regarding whether Tenorio might have committed a felony or simply an ethics violation. The possible actions that could be taken include, I’m guessing, asking the Hays County district attorney’s office to pursue prosecution, turning the matter over to the Texas Rangers for additional investigations, remanding the issue to the city’s Ethics Commission (which contains at least two avowed Tenorio supporters), asking for Tenorio’s resignation, a censure, a reprimand, or taking no action at all. A number of these aforementioned options involve legal proceedings and it’s important to remember that in any legal proceeding there is a presumption of innocence on behalf of the defendant, at least until a final judgment has been rendered.

But there is another court at work here, the Court of Public Opinion, which for someone’s political present and future is just as important as the courts of law. And immediately speaking, the Court of Public Opinion might be even more important in this situation. How Tenorio handles that court will determine her immediate political future.

My advice to council member Tenorio right now would be to bite the bullet and hire a crack crisis communications strategist, one with a record of successes in the world of politics, and then follow that person’s advice on what to say, when to say it, where it should be said, how it should be said, and, equally as important, who should actually be saying it. Lay out a strategic communications course of action. Don’t deviate from it one bit. Don’t go off-script, not for a second.

This is the only way she will have a chance to successfully persuade the persuadables.

Something economically important to note about that blood bank

I wish I could say I glossed over this when I wrote about the postponement of a conditional use permit for BioLife Plasma Services during Tuesday’s Planning & Zoning Commission hearing. The truth is I really ignored it.

During the discussion about why the blood bank, proposed to be constructed across Seton Parkway from where the Goodwill Industries center is under construction, required a comparatively high number of parking places, the facility’s architect Doug Elsbury said, among other things, that center will employ 90 persons.

That’s 90 new jobs for Kyle, folks! And I’m betting most, if not all, of these positions will be considerably more lucrative than minimum wage jobs. As far as I’m concerned, this project can’t move through the municipal pipeline quickly enough.

For an area zoned RS, which is the zoning for this particular site, the maximum number of allowable parking spaces is 101. BioLife wants 170. Why? Elsbury addressed that very question at Tuesday’s P&Z meeting:

Doug Elsbury

"We get that question a lot because it’s like ‘Seriously, guys, this is not even 17,000 square feet and you’re asking for 170 parking spaces. What are you doing in there?’ It’s amazing how many people donate. It’s a cool thing. You get money for donating as well as it’s medicine. Immune deficiencies is the main thing. So you have 72 beds. They typically have that thing at least half full of beds. And that front door is busy. And they have 90 employees. So the math adds up. We have factual evidence from the 80 centers that we’ve done that we need those (parking) stalls."

As you can see. Elsbury figuratively buried the 90 employees number (no pun intended) in his explanation so I am going to try to exonerate myself with that. But, later, I got to thinking about what he said. In the back of my mind I kept thinking "He said 90 employees, meaning 90 new jobs, at a medical facility. In my book, that seems significant and I didn’t even mention that in my original story.."

So, today, I reviewed my recording of the meeting and, sure enough, that’s what he said, albeit, as you can read for yourself above, somewhat off-handedly.

The Board of Adjustments will consider BioLife’s request at its Oct. 3 meeting. A public notice of that meeting appeared in this week’s Hays Free Press. That notice said "All interested persons are encouraged to attend the public hearing and express their opinion on the variance request." The meeting is scheduled for 6:30 p.m. and personally I hope the city council chambers is crammed with supporters who want to see Kyle become a more economically viable community. Remember: this is not about parking, it’s about 90 new above minimum wage jobs in a medical facility.

And, hopefuly, once the Board of Adjustments grants the variance, the Planning & Zoning Commission will quickly approve the conditional use permit at its Oct. 11 meeting so that earth can start to be moved to create 90 new, much-better-than-minimum-wage, jobs in the heart of Kyle.

Earlier today, I had a telephone conversation with Elsbury about these new jobs.

"Not only are you creating decent-paying jobs, you’re infusing money into the area because you get money when you donate," Elsbury told me. "I think it’s around $40. So there’s quite a bit of spending money that would just come from that, let alone the jobs."

I told Elsbury during today’s telephone conversation that the overwhelming majority of new jobs in Kyle of late have been minimum wage retail positions and that I was assuming the BioLife jobs would be of a more professional, thus higher paying, variety.

"I don’t know exactly what their pay scale is," he said, "but these are jobs that require education, a degree. There’s phlebotomists — they’re the people that are on the donors’ floor. You have to be educated for that. That’s more than minimum wage."

So there you have it.

Council OKs budget, lower tax rate, pre-annexation template but tables loan-for-jobs deal

The City Council unanimously approved an $80 million budget for FY 2016-17 tonight, lowered the property tax rate one cent to $.5748 per $100 property valuation, unanimously passed a template for agreements that will be used whenever a property owner outside the city limits requests utilities from the city, but tabled a plan to offer RSI, Inc., an interest-free economic development loan in return for hiring new employees.

No reason was given during the council meeting for tabling the RSI agreement, an action the council took at the behest of City Manager Scott Sellers. After the meeting I asked Sellers why he made the request and he replied: "I think we just needed a little more time to get everyone comfortable with it." When I asked "Who is not comfortable with it," he just gave me a "C’mon, I can’t tell you that" smile, but added "You’ll know soon enough."

It was really the only unexpected event of the entire 28-minute meeting.

The blank spaces on the agreement template will be filled in and signed by all parties whenever a property owner outside the city limits wants the city to provide utilities to that owner. The agreement basically says that, in return for providing the utilities, whenever the city blows the whistle that property will be annexed into the city limits.

Sellers told the council the agreement applies to "utilities extended within the city’s CCN, meaning our service territory for water/wastewater, another neighboring jurisdiction’s CCN, a neighboring jurisdiction’s ETJ or in their corporate municipal limits. But what this agreement stipulates is any time those services are extended to a property owner they would need to sign one of these pre-annexation agreements which basically states they would dis-annex from whatever territory they are in and, in exchange, annex into either the city of Kyle’s corporate jurisdiction or sign an agreement that says at the time the city of Kyle desires or has the ability to annex that area that it will be a voluntary annexation."

Sellers said the city has extended utilities to some of these areas in the past and when the city tried to annex them, "there are times when we are fought for that annexation. Yet they are taking advantage of that city service we have already provided to them.

"So this basically states," Sellers said, "if you’re going to receive city services that you will annex in at the time that annexation is called upon." He said that annexation might not take place until three to five years after the utilities are provided, "but at the time that annexation is the logical next step for the city, that property owner will annex into the city of Kyle."

Mayor Todd Webster said the template came about largely because of recent annexation efforts.

"We had property owners receiving utilities who didn’t want to be annexed," the mayor said. "They said they already received all the benefits of being within the city without having to pay city taxes, so why should they be annexed? I could see from where they were coming from why they would feel that way. I think this policy will resolve a lot of future disagreements. And it wouldn’t apply to anyone unless they made the choice to ask us for utilities."

As predicted, the vote on the final reading of the proposed budget was 6-1 with council member Daphne Tenorio casting the lone vote in opposition, presumably for the same reasons she gave for opposing it on first reading last Wednesday. The vote on the lower tax rate was unanimous.

In other action tonight, the council:

• Officially welcomed the city’s new recreation division manager, Jason Miller, who comes to the city after having worked for the city of New Braunfels, as well as Sarah Watson, who will become the city’s new programs and events specialist. Watson is also the staff liaison with Kyle Area Youth Advisory Council (KAYAC) and she told me after the meeting she plans on retaining that liaison position in addition to her new responsibilities.
• Unanimously approved the appointments of seven high school students — Jude McClaren, Skyler Gold, Mia Padron, Dharma Heaney, Raymond "RJ" Navarro, Anna Holsonbake and Samantha Martinez — to KAYAC.
• Unanimously approved Ryan Browning, council member Travis Mitchell’s nominee, to the Ethics Commission.

Building permits indicate city growing at phenomenal rate

Although the last couple of months have seen a tapering off of residential building permits issued, the city is on a pace to issue 646 such permits this year, 123 more than in 2015.

Looking at the numbers during the last three years and comparing those to the figures from three years before that is what really gives you an idea of Kyle’s amazing growth. Assuming 646 residential permits are issued this year, that would bring the total of such permits issued during the last three years to 1,674. The numbers for the three years before that — 2010-2012 — were 757, less than half of what’s been issued since Jan. 1, 2014.

Translate all that into population numbers, using acknowledged, accepted formulas, it means the city's population is on a pace to grow by 24,079 during the current decade. Stunning!

Commercial growth reflects similar trends. Between 2010-1012, the city issued 103 commercial building permits. This year alone the city is on a pace to issue more than what was issued between 2010 and 2012, an all-time high of 108 (which could be a problematic figure because the numbers are somewhat skewed by the realization 40 such permits were issued just last month alone, very much a one-month aberration. The city would have to average issuing nine commercial permits each month for the rest of the year to reach 108 and the highest number for any one month this year before August was 8 in July. So I’m going to assume the final figure will hover closer to 90). But even that somewhat pessimistic assumption of 90 commercial permits issued this year means, during the last three years, the number of commercial permits issued would be 246, again appreciably more than twice the number from the three preceding years.

The numbers speak for themselves.

Economic development project bringing 66 new jobs headed our way?

City manager Scott Sellers told the city council tonight he would like to apply for a $1 million grant that would help lure an economic development project to Kyle that could mean at least 66 new jobs.

The money, Sellers told the council, would be used to extend wastewater service to the site of the development that Sellers described as "an industry looking to relocate to Kyle."

The announcement was part of a Texas Capital Fund Program public hearing at which no one chose to speak.

According to the Capital Fund’s website, a number of the grants it offers are matching grants, although the program under which Sellers will be seeking funds seems to come under the heading of "Infrastructure Development" which, according to the website, "provides grants for infrastructure development to create or retain permanent jobs in primarily rural communities and counties." The word "matching" is notable for its omission in that description.

After the council adjourned its astonishingly short 16-minute session, Sellers said: "It’s a matching by employees, basically. If there’s a certain number of jobs generated, it’s not matching. There has to be a certain number of employees committed and that will be 66. So if this company brings 66 new employees to this area, it’s non-matching."

He said, at the most, there could be a 20 percent matching component (which translates into $200,000 from the city’s pockets based on the $1 million figure), but Sellers said he was working with the company looking to relocate to come up with "creative ways" to keep the city’s monetary contribution at the absolute minimum.

He said the official announcement of the project should come "very soon. You’ll see it."

The only other items on the council’s agenda tonight were:

• A citizen comments period during which anyone could come and talk about their problems with the proposed budget and/or tax rate but no one did.
• A first reading on that FY 2016-17 proposed budget that passed 6-1 with council member Daphne Tenorio casting the lone negative vote, which was not completely unexpected. She told me she voted against it because (1) it eliminated transportation subsidies, (2) new positions were created she felt were not needed and (3) she objected to the implementation of a stormwater fee. When I reminded her the stormwater fee would be set later and was not part of the budget, she told me "The city just needs to do a better job of taking care of the infrastructure it has." Later she added: "One of my biggest concerns about the budget is the lack of cushion. Last year we spent as much as we could. This year we did a better job of having some cushion. I just worry we won't have enough in case of a major issue." The city unanimously approved one amendment to the budget that will have absolutely no effect on this year’s revenues or expenditures — to rename placeholder item for the 2020 Capital Improvement Program. That item, Item 31 on page 237 of the budget proposal, was mistakenly labeled "City Square Fountain" for reasons not important enough to take the time to explain. The amendment changed the name of the item to "Splash/Skate Park." Be that as it may, that’s an item that’s four years down the road and who knows what the political makeup of the city council will be in four years or who will be the city’s CEO when 2020 comes around.
• A first reading of an ordinance, approved unanimously, to lower the tax rate by a penny. The council did acknowledge, however, that even with the reduction in the tax rate property owners’ tax bills will still be considerably higher this year than last because of increased property values coupled with the fact that the one of the eight governmental entities taxing Kyle property owners, Hays CISD, which accounts for 54.3 percent of the total tax bill, is not lowering its tax rate. In addition, the Austin Community College District will be raising its rate slightly ($.0015 per $100 taxable value). It accounts for roughly 3.5 percent of a property owner’s total tax bill.

Economic Development Board’s rigged recommendation on joining Clean Air Coalition

The only "outside experts" the city’s Economic Development Board consulted when considering the impact that joining the Cleaning Air Coalition would have on attracting new business to Kyle were representatives of the coalitions’s umbrella agency.

That’s exactly like asking the fox for recommendations on how to build the henhouse.

The Central Texas Clean Air Coalition is part of the Capital Area Council of Governments (CAPCOG) and, according to the official minutes of the Economic Development Board’s May 10 meeting at which this subject was discussed, the only two persons to address the board on the subject were Andrew Hoakzema, CAPCOG’s air quality control manager and the head cheerleader of the Clean Air Coalition, and Chris Schrenck, CAPCOG’s director of planning and economic development, neither of whom was going to be objective on the issue.

Immediately after their presentations, according to the minutes, board member Harish Malkani moved the Economic Development Committee recommend to the City Council that the city join the Clean Air Coalition, not as a supporting member, as the majority of the council wished, but a full-fledged general member. That motion was seconded by Tony Spano and approved unanimously (board members Tessa Schmidtzinsky and Don Tracy did not attend the meeting).

The charge from the city council to the Economic Development Board was clear: Determine whether joining the Clean Air Coalition would have a detrimental effect on attracting new business to Kyle. Does anyone think that simply talking to representatives of the Clean Air Coalition will provide the objective, thorough analysis that was requested by the City Council? Give me a break!

It seems to me a more thorough examination on this subject could have been presented by inviting representatives and seeking testimony from Austin area businesses who actually make relocation/expansion decisions or perhaps educators from the business schools at either UT/Austin or Texas State who may have actually studied this subject.

But, sadly, that was not the case. The Economic Development Board’s idea of an objective look on whether to join the Clean Air Coalition is to listen only to the chief proponents of the Clean Air Coalition.

That makes the board’s recommendation absolutely worthless.

Secede!!!

The city’s Economic Development & Tourism Board received two separate reports during its meeting today at the Seton Medical Center, one on building permits and the other an update on the effort to make Kyle-Buda a triple freeport area, without realizing, I think, the two items are intrinsically linked. In fact, the two items weren’t even together on the board’s agenda; they were separated by three other items although they both came under the heading of "Economic Development Updates."

On the subject of building permits, Diana Torres, the city’s director of Economic Development, said residential permits were going great, but commercial permits seemed to be stalling. After cautioning the board that apartment complexes count as commercial permits, Torres said the city is averaging four commercial permits a month, compared to five a month in 2014 (she did not provide numbers for last year).

Residential permits, however, "are way up," she said. The city averaged granting 62.83 residential permits per month., she said compared to 54.33 this time last year and 48.8 the year before that. In 2013, she said the number was 21.8, so essentially that figure has ballooned to three times its size in three years.

And yet, in the two years I have lived here, this city has not landed even one major non-retail economic development project. And one of the convincing arguments for that is because we are not a triple freeport area.

I have discussed triple freeport at length before but, in short, it is an economic development tool that exempts from taxation certain goods a company may have at its facility for less than six months. It most commonly affects businesses that assemble parts into a product that is then shipped out and allows those parts to be exempt from taxation. If this exemption is granted by an area’s three main taxing entities — the city, the county and the school district — then that area is known as a triple freeport area. Most, if not nearly all, businesses eligible for such an exemption that are looking for new locations will not even consider an area that is not designated triple freeport. Here, both the city and the country have granted the exemption; the school district, which levies the largest share of taxes in any Texas community, has not.

Subtle pressure has been applied to the Hays Consolidated School District board to grant such an exemption but so far those applying the pressure have been arguing facts, (i.e., the district will not lose any money by granting the exemption), that are irrelevant to the board. I am convinced the school board is, if not dominated by, at least influenced the strongest by no-growth advocates. Their argument is the school board’s sole interest should be education and that they were not tasked with promoting economic development so they should play no role in promoting economic development. The money argument does not counteract that.

So what to do? One could argue that a strategy could be developed to counteract the board’s point of view. But that rarely works. I have always found that, in any political battle, the side that sets the agenda wins. So one could try to argue the school district’s position is wrong, but you are simply arguing their position, not one of your own.

I am convinced that if Kyle leaders really believe a triple freeport designation will significantly alter the economic development landscape for the better, they should begin an effort immediately to secede from the Hays Consolidated School District to form a Kyle Independent School District, with its own board that has the ability to grant the exemption.

I am also convinced that even the serious threat to break away would force the Hays school board to reconsider and grant the exemption. And, if it doesn’t, the argument could be made that Kyle students would be better served by a locally controlled school district.

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."