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City offers NISD funds from development lease | Alert

The Seguin Public Finance Corporation has taken a step toward creating a partnership with Navarro ISD and sharing a portion of the proceeds from its proposed workforce housing development.

The corporation — comprised of city council members — voted 7-1 Tuesday, with council member Chris Aviles dissenting, to approve a resolution with the city’s offer to give the district the $500,000 closing fee and share 50% of the proceeds from the rentals of the 288 unit apartments.

The resolution came as the district, along with several Navarro ISD residents, voiced their concerns over the proposed city-owned apartment complex within the district’s boundaries.

“We listened to those concerns and figured out if there is a way to partner,” Seguin City Manager Steve Parker said. “I think the major issue there was the 75-year tax abatement related to it not being on the tax rolls.”

In September, the city of Seguin took the first step in entering a partnership as a public finance corporation with Vaquero Multifamily, LLC, to build Lily Springs, a 288-unit apartment complex at the intersection of State Highway 46 and Cordova Road. The terms the two entities agreed upon include the developer assuming all of the financial risks, while the city owns the property run through the Public Finance Corporation, and a 75-year tax exempt lease.

The property resides in the Navarro ISD boundaries and would greatly affect its finances; however, the impact is still unknown, Navarro Board President Renee Rehfeld said during the meeting. Rehfeld asked the council to hold off on approving the resolution until the Navarro board could have a chance to discuss the terms.

“We need to discuss it as a board, so we can come back to you in a more formal manner,” she said. Tuesday. “We scheduled a special meeting tomorrow night so that we could discuss the proposal that was sent to us.”

After the development was announced, city, county and district officials met to discuss the development and the impacts it would have. During the meeting, the city offered a partnership between the three entities, with all three sharing a third of the funds from the leases, Parker said.

“Council believes that workforce housing is an initiative that they want to invest in but, at the end of the day, it wasn’t our intention to not partner with the school district,” he said. “With that, council has intent to share in the revenues related to the rental lease payments that would be coming from Vaquero as the developer.”

The county, however, was not interested in partnership or the project, Parker said.

And instead of collecting their portion, county officials asked for its cut to go to Navarro ISD, Rehfeld told the council.

“The county asked that their one-third go to the school district,” she said. “They said it that night at the meeting. I think they communicated that a couple of times to Mr. Parker. They communicated it to the district.”

Rehfeld explained the county understands the district’s inability to collect financing outside funding state and property tax revenue, which was the county’s reasoning for passing its third to the district.

“I know it may sound like we’re trying to be greedy with two-thirds, but we don’t have other revenue streams as the city and the county does,” she said. “That is the reason why the county gave up their third to give to the school district. They know we have state funding and we have taxes. That is all we can do to get revenue for the district. So, our question back to the city is why would the city not grant the county’s request for the one-third go to the school district to help minimize the impact.”

A portion of the resolution states that state funding would cover the loss of tax revenue, which Rehfeld said isn’t the case.

The resolution states “Whereas, through state law the Navarro Independent School District (“Navarro”) would be partially compensated for the loss in tax revenue by a State transfer based on the number of students living in the Project.”

The state’s funding and tax revenues are not the same, Rehfeld said.

“We’re going to get those students, the state funding has nothing to do with the taxes that we’re going to lose on this PFC,” she said. “We’re talking about the students that come through our door, we get state funding. All of what we talked about with our tax implications, and the taxes we are losing has nothing to do with the state funding. The $7,000 we get per child, we’re going to get whether it is a taxable entity or a nontaxable entity. It doesn’t help us make up the tax loss.”

Rehfeld also shared concerns about the $500,000 and it’s connection to Link Road and any updates that need to be made.

“It always had Link road attached to it. We don’t own Link Road, so we weren’t sure if we could even accept the $500,000,” she said. “If there is any understanding that the $500,000 is to be used for Link Road, we can’t do that. As a school district, we don’t make improvements on Link Road. It is the city and the county that own Link Road.”

Parker did clarify that the money is not earmarked for a specific project and acknowledged the work that Link Road would require.

“There isn’t any stipulation in this agreement that the $500,000 would be towards Link Road,” he said. “Now there may be requirements of you having to do improvements with turn lanes, drainage, related to Link Road… that we would treat any development, and have those requirements, so you could use that for some of those things, but that portion of that is in the city limits and we do not have a project funded for this.”

Parker admitted Link Road is in need of work, but it is not on the city’s current schedule for repairs.

The district was concerned that Tuesday’s resolution was a contract, however, City Attorney Andy Quittner assured officials it is merely a formal statement of council member’s intentions.

“The resolution is not a contract. It is loose in that way,” he said. “I’m not sure, but I have to meet with the school board’s attorney, of whether or not you can do a 75-year inter-local or whether or not this group can enter inter-local with them. School districts have different restrictions. We’ll work with the appropriate people to form what needs to be done, but the intent is also to last the entire period of lease payments.”

The partnership with the district is not something public finance corporations do, Parker said.

“This is the only community that I know who has ever offered … a share in any payments related to the public finance corporation in any community. The cities have chosen to keep the money to themselves,” he said.

Felicia Frazar is the managing editor of the Seguin Gazette. You can e-mail her at felicia.frazar@seguingazette.com .

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