Texas Border Business
TUESDAY, APRIL 26, 2016
Pharr, Texas – City of Pharr officials held a press conference earlier today to explain and clarify information regarding certain fiscal losses from two economic development projects. The press conference was led by City Manager Juan Guerra, who addressed the media and the public about the losses which had been recently reported in an annual audit report presented during a Pharr Economic Development Corporation (PEDC) meeting held last week.
During the presentation, a question was asked regarding a fiscal loss that was noted in the audit report. The report recorded a loss of nearly $6.5 million, this year alone, on the value of the land for two City projects – the Pharr Produce Park and the Jackson Retail Project. While this report raised questions and concerns among Pharr officials and the public, and local news media, this is not the first time the loss was been publicly reported. The losses were first recorded in the September 30, 2013 audit. Although the loss this year of $6.5 is a material amount, in fact, the total loss for the projects to date is approximately $14 million. In addition there is currently $20 million in debt outstanding with only $11 million in land. In the interest of full public disclosure and transparency, Pharr officials felt it necessary to clarify the situation regarding these projects and the fiscal losses on the value of the land.
City Manager Guerra began by emphasizing Pharr Mayor Ambrosio Hernandez and the current city administration’s leadership directive to increase public accountability and transparency, stating that “earning and keeping the trust of the community is a major goal of this administration.”
Guerra then described the two projects in detail – the Jackson Retail Project and the Pharr Produce Park. Excerpts from his remarks are included below:
JACKSON RETAIL PROJECT
“The Jackson Retail project consists of the development of Costco along with land consolidation at the corner of Jackson and Expressway, roughly 60 acres at a cost of almost $34 million. This was paid from $19 million in loans and $15 million from excess cash.
“The City’s goal of this project was to entice Costco to develop in Pharr and spur growth in the area, with good retail and high-quality restaurants to the area along Jackson Road. This goal was not achieved. The businesses that have developed there are fast-food attractions, which severely limits any future development to more fast food restaurants.
“The City’s goal was to sell all the land within one year. This goal was not achieved. Land was purchased in 2011, we are now in 2016, five years later and the city still has the land in our books. The City’s goal was to break even within 5 to 7 years due to the enormous sales tax potential that was anticipated and widely touted. This goal was not achieved. In a best case scenario, we will break even in roughly 21 years. To date, we have roughly $5 million of land we still need to sell while our debt for this project is roughly $10 million. Since this project began in 2011, the losses on the value of the land are almost $11 million.”
PRODUCE PARK PROJECT
“The Produce Park project consists of the development of 90 acres of land located by the Pharr International Bridge. The cost of this project is roughly $11.5 million. The project was done without any professional planning. The land was purchased on September 2011, and the City issued a loan to repay itself for the cost of the land 14 months after the land was purchased. The loan to pay for the infrastructure was finalized in July 2012, 11 months later. The project was not completed until early 2014, over 3 years after the purchase of land
“In theory, the goal was to develop an industrial park next to the bridge to be ready to receive new businesses coming into the area. It was intended to do this before any other commercial bridges in the area opened up.
“Once again, the City’s goal was to sell all the land within one year. This goal was not achieved. The land was purchased in 2011, today is 2016, five years later, and as of today, there is not a single building built yet. Only 4 out of 29 lots have been sold.
“To date, we have roughly $6.5 million of land we still need to sell while our debt for this project is roughly $10 million. Since this project began in 2011, the losses on the value of the land have been almost $3 million.
“The City’s goals for these projects were not met, more than likely the result of doing them without a proper feasibility study, without any analysis of what we can buy the land for versus what the market will bear.”
After describing the projects, Guerra emphasized to those in attendance that the explanation was intended to provide transparency to the public, to be a clarification on the facts of the timeline of these projects that were approved in the past.
Guerra continued, “Despite the substantial losses, the city remains strong and in good fiscal health, Pharr’s future looks very bright,” and outlined some notable and recent accomplishments, including the following:
- The STC, PSJA, and City of Pharr partnership to bring a branch of STC to Pharr which was previously, and I quote per Dr. Reed of STC: “on life support”, finally moved forward with a grand opening expected in 2017, thanks to the leadership of Mayor Hernandez and a united City Commission;
- The Boggus Ford Events Center previously losing roughly $700k annually, is now positive and making money;
- Unemployment rate has gone down from the previous rate of 7.1%, down to 6.3%;
- Sales tax continues to be #1 in the region for the month and for the year, recent numbers show us growing a very impressive 15%;
- New stores this year are coming to Pharr, highlighted by the opening of Academy, with TJ Maxx, and Bealls opening soon, along with a Starbucks and many more; and
- After implementing the largest reduction in property tax rates in over 20 years, Pharr now has the lowest property tax rate since 2000.
“It is the current administration’s position to make the best of the situation, and move forward, to professionalize the staff, use market research and other data to make informed decisions in the best interest of the City and not repeat mistakes that result in such major losses,” Guerra added.
“Accountability is alive and well in our great city and that moving forward it will be transparent to the entire community,” he continued.
“Projects that the City of Pharr promotes will be for the betterment of the city and not any one individual, and together, under the leadership of Mayor Hernandez and a united City Commission, our better days are ahead of us,” Guerra ended.
After his remarks, Guerra entertained a question-and-answer session from the audience. For video and full coverage of the press conference in its entirety, visit https://pharr.io/pw
Land Available For Sale Chart
Jackson-Expressway Economic Revitalization Project-Breakeven Analysis
