Laredo City Council last week voted to enter into a preliminary public-private partnership with a commercial real estate developer to build a $1 billion, 2,000-acre business park off Interstate 35.
In 2015, Majestic Realty purchased the former Mercedes-Benz test track facility near mile marker 13 and developed a master-planed logistics park called Port Grande. They completed the first phase of this project in 2017, developing 100 acres into warehousing for several large logistics companies and customs brokerages.
Then for the past three years, Majestic Realty has been working with the City of Laredo, negotiating a increment reinvestment zone proposal for the subsequent phases of development.
A tax increment reinvestment zone sets aside a portion of the developer’s taxes to the city over the term of the agreement in order to reinvest into the infrastructure and public improvements needed in the development process.
In this case, the term of the agreement is for 30 years. The city will continue to collect taxes based on the property’s current value. But as the property is developed and its value increases over the years, the city will split the new tax revenue with the developer, keeping 45% for the general fund and reinvesting 55% back into the project.
So over the course of the 30 years, the city is estimated to collect $51 million in revenue and spend $53 million to build public infrastructure in the logistics park, like five-lane streets built for heavy truck usage, said Teclo Garcia, economic development director for the city.
When the deal expires in 2051, the City of Laredo will collect taxes on the development’s full value.
Phase 1 of Port Grande has created 3,000 jobs, the city reported. Councilmember Marte Martinez said this deal will bring 1,000 more jobs in the next three years and 9,000 jobs total. This is the largest project the city has ever been involved with, he said.
City Manager Robert Eads noted that this deal also commits Majestic Realty to Laredo.
“For the next 30 years, we will be joined at the hip as partners in this endeavor,” Eads said.
Councilmember Alyssa Cigarroa asked that the city present this project to the city’s Economic Development Committee. And Councilmember Vanessa Perez wanted to ensure that the development won’t create additional traffic or bottlenecks in Laredo. There needs to be a traffic impact analysis to make sure the city can handle the increase in movement, she said.
The tax deal in fact requires that the developer attend to traffic issues before they start, Eads said.
Council will have to take a few more votes on this project before the city enters into an official agreement with Majestic. They’ll have to create an ordinance, hold a public hearing, create a TIRZ board, hear the financial plan and then agree to the full development agreement. This is scheduled to be completed by May of this year.
Majestic will also be approaching the Webb County Commissioners Court to request their participation in the tax deal.
Julia Wallace may be reached at 956-728-2543 or email@example.com
Link to Original Article: https://www.lmtonline.com/insider/article/Laredo-council-approves-tax-deal-for-2-000-acre-15898612.php